IP: Identification and disposal of unneeded IP assets

Factors to consider include the longevity of the protected product and any projected income stream

While a clearly defined purpose is critical to the success of an IP program, a strategy regarding costs is equally critical. Different goals will dictate differing levels of commitment and expenditure. An IP program must therefore also contemplate the identification and disposal of unneeded or unproductive IP assets. Disposal does not mean abandoning IP assets. The process should instead involve, as much as possible, the sale or divestiture of unneeded IP assets.

As with the planning and forecasting addressed in our previous article, a company should also assess industry or market trends with regard to the need to maintain IP protection. Factors to consider include the longevity of the protected product and any projected income stream. IP assets related to products or operations which no longer economically justify such protections, or which are no longer operational significant from a market perspective, are good candidates for disposal.

Geographic considerations may also come into play when assessing IP assets for disposal. For example, economic declines in a specific country may no longer justify the expense of maintaining IP protection there. This would suggest disposal of IP assets specific to that particular country, but perhaps not with regard to others. All too often companies obtain and maintain IP protections in a particular set of countries, even if there are significant economic differences between these jurisdictions and the need for IP protections. Multijurisdictional IP protections are one of the most expensive aspects of IP protection, and therefore can often yield significant low hanging fruit with regard to the disposal of unneeded IP, resulting in cost savings with little loss to an IP portfolio’s overall value.

The need for continuing IP protection should also be considered relative to any other IP protections held by the company, such as overlapping protections from a company’s portfolio of trademarks/service marks, copyrights and patents. Companies may be able to dispose of certain IP assets or protections based upon the ability to maintain an appropriate level of protection via other less costly means. A disposal of an IP asset should be done within the context of the remaining mix of IP protection best suited to the company’s ongoing business. These factors should be assessed in association with ongoing market consideration, IP development and licensing policies.

Industry changes in the form of interoperability, open source development or new standards can sometimes lessen the value of related IP assets. If so, a company should consider contributing these IP assets to industry groups, research bodies, or the public domain. Doing so may permit a company to derive collateral benefits from the disposal of an otherwise unneeded or indefensible IP asset. This may even actually protect against a later threat of infringing third-party technologies that may have incorporated the innovation. This is particularly true when standardization or commoditization has occurred through broad industry participation.

Companies should also consider the ability to obtain value for unneeded IP assets through divestitures. A company should evaluate including otherwise unwanted IP with planned corporate divestitures or spinoffs and seek consideration for this. Similarly, if a company has exited a particular market sector, then it should consider divesting any relevant IP assets. This can be done through the sale or brokerage of legacy IP assets to other participants in the industry or to licensees who have an interest in seeing the asset protected.

As with every other aspect of a business, a company should determine where it can obtain the best return for its IP investment, and in doing so may need to exit or otherwise dispose of unproductive IP assets, in order to invest in IP assets with a greater value, importance or return to the company.

Contributing Author

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David E. Mixon

David E. Mixon is a partner and registered patent attorney with Bradley Arant Boult Cummings LLP (Huntsville, Ala.). He can be reached at

Additional Contributors: David Vance Lucas

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