II-SDV 2014 Patent Valuation: Building the tools to extract and unveil intelligence and value from patent data (Laurent Hill and Renaud Garat – Questel, France)
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II-SDV 2014 Patent Valuation: Building the tools to extract and unveil intelligence and value from patent data (Laurent Hill and Renaud Garat – Questel, France)
- 1. PATENT EVALUATION Building the tools to extract and unveil intelligence and value from patent data April 2014 - Nice Laurent HILL - Renaud GARAT Copyright 2014
- 2. 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
- 3. 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
- 4. 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
- 5. 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?
- 6. 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
- 7. 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? – …
- 8. 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
- 9. 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
- 10. 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
- 11. Goal driven evaluation process Select patents Build comparable set Compute metrics Assess patents against comparable set Make a fast, documented, high quality decision
- 12. BUSINESS NEEDS IP RELATED CHALLENGE IP SOLUTIONS R&D PRODUCT 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 comparison Copyright 2014
- 13. BUSINESS NEEDS IP RELATED CHALLENGE IP SOLUTIONS R&D PRODUCT 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 comparison Copyright 2014
- 14. LEGAL Best Patents 1. BENCHMARK PATENTS 2. COMPARE STRENGHTS & WEAKNESSES 3. LEVERAGE NEGOCIATION POWER4. NEGOCIATE TECHNICAL GEOGRAPHICAL Potential Licensors Licensing-in Copyright 2014
- 15. BUSINESS NEEDS IP RELATED CHALLENGE IP SOLUTIONS R&D PRODUCT 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 comparison Copyright 2014
- 16. Exclude Others PLAYERS INVESTMENT DOMINANCE INTENT SUBSTITUTE THREATS 1. BENCHMARK PATENTS 2. APPLY INDUSTRY PATTERNS 3. ABILITY TO EXCLUDE ASSESSMENT 4. ASSESSMENT REPORT DETAILS Copyright 2014
- 17. BUSINESS NEEDS IP RELATED CHALLENGE IP SOLUTIONS R&D PRODUCT 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 comparison Copyright 2014
- 18. COMPUTE METRICS ABANDON SCAN PATENT PORTFOLIO MANAGE QUALITY RANKED PATENTS RENEW Patent Portfolio Pruning
- 19. BUSINESS NEEDS IP RELATED CHALLENGE IP SOLUTIONS R&D PRODUCT 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 comparison Copyright 2014
- 20. LEGAL Best Patents 1. BENCHMARK PATENTS 2. COMPARE STRENGHTS & WEAKNESSES 3. LEVERAGE NEGOCIATION POWER4. NEGOCIATE TECHNICAL GEOGRAPHICAL Potential Licensees Licensing-out Copyright 2014
- 21. • 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
- 22. • 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
- 23. Technical Metrics Copyright 2014 Sample charts: licensing out
- 24. Legal Metrics Copyright 2014 Sample charts: licensing out
- 25. Geographical Metrics Copyright 2014 Sample charts: licensing out
- 26. Ranked Patents Copyright 2014 Sample charts: licensing out
- 27. • 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
- 28. Thank you