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Be Competitive: Patent Planning for Robotics Companies

by Linda J. Thayer and Rachel L. Emsley

Linda Thayer is a Partner for Finnegan, a world leading intellectual property (IP) law firm. She can be reached at 617-452-1680; linda.thayer@finnegan.com

Robotics plays an increasingly important role in the global economy and day-to-day life, as engineers strive to create complex systems for a rapidly expanding range of applications and human activities. With new robotics devices or initiatives appearing in nearly every industry – including manufacturing, medical, service, defense, and consumer industries – the robotics industry is poised for recovery following the 2009 economic slump. In fact, the International Federation of Robotics forecasts that the demand for robots that weld cars, assemble electronics and package food in China will almost double by 2013. As consumer markets emerge in Russia and India, wages rise in the so-called lower wage manufacturing countries and demand increases for quality goods, limitless opportunities for growth in robotics abound. North America, with a comparatively low degree of automation, may find itself in a position of needing to catch up through investments in robotics.

As in all industries, growth will foster increasingly intense competition. Having a sound patent plan can make the difference between a dominant company or successful hobbyist, and one that falls to the back of the pack. Those that gain an understanding of the relevant patent landscape will have the confidence to make competitive decisions while reducing the risk of costly litigation or late-stage design changes. Additionally, those who invest in developing a strong patent portfolio are better equipped to protect their market space and may have leverage against others seeking to enforce patent rights. Further, companies that have outlined a patent enforcement and response strategy before one is needed will already know what to do when confronted with a patent issue, and react more efficiently. A sound patent plan should address each of these areas.

Knowledge is key

Operating blindly in the patent world is risky. While patents do not grant the owner the right to practice the invention set forth in the claims, they do grant the patent owner the right to exclude others from practicing the invention. Thus, each issued patent relevant to a robotic device creates a potential roadblock to others that make use, or sell products in the same technology area. Further complicating matters, many robotic devices incorporate or combine technologies from multiple disciplines (such as mechanical, electronics, software and medical). Gaining an understanding of the patent landscape in the relevant technology areas can help to minimize the risk of a patent conflict.

Successfully navigating the ever-growing labyrinth of patents requires information. Identify patents and published patent applications relevant to a particular technology area or product and study them. These documents may reveal competitors’ research and development efforts, future products and relative patent portfolio strength. This initial step may be as simple as having employees knowledgeable about your R&D efforts perform Internet searches or examinations of the U.S. Patent Office’s website as a first cut. As a next step, engage patent counsel to analyze or discuss results or assist in obtaining a search of international patents.

Understanding the patent landscape promotes competitive business decisions. Identifying who owns the most relevant patents may reveal the true competitors or may identify potential business partners. Knowing where relevant patents have issued may suggest preferred markets for business activities. Most importantly, knowing what these patents cover will promote an understanding of where freedom to operate exists (and the extent of this freedom) and where potential conflict exists. Armed with this knowledge, companies can select or change product and process designs early on to minimize the risk of costly patent litigation, or approach potential licensors before making significant investment into a particular product or process design.

Develop a strong patent portfolio

The old adage saying “the best defense is a good offense” applies equally well to the patent world. Because a patent provides a right to exclude, patents can be used offensively to defend a particular market space by restricting competitor access to that space. As the strength and number of a company’s patents grow, the barrier to entry into a particular technology area can become formidable to competitors. Without patent protection, however, there is little to do to restrict competitor activities. Unhindered by patent restrictions, a competitor would be free to reverse engineer products, begin manufacturing replicas of those products and start selling those replicas to the their own customers. And, the sale price would likely be lower because the competitor was able to avoid the costly research and development investment.

Patent protection is national, and international products require an international patent strategy. Companies must consider where infringement will occur and seek protection accordingly. A smart strategy may not require filing for protection in every market, and one should consider where they can find value for the cost. Such considerations involve more than simply applying for patent protection in the manufacturing country. For example, owning a U.S. patent, a company can seek exclusion orders from the International Trade Commission (ITC) to prevent the import of the patented good.

While a dense thicket of patents over a wide-ranging technology area can provide a wide barrier to entry, even a more focused approach can create a significant competitive advantage. For example, a well-designed patent portfolio may target the primary technological path and include claimed inventions that capture and protect the most commercially viable designs (and even the most desirable alternatives). Thus, to compete in the same space without provoking a patent infringement lawsuit, a competitor would have to decide between obtaining a license to the relevant patents or, if possible, designing around the patents. Either way, the company could benefit. A license would increase costs to the competitor while providing a source of revenue to the company, and, even assuming that a design-around was available, the competitor may be forced to rely upon a less desirable or more costly technological alternative.

File early, file often

A smart global patent filing strategy may be to file first in the U.S. Not only is the U.S. one of the largest growing markets for robotics, it has a robust enforcement network, between district courts that may award damages, and the ITC, which can exclude products made outside the U.S. from entering the U.S. market.

Patents need not be tied directly to current or planned products. Rather, value from patents may be derived from protecting inventions arising out of research and development efforts, even when those inventions fall outside the primary technology path. Such inventions may become important to future products or processes, or may generate licensing opportunities if they relate to the activities of others. Start-ups or early stage companies will find that even a small portfolio of patent applications can increase the value of the company and put them in a better position for next-round funding or acquisition.

A well-developed patent portfolio can also serve as a strong deterrent or source of leverage. For example, a competitor is less likely to sue for patent infringement if the target company has patents that read on the competitor’s own products. Additionally, if a competitor does file a patent infringement suit against the company, the ability to file counterclaims of infringement could even the playing field. Strong patent portfolios can also promote favorable cross-licensing terms among similarly situated competitors (an outcome that would be less likely if one competitor’s patent position was significantly stronger than the other’s).

Create a patent action plan now

Patent enforcement issues are typically complex, so it’s important to have a plan in place for dealing with those issues before they arise. Whether offensively asserting one’s own patents or responding to a patent assertion by others, early development of a patent action plan will likely pay dividends and avoid actions that are contrary to company objectives. When a patent situation arises without an action plan in place, the risk increases for a reactionary response made without fully considering the ramifications.

Offensive planning

To develop an offensive patent action plan, a company first needs to know the scope of its own patent portfolio. This can be more difficult than it sounds, especially as the portfolio grows. Next, the company should identify those areas of the marketplace most critical to its business and consistently monitor the activities of competitors in that space. As competing products enter the market, the company should study those products and consider mapping the claims of its relevant patents to competitors’ products. This methodical approach may aid in making well-informed decisions regarding whether to pursue enforcement of patent rights, and when such a decision is made, the supporting infringement analysis will already be available for use.

An offensive patent plan should also include an objective approach for determining whether to seek enforcement of patent rights. For example, a decision matrix can aid in analyzing a set of factors (e.g., whether a competitor’s potentially infringing activity is occurring in a market area critical to the company, the sales volume of the potentially infringing product, the strength and relevance of the competitor’s patents, etc.) and determining whether to seek a license, litigate, or take no action.

Offensive strategies are especially important to companies creating products with relatively short product life cycles and costly research and development efforts, for example medical robotics that require regulatory approval. For such companies, the ability to act quickly to achieve and preserve market share can be crucial.

Defensive planning

On the defensive side, a company needs to have a response plan in place before the “you’re-infringing-our-patents” letter arrives. They should understand which market areas are critical to its business and must be protected as top priority assets. Having a new product excluded from a significant market because of an unanticipated infringement issue could be a major setback.

The company should also know its competitors and which of its own patents may be viable for counter assertion against those competitors. Quickly responding to an enforcement letter with counter assertions of infringement or introducing threatening counterclaims in an infringement suit can promote early settlement of the dispute. In some instances, when threatened with an infringement suit, the company may choose to file a declaratory judgment action or seek reexamination at the PTO to have a competitor’s patent invalidated.

A defensive plan should also consider scenarios for responding to assertions by non-practicing entities (i.e., patent owners that, for the most part, do not make or sell products). Depending on the demands of the non-practicing entity, a company may be more inclined to litigate than to settle for a license.

Know the legal landscape

Patent rights, while strong, can be difficult to obtain and enforce without a cautious eye towards the current legal precedent. In recent years, for example, obtaining a patent for a combination of known elements (often the case for robotics inventions) has become increasingly difficult in view of the Supreme Court’s decision in KSR v. Teleflex. In that case, the Court effectively raised the bar to showing one’s invention is non-obvious. Patent examiners no longer need to rely on an explicit teaching, suggestion or motivation to combine elements found in the prior art references cited against applicants. On the flip side, this new precedent has given accused infringers a strong defensive weapon, making it easier to invalidate asserted patents as obvious.

A company that understands the legal landscape can ensure that its patent counsel carefully drafts software and process claims to avoid pitfalls created by recent cases attempting to limit what types of inventions are patent-eligible. A strong patent portfolio takes advantage of multiple claiming strategies to anticipate potential infringers’ product designs. The multi-disciplinary nature of robotics inventions requires a skilled and knowledgeable draftsman who can not only predict competitors’ design choices, but also draft patents that will withstand current and future requirements from the courts.

Final thoughts

The patent system offers opportunities for effectively competing and for defending market space in robotics technologies. Be sure to take advantage of those opportunities to stay ahead ─ as your competitors are most likely doing just that.

Linda Thayer is a Partner for Finnegan, a world leading intellectual property (IP) law firm. She can be reached at 617-452-1680; linda.thayer@finnegan.com