Determining the quality of patents can be a cumbersome task as many factors influence their quality. While patent quality is subjective, it is an important measure in the valuation process. In order to deliver proper patent valuations, an IP analyst must understand the true qualitative aspects of patents.
Factors that influence patent quality are numerous, with various influences including patent strength, breadth, and interest. The following are just a few examples of factors that IP analysts must consider when determining patent quality for a proper patent valuation.
- Patent prosecution by attorney or agent. An attorney or agent may better understand how to construct claims that will withstand litigation in comparison to an inventor who constructs claims.
- Number of dependent and independent claims. Patents with a high number of both claims describe more potential inventions and variations.
- Patent prosecution process. Patents that undergo numerous office actions and claim rejections forces the applicant to refine the patents. The more refined the patents, the less likely they are to face post-grant validity challenges. Therefore, the more exhaustive the patent prosecution process, the higher the quality of the patents.
- Patent assignments. Arm’s length patent transfers indicate that patents may have quality. Many times patent owners transfer patents among various entities of interest or among entities that they may own. However, when patent transfers occur between patent owners and entities in which the patent owners do no have a vested interested, then the entities’ interest in the patents implies that the patents have some value, which may indicate patent quality.
- Maintenance fee payments. Companies that pay recurring maintenance fees on existing patents suggest that they find value in them.
- Prior art disclosure. Substantial prior art disclosure implies the applicant has a deep understanding of the patent space. It also implies that the applicant considered prior art while drafting the patent application. Also, an examiner considers relevant prior art when reviewing a patent. Therefore, it may be harder to challenge the validity of granted patents with an abundance of prior art disclosure.
- Post-Grant challenges. Patent assets that survive post-grant challenges such as inter partes reviews and ex parte reviews indicate higher patent quality. Patents that survive such challenges become less susceptible to subsequent challenges. Such successes also further assure patent validity over prior art.
- Infringement wins. Patent owners who assert their patents and win infringement cases prove their patents have good quality. Proof exists in such cases because the patents do not become invalidated despite the efforts of accused infringers to do so.
As you can see, numerous factors exist that IP analysts must consider when determining the quality of patents. However, even with the highest quality patents, if the market does not believe the invention provides utility superior to others in the market, then the patents may have little value. Therefore, while patent quality is an important metric and one that must be considered by an IP analyst, it is only a small part of the larger patent valuation process.