Qualitative patent portfolio analysis involving a case study on key players in Artificial Blood Substitute
Qualitative patent analysis for building a strong patent portfolio
Patents are intangible assets but can be traded and monetized as like any other asset class. During periods of slowdown in growth it is important to consider your patents as a source for generating revenues. There are many options using which you can do this – patent licensing, enforcing, pooling, sale or brokerage, and via intellectual property banks. However, it should be noted that 90% of patents do not get commercialized for several reasons like not having sufficient supportable infringement position or claim language not being up to the mark; meaning that it is not simple and straightforward job to do.
An important step in patent monetization is getting to its value. Patents are outcome of an extensive research and significant degree of monetary expenditure hence you need to be sure that despite being an intangible item, theycan create a scalable value, cash-flow, and goodwill.
Generally (Traditionally) there are three main approaches to valuing patents –  cost method,  market method, and  income method.
Each approach is a multi-step process involving diligence, analysis, and reporting. The complexity is not just limited to the information which a patent holds but also the language – in 2017 over 5.6 million patented documents were published globally of which more 62% were in Chinese, Korean, or Japanese language, with no English language equivalent at most times. Besides these, several other factors impact true patent value and finding these factors rightly set the tone to assess the valuation.This situation makes the whole valuation exercise more tricky, thus demanding the need of smart tools that can automate the first-pass analysis without missing out on any factors typically used in calculation.
As a solution, a number of software companies have expanded the capabilities of their programs to gauge the value of a patent. These patent analysis tools make use of the latest in modern day technology like artificial intelligence, and can calculate a score based on various attributes of a patent like, number of forward citations, family coverage, remaining life, comparison with parallel existing patents with known value, its technological importance, etc.
The patent value scores have multiple use cases
- To identify and to find merits and strengths to buy or build or to license
- To find potential licensable art within portfolio
- Pinpoint R&D Pioneer or Laggard positions early on
- To Evaluate the legal strengths and positions held by key players in a technology space
- To identify the weakest patents and stop wasteful expenditure – Patent Portfolio pruning
Application of artificial intelligence to the patent valuation process comes with a wide range of advantages compared with the manual process – it is easier, quicker, less expensive, and convenient to handle. The automation can also handle multiple requests and can hence be also be utilized in weighing the patents in a competitors’ basket in addition to uncovering the true value of your own patent, thereby helping you craft your monetization strategy accordingly.
AI-powered qualitative analysis tools like PatSeer 360 helps you unlock the hidden value of Patents by analyzing portfolios and correlating it with various other data points such as Litigation, Oppositions, Transactions and others
Lets take this up with help of an example technology area – Artificial Blood Substitutes
Patent landscape of Artificial Blood Substitutes demonstrating how qualitative analysis can help a company in building a strong portfolio.
A basic quantitative analysis of the patent landscape gives us the following result.
This shows us the top players in the field but, this information is pretty obvious for someone tracking this for years. The portfolio size alone is insufficient to accurately measure the portfolio strength.A market study of what’s happening in the space reveals a sequence of acquisitions. Signal Pharma LLC got acquired by Celgene Corp, which eventually got acquired by BMS.
A qualitative analysis in PatSeer 360 shows that though Signal Pharma LLC had a very small portfolio size, the quality score was very high. On the other hand Celgene Corp comparatively had a much bigger portfolio with a lower quality score.
Celgene acquired Signal Pharma to improve it’s portfolio strength. After acquisition, the overall patent quality of Celgene portfolio increases significantly.
What follows is the acquisition of Celgene Corp by BMS to create a premier innovative Biopharma company.
The same method of analysis helps us watch out for other companies with a high-quality portfolio and can potentially drive a major business decision.
The traditional way of evaluating portfolios for mergers and acquisitions takes weeks, and even months of reading through patents. Whereas, it takes hardly 15 minutes to produce the qualitative graphs that can potentially drive early decisions of whether you would like to invest further time on the evaluation or not.
Of course, a final decision can’t be made based on an algorithm, but a qualitative analysis can certainly make it easier for IP professionals to look in the right direction.
The business environment of today is moving rapidly and that coupled with disruptive working models and innovations, has made the need of faster analysis of opportunities that are coming a company’s way and so even the most established organizations need to have the tools to handle this efficiently.
From the intellectual property perspective, challenges are to analyze the large volumes of content that patents hold, identify and unlock the complexities involved, something which only sound predictive analysis and actionable data delivering tools can provide. Not doing a quality assessment of your and your competitors portfolios can result in you losing out on additional revenue channels, opportunities for M&A, cost-savings by pruning your patent portfolio or identifying weak signals such as startups with promising/potentially threatening portfolio.This can there bycreate a door for your competitors to challenge your market position.