From fast to focused: Lessons from Xero’s portfolio growth featuring Senior Patent Counsel James Richardson-Bullock

From 2012 to 2016, LinkedIn grew its patent portfolio aggressively from 36 to 1,000 patents based on internal innovation and another 900 purchased assets, as reported by IAM in 2017. Earlier in 2012, the company had found itself in the vulnerable position of holding only 22 patents despite growing 86% to revenue of almost $1 billion. After aggressively closing its gap, however, LinkedIn eventually slowed its growth. As of 2024, its global patent portfolio has shrunk to 955 patents, 695 of them granted, and only 30 (3% of the total portfolio) active. This pattern of rapid growth followed by significant portfolio reduction raises important questions about how companies can build sustainable patent portfolios while avoiding the pitfalls of overly aggressive expansion.

Growing a patent portfolio quickly is complicated and can produce a significant management and cost burden if not done well and with foresight. This blog post discusses lessons learned from such rapid growth and recommendations for companies to manage the process well. There are good reasons teams might want to rapidly expand their portfolios, but can it be done in a way that reduces regret and admin challenges once annuity bills come due? To explore this topic, I talked to James Richardson-Bullock, Senior Patent Counsel at Xero, a company like LinkedIn that saw the value in growing its patent portfolio.

The factors leading to Xero’s portfolio expansion

Xero is a public company that offers small business software and is headquartered in New Zealand with global operations. Xero’s smart tools help small businesses and their advisors to manage core accounting functions like tax and bank reconciliation, and complete other important small business tasks like payroll and payments. Shortly before James joined in 2023, Xero had quickly increased its patent count for a number of reasons:

1. International expansion New Zealand is a relatively small and friendly market. But, as James explains, “Once we entered the larger European and US markets we saw a value in expanding our IP portfolio to support our global ambitions.”
2. Investor expectations Another consequence of moving into the US market was different investor expectations: “It’s fair to say that US investors more readily see the value in intangible assets like patents, especially given the number of IP-supported success stories like Uber and Airbnb,” reports James.
3. Patent trolls “Expansion can also make a company more of a target for potential infringement actions,” says James, “We soon realised we’d feel a lot safer if we had a few more patents in our back pocket and a thicket of IP around our core products.”

As these individual factors all came together at once, “The signal to start filing patents was flashing pretty rapidly,” James says. “We took stock of what we already had and what products on our release schedule were potentially patentable, and then got to work. It’s fair to say it required significant uplift as we looked to grow the portfolio as quickly as possible.”

Early days: Leveraging IP champions to ramp up disclosure volume and patent fast while preserving growth

Xero grew its portfolio into one that includes approximately 80 patent families and almost 400 individual patent rights. To achieve this, Xero’s IP team developed a program to recruit inventors as IP champions who could spread the word efficiently. These approachable, patent-savvy engineers became the IP team’s touchpoints throughout the wider company. “It’s quite tricky to insert yourself into the development pipeline without slowing anyone down,” James shares. “The easy way would’ve been to shut down any product releases and place an IP review in as the final step. But that just doesn’t work when there’s a release schedule and customers expecting new or updated features. It also risks alienating your people and training them to see IP as nothing but a burden, slowing them down.”

As they matured: Shifting from a “patent everything” to a product-led approach

Eventually, Xero’s IP team reached capacity and portfolio growth plateaued. The team then faced a decision point: continue at an unsustainable rate, hire more people, prune the portfolio, or find another path. These were the questions James was brought on to answer. James and the team decided to maintain portfolio growth, but only in specific areas linked to Xero’s strategic priorities. “Our job is no longer to file patents full stop,” James explains, “but to file them in a way that makes sense with what the company is doing, with an awareness of everyone else’s actions and priorities. We’re not actively pruning the portfolio, but we are encouraging new shoots to grow along the directions we know are a priority for the company.”

At the end of the day, these lessons translated into several insights for Xero:

Engaging with inventors strategically “If the firm wants to prioritize growth in a particular market and plans to release say three products,” James explains, “I might know that one product is particularly patentable in certain territories thanks to a recent piece of case law, or a change in legislation. We can then focus our efforts by territory and/or technology to quickly gain an asset aligned with one of our core products in a core market.”

Formalizing patent decision criteria “Patenting for patenting’s sake works when you’re trying to build a portfolio from nothing,” James notes, “but now a possible patent application has to score enough points against one of our internal metrics to proceed. Example metrics include detectability, patentability, or relevance to an existing or future product.”

Sunsetting patents filed as a metric The team now uses the number of potential patents investigated as a performance metric, rather than the absolute number of patents filed. “That can legitimately go up all the time, it’s only a positive to have more and more ideas flowing — but that increase isn’t tied to an ever increasing budget or administrative load.”

Mapping patents to products Perhaps most significantly, the team is now tying patent families to products — a practice James strongly recommends adopting from the start. “It’s obviously much easier to link a patent with a product area when you’re at the drafting stage,” he explains. “But trying to do that a year or so later when you and the inventor have both moved on to other projects can be a nightmare.”

The challenge becomes more complex because both a product and the patent application meant to represent it often evolve during prosecution. “You might make a decision to get a patent granted,” James notes, “only to realise that decision actually takes you quite far away from the likely commercial embodiment of the product. This can have value — you’re still building up a patent thicket and there’s the possibility of a future license fee. But it might be that the aspect you can’t get patented is actually the core functionality you’re really interested in — in which case you might be better off moving on.”

Without clear product mapping from the start, reconstructing these connections becomes a complex, forensic-like exercise. “Tying IP to company priorities is so much easier when you know what product groups, what dev teams, and what specific engineers are working on which products, and which patents relate to said products,” James explains. “If you’re rushing to get everything patented and don’t draw those lines at the beginning of the patenting process, you’re in for a world of hurt. Patent applications are broad and by design — trying to map a set of deliberately abstract claims to an end product is not always straightforward, especially after the fact.”

Takeaways and resources for teams exploring rapid portfolio growth

For companies looking to build their portfolios quickly but sustainably, Xero’s journey offers several key lessons: document product-patent connections early, create metrics that encourage the right behaviors, and develop patent criteria aligned with business priorities. The real challenge lies in evolving from “patent everything” to “patent strategically.” Want to learn more about managing rapid portfolio growth? Check out our guide on patent portfolio inflation, covering why it happens and how to avoid its common pitfalls.