“Patent utilization” has been a buzz word in Japanese IP industry. There seems to be an increasing number of companies thinking that they should make effective use of patents that haven’t been used by themselves; i.e. monetize such patents by selling or licensing them to others. Actually, a client of ours has asked me what salable or licensable patents are like.

First of all, you may need to know when a patent transaction occurs.

One is when a company has to use a patent. In other words, it is the case that the company possibly infringes someone’s patent. We may be able to call this case an assertion-based transaction, since it often begins with a kind of warning notice from a patent owner in this case. Some companies occasionally have interest in acquiring patents that they don’t infringe but their competitors possibly infringe. This is preparation for present or future disputes with their competitors. Both cases are associated with enforcement of patent right.

For the assertion-based transaction, the patented technology doesn’t necessarily need to be superior from a technical point of view. Rather, a technology which seems to be normally used to realize a particular function has high value. Standard essential patents (SEP) should be included in this category. The patents for the assertion-based transaction should be easy to find and prove infringement to prepare an EoU (Evidence of Use) or a claim chart, and also invulnerable to arguments on invalidity.

A patent transaction also occurs when a company wants to use a patented technology which likely to contribute its business but the company currently doesn’t have such a technology. This leads to a technology transfer transaction. The Japanese government is promoting this type of patent transaction. The government expects economic revitalization by utilizing large companies’ unused patents for SMEs to create new products. A challenge of this model is to reduce cost of matching patent owners with SMEs who need the patented technologies (Please see a related article on this point). It’s hoped that artificial intelligence (AI)-based solution will be developed.