Build a Portfolio, Not a Pile

Most ideas aren’t obviously great. But they’re also not obviously bad. They exist in this uncomfortable middle ground.

This is where companies make their worst patent filing decisions.

The problem isn't that they file bad patents. The problem is that they file random patents. When you can't tell if something is good, you fall back on arbitrary metrics. Your team filed four patents this quarter, but the target is ten. So you file six more that are "medium"—not bad enough to reject, not exciting enough to champion.

This feels productive. You're making progress toward your goal. But goals that aren't connected to outcomes are just expensive habits.

The real question isn't "should we file this patent?" It's "what kind of future are we betting on?"

Many companies build patent portfolios the way beginners build investment portfolios: by picking individual stocks without thinking about allocation. They evaluate each patent in isolation—is it new? non-obvious? strategic? detectable?—without asking how it fits into the whole.

But portfolios are about balance, not individual picks. If you're going to file patents, you need to know what you're optimizing for.

Here's a better approach:

Map your technology areas to total market size five years from now. Not today's market—the market your patents will mature into. Then allocate your filing budget proportionally. File more patents in areas with bigger futures. File fewer in areas that are shrinking. If you have more filings in an area than you should (according to the projected TAM), prune, divest, or choose to spend your budget in an under-filed area.

This sounds obvious, but almost no one does it. Most companies file patents in proportion to the ideas they can find or are submitted, not their future business opportunity.

You can get more sophisticated. Layer in litigation data to weight areas where patents actually get used. But the core insight remains: every patent should be tied to a plausible business use.

That doesn't mean you know exactly how it'll be used. But you should at least believe the space has value, the idea fills a real gap, and it aligns with where you're headed.

If you want to grow your portfolio with direction, you can use total addressable market as one compass. It turns patent filing from a guessing game into a betting game—and you can get better at betting.

PS. TAM isn’t the only way to allocate intelligently. You can, instead, substitute your company’s internal projections, i.e., your best vision of the world should your company succeed. The idea is to file patents considering the whole of the portfolio, not solely individually.

PPS. The image from ArcPrime shows the recommended target % per tech area based on total TAM vs. the actual % of current filings. Red means over-filed, orange means under-filed, and green means balanced.