Colleen Chien: Supporting Software Innovation Through Software Patents


Photo:  Vincent LoTempio, November 25, 2011

Everywhere you look, software innovation is transforming the economy. Algorithms are embedded into the cars we drive and determine the prices of the goods we buy and as the recent election has highlighted, the news we read. Software increasingly powers hardware, and not only “tech” devices that make up, for example, the internet of things. According to a recent study by Lee Branstetter and his colleagues, traditional manufacturing sectors like automobiles, aerospace and defense, medical devices, and pharmaceuticals are increasingly turning to software, rather than more conventional mechanical or chemical engineering approaches, to differentiate products, enhance product performance, and increase user utility.

Yet our understanding of how patents and patent transactions support software innovation is limited, in part because patent transactions data is hard to find.  There is no requirement to record patent licenses and no universal way to signal a desire to sell or purchase, or license in or out a portfolio. Patent sales, though routinely recorded at the USPTO, comprise only about 10-15% of the public record according to the USPTO, complicating interpretation of this record.  Recent Supreme Court decisions have cast doubt on the enforceability of a large swath of existing software patents. Despite these problems, the software patent market is robust, and surprisingly so. In a study I released earlier this year, I found that from 2012-2015, sales of software patents actually increased, not decreased. Though the first half of 2016 has seen a decline from these highs, several forces should continue to drive transaction volume among software patents:

  • The growth of software-based innovation, even in “non-tech” areas like the life sciences and pharmaceuticals;
  • The importance of freedom to operate to incremental, software-based  innovation, which drives the demand for patent portfolios in order to deter or avoid suits;
  • The flourishing of technology companies for whom buying presents is an attractive option alongside traditional patent portfolio growth, and the death of technology companies whose portfolios can be among their most valuable remaining assets.

To take advantage of these trends, either as a buyer or a seller requires locating the right potential partners, communicating the value of the portfolio, and reaching agreed upon terms.

Powerful, machine-learning based analytics built into the IPDealRoom product of ClearAccessIP can be leveraged to overcome the pitfalls that accompany each step, and to create the trust that supports successful transactions.  Sellers can effectively market their patent portfolios by:

  • Making sure the patent transaction package includes key market information, know-how, and a mapping to products and companies;
  • Ensuring that the terms of the desired transaction(s) are clearly communicated (e.g. to license, sell, pool, pledge, or cross-license the patent);
  • Using analytics and automation that show the status and details of the portfolio (i.e. maintenance fees due, terminal disclaimers, family size, encumbrances, etc.)

Buyers can leverage many of these same capabilities of ClearAccess IP’s Deal Room when evaluating or diligencing a portfolio for potential acquisition or licensing. Rapid visibility into the characteristics of patents in a portfolio that can be used to quickly match commercial need with patent profile in order to determine a fit including:

  • Any encumbrances, including patent pledges or commitments, on the patents ;
  • The streams of maintenance and related payments that are due on the patents and the expiration dates of same;
  •  Information on foreign counterpart assets;


Developing a comprehensive patent strategy is possible today with the right tools in place.

If you would like to learn more about how ClearAccessIP can shape your organization’s patent strategy, please go to www.clearaccessip.com, write us at info@clearaccessip.com or call 650-460-2110.