How to Use Patent Analytics to Identify Potential Acquisition Targets

3. Key Metrics for Evaluating Potential Acquisition Targets 

When analyzing patent portfolios, focusing on the right metrics is critical. Here are the most important indicators: 

1. Patent Citation Analysis

Patent citations act as a measure of a patent’s impact and relevance. Frequently cited patents are typically considered more valuable and influential in their respective technology areas. 

• Forward Citations: The number of times a patent has been cited by other patents. High forward citation counts often indicate groundbreaking technology. 

• Backward Citations: These indicate the prior art referenced by a patent. Understanding backward citations helps identify the foundation of a company’s technology. 

Example: 

• Google’s acquisition of DeepMind in 2014 was partly driven by its portfolio of highly cited patents in AI and deep learning. These patents were cited by multiple industry leaders, making DeepMind an attractive target. 

2. Patent Family Size

Patent family size refers to the number of jurisdictions in which a single invention is protected. A large family size suggests that the company is serious about protecting its innovation globally, indicating high market potential. 

• Bigger patent families = higher market relevance and global scalability. 

• Small family size may indicate niche technology or budget constraints. 

Example: 

• Apple’s acquisition of Beats Electronics in 2014 was influenced by Beats’ extensive patent family protecting its audio technologies across key markets, signaling its strategic importance. 

3. Geographic Coverage

Patent filings across multiple countries often reflect a company’s expansion strategy and the global relevance of its technology. Analyzing geographic coverage can help identify companies targeting high-growth markets. 

Key Insights: 

• Patents filed in China, the U.S., and Europe indicate a focus on the most competitive and lucrative markets. 

• Companies expanding into emerging markets might signal untapped opportunities. 

Example: 

• Tesla’s acquisition of Maxwell Technologies in 2019 was driven by Maxwell’s patents on energy storage solutions. The company’s geographic patent filings revealed its stronghold in both North America and Europe—key markets for Tesla’s electric vehicle expansion. 

4. Emerging Technology Focus

Analyzing patent filings in emerging technology domains helps companies spot acquisition targets working on the next big innovation. Startups in AI, quantum computing, green energy, and biotech often become prime targets. 

Example: 

• Intel’s acquisition of Mobileye for $15.3 billion was a strategic move to enter the autonomous driving space. Mobileye’s patent filings revealed its pioneering work in vision-based driver assistance systems, signaling its dominance in the emerging autonomous vehicle industry. 

5. Patent Litigation and Freedom-to-Operate (FTO) Risks

Before pursuing an acquisition, companies must assess potential risks associated with the target’s patents. 

• Litigation History: If a company is involved in multiple patent disputes, it might pose a significant risk to acquirers. 
• Freedom-to-Operate (FTO): Ensures that the target’s patents are not infringing on others’ IP, reducing potential liabilities.