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.


AMIT said...

Nice post about this.

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