The term patent quality gets used frequently within the industry, but what does it actually mean? For some patent quality means that few, if any, patents should issue. For others, patent quality relates to concerns over whether patent examiners are finding and applying the best prior art possible. For still others, patent quality is about fairness and awarding a patent when one is deserved regardless of the patent examiner or Art Unit assigned.
To a large extent the meaning of the term depends on your viewpoint, but for a patent owner patent quality is all about value. Indeed, from the patent owner’s perspective it is virtually impossible to divorce patent quality from patent value. This should hardly be surprising. A patent that is guaranteed to have only valid patent claims but which is extraordinarily narrow may be a quality patent in the eyes of some, but commercially useful it will not be. Thus, from the standpoint of a patent owner patent quality must necessarily be a function of value.
The value of a patent, for better or worse, is related to the likelihood that it could be successfully enforced in litigation. The value of the patent is also a function of the likely damages that could be obtained in litigation. As true as that is, the truth is that the overwhelming number of patents are not litigated or licensed. In fact, by some estimates less than 5% of patents will ever be licensed or litigated. Indeed, even in a portfolio that is licensed there will be only a small handful of anchor patents that are of primary importance, with the remainder of the portfolio there to create volume, or safety in numbers.
The issuance of a patent also doesn’t guarantee that the underlying innovation is of any kind of foundational importance, or that the patent and claims are written in ways that suggest the patented innovation is valuable.
One of the unfortunate realities of the patent system is that the Patent Office is inundated with patent applications and patent examiners have a finite amount of time to examine applications. With a persistent unexamined patent backlog of over 600,000 patent applications patent examiners simply do not have the luxury of spending all the time they could to render a determination. Nor should they spend all the time they could when 95% or more of issued patents will never be commercially relevant.
This reality, however inconvenient, drives a tangible need for patent professionals to develop a reliable set of objective patent quality factors that can be used to help evaluate the potential importance of individual patents or even patent portfolios. Ultimately, there is no substitute for subject matter expertise and deep market knowledge, patent professionals often need quick, dependable tools for the assessment of patent significance across a broad range of markets and technologies to make decisions without the resources required to retain experts for all relevant subject matter. Fortunately, there are a several techniques available that can help provide patent quality and value insight without the need to hire a team of subject matter experts.
Patent Quality Assessment Techniques
Opinions vary as to which attributes contribute most to overall patent quality. Notwithstanding, while this list is not exhaustive it does provide some interesting objective attributes and corresponding metrics that can be useful to get a sense for overall patent quality.
1. Patent Family Analysis
Family heritage is important when evaluating an individual patent. Examining the patent family shows the breadth of the patenting activity around the invention, and can reveal information about the overall importance placed upon the overall technology by its inventor. Larger families can indicate that the invention was well planned and protected by its applicant(s). At the very least, a large patent family means that the applicant invested a significant amount of capital into the core technology associated with the underlying innovations. This is particularly true when the family includes a number of international patent application filings because the Patent Cooperation Treaty (PCT) process can be quite expensive. While the PCT process does afford flexibility at the front end with the ability to file a single unified application, seeing the process all the way through the International Phase and into the various National Phases is not cheap, and therefore not something you would do unless the patent in question covered a valuable innovation.
Thus, the size and scope of a patent family can be an important indicator of potential patent value, and therefore a proxy for patent quality.
To build a domestic US patent family, you would query the USPTO public PAIR database and review the patent continuity data. Children and parents in the family for any given patent can be identified and queried. This process can be repeated for as many levels as necessary to generate the entire family.
2. Expiration Analysis
Calculation of patent expiration is critical to understanding patent value. Expired patents have no enforceable value, and value is obviously limited for patents nearing expiration. Of course, all patents eventually expire, but any patent can prematurely expire when maintenance fees are not paid, whether accidentally or intentionally. Thus, calculating true patent expiration requires knowledge of patent maintenance history. Calculating a true patent expiration date and remaining time to expiration using maintenance data is far more valuable than using just an estimate when attempting to determine patent quality, or at least when determining the value of a particular patent asset.
To determine the patent expiration one must ordinarily know the filing date of the first U.S. non-provisional patent application in the chain of priority, although patent term can also be governed based on the international filing date. Sticking with an example based on the filing of a U.S. non-provisional patent application, since June 1995 the general term for a U.S. patent is 20 years from the filing date of the oldest non-provisional patent application claimed for priority. The patent expiration date is then modified based on the patent term adjustment (PTA) set by USPTO as patent issuance. A total PTA is set at issuance of the patent and is available in the PAIR data. Understanding PTA goes well beyond the scope of this article, but suffice it to say that unnecessary delay caused by the USPTO is added to patent term, but unnecessary delay caused by the applicant is subtracted.
Because patents can expire due to lapsed maintenance, it is important to also check USPTO Maintenance data to be sure the patent has been maintained properly and is still in force. A patent has three maintenance events due at 3.5, 7.5, and 11.5 years from the issue date. The USPTO will declare expiration in the maintenance logs after a period of time.
3. Classification Analysis
Understanding the overall innovation activity within a patent’s technology area is another important element in assessing patent quality. Each patent classification code has a life cycle which reflects the state of the particular industry and the innovation cycle of the respective technologies involved.
One classification analysis technique is to determine where the patent falls in the life of the classification. Typically, these can be divided into three types:
- Early in the innovation cycle – This could indicate a higher potential for being considered “prior art” for later patents. Patents located very early in the innovation cycle may even be foundational for the technology classification at large. Being early in the innovation cycle can be a very positive indicator of potential value.
- Middle in the innovation cycle – Less likely to be foundational prior art for the technology but still potentially involves marketable incarnations of the technology
- Later in the innovation cycle – Patents located here generally have a low likelihood of being considered foundational for the technology classification under study.
Another valuable classification analysis technique is to look at the volume of patents filed or acquired in this classification, broken down by assignee, by year. This highlights the activity of the most active organizations in this classification, through newly awarded patents and potential patent reassignments (patents which have been legally transferred from one entity to another). Looking for assignees active in the classification after the patent of interest’s filing year could yield marketing or licensing opportunities for the patent under study.
4. Forward Citation Analysis
When reviewing a patent filing, it is important to review the citations of that patent. This helps to understand the legacy of the patent under study. When considering patent value, it is often more valuable to understand the patents which reference the patent(s) under study, also known as forward citations. While backwards citations can be viewed with the patent record from the USPTO, forward citation must be located using patent search tools and techniques.
In using this information for patent value assessment, large number of forward citations generally indicates that the patent has been cited as prior art for other patents. It is possible to determine whether a reference to the patent under study was made by an examiner during prosecution of another patent, or whether it was made by the inventor of that patent. A patent having forwards citations from examiners is a very significant indicator of value, because this carries an implicit acknowledgement by the USPTO that the referenced patent is in at least some ways foundational for other patents.
5. Prosecution Analysis
During the prosecution of a patent, there is ongoing correspondence between the patent examiner(s) and the applicant(s). Understanding the amount of effort and resources used during prosecution can indicate potential patent quality, at least from the perspective of the filer. The types of communication and the potential impacts on quality are as following:
- Rejections – Was the application rejected by the examiner, and how many times? Knowing this shows the inventor or assignee was willing to invest resources to get the patent through prosecution.
- Requests for Continuing Examination (RCEs) – If the application received a final rejection, did the inventor file an RCE? This is another indicator of resources applied.
- Time from Patent Application to Grant — Comparing how long the patent took to grant to all of the other patents in the classification is another way to garner the resources used to apply for a patent. Patents that issue quickly compared to others in the same classification could mean that the invention scope is more narrow that preferable, and therefore of a lower quality from a value proposition.
- Claims Analysis — Claims are an important indicator of potential patent quality, perhaps the most important. Evaluation of claims as part of a quality or value evaluation is essential because longer claims are necessarily narrow. While no patent owner wants to have short claims that are likely too broad and, therefore, invalid, the length of claims provides useful insights. For example, long claims are typically drafted in order to avoid prior art, which can and should lead to questions. Often claims are lengthened through the addition of more specific language during prosecution at the request of the patent examiner. Longer claims can (and perhaps usually does) mean a more specific applicability for the patent under study, and thus a lower overall value.
It is important to look at a Claims Analysis and Prosecution Analysis (section #5 above) together. If there has been a lot of back and forth between the applicant and examiner, this can indicate that the claims have had to be lengthened, which typical indicates the claim was narrowed in order to allow for a grant.
Comparing first claim length to the average first claim length of other similar patents will provide a context. One technique is to compare the patent to all patents in the same classification. After comparing the lengths of all of the claims in a classification, a shorter independent claim than the average can indicate a greater potential value.
This article presents some objective metrics for assessing patent quality and the methodology and explanation thereof. Fundamentally, most of these assessments are made by comparing the patent under study to its peers within the same class. Lack of quality indicators based on these factors does not necessarily mean that the patent is not of high quality, but it should at least raise questions that should be considered. Of course, where critical decisions are being made the individual patent should be examined for technical content and other factors not related to this objective style of analysis.