Friday, October 13, 2006

The Social Patent Process

There is a considerable amount we, as IP Managers or Attorney's, can learn about patent process from the Early Adopter internet geeks in this world.

Last month I read about Social Networking still being an Early Adopter technology. Upon reflection, I think there is a valuable patent process based idea we can take away from this.

One of the larger (useful) social networking information sites is – a social networking site that combines social bookmarking, blogging and syndication – but all in a democratic environment. Users can submit stories and “digg” other users stories. Through a real-time user based ranking system, if the story gathers enough “digg’s”, depending on the algorithm that runs in the background, the best stories make it to the front page. There are specific categories (Technology, Science, World & Business, Sports, Entertainment, Gaming, and Video’s), each with sub-categories. Listed in the top 100 most visited sites on the internet by Alexa, it claims over 500,000 registered users and 3000+ submitted stories per day. To get to the front page a story typically needs 350-600 “diggs” to get to the front page, the range dependant on the time of the day and week a story is posted.

Now you may be wondering, how does this relate to an IP process? In short: Idea screening and ranking. Many companies have ranking committees, all filtering out the good ideas from the bad. Often several different departments are included, perhaps IP counsel, and an IP Manager. For mid to large firms that have a large amount of innovations submitted for patenting, the ranking process that is controlled by the few on the ranking committee, which means these few have to sort and filter a large number of ideas. But is this process skewed?. Recently Bill Mead of Basic IP wrote an article entitled “The 6 Stages of Inventors” which sums up the state of most current processes. Mead notes several social norm based problems with this ranking process. He writes “Many patent committees will not select patent applications based only on merit. A variety of other factors can crowd merit off the table. For example, "This is this inventor's first disclosure, we need to file on it to encourage them." Or, "We are not getting enough disclosures in this area of technology, we need to file on this disclosure because we need more coverage here." Or, my personal favorite non-merit-based reason "Might be useful." When taken with the "This person has more than his/her fair share of patent applications this meeting" norm that inventor mentors have inflicted on them, these seemingly innocuous norms can become an oppression to your company's best and brightest inventors, your inventor mentors.”

In considering the patent idea ranking, both from an employee effort perspective and a idea merit perspective, there is room for improvement. I suggest a way to move to a more democratic and meritcratic process may be to insert the social networking backbone of sites like into the searching or idea ranking process. In doing so the structure of such a system could have the following structure and benefits:

  • Ideas get 1 vote per [qualified] employee (anyone is free to rank, but that may cause more issues than having a larger set of qualified rankers). The goal here is to get people involved and build innovation (and ranking of what is good/bad idea) into the culture.
  • Ideas are submitted by anyone, but all inventors (theoretically the entire R&D department and beyond) are encouraged to use this innovation database as a pool of ideas to build on, or see what others are working on. The goal here is to expand the idea database into a true working innovation/brainstorming database. This will have an end result as to promote innovation within development as a culture, and give opportunities for anyone to build on ideas.
  • Ideas are commented on or added to by anyone. The goal is to spread the ownership of the idea to more people across the organization, which would in build a cycle of buy-in of the new ranking system.
  • Inventors get relatively instant feedback as to if the idea is valuable, or needs work. The goal is to speed up and make more valuable the feedback cycle, which will result in increased motivation to file ideas, and better ideas submitted over the long term.

Over time these characteristics would develop an idea raking process that is used in two distinct employee groups - the ranking committee and the inventors.

  1. Ranking Committee: the ranking committee could meet, already having a rough outline of the ranked ideas to move forward. While most employees don’t have the perspective of the ranking committee – a combination of legal, business and technology reasons to pick the ideas they do – it will give a base to start from (thereby reducing work), ultimately fostering a process where ideas to be ranked mostly on merit. On the flip side, having everyone see what was highly ranked, and what eventually was patented gives feedback and training to everyone at a more global level, ‘what was actually important, and why.’
  2. Inventors: The employees can use the idea/ranking database as a incubation center in the product development process. Integrating this tool into the actual R&D process automatically begins to ingrain the culture of IP into the employees. Development is done and without any effort, the ideas are already populated into a database for ranking and filing.

I could see this being more valuable the larger the organization, which makes sense because the smaller organizations are more nimble and ranking should be easier to begin with. It could also be very valuable in organizations that have R&D spread across multiple locations. As I noted earlier the best residual effect of this improved process would be the fostering of collaboration and inserting IP right into the fabric of the development culture.

Any comments on if / how this can workout?

Thursday, September 21, 2006

Strategic Patenting Decisions and their Influence on Patent Value

As promised, here is part III –Which Patent Variables are indicators of Patent Value?

Again I ask, why is this important for the practicing attorney? As one who prosecutes patents and gives advice to clients on which applications to pursue and which to let abandon, this will give scientific weight to your advice.

In doing so I will answer the research question:
For firms what early strategic patenting decisions around the patent itself will impact the future value of the patent?

In my previous posts I looked at the 6 independent variables, all of them measured against the dependant variable of Forward Citations, which was used as a proxy for Patent Value.

The Statistical Analysis:
I performed a hierarchical regression analysis to test both the hypothesis with the enter method for the control variables and the stepwise method for the independent variables. The analysis was sorted across large and small firms to enable a comparison as well as to allow for detailed analysis of small firm patent characteristics. In controlling across Firm Experience and Industry, a hierarchical regression analysis was performed using predictors of Family Size, Breadth, Claim Count, Jurisdiction Count, Priority Basis and Provisional Basis.

The Results:
The results show support for the hypothesis for both small and large firms at the p < 0.05 level. For the small firm the model was significant at the p-value < 0.05 level for the independent variables of Industry Type, Priority Claim and Breadth of Patent whereas the Large firm had significance at the p-value < 0.05 level for the independent variables of Industry Type and Number of Claims. The R2 was 32% for the small entity, but only 9% for the large entity. This empirical result show support for the research question in that there are internal predictors that are associated with the value of the patent. However it should be noted that this implies that while predictors of significance were found for both small and large firms, it is more so the predictive results for small firms that should be contemplated for inclusion into business practices by industry.

Take Away Points:
How can I apply this to my firm? Small firms can benefit from this research by seeking to increase the value of their future patent portfolio by filing new patents that do not claim priority to other applications, yet cover a broad scope of technology.

How should I change my filing strategy? Dont' just churn them out. Simply having a patenting strategy that is focused on creating large patent portfolio counts, or having a standard procedure to patent all innovations across a pre-defined batch of jurisdictions will not necessarily lead to a portfolio with a high volume of valuable patents. They must consider each new innovation separately and make filing decisions accordingly and not based on pre-determined business decision procedures.

Can small firms really make a difference by patenting things? Does their lack of patenting experience matter? Although small firms have less patenting experience than large firms as seen by their experience distribution plots, surprisingly the firms patenting experience was not a significant predictor in the model. This suggests to industry that small firms with little or no patenting experience still have potential to create valuable patent portfolios from inception.

Saturday, July 29, 2006

Patent value & court decisions

A recent bump in traffic has come from someone posting about my citation/value research in Silicon Investor.

One reply to the thread said this : "interesting blog... It is, and goes back to the Glimstedt study of citations, but I'd be happier if he were listing court decisions based on the citation method of valuation."

Actually the citation method is tied to court decisions, it was just not the focus of this particular research paper. I am only posting a brief summary of the full paper here, hence you didn't see the link back to the references which ties litigated patents (which I will loosely interchange with court decisions here) and citations. For your reference here's the portion of my research that ties them together:

It has been suggested that given the high cost of litigation, patents which are litigated are also typically considered valuable patents. Research with litigated patents have been correlated to high patent citations (Lanjouw and Schankerman 1997; Allison, Lemley et al. 2004) with Allison arguing strongly for the bi-directional relationship between litigated patents and value. Their research argument is based on the premise of the high relative cost of litigation as compared to the cost of merely obtaining the patent with almost 75x the cost to enforce through litigation compared to filing.

An interesting step in the research would be to dive more deeply into the litigated patents and pull out the citation counts, ultimatly seeing if there is a model that can be developed for monetary settlements and citations.

References above:
Lanjouw, J. O. and M. Schankerman (1997). "Stylized facts of patent litigation: value, scope, ownership." NBER Working Paper (No. 6297).
Allison, J. R., M. A. Lemley, et al. (2004). "Valuable Patents." Georgetown Law Journal 92(3): 435.

Saturday, July 8, 2006

Patent data: foreshadowing of value to come

As promised, here is part II – Patent Variables to measure internal patent value.

Why is this important for the practicing attorney? As one who prosecutes patents and gives advice to clients on which applications to pursue and which to let abandon, this will give scientific weight to your advice.

First I will give a short background on how I “measured value” objectively for the patents in my data set.

Dependent Variable, or “measured value”: Forward Citation Counts

The dependent variable, forward citations, is measured by the number of citations the granted patent has from other patents. The variable was operationalized by counting the frequency of citations that the particular patent receives from subsequent patents as filed in the USPTO. I also controlled for self-citing.

Is this valid? I propose it is – Starting as early as 1990 forward citations have been validated by other research, showing that a general conceptual patent value or quality definition can be linked to the number of citations and external references it receives. The reasoning for the use of citations as a measure of value is the same for scientific literature: the economic importance of a work should be correlated with the frequency to which it is cited as a benchmark for further developments. It has been suggested that given the high cost of litigation, patents which are litigated are also typically considered valuable patents, and research with litigated patents have been correlated to high patent citations.

Independent Variables: Strategic Patenting Decisions
I am suggesting that each of these variables has an influence into the final value of a patent.

Family Size. Family size is all related applications (continuations, continuation-in-part and divisionals) filed worldwide.

Breadth. Patent breadth or scope is a measure of the technological influence or boundaries that the patent encompasses.

Claim Count. Claims define the legal boundaries of the patent rights, thus the firm typically has incentive to claim as much and as widely as possible while the examiner may narrow or reduce the claims to ensure validity before granting.

Jurisdiction. Jurisdiction size is computed as the number of separate country jurisdictions in which patent protection was sought for the same application.

Provisional Basis. Provisional applications allow an inventor to file information relating to their invention claim priority to that filing date up to 1 year from the original provisional filing date

Priority Claim. Priority claim is the basis of whether the patent application was based on a previous application, such as a continuation or divisional.

If you wish to see how I operationalized any of these variables let me know and I will post some additional details.

Next up: Part III – Results How did each of these independent variables fair when put to the statistical tests? And, more to the point, how can we apply this from a patent filing strategy perspective?

Thursday, April 27, 2006

New way to look at value of patents?

First off - let me apologize for the lengthy delays between postings. I was hoping for at least 2 a week when I started this site but other non-work obligations mean this site will fall to the bottom of my pile for at least another few months. I will keep you posted...

In the mean time, here is something to ponder:

Institute of Physics put out a news article on entitled "Google unearths physics gems". It outlines how the Google page rank algorithm is being used to find, and in some cases uncover, important scientific papers. On a personal note I used the google scholar extensively when doing research for my thesis last year and found it at least as valuable as, if not more, than some of the traditional searches such as ebscohost et al.

My question for the post is this: How can Google's page rank algorithm be used in patent searching and ranking, specifically to help do accurate prior art searches? How can it be used to help determine value of a filed or granted patent?

I think that is something worth postulating... Perhaps for my next thesis. Any thoughts or ideas would be interesting to hear...

Saturday, February 18, 2006

Patenting differences between large & small firms

Part I: Data Sources

My research interests lie in the patenting differences between large & small firms – and more importantly how can a small firm with relatively smaller resources get “more for their money” by having more valuable patents.
Those in the patent field realize that small firms have less experience than large firms, as measured by filed applications – but by enough to statistically compare the two groups? We must determine that before moving forward.

Data Source: The data collected was tested using patent data collected for US patents granting in January 1999[1] within the International (IPC) patent classes related to Electrical Devices (H01) and Mechanical Devices (F16). These particular classes were chosen as they were relatively opposite technically based categories allowing for a clear comparison across industries. A total of 847 samples drawn from the USPTO with both expired patents and those granted to non-US based firms removed from the sample. The remaining 386 samples were coded into Small and Large Entity status, as listed by each patent application record available from the USPTO.

Small and large firms patenting experience distribution, as measured by filed applications.

With negative skewness (-0.58) and kurtosis (-.457) for the large firms and positive skewness (1.25) and kurtosis (1.452) for the small firms, it can be seen that small firms have less experience than large firms, as measured by filed applications

(Sorry the background is black but SPSS was doing wierd output that I couldn't fix when importing into blogger - you need to click and open it to see the graph.)

So, with this difference in experience established in statistics we can move to comparing the two small & large firms patents.

Next: Part II – Patent Variables to measure internal patent value. I will be using claim count, patent breadth, patent jurisdiction size, number of claims, provisional basis and priority claims as my variables of value.

[1] A data-set from pre-November 29, 2000 was also consciously chosen as the law of the US now requires all US patent applications filed on or after this date to be published 18 months after the earliest filing date for which the benefit is being sought, unless the application will not be filed in a foreign country that provides for 18-month publications. Data collected after this date would cause issues as there would effectively be 2 data sets to consider: citations granted applications that had an earlier publication date and citations for granted applications that were not published.

Thursday, January 12, 2006

BasicIP's 6 Stages of Inventors

Today Rethink(ip) posted Bill Meade's part 1 of The 6 Life Stages of Inventors. As stated he does, on purpose, over simplify the article but as a result I think it causes a key point to be missed.

I think Bill definitely goes in the right direction with the start of his 6 stage. However, he seems to view one of the disruptive "off-ramps" from the bottom up where as I suggest a more prudent and long term view should be to address it from the top down in addition to Bill's bottom up approach.

This is where I thought he missed out on a key point: IP strategy needs to be supported from the top down and motivated from the bottom up. Simply motivating employees from the bottom up by giving them tools to overcome their anti-IP boss won't solve long term invention submission issues.
Contemplating short term fixes which include coaching the boss that people aren't "wasting time" by inventing doesn't seem to suggest that IP/Business training should be done at the manager and executive level. This should be done at, the very least, in parallel with employee training or incentive programs. Top level buy-in that IP is an asset to the company and should be taken seriously by everyone is a key success factor. I don't think merely stroking the non-supportive boss by making him a co-inventor makes long term sustainable advancements to the IP process. There needs to be an understanding that promoting and supporting IP furthers the business and long term value for the company. As well, just adding an inventor to make him happy may cause legal issues unless he really contributed to the invention.
War Story: Just by adding a boss to an invention caused huge litigation problems for a defendant in an IP lawsuit I was involved in. Simply "appeasing the boss" cost them an extra $10k or so in legal fees to sort it out a few years down the road once the other side found out about it.
I have found by spending time to really educate and promote the win-win benefits of IP to the management and executives, I have considerably more success in getting inventors to submit ideas and become involved in the patent processes. Why? Because the importance of IP and idea submission is preached to a wider audience (all staff) in several mediums (meetings, presentations, design reviews), all without a member of the IP Team there to remind them all.

On the inventor level while Incentive Programs motivate some, the enthusiasm fades quickly unless supported in parallel with fresh and innovative training programs. I have found success in doing both, but limited long-term success when I focus on just one.

BUT, all of the above is pointless unless quality ideas an innovations can be drawn from the inventors. Merely encouraging inventors to hit a quota of submissions does nothing for the value of the future patent portfolio. I am making an assumption by the title that Bill will address the quality of inventions in the "Calibration" stage.

I am looking forward to reading the rest of Bill's stages, and hope he addresses the quality/quantity issue.

And, for the record, I do like the cookie and T-shirt idea. I will try that one next time....

Saturday, January 7, 2006

Strategic Patenting Decisions and their Influence on Firm Patent Valuation

I finished my thesis in the area of patent strategy a few months ago and I will be posting revised and extended sections of it on this blog over the next month or so as I prepare it for publication. My research focused on the economic and business management side of IP, specifically related to small firms and their ability to positively influence their future patent portfolio value.

My interests were rooted in wanting to understand the business and economic drivers of IP in order to ensure more legal based successes in business practice.
Value can be measured in many different ways but I opted to use a relative "internal" value, using patent citation counts as the proxy for value. This is heavily used in research with academic IP focused Economic authors such as Manual Trajtenberg (Tel-Aviv University), Adam Jaffe (Brandeis University) and Bronwyn Hall (UC Berkeley).

Title: Strategic Patenting Decisions and their Influence on Firm Patent Valuation


The economic rents associated with patent portfolios are highly skewed with only a small portion having value. This leads researchers and industry to ask what early strategic patenting decisions around the patent itself will impact the future value of the patent, specifically within the context of small firms. To address this question the paper modeled these ex-ante strategic patenting decisions by using a common measurement of forward citations as a proxy for patent value. Six indicators were modeled with two of them, provisional basis and priority claim, not explicitly investigated in previous research.

A focus on the small firm as well as the two strategic patent decision indicators provisional basis and priority claim are areas that have not been explicitly investigated in previous research.

A stronger relationship was found for small firms with indicators of breadth and priority claims, as compared to a weaker relationship of only claim counts for large firms. Research also indicated that from a small firm management perspective the most potential valuable patent is one that covers a broad scope of technology is a new filing and does not claim priority to other applications.

I am working on a rewrite for publication , so any comments you have on the topic would be appreciated as they may influence my publication submission rewrite. In the mean time if you would like a copy for peer review, please let me know via email and I will send one your way.

Monday, January 2, 2006

Managing Intellectual Property & Business

I was asked to write a short summary of an article with some commentary, so I thought I would post it as well. I based the summary on an article entitled Intellectual Property - from Management to Litigation, as published in The Deal on April 25th, 2005. A PDF of the article can be found here on the Brinks Hofer Gilson & Lione website.

Several months ago the Grokster case was argued in the US Supreme Court. This 2005 case was to our digital generation to what the Betamax case was to 1984. The Betamax case answered for the affirmative when looking at if Betamax could be used for substantial noninfringing uses and thus legal for Sony Corporation to sell. Now we have new digital music and video files capable of being transmitted over any remote digital network. This means the issue, albeit more technical, appears to have come up again but in reality the peer to peer based Grokster case needs to be viewed from a different perspective than Betamax was. The content owners, who claim their intellectual property is being given away for free with these file-sharing sites, realize they can't stop technology and thus are simply trying to limit their use.

Balance between intellectual property protection and innovation can best be viewed through a blending of economic, intellectual and legal issues.
First, one must consider the fundamental reason for intellectual property protection was created to ensure the protection for innovators - through legal avenues inventors are given economic incentive to continue to invent. But at what point does old protected innovation stifle new innovation? Open competition is also required to prevent unhealthy economic monopolies and stimulate more business. It is this perspective of "fair use" that most proponents of technology over intellectual property state their cases on. As the global economy is starting to shift to more of a knowledge base economy, the there is a need for proactively managing a company's intellectual property protection and exploitation, instead of reactively managing within the marketplace.

To add a third dimension of complexity to the issue of protection & innovation the growth and change of a company's structure in today's working global environment should be considered. This suggests for mergers and acquisitions the intellectual property (IP) of a company is becoming more important to consider. One reason is due to the increased knowledge economy of software and other intangible literature. The second is some firms that are up for acquisition may not realize the potential of their IP, instead being too focused on their tangible products and their markets. IP also extends beyond the traditional business merger and can be used for two competitors to create a larger user base and thus a potential standard to which they can both benefit instead of fighting for the existing customer base. A third is the realization that global business is a necessity to stay competitive. Global outsourcing mixed with differing intellectual property legal protection across country jurisdictions can create a complex environment to structure an acquisition. Having IP enforced or protected differently in multiple jurisdictions where certain portions of a company's operations reside may impact the way product or services can be handled.

But with the cost associated with acquiring IP, one must be willing to enforce it.

One obvious component in enforcement is litigation, which has showed no signs of weakness in the past few years. While new technology cases such as Grokster are expanding into unchartered legal territory, many of the recent cases have honed current law. Recent casts have been clarifying more mundane, but necessary, portions of IP law, such as claim construction and willful infringement.

The most recent willful infringement case, the Festo case, deals with the issue of treble damages when a corporation is held to have willfully infringed a patent. Historically part of a successful defence to treble damages was to produce a good faith non-infringement opinion of counsel. This caused an issue of adverse inference for defendants if they chose to not use counsel for an opinion, or reveal the opinion in court. This means the judge or jury could assume an opinunfavorablevourable and award treble damages. With Festo eliminating this adverse inference rule, companies have larger legal latitude in their handling of potentially infringing patents at the time an opinion is drafted.

The recent Phillips case relates to the issue of claim construction. Presently claim construction is taken as a matter of law and defined by the judge and dictated to the jury. But with this being a point of law it resulted in over 50% of the patent cases tried in district court being overturned by the court of appeals. With a $2 to $5 million cost to take a case through litigation, it posed huge financial uncertainties for parties of the court as it moved to appeals. After accepting amicus briefs the Federal Circuit panel issues it's en banc ruling giving a detailed recitation of claim construction principles, but it did not address the differences applied to the district courts over the federal courts. This infers the issue of large amount of reversals in the federal courts may still stand for the time being.

So where does this leave us?

There are two common ways to manage a firm's intellectual property - from the business perspective of products and markets, and from the focused legal perspective of asset protection.

Within both views the goal is to ensure any existing IP is being utilized to its full potential. In either case IP is a complex issue to deal with and should not be considered as an afterthought or add on to corporate growth and strategy. Strict interpretation and enforcement of IP law is becoming more fluid as technology continues to evolve and mature, leaving many IP issues such as open-source software and peer-to-peer programs unguided by the courts.

As the courts and legal field have typically move slower than the technology growth of our generation, I suggest it will provide an interesting wild west type free for all at least for the next few years of IP business.

I think I'm gonna get me one of them there patent six shooters when I get back to work.

Sunday, January 1, 2006

ipResearch: Mission Statement

I have started this blog to codify my IP related knowledge base and information into one single point of reference.

To fully inderstand and employ Intellectual Property (IP) successfully in practice one must simultaneously balance the economic, management and legal perspectives. A considerable amount of the current academic research and business applications are focused on only one of these areas - I will fill the current gap by addressing all three points of view within my posts.
The goal of ipResearch is: to become a forum to share and exchange best practices, ideas and issues that arise within intellectual property management.

At the very least it will be my personal, one-stop, resource for the IP information I use in my work environment.