IP Commercialization Is the Key Measure for Patent Quality Assessment

With exponential growth in patent filings each year and expanding company portfolios, Patent Quality Assessment (PQA) has become a significant and crucial task. USPTO maintenance fees, which are required to be paid periodically to keep a patent alive for 20 years, further add to the importance of maintaining only quality patents.

Defining Quality

Patent professionals worldwide have developed a myriad of metrics to assess the quality of patent assets. Benchmarking tools include terms like “Qscore” and “Asset indexes” to quantify the qualitative attributes of a patent. The patents are ranked based on various statistical parameters such as:

• Family information
• Citation velocity
• Time to grant
• Number of independent claims
• Examiner response and many more.

Judging the quality of an asset is a subjective analysis. The dictionary meaning of “quality” is “the standard of something as measured against other things of a similar kind” OR “a distinctive characteristic possessed by someone or something”. Hence, we still lack a globally acceptable standard protocol for patent quality assessment.

One yardstick used to gauge the quality of an IP portfolio/ asset is the commercialization phase. If a patent has a product in the market, its quality is undeniably high. The World Intellectual Property Organization (WIPO) has stated, “The returns in terms of profit upon its commercialization are the ultimate proof of the success of any invention or new product.”

However, a Forbes article raises pertinent questions about the commercialization yardstick for PQA. The article indicates that  only 5% of the patents filed worldwide are successfully commercialized or licensed. This raises questions about the remaining 95% of patents, such as:

• Were the patent claims not commercially viable?
• Did the patents lack market adaptability?
• Were the inventions not feasible?
• Were the patents solving pseudo problems?

This low rate of success for commercialization suggests there is a need for companies to better assess and categorize patents early on in order to maximize value.

IPQ + HPQ = PQA

Analysis of the following factors can divide the PQA into two categories, as described below:

1. Indicative Patent Quality (IPQ): The indicative quality is based on statistical parameters, which indicates a patent to have a commercial scope as well as assertive characteristics. The calculation for IPQ implies various algorithms and regression models focused on the patent meta-data to work out an indicative quality score. To provide a more affirmative score, big data analytics learning from previous patent data is used.
2. Hallmark Patent Quality (HPQ): The Hallmark quality is based on market relevance of the IP asset as well as the commercial products sold in the market. The HPQ takes into account the contribution of a patented technology in the overall product specification. A patent being declared as a standard essential patent (SEP) or under litigation can also fall under HPQ.

For an accurate estimation of the PQA of a patent, both IPQ and HPQ should be ascertained, as shown in Figure 1 below.

• Patents with a Positive HPQ score and Positive IPQ score are labelled as Gold.
• Patents with a Positive IPQ and Negative HPQ score are labelled Silver due to their potential of commercialization.
• Patents with a negative HPQ score and negative IPQ score are labelled Bronze.
• Patents with a Positive HPQ score and Negative IPQ score are also labelled as Gold since having Positive HPQ ascertains the market importance of the patents and having negative IPQ score does not affect their value.

FIG.1

Patents falling in the Gold section are considered the most important IP asset for an organization, as they have a direct financial impact on the company’s business streams.

Patents falling in the Silver section are vital as they can lead to future growth of an organization in a particular technology space. These patents can also relate to the future roadmap of the company and could be used for fencing off competitors from the company’s core technology areas. Patents that have a positive IPQ can also be used for licensing opportunities by an organization.

Patents falling in the bronze section are the tertiary IP assets of an organization. These patents can undergo an audit for trimming of the portfolio.

To summarize:

• PQA is a complex task and the above-suggested methodology is one option for achieving a better assessment of the portfolio strength of an organization’s IP assets.
• Patent professionals should seek a standardized quality assessment methodology that can be applied across all fields of technology and across all organizations globally.
• An automated system that links patents to products can be very helpful to IP professionals in estimating HPQ.
• Commercialization of technology holds the key to the success of an invention, as well the company holding the IP.
• The estimation of IPQ and HPQ can provide one standardized protocol for PQA.
  

 
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