Strategies for effective IPR Risk Management

IPR Risk Management is the tool you perhaps didn’t know you needed. Kolster Associate Partner, German & European Patent Attorney Simon Mügge shares simple ways to keep your business ahead of the competition and avoid costly disputes.

IPR risk management brings economic and strategic business development and prevents infringement and costly disputes. The first step is to early identify and monitor potential risks. Once such risks are identified, using the right tools and the right timing is at the core of operations.

“To simply wait and hope for the best is a bad advice. If a problematic European patent has time to develop into a bundle of national rights upon grant, nullity proceedings must be initiated separately in different countries. Wilful or negligent infringement may result in harsh punishments in certain jurisdictions”, Kolster Associate Partner, German & European Patent Attorney Simon Mügge says.

According to Kolster’s IPR Survey 2021, there are a lot of companies that haven’t identified the potential IPR risks at all – only 37 % of responders had done so.

“Even if you don’t own by yourself intellectual property rights, you may still fall within the scope of someone’s patent and be sued or obligated to pay licensing fees. In a worst case scenario, you may be prohibited to manufacture and distribute your commercial product.”

Giving the Examiner ammunition by filing third-party observations

Third-party Observations (TPO) are a way to interact directly with the Examiner to cut down a broad scope of patent claims at low costs. TPOs can be filed with regard to all patentability requirements and are particularly useful when an application is still under examination before the EPO (the European Patent Office).

“A TPO provides the Examiner with ammunition for objections, even though one is not party of the proceedings. For example, if the original patent claims were directed to a combination of features A, B, and C, and the claims are amended in the examination to refer to a combination of A, B, and D, the subject matter of a combination of features A, B and D only has not been searched. Therefore, this can be pointed out to the Examiner as a contradiction to Rule 137(5) EPC concerning unsearched subject-matter. Requesting clarification of an ambiguous claim is another primary example”, Mügge explains.

A TPO can be filed by any natural or legal person, even those are not party to the proceedings. In fear of being identified, many file TPOs anonymously. Mügge advises against it.

“TPOs with an indicated name are treated with higher priority. Instead of your own name, they can be filed in the name of a lawyer or IP professional. It’s also wise to ask a specialist to formulate the arguments in a way such that they can’t be ignored by the Examiner.”

Opposition for long and detailed arguments

Once a patent has been granted, there is a 9-month time period where any third party can oppose to the grant. If you do not have novelty-destroying prior art and your line of argumentation is long or difficult to explain, Mügge suggests opting for opposition proceedings in favour of TPO.

“Compared to TPOs, opposition proceedings allow more time to argue and explain your line of argument during 1–2 rounds of petitions and 1–2 rounds in response to the preliminary opinion. At the end of oral proceedings, the patent is either revoked, maintained in amended form or maintained in the form as granted”, Mügge says.

It is good to keep in mind that the grounds for opposition are limited: cases where the subject-matter is not patentable under articles 52 to 57 EPC, e.g., novelty or inventive step, or it does not disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art.

“Another ground for opposition are cases where the subject-matter extends beyond the content of the application as filed. Third parties have a right to legal certainty that the scope of a patent can’t be extended to include an undisclosed combination of features afterward. If well-played, such an objection can result in an inescapable trap between Article 123(2) and (3) EPC, which cannot be cured by the patent proprietor, such that the patent is inevitably revoked in total.”

Straw man oppositions: advantageous anonymity

Opposing by a straw man provides companies anonymity, which may help in protecting their patent portfolio, as the competitor can’t aim for counterattacks.

“If done right, the anonymity is an advantage when you don’t want to disclose how relevant the competitor’s patents are to you, or when you wish to clear the path to a new field of business without revealing the direction you’re interested in”, Mügge says.

Leverage in negotiation tables and a sign of economic value

Opposition can be a useful tool for creating pressure and negotiating better licenses or cross-license agreements. However, opposition proceedings don’t automatically come to a halt when an opposition is withdrawn. That’s why Mügge recommends using only an opposition draft in negotiating a (free) license.

“Parties may end up in a win-win situation: the possible future opponent may become a free license or a license with good conditions. On the other hand, the patentee does not run into the risk of losing the patent. Additionally, other third parties are still repelled by the patent to enter the technical field in question.”

Currently, the EPO’s official opposition fee is 815 euros, but a worthwhile investment. A filed opposition against your own patent is a sign of economic value, and a successfully defended patent has usually high validity in infringement proceedings.

“The opposition division has already taken a closer look at the patent and it has been re-examined for validity. If it has survived all the proceedings, you can assume that is indeed a very strong patent. Additionally, a narrow but strong patent is more valuable than a broad one: if it has commercial value, it will be opposed anyway and cut down to what has been demonstrated to contribute over the prior art.”

Unitary Patent System bringing alternatives on the IPR table

To opt or not opt for the upcoming unitary patent is an important part of future IPR risk management.

“Normally, a granted patent is validated into a bundle of national patents, each in force in the selected countries. To destroy them, nullity proceedings must be initiated in each country separately. It takes time, effort, and money. For the same reason, it is costly to sue third parties for infringement in each and every country separately”, Mügge says.

The Unitary Patent System and Unitary Patent Court are expected to become operational in late 2022 or early 2023, giving patent seekers cheaper and faster alternatives for protecting their IPR in several countries without relying on a bundle of national patents.

“If you opt for a European patent with unitary effect, you can sue the other party in one proceeding in any country member state, which ratified the UPC agreement. On the other hand, nullity proceedings have the same effect: if your patent falls, it falls with effect in all countries. The strategy whether to opt for a European patent with unitary effect, or not, should thus be decided on a case-by-case basis.”

If determining the best way to monitor competition to identify potential risks in IPR and reacting to potentially harmful applications and patents feels challenging, Mügge recommends asking an IP professional for advice.

“We provide information to support decision making, help to build IPR portfolio, provide with legal support for business with e.g., licensing and negotiations, and control disputes. As a strategic IPR partner, we protect and defend your IPR rights all over the world when needed.”