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Finding the Best Patents: Patent Ranking Systems
It might be time-consuming and challenging to select the most important patents from a list of thousands. It is far easier to rate patents using an automated, first-order method. Tools for determining which patents are most and least likely to be valuable are called patent ranking tools.
The new information provided by the invention can be used by experts in patent valuation, financial advisors, economists, and others to help direct future licensing programs, patent appraisals, tax valuations, transfer pricing, economic forecasting, and planning, mediation, and/or settlement of patent litigation lawsuits.
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Patents are crucial to our economy because they promote private investment in the creation of cutting-edge technologies that raise everyone’s productivity and standard of living. The United States Patent and Trademark Office (USPTO) receives approximately a quarter of a million patent applications yearly, and over 1, 55,000 patents are issued each year as a result. Nearly one billion dollars worth of fees and expenses are paid annually by patent owners and applicants. Additionally, thousands of lawsuits alleging patent infringement are filed in federal courts annually in an effort to enforce intellectual rights.
The intrinsic value of patents and their contribution to the economic success of the people or businesses that own and/or control them have drawn continuing interest because of their significance to the economy of the United States and the rest of the world. There are several uses for this kind of information.
For instance, patent owners themselves may be interested in using such data to assist in future decision-making, for tax treatment, transfer pricing, or to resolve legal problems relating to patent licenses. Financial advisors and investors may try to utilize this data for comparative value analysis or to create metrics of publicly traded companies’ “fundamental value” in order to assess potential strategic acquisitions or as an investment guide. Patent valuations may be used by economists to forecast and plan the economy.
The first approach includes looking for papers and contacting knowledgeable people in the academic community. After reading a few papers, several publications can be located that are pertinent. The papers are cross-referenced demonstrating the existence of a tightly linked body of scholarly work on the topic.
There are also several commercial techniques for ranking patents. Many of these businesses frequently employ unique techniques. For instance, Innography, a well-known provider of patent rating in the US, bases its ranking methodology—known as PatentStrength™—on 12 different criteria. It is interesting to note that in 2014, Innography also introduced a brand-new rating tool called CustomStrength™ that allowed users to create their own custom rankings by choosing the elements and weights. Customers would then be able to create a unique rating formula based on virtually any method from the reviewed literature.
The most important criteria in determining which patents are likely to be bought is forward citations, or later patents that quote the subject invention. In fact, a brokered patent package’s sold patents displayed an even higher number of forward citations than litigated patents, or even more than those that brokers even highlighted, such as the representative patent.
Why consider forward citation? Why not consider claim length or a variety of other things? Forward citations serve as a stand-in for overall industry R&D spending in a certain technology area. There are typically more products when there is a greater investment. There is a greater likelihood of infringement when there are more products. Infringement creates value and probably satisfies the requirements of a client. A purchase specifically either ends the client’s own infringement or gives them a weapon to employ against someone else.
Patent Age From Priority Date
People typically want to buy patents that are actively used and adopted in industry, but they also look for patents with enough remaining life to benefit from their purchase. For instance, it is typically preferable to have at least five years of remaining life if a client is purchasing for a possible dispute that has not yet developed.
It has been noted that patents with a priority date between 8 and 12 years have the highest likelihood of becoming profitable for licensing. The timing of litigation in relation to the remaining life of patents has also been the subject of extensive academic investigation.
Independent Claim Count
It has been noted that the likelihood of a patent being litigated, purchased, or identified as the representative patent for a sales package – i.e., the patent that is the most significant in the package – was substantially connected with the presence of more than three claims.
However, even if all of the independent claims are constructed as means-plus-function claims, for example, the number of independent claims alone is not adequate. The current case law, at least in the United States, indicates that such claims are often of lower value. It has been observed that a means claim generally has the value of 1/10th of a non-mean claim.
Family Size And International Filings
Does the size of the family affect your search for the best patents? Intuitively, the size of the family and the variety of overseas filings should be reliable measures of value. It has been noted that the expenditure to generate a larger patent family and submit worldwide patents would correspond to increased value, similar to independent claim count. However, it only accounts for 10% of the total weight.
In summary, a wide range of legal, technical, and accounting disciplines must be understood in order to accurately value patents and other intangible intellectual property assets. Rarely are intellectual property assets traded on public financial exchanges or auctioned off. They are intangible assets that provide special advantages to the people or businesses that own them and/or utilize the underlying goods or technological underpinnings of the intellectual property.
There is a need for a comparative valuation method that gets over the issues and restrictions of gathering market information on similar patent portfolios or estimating hypothetical future income streams or royalty rates. An intellectual property valuation system that generates statistically accurate valuations, ratings, or rankings in accordance with a set statistical accuracy is additionally required.
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