Corporate Patent Policy

by Christopher Faille
Pooling patents is one approach to getting the best use of them.

Pooling patents is one approach to getting the best use of them.

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A corporate patent policy is the manner in which a specific corporation creates, maintains and employs its patent portfolio. In large corporations, especially in technologically advanced industries, this typically includes, for example, issues of employer-employee relations; of the potential purchase of patents from outsiders; or the pooling of them with other firms working in related fields; and decisions about litigation strategy or settlement. Any of these decisions can have great impact on a company's bottom line.

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Employment Relations

As David Burge has said in his book on patent and trademark tactics, it is a good policy for corporate employers to "eliminate any conflict between employer and employee over invention ownership" by defining in advance the rights of the parties in the employment contract. The specific clauses differ. Some employers do, but others don't, extend the requirement of an assignment of rights beyond inventions that relate to the employees' specific work assignments, encompassing any inventions at all relevant to the employer's business. Some employers will grant releases for inventions that they do not plan to exploit. These are policy decisions that corporations must make based not just upon their own development plans, but upon the competitive market for tech-savvy labor.

Purchasing Patents

Another policy decision is how active a company wants to be in acquiring patent rights. Often, for example, patents are the most valuable assets of a bankrupt corporation that proved unable to employ its own patent portfolio effectively. In such a case, the bankruptcy estate can put the patents up for auction, and the bidding can get very expensive. In the summer of 2011, Nortel's patent portfolio sold to a six-firm consortium for $4.5 billion.

Pooling Patent Rights

Corporations must choose whether they are going to pool their patents, entering into agreements with other companies in related fields, or whether they prefer to keep their portfolio close to their own vest. In the software field, the extreme of pooling is the "open source" approach, where the source code, as well as later adaptations and improvements, is made available not only to a small circle of project participants but, in principle, to the world.


A related decision a corporation must make as part of its patent policy is: how aggressive will it be in claiming infringements of its patents and litigating for redress? Consider the ongoing litigation between Google and those manufacturers who license its Android software for smart phones on the one hand, and Apple, which has its own proprietary software for its iPhone, on the other. The late Steve Jobs reportedly said, "I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this." But current Apple CEO Tim Cook seems more inclined to peace or settlement talks. That is a high-profile example of a quite common policy decision.