Patent valuation uses an “A” through “D” rating scale. A-rated patents represent the highest value, B-rated patents have medium value, C-rated patents have low value, and D-rated patents are unlikely to have any value. The checkup further distinguishes Commercial Value (CV) and Enforcement Value (EV); both are individually scored and combined to produce the Patent Rating. Checkup analyzes each patent claim and the final Patent Rating is determined by the independent claim with the highest combined score. Having Commercial Value and Enforcement Value measured separately is particularly useful when analyzing a sizeable portfolio of patents (see Portfolio). Patents can be prioritized according to business goals; for example, patents with the highest Enforcement Value could be prioritized for licensing (see Custom Services).

Commercial Value represents the value of a patent in the context of its utility in commercial or business activities. It is based on the revenue it can generate for a business through its application or licensing. A granted patent is no guarantee that the invention has commercial value, in fact most patents will never achieve significant commercial relevance. Licensees and buyers often need to be certain that a patent can support a revenue-generating licensing program. They consider who is using the patented technology, whether the technology generates profits and/or reduces costs, how much revenue the products generate and how much the patented technology contributes to that profit generation. Business Value is expressed as a decimal value on a scale from 0-1 with 1 representing the highest score.

Enforcement value is a measure of the effectiveness of actions taken to uphold a patent holder’s rights against unauthorized use, infringement, or violation of their patent. It measures the success in negotiating licensing agreements with infringing parties and financial compensation received through settlements before or during litigation. The value highly depends on the way claims were written and their ability to stand up to legal scrutiny. Claim language should be explicitly supported within the specification, written to be understood by persons of ordinary skill and – probably most important – be supportable. Simply stated if one cannot demonstrate that someone is practicing all elements of an issued claim, there is no case to assert the patent. Evidence of use (EOU) in the form of a detailed claim chart offers concrete evidence that a patented invention is being used in a product and shows how the claim is being infringed (see Custom Services). Licensees and buyers often base their decision on the presence of strong EOU. Regardless of an invention’s Commercial Value, without sufficient Enforcement Value the overall value of the patent is significantly diminished. Inventions are knowingly being infringed all the time because enforcement is either too difficult or cannot be economically justified. Enforcement Value is expressed as a decimal value on a scale from 0-1 with 1 representing the highest score.

Patent claims provide owners the “right to exclude others,” i.e. they put the world on notice with respect to the subject area and boundaries of an invention. Strong Evidence of Use (EOU) is a critical component in the successful monetization of a patent portfolio, as buyers and licensees frequently base their decision based on compelling EOU in the form of a claim chart. In the patent world, claim charts are used to illustrate how a real-world product or service is infringing on a given patent claim or claims. A vital tool, claim charts demonstrate “use” of the patent claims in relation to a product or method in a clear and concise manner. Infringement must be proven either by showing that the product or method infringes each and every element or each and every step of the asserted claims, providing concrete factual evidence that a patented invention is being used.

It may take several years from the time an invention is filed until a patent is granted. During that period a competitor product may have entered the patented space.  Strengthening entails monitoring products and drafting new claims mapped onto products as they come to market. Many, if not most, patent prosecutors are taught to draft broad claims. Recent court rulings have proven otherwise. Valuable claims are often those that are carefully targeted and often include at least some relatively narrow claim elements by intent. Such narrowing elements should be a point of patentability distinction. Furthermore, a targeted, narrower claim will be more difficult to invalidate. Claim language should be explicitly supported within the patent specification, or at least construed as commonly understood by persons of ordinary skill in the art. Lastly, and most important, is the detectability of claims. Simply stated if one cannot demonstrate that someone is practicing all elements of an issued claim, there is no case to assert the patent.

US assets account for most value because this is where the largest damage awards are available. The US is unique in that it permits the filing of continuation applications, which gives inventors the benefit of claiming new inventions and allows the earlier filing date of the initial application. A continuation application can be filed at any point while at least one patent application in the family is pending. Many inventors fail to seize this unique advantage, being content to receive their initial patent and neglecting to file a continuation to keep the family of patents alive. Buyers will pass on a portfolio that can no longer evolve; therefore continuation applications should be leveraged to bolster a patent portfolio and provide additional patent protection, thereby increasing value.

The first step is understanding what you have in your own patent portfolio. Typically, the approach has been to rely on subject matter experts (SMEs) to analyze each patent in the portfolio. SMEs are skilled at making assessments based on the key factors affecting the value of each patent. However, the assessments are entirely subjective and error prone even for experienced patent specialists. Mistakes can cause thousands of dollars in wasted effort and legal costs. Even a single overlooked claim element can severely limit the value of a patent. For large portfolios, the use of SMEs alone becomes cost prohibitive.

The alternative for portfolios relies on using automation. Commercial patent analysis tools automate certain tasks; however, none are geared specifically for enforceability and commercial value. Furthermore, the tools are generally expensive, require training and a skilled user. The problem is that these tools typically rely on patent office data and there is simply no information that can be directly applied since patents are granted irrespective of whether allowed claims can be enforced or not. Some attempts have been made to extract inferences, for example using claim word count as an indicator; however, our experience and feedback from clients has shown that these methods are generally inaccurate.

We help our clients get more out of their patent portfolio. It’s about understanding how to identify high value patents, and then deciding how to make those patents work for the company’s bottom line. The analysis allows clients to make informed choices about how to best leverage their portfolio. The results can be used for bench marking portfolios, identifying patents suitable for licensing, portfolio development and reducing maintenance costs by identifying low- value patents.

An assessment allows users to assess the overall value of a portfolio and home in onto technology areas with the highest concentration of valuable patents, uncover hidden value patents, and flush out weak patents for abandonment. The report can form the basis for further decisions concerning portfolio development or used to promote a company’s value. Typical use of portfolio analysis includes:

·         Identifying valuable portfolios

·         Valuation

·         Licensing

·         Impairment Testing

·         Benchmarking

·         Strengthening patent portfolios

Pelent’s Portfolio Analyzer provides an overall portfolio snapshot including Patent Rating metrics and a ‘floorplan’ visualization which allows users to hone into technology areas with the highest concentration of valuable patents. A Quickview URL provides a dynamic link for viewing the snapshot – placing the cursor onto any of the blocks provides a technical description of the selected block, the number of patents and ratings within the block.