The metrics challenge

In days long past, entrepreneurs could rely on patents to help to launch their businesses. Indeed, some of the most iconic companies were spawned from early patent portfolios – for example, General Electric traces its roots to prolific patentee Thomas Edison. More recently, however, patents have become a closer value proposition. The Patent Trial and Appeal Board, state anti-troll laws and anti-patent Supreme Court and Federal Circuit decisions have eroded patent protection. Factor in the increasing cost of litigation, and the value proposition becomes more obscure. This is evidenced by the advent of efficient infringement.

Patents are still a tool to gain a competitive advantage, just no longer a 'no-brainer'. In-house and outside counsel must increasingly justify themselves, their patent expenditures and the resulting work product. Management consultant Peter Drucker famously once said: "if you can't measure something, you can't manage it." Billy Bean took this to heart when he became general manager of the Oakland Athletics in 1997. His use of baseball performance metrics built the Athletics into one of the most cost-effective winning teams in baseball history, as depicted in the film Moneyball.

Patent data is no less a tool for gaining a competitive advantage, so what opportunities exist for emerging companies and patent practitioners? Unlike baseball, every company's situation is different and there is no one-size-fits-all approach. Nevertheless, there are basic metrics that can be used in almost every technology-driven company to measure innovation, technology trends and R&D activities. In-house legal departments have long measured basic patent number counts such as:

  • invention disclosures received;
  • positive/negative patentability searches;
  • provisional applications filed;
  • conversion applications filed;
  • patents granted;
  • licensing/sale incomes; and
  • cost data along the way.

These simple numbers can be sliced, diced and used for comparison with the competition. However, they often result in overly mechanical policies such as the old 'rule of thumb': companies should file a patent application for every amount spent on R&D. Moreover, they can be superficial and misleading. For example, a 100% grant rate may obscure the fact that claims are being arbitrarily narrowed to gain allowance. A more robust qualitative assessment can identify high-impact patents, patent quality, patenting or enforcement opportunities, and even infringement-avoidance or licensing strategies. Ample data exists for all of this and more, but therein lies the challenge. Relatively few companies are making the attempt, and there is substantial disagreement over what the data actually proves. For example, it may seem intuitive that a patent's value is a function of patent counts in that art unit (fast-developing technologies reflect higher patent counts and value) and forward citations (important patents should receive more citations). Some argue that this is an inverse relationship (see Abrams et al, "Understanding the Link between Patent Value and Citations: Creative Destruction or Defensive Disruption?", University of Pennsylvania (2013)). The patent world awaits its Billy Bean. To provide a jump start, the following is an overview beginning with available data sources:

  • US Patent and Trademark Office (USPTO) patent statistics:
  • International patent statistics:
  • Commercial vendors – a few commercial vendors are beginning to rise to the occasion, offering a variety of informative reports, software solutions and services:
    • SciVal Patent Metrics from Elsevior® include patent-article citations;
    • AcclaimIP™ by Anaqua®, including comprehensive patent owner reports;
    • Juristat®, which includes patent law firm performance metrics;
    • Clarivate Analytics by Thomson Innovation;
    • consultants such as IPVision™;
    • PatSeer by Gridlogics; and
    • Innography™ by CPA Global, including PatentStrength®, a proprietary algorithm that predicts patent value and relevance by deriving the likelihood that a patent will eventually be litigated.

For patent practitioners, analytics can be used to form prosecution strategies and boost allowance rates. For managers, they can be used to choose the best practitioners, analyse the value of a company's patent portfolio and provide upper management proof of the effectiveness of the patent portfolio in protecting and creating value. We need our own Billy Bean to raise the game, but there are contenders – check out Justin Roettger’s Patent Ninja website.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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