A well-constructed, well-designed IP Portfolio should leverage three types of patents to transition into market dominance.

Buffer, Defensive, and Core patents are essential to any well designed Patent Portfolio.
Defensive patents should be developed to prevent profit disgorgement when sued, force cross-licenses, and create formidable barriers to entry. Buffer patents should be developed to exclude substitute products, provide optional solutions for future product development, and increase the value of core patents. 

Core patents should be developed to enable meaningful product differentiation and enable monopoly pricing structures. Some core patents underwrite entire industries. These “crown jewels” enable the domination of extremely large market segments and are independently worth hundreds of millions of dollars sometimes more. Core patents can also serve to set industry standards. When standard setting core patents are developed they are usually licensed to all sellers in the industry creating immense revenue streams.

A purposefully developed IP Portfolio should utilize current decision making tools when determining what Patents are worth pursuing.

Patents can provide a high return on investment but they can also be expensive Patents should be valued at many points along the drafting and prosecution timeline to ensure valuable resources are used most appropriately.

Every organization operates with scarce resources; the most effective IP Portfolios are only obtained by carefully valuing the potential property rights of patent protection. This value should be assessed at multiple points along the patent lifespan

Utilizing the Black-Scholes Real Option Valuation method, IP Portfolio development can be managed similarly to any research and development project, instead of the typical all-or-nothing investment. By implementing periodic assessments, enabled by the collection of meaningful data, the informed management decision can be made whether to invest in protecting the idea or to divert the resources to projects with greater expected returns.