How Companies Respond To An Economic Downturn
During an economic downturn, companies typically respond in one of two ways. They either conserve limited cash resources, or they use the downturn as an opportunity to invest those limited resources in tomorrow. In this article, we discuss patent applications and patent enforcement and the issues involved in slowing down, speeding up, or pivoting the patent strategy.
Current economic conditions related to the COVID-19 pandemic have corporations slashing budgets in any way possible, and life sciences companies are no exception. With the current focus on profit-generating activities, many life sciences companies are cutting expenses related to R&D, clinical trials, and patent applications. Some have completely back-burnered patent litigation; they are settling existing cases or pushing the pause button on patent infringement lawsuits, and the like.
The obvious benefit to cutting costs related to research, development, and litigation is immediate cost savings. However, this type of budgetary tunnel vision can lead to serious consequences, for both companies and the general public. When the economy finally begins to dust itself off and emerge from its bewildered slumber, there will be nothing but a trickle of new products coming out of the pipeline due to the unprecedented lack of R&D. The judgment call for any company is whether to continue R&D activities, generate possible inventions, and file patent applications. A company may fear that even if R&D is conducted, the cost of patent applications is prohibitive.
Cost-Effective Measures In Patent Applications
In terms of patent applications, there are cost-saving measures that one can take. First, an applicant may choose to file one or more provisional patent applications. This can have two obvious benefits: (i) a provisional need not be as formal as a regular application, thus less time (and hence money) is spent on the provisional application narrative; and (ii) because the provisional lives for 12 months, costs of full applications can be delayed for that year.
Second, a company may choose to waive any patent rights but could defensively publish its innovations to block others from obtaining patents. Creating defensive publications is rather cheap. Strategically publishing documents on the internet can create prior art.
Third, a company could choose to keep the innovations as trade secrets and so long as the innovation does not become statutory prior art, the innovation can later be the subject of a patent application.
Fourth, an applicant may reduce costs by selectively deciding where to file patent applications and on what subject matters. For example, because patents are territorial, does the innovation require patent applications in 150+ countries? Can an applicant get away with applications in just a few of them? Can you drop countries that have foreign language translation requirements and only file in countries that accept English to save on translation costs? The applicant may also choose only to file on product patents and not on methods of manufacture as product patents tend to be easier to enforce in a particular country.
For a client, we looked at the patent portfolio and dropped pending applications or issued patents in countries where no legitimate court system existed, where enforcement rights were flimsy, the maintenance costs were high, or the country was in the midst of a civil war. In another situation, our innovations required no less than $1 billion in investments. So, we filed applications in just a few countries recognizing that we covered the most important markets and if a competitor wanted to invest $1 billion only to serve a few insignificant markets, then so be it. Effectively not filing in every country still gave us excellent patent protection.
Finally, as start-up or other companies fail, the I.P. estate may be available for sale. A company could use this downturn to obtain valuable I.P. from faltering companies.
How We Help In Patent Applications
We help companies figure out what to do. We can help analyze the portfolio, determine the “kinds” of patents one owns, where they are filed or issued, and what value they may have. We can then help with potential filing strategies to determine how to do less and get more value.
Patent Enforcement – Drilling for O.I.L. and Protecting Market Share
Some companies are using this economic crisis as an opportunity. Many companies have enforceable patents to protect market share from current competitors, knock out future competitors, or obtain royalties through licensing. Your company may actually have licensing revenue that could create additional cash flow during these uncertain times.
These forward thinkers are reviewing patent portfolios, conducting infringement use mapping exercises, and determining if infringers exist. This may result in an ability to knock a competitor off the market (to preserve today’s market share) or obtain new cash flows because of injunctions, damages, and royalties. Such a company dusts off the pile of patents it owns, conducts a thorough examination, and identifies ways of leveraging that patent portfolio.
How We Help In Enforcement
“Drilling for O.I.L.”, which means “Opportunities In Licensing” for patent holders, is our program to help with patent mapping activities to find potential licensees.
In addition to potentially generating additional cash flow, dealing with patent infringement (and taking a license today) will help to clear the way of a potential competitor’s patents. This may greatly improve the chances of a successful product launch in the future. A patent holder may be more willing to deal with you today via a license deal for today’s cash versus extracting more value from you in the future. That is, a patent holder’s desire to monetize some I.P. today may outweigh its desire to extract higher future values from you.
Patent Enforcement At The PTAB and Courts; Litigation Funding
Our deep experience in patent & FDA law and litigation (in court and at the PTAB) helps us become laser-focused on how to help clients move the business forward. In terms of infringement mapping exercises, we help clients identify potential opportunities, conduct the infringement analysis, and then help determine the next steps. If a company wants to “clear the way”, we can help determine if an IPR/PGR at the PTAB are better options than filing a Declaratory Judgment in court.
Our team has been involved in 100’s of patent enforcement actions, both on the offense and the defense. In terms of offensive enforcement, we can help arrange for litigation financing/funding to help defray costs. Furthermore, our firm uses creative alternative fee arrangements to create a win-win for clients and the firm.
It should not be forgotten either that timing may force you to file a suit. For example, if you are running up against statutory bars, laches, etc. you may need to file. But skilled counsel can help you file but then try to slow the process down. Courts are also varying the in-court procedures so that enforcement can still take place. Similarly, the one-year deadline to file a PTAB proceeding may come even though the pandemic slows things down.
Of course the pandemic and slowdown force a company to ask the operative question of whether enforcement is a good use of today’s money. But as we discussed above, enforcement has always been an available tool and remains a tool, among other tools in the toolbox, to help a company succeed.
How Upadhye Tang LLP Can Help
At Upadhye Tang LLP, we understand the unique and immense challenges faced by companies during the pandemic, particularly those involved in R&D. This global crisis is unprecedented, with world leaders, scientists, and technologists all throwing their proverbial hands up in the air.
Although we are just as uncertain about the long-term impact on global health and the economy, our knowledge of how to utilize existing resources to generate cash flow can provide immediate benefit to clients with limited budgets. We also understand that a global economic downturn can be a massive opportunity for life sciences companies with resources—even if they are limited—to identify infringers and increase cash flow through damages and royalties. This increased cash flow can then be used to conduct R&D, thus positioning that company to be one of the few with new products in the pipeline during this crisis.
Contact Upadhye Tang LLP Today
At Upadhye Tang LLP, we are laser-focused on helping clients win. Because I.P., FDA, and related commercial law is all we do, we know how to work with clients. As described above, we can help with critical strategy on patent applications and enforcement activities. Further, we can help negotiate settlements and/or licenses. At Upadhye Tang LLP, we utilize our deep network of industry contacts to make introductions and help our clients’ businesses grow.