Patent valuation using MDMP methodology

2,009 views
1,873 views

Published on

Crafitti's (http://www.crafitti.com) methodology for Patent Valuation using TRIZ, Social Value Analysis, Scenario Planning and Analytic Hierarchy Process (AHP) - A Unique methodology called - Multi-Dimensional Multi-perspective Methodology

Published in: Business, Education
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
2,009
On SlideShare
0
From Embeds
0
Number of Embeds
7
Actions
Shares
0
Downloads
129
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Patent valuation using MDMP methodology

  1. 1. Patent Valuation – The Achilles’ heel of Technology crafting innovation together Commercializationcrafting innovation together Multi-Dimensional Multi-Perspective Valuation Methodology Confidential © Crafitti Consulting Private Ltd.
  2. 2. What life cycle stage is your Invention/Patent? crafting innovation together Cross Licensingcrafting innovation together Post Grant Opposition Granted Patent Patent Application Invention Idea Confidential © Crafitti Consulting Private Ltd. April 27, 2011 2
  3. 3. Valuation Methodology for a Patent crafting innovation together Claims Analysis Parameters used by standard methodologies Citations backward/ Current State of forward the Patent/ Family Patent Value Sizecrafting innovation together Indicators Maintenance levels/ Legal Status Remaining Technical Life Description Confidential © Crafitti Consulting Private Ltd. April 27, 2011 3
  4. 4. Crafitti’s Multi Dimensional Multi-Perspective Valuation Methodology (MDMP) crafting innovation together TRIZ- Patent Life Standard Contradictions resolved based Valuation Social andcrafting innovation together Value Future Thought Experiments Network Potential Analysis Multi-Dimensional Multi-Perspective (MDMPTM) Valuation does not produce a single $ number. The methodology gives a sum total of past, current and potential future value that the asset may create in a range of possibilities. Confidential (c)
  5. 5. Lets go back 60+ years …….. crafting innovation together 1946, WW II has just ended A 20 years old Engineer in Baku, USSR, working in USSR Innovation Office, decidedcrafting innovation together To develop a method for systematic invention that could transform engineering creativity from MAGIC, attainable by few, into a logical discipline available to many more. He Conjectured, the key secrets of inventiveness should NOT be sought inside the inventor’s minds, but rather in the logic of inventions themselves. Confidential © Crafitti Consulting Private Ltd. 5
  6. 6. Father of TRIZ - Genrich S. Altshuller (Oct.15 1926 - Sept. 24,1998) crafting innovation together He uncovered the secrets of systematic creativity, successful innovation and design. The development of TRIZ involved thousands of engineers, took more than 50 years and included the analysis of millions patentscrafting innovation together worldwide. Main postulates of TRIZ: ► The evolution of engineering systems is not a random process, but obeys certain laws; ► Products/processes evolve towards the increase of perfection (ideality) by elicitation and overcoming technical and physical contradictions. Confidential
  7. 7. Estimating The Current State of the Patent Using TRIZ – why TRIZ? crafting innovation together Theory of Inventive Problem Solving by Altshuller Main postulates : ► The evolution of • 1946 Patent Officer engineering systems in Russian Navy is not a random • Discovered patterns process, but obeys in patents, published certain laws; paper. Sent to Gulag ► Products/processescrafting innovation together • 1954 released, evolve towards the analysed 2,500,000 increase of patents perfection (ideality) • Identified what by elicitation and makes a successful overcoming technical patent and physical • 1956-1985 TRIZ contradictions. formulated Confidential © Crafitti Consulting Private Ltd. April 27, 2011 7
  8. 8. Patent Valuation crafting innovation together • 4 Key Pillars of Our Holistic Approach – TRIZ – Social Network Analysis – Scenario Planning – Analytic Hierarchy Process (AHP)crafting innovation together • Multi-Dimensional Multi-Perspective Methodology Confidential © Crafitti Consulting Private Ltd. April 27, 2011 8
  9. 9. Crafitti Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology for a Patent crafting innovation together History of Current State of Future Scenarios in Super System Technology, Market Technology, Market Technology, Market and Competition and Competition and Competition Historical Factors Current State of Future State of the System related to the the Patent Patent invention/Patentcrafting innovation together Current State of Future State of sub- Historical Factors sub-systems, systems, Sub System related to components and components and components and parts that make-up parts that make-up sub-systems the patent the patent PAST PRESENT FUTURE Confidential © Crafitti Consulting Private Ltd. April 27, 2011 9
  10. 10. Crafitti Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology for a Patent crafting innovation together Assessing the Patent Using Claims Theory of Inventive Problem Length/Breadth Solving (TRIZ) – A Unique Proposition Citations backward/ TRIZ Level of Invention Current State of 77% of inventions are at Level 1 or 2, forward the Patent/ 19% at Level 3, 4% at Level 4 less than < 0.3% at Level 5, Higher Level means higher Valuation Maintenance Patent Valuecrafting innovation together levels/ Legal Indicators TRIZ Laws of Evolution 9 Laws have been identified. Based on Status the position of patent on each of these TRIZ Function and laws it is possible to ascertain the Remaining Resources Analysis strength of the patent How does various parts of the invention Life combine to perform the function and how much resources have been utilized Technical Family help in understanding the strength of Invention Description Size Confidential © Crafitti Consulting Private Ltd. April 27, 2011 10
  11. 11. 5 Levels of Inventions crafting innovation together • Pioneering Invention – based on newly discovered phenomenon Level 5 (<0.3%) • Pushing existing technology to a higher level • Revolutionary • New System Developed Level 4 (< 4%) • Interdisciplinary solutions • Replacing old technology with New • Radical change or elimination of one principal system component Level 3 (19%) • One Engineering Discipline • Resolution of a physical contradictioncrafting innovation together • Slight Modification of the system Level 2 (45%) • Knowledge from different areas within the industry • Resolution of a technical contradiction • A simple improvement Level 1 (32%) • Knowledge within the trade • No system conflicts are resolved Confidential © Crafitti Consulting Private Ltd. April 27, 2011 11
  12. 12. How strong are the inventions? crafting innovation together Invention using a conceptually distant construct (totally unrelated domain) This patent belonged to a Invention using a known construct from startup another (possibly related) domain Invention using constructs known within the domaincrafting innovation together Small incremental improvement Confidential (c) Crafitti Consulting Private Limited
  13. 13. crafting innovation together A law of technological system evolution describes significant, stable, and repeatable interactions between elements of the system, and between the system and itscrafting innovation together environment in the process of its evolution Confidential
  14. 14. TRIZ: Laws of Evolution crafting innovation together 1. Law of Increasing Degree of Ideality - Increasing Ratio -> Benefits/Harm (cost) 2. Law of Non-uniform evolution of subsystems -> Leads to System Conflicts 3. Law of Transition to a higher Level system -> from simple to more complex 4. Law of Increasing dynamism (flexibility) -> More adaptable to change 5. Law of Transition to micro-level -> Increasing fragmentationcrafting innovation together 6. Law of Completeness -> Gradual Elimination of Human Component 7. Law of Shortening of Energy Flow Path -> Reduction in Energy/Info transformation stages 8. Law of Increasing controllability -> Evolution of controlled interactions of system elements 9. Law of Harmonization of rhythms -> Synchronization of natural frequencies of elements Confidential © Crafitti Consulting Private Ltd. 14
  15. 15. Case Study: Technological Alternatives Study on EP0922744 crafting innovation togethercrafting innovation together Confidential Patent Benchmarking Competitor’s Patents to TRIZ Lines of System Evolution
  16. 16. Crafitti Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology for a Patent crafting innovation together Citations Assessing the Patent Using the Claims its Relative position in its Ego- Length/Breadth backward/ Centric Citation Network and forward Social Citation Network TRIZ Level of Invention Current State of 77% of inventions are at Level 1 or 2, 19% at Level 3, 4% at Level 4 less than < the Patent/ 0.3% at Level 5, Higher Level means higher Valuation Maintenance Patent Valuecrafting innovation together levels/ Legal Indicators TRIZ Laws of Evolution 9 Laws have been identified. Based on Status the position of patent on each of these TRIZ Function and laws it is possible to ascertain the Remaining Resources Analysis strength of the patent How does various parts of the invention Life combine to perform the function and how much resources have been utilized Technical Family help in understanding the strength of Invention Description Size Confidential © Crafitti Consulting Private Ltd. April 27, 2011 16
  17. 17. crafting innovation together SOCIAL CITATION NETWORK ANALYSIS OF A PATENT – Crafitti’s Methodologycrafting innovation together Confidential © Crafitti Consulting Private Ltd. April 27, 2011 17
  18. 18. HOW SOCIAL IS YOUR crafting innovation together PATENT?crafting innovation together A unique way to quantify the relative value of a patent in its citation network Confidential 18 April 27, 2011 ©
  19. 19. Relative Centrality of the Patent in its Ego-Centric Citation Network crafting innovation togethercrafting innovation together 1984 1985 1987 1996 1997 2000 2002 2003 2006 2007 2008 2009 EVERY DOG IS A LION IN ITS STREET Confidential © Crafitti Consulting Private Ltd. April 27, 2011 19
  20. 20. Relative Centrality of the Patent in its Ego-Centric Citation Network crafting innovation togethercrafting innovation together 1984 1985 1987 1996 1997 2000 2002 2003 2006 2007 2008 2009 Building the Ego-Centric Citation Network of the Patent Confidential © Crafitti Consulting Private Ltd. April 27, 2011 20
  21. 21. Relative Importance Index quantifies (using crafitti’s methodology) the centrality of the Patent in its Ego-Centric Citation Network crafting innovation togethercrafting innovation together 1984 1985 1987 1996 1997 2000 2002 2003 2006 2007 2008 2009 Relative Importance Index gives a view of vitality of the patent. If its value is more than the rest of the patents in its ego-centric citation network, valuation should be more Confidential © Crafitti Consulting Private Ltd. April 27, 2011 21
  22. 22. Relative Centrality of Patent in its “Social” Citation Network – taking a cue from social network analysis crafting innovation togethercrafting innovation together Relative Social Importance Index gives a view of vitality of the patent in its social network of patents which is formed by connecting all forward and backward citations of patents in its ego centric citation network. This involves forming the “social” citation network of the Patent, which may large number of patents Confidential © Crafitti Consulting Private Ltd. April 27, 2011 22
  23. 23. crafting innovation together CASE STUDYcrafting innovation together Confidential © Crafitti Consulting Private Ltd. April 27, 2011 23
  24. 24. Citation Analysis from Espacenet crafting innovation together Social Network Analysis and Ego Centric Index Computation Using Crafitti’s Methodology for finding important patents in the dense citation network of a patentcrafting innovation together EP Patent No. EP1514784A1 Confidential 24 April 27, 2011 ©
  25. 25. What is the Ego-Centric Citation Index of a Patent? crafting innovation together Ego-Centric Citation Network of a Patent (called the central patent) consists of all those patents that either cite the Patent or are cited by the Patent. Besides the ECCN of a Patent has links that connect any two nodes in the ECCN but need not pass through the central patent. Social Citation Network of a Patent (called the central patent) consists of all patents in its ECCN plus all patents that cite or are cited by each patent in the ECCN of the central patent.crafting innovation together Crafitti’s Social Citation Network Analysis measures three indices on these Patents – Patent Dependency on Network Index (PDNI, which gives a relative measure of how much the network depends upon the Patent in terms of citation relative to all other patents in the network. Network Dependency on Patent Index (NDPI) gives a relative measure of how much patent depends upon the Network in terms of citation relative to all other patents in the network. The Ego Centric Citation Index (ECCI) gives the relative measure of how much it cites the other patents and how much it is cited by other patents in the network. Confidential 25 April 27, 2011 ©
  26. 26. Ego Centric Citation Network of Espacenet Data crafting innovation togethercrafting innovation together Confidential 26 April 27, 2011 ©
  27. 27. crafting innovation togethercrafting innovation together Confidential 27 April 27, 2011 ©
  28. 28. Social Citation Network of Espacenet Data (Depth 2 or Degree 3) 87 Patents 129 Citation Links crafting innovation together Which of these Patents are more important?crafting innovation together Confidential 28 April 27, 2011 ©
  29. 29. crafting innovation togethercrafting innovation together Confidential 29 April 27, 2011 ©
  30. 30. crafting innovation togethercrafting innovation together Confidential 30 April 27, 2011 ©
  31. 31. Crafitti Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology for a Patent crafting innovation together Citations Assessing the Patent Using the backward/ its Relative position in its Ego- Centric Citation Network and forward Social Citation Network Claims Analysis TRIZ Level of Invention Current State of 77% of inventions are at Level 1 or 2, 19% at Level 3, 4% at Level 4 less than < the Patent/ 0.3% at Level 5, Higher Level means higher Valuation Maintenance Patent Valuecrafting innovation together levels/ Legal Indicators TRIZ Laws of Evolution 9 Laws have been identified. Based on Status the position of patent on each of these TRIZ Function and laws it is possible to ascertain the Remaining Resources Analysis strength of the patent How does various parts of the invention Life combine to perform the function and how much resources have been utilized Technical Family help in understanding the strength of Invention Description Size Confidential © Crafitti Consulting Private Ltd. April 27, 2011 31
  32. 32. COMPARING APPLES WITH ORANGES – AN EXPOSITION OF AHP crafting innovation together Similar to Decision Matrix approach butcrafting innovation together allows a wider range of values in comparison of alternatives Developed by T.L. Saaty (1980) AHP invites pair-wise qualitative comparisons The problem is organized as a hierarchy Confidential
  33. 33. Why AHP ? crafting innovation together Qualitative Inputs Sound Mathematical Basis Pairwise comparisons Consistency Evaluation Gartner Reduces Complexity of decision by organizing it in structured format Promotes comparison of homogeneous characteristicscrafting innovation together Framework to check logical consistency Facilitates What if Scenarios It undermines Political Agendas Facilitates Senior Managers’ buy-in Confidential
  34. 34. Combining Multiple Value Indicators Using Analytic Hierarchy Process (AHP) crafting innovation together Integrated Patent Valuation Rating Citation Function/ TRIZ Level of Claims Family Network Resource Invention Analysis Size Analysis Analysiscrafting innovation together Maintenance Analysis as per Technical levels TRIZ Laws of Description Evolution Ego- Social Centric Citation Citation Network Network Confidential
  35. 35. Using the AHP for relative importance of each parameters from multiple experts crafting innovation together Parameter Relative Importance Level of Invention 15.0% Position as per Laws of Evolution 15.0% Function/ Resource Analysis 15.0% Citation Network Analysis 15.0% Maintenance levels/Legal Status 5.0%crafting innovation together Technical Description 10.0% Claims Length/ Breadth 12.5% Family Size 12.5% Total 100% Confidential © Crafitti Consulting Private Ltd. April 27, 2011 35
  36. 36. Crafitti Multi-Dimensional Multi-Perspective (MDMP) Valuation Methodology for a Patent crafting innovation together Future Scenarios History of Current State of Super System in Technology, Technology, Market Technology, Market and Competition and Competition Market and Competition Historical Factors Current State of Future State of the System related to the the Patent Patent invention/Patentcrafting innovation together Current State of Future State of sub- Historical Factors sub-systems, systems, Sub System related to components and components and components and parts that make-up parts that make-up sub-systems the patent the patent PAST PRESENT FUTURE Confidential © Crafitti Consulting Private Ltd. April 27, 2011 36
  37. 37. Scenario Writing and Thought Experiments (understanding something about something in future) crafting innovation together Scenario Writing: Description of sequences of Thought Experiments: the process of events for thought stimulation on potential crisis and employing imaginary situations to help us to anticipate future. Usually include plausible, but understand the way things really are. The unexpectedly important situations and problems that understanding comes through reflection upon exist in some small form in the present day. this imaginary situation. Crafitti Approach Combines Scenario Writing with Thought Experimentscrafting innovation together During the Idea Crafting Engagement for one of the world’s top three financial data provider, four global scenarios were written and future initiatives played out in each of Global scenarios as thought experiments to rank order the initiatives Confidential © Crafitti Consulting Private Limited 37
  38. 38. Valuation Methods Used (in Practice) crafting innovation together • The Capitalization Approach • The Income Approach • The Cost Approach • The Market Approachcrafting innovation together We Propose a Valuation using multiple perspectives and multiple Scenarios Confidential © Crafitti Consulting Private Ltd. April 27, 2011 38
  39. 39. MDMP Valuation crafting innovation together • In each of scenarios (i) that emerge during the valuation study what are the potential benefits that can accrue from the patent (bi) and the risks (ri) – Incorporating the Invention in the existing products – Potential Market Share enhancement – Using the invention to Invent more adjacent areas – Does it denies a space to competitor – Does it enhances the portfolio of the inventor – the synergistic effect – How easy it is to design around the patent?crafting innovation together – How easy it is to verify the infringement? • In each of scenarios Value (vi) of Patent will vary within a range based on benefits and risks of the patent loosing its relevance (bi) and (ri) • Each Scenario also comes with an estimation of likelihood or a probability estimation (pi) • Overall value V = ∑ pi x vi = ∑ pi x f(bi , ri) Confidential © Crafitti Consulting Private Ltd. April 27, 2011 39
  40. 40. Crafitti’s Patent Valuation Methodology crafting innovation together • Is Multi-Dimensional and takes into account multiple perspectives to produce a robust valuation considering multiple futures, current state and past trends • We combine multiple science based methodologies to come up with the valuation framework – TRIZ Based Patent Analysis – Value Network Analysis – Analytic Hierarchy Processcrafting innovation together – Scenario Writing – Standard Patent Landscaping and Analysis – Systems Analysis Multi-Dimensional Multi-Perspective (MDMPTM) Valuation does not produce a single $ number. The methodology gives a sum total of past, current and potential future value that the asset may create in a range of possibilities. Confidential © Crafitti Consulting Private Ltd. April 27, 2011 40
  41. 41. crafting innovation together Thank You Navneet Bhushan, Co-craftercrafting innovation together Founder Director| Crafitti Consulting Pvt Ltd |www.crafitti.com +91-9902766961 |+91-80-41688077 (navneet.bhushan@crafitti.com) 1B-401, Akme Harmony, Amblipura, Sarjapur Outer Ring Road, Bangalore 560037, INDIA Confidential © Crafitti Consulting Private Ltd.

×