II-SDV 2014 Patent Valuation: Building the tools to extract and unveil intelligence and value from...

PATENT EVALUATION

Building the tools to extract and unveil

intelligence and value from patent data

April 2014 - Nice

Laurent HILL - Renaud GARAT

Copyright 2014

PATENT EVALUATION

Evaluation is a systematic determination of a subject's

merit, worth and significance, using criteria governed

by a set of standards (…) to help in decision-making;

(…) any particular definition of evaluation would have

be tailored to its context

Copyright 2014

Patent valuation vs. Patent evaluation

• Valuation: Assess economic worth

– How much ?

• Evaluation: Systematic assessment of worth to

assist in decision making in a given context

– Should I ?

• The first part of this presentation will try to contrast

methodology and intended use for both approaches

Contrast uses

• Global valuation model: How much ?

– Provide a single number per patent, representing the

"economic worth"

– May be aggregated for any large corpus of patents

�Single value for a large portfolio

• Goal driven evaluation : should I ? (and why?)

– Answer a specific question

– Provide rational for the decision making process

�Reach quickly high quality, documented, decisions on

specific IP issues

Examples: you choose the right approach

• How much has the value of US companies

portfolio grown in 2013?

• Are HP patents worth more than Apple's?

• Are my 10 nanotech patents worth licencing

out? to whom ?

• Which patent should I stop renewing this year?

Global valuation models: how does it work?

• Three steps

1. Estimate value V for historical patents

• Based on renewal behavior

2. Compute predictor metrics P for same corpus

• Citations, family size, claim length, …

3. Build model

• Use machine learning techniques to estimate V=f(p)

• Now V can be estimated for any patent for

which we can compute the metrics

Goal driven evaluation

• Our Goal: make the best decision on an IP issue

– Can we license out some of our patents? To

whom?

– Is this patent cluster offered to me for licencing a

good match for our company?

– For which patent should we stop paying annuities?

– …

A process based on expert best practice

• To answer these questions, licencing professionals use

specific metrics, to compare the patents at hand with

comparable patents

• There is more or less a consensus in the industry on what

the main ones are

• High level, business driven metrics: legal strength, originality,

predator presence, citation velocity…

• These metrics contribute to the decision process, are

understandable by decision stakeholders

• Metric list depend on question being answered

Nothing is absolute

• The core of the evaluation process is to compare

metrics value with the distribution of metric values

for a comparable set

• Values have no intrinsic meaning for business stake

holders

– Compare explaining: "our average velocity is 3.2"

versus "our patents get twice as much citation per

year as the rest of the industry".

• What is important is: how do the selected patents

compare to similar patents

What is a comparable set?

• Building a good comparable set is key to this approach

• May be manual, expert work:

– combination of IPC classes, keywords, competitors…

– serious patent information expertise + time needed

• Questel of course advocates the use of our similarity

algorithm, allowing instant comparable set building.

– Based on a proprietary semantic engine, plus all other available

information: classes, citations…

– Much faster: usually all is needed is to decide where to set the

cutoff point

Goal driven evaluation process

Select patents

Build comparable set

Compute metrics

Assess patents against

comparable set

Make a fast, documented, high quality

decision

BUSINESS

NEEDS

IP RELATED

CHALLENGE

IP

SOLUTIONS

R&DPRODUCT

DEVELOPEMENT

GO-TO-

MARKET

ASSET

MONETIZATION

SPEED

R&D

MITIGATE

RISKS

SUSTAIN

COMPETITIVE

ADVANTAGE

MAXIMIZE

PROFIT

Portfolio PruningBusiness Dev.FTO

EVALUATING = BENCHMARKING

Business needs drive evaluation methods

Technology scouting

Licensing outExclude OthersPortfolio BuildingLicensing in

Evaluation

principles

Metrics-

based

comparisonCopyright 2014

LEGAL

BestPatents

1. BENCHMARK

PATENTS

2. COMPARE

STRENGHTS &

WEAKNESSES

3. LEVERAGE

NEGOCIATION

POWER4. NEGOCIATE

TECHNICAL GEOGRAPHICAL

PotentialLicensors

Licensing-in

Copyright 2014

BUSINESS

NEEDS

IP RELATED

CHALLENGE

IP

SOLUTIONS

R&DPRODUCT

DEVELOPEMENT

GO-TO-

MARKET

ASSET

MONETIZATION

SPEED

R&D

MITIGATE

RISKS

SUSTAIN

COMPETITIVE

ADVANTAGE

MAXIMIZE

PROFIT




Technology scouting


Evaluation

principles

Metrics-

based


Exclude Others

PLAYERSINVESTMENT

DOMINANCEINTENT

SUBSTITUTETHREATS

1. BENCHMARK

PATENTS

2. APPLY

INDUSTRY

PATTERNS

3. ABILITY TO

EXCLUDE

ASSESSMENT

4. ASSESSMENT

REPORT DETAILS

Copyright 2014

BUSINESS

NEEDS

IP RELATED

CHALLENGE

IP

SOLUTIONS

R&DPRODUCT

DEVELOPEMENT

GO-TO-

MARKET

ASSET

MONETIZATION

SPEED

R&D

MITIGATE

RISKS

SUSTAIN

COMPETITIVE

ADVANTAGE

MAXIMIZE

PROFIT




Technology scouting


Evaluation

principles

Metrics-

based


COMPUTE

METRICS

ABANDON

SCAN PATENT

PORTFOLIOMANAGE

QUALITY RANKED

PATENTS

RENEW

Patent Portfolio Pruning

BUSINESS

NEEDS

IP RELATED

CHALLENGE

IP

SOLUTIONS

R&DPRODUCT

DEVELOPEMENT

GO-TO-

MARKET

ASSET

MONETIZATION

SPEED

R&D

MITIGATE

RISKS

SUSTAIN

COMPETITIVE

ADVANTAGE

MAXIMIZE

PROFIT




Technology scouting


Evaluation

principles

Metrics-

based


LEGAL

BestPatents

1. BENCHMARK

PATENTS

2. COMPARE

STRENGHTS &

WEAKNESSES

3. LEVERAGE

NEGOCIATION

POWER4. NEGOCIATE

TECHNICAL GEOGRAPHICAL

PotentialLicensees

Licensing-out

Copyright 2014

• Worldwide invention based family-grouped patent database

• Up-to-date normalized legal status info:

• Reassignments

• Oppositions

• Litigations

• Licensing

• Alive/dead state

• Comprehensive citation coverage

• Clean & normalized patent assignee names

Copyright 2014

Evaluation pre-requisites

• Up-to-date patent classifications

• Deep indexing (semantic technical concepts)

• Sophisticated similarity algorithms

• Citations (forward & backward)

• Patent classifications (IPC + CPC)

• Semantics

• Broad choice of pre-defined valuation metrics (120+)

• Full user control over metrics (weighting)

• Fast on-the-fly metrics computing capacity

Copyright 2014

Evaluation pre-requisites

• Patents are a key business evaluation material

• Evaluation is driven by business needs

• Business needs define metrics & methodology

• Evaluation is contextual

• Context is set by benchmarking

• Benchmarking relies on similarity algorithms

• Data quality & value-add are essential

• Metrics adjustment lead to sharper conclusions

Copyright 2014

Conclusion

Thank you

II-SDV 2014 Patent Valuation: Building the tools to extract and unveil intelligence and value from...

Software

Transcript of II-SDV 2014 Patent Valuation: Building the tools to extract and unveil intelligence and value from...