All Patents Great and Small: A Big Data Network Approach to Valuation

Abstract

Measuring patent value is an important goal of scholars in both patent law and patent economics. However, doing so objectively, accurately, and consistently has proved exceedingly difficult. At least part of the reason for this difficulty is that patents themselves are complex documents that are difficult even for patent experts to interpret. In addition, issued patents are the result of an often long and complicated negotiation between applicant and patent office (in the United States, the United States Patent & Trademark Office), resulting in an opaque “prosecution history” upon which the scope of claimed patent rights depends. In this article, we approach the concept of patent value by using the relative positions of issued United States patents embedded within a comprehensive patent citation network to measure the importance of those patents within the network. Thus, we tend to refer to the “importance” of patents instead of “value,” but there is good reason to believe that these two concepts share a very similar meaning. Our study examines both patent litigation and patent importance, and suggests that litigated patents tend to be more important than non-litigated patents, and the higher the federal court level in which patent litigation takes place the more important the patents there litigated tend to be. These findings are consistent with the findings of influential studies on patent value carried out by Allison et al. in 2004 and 2009, in which litigated patents were generally found to be more valuable than non-litigated patents and those litigated most often were found to be especially valuable. Our findings also reveal marked differences in the mean and median importances of patents litigated in different federal district courts. Finally, we find several geographic clusters of federal district courts characterized by the litigation of disproportionately important patents. These clusters do not cleanly correspond to traditional assumptions about where, geographically, important technologies, and the owners of patents that claim them, tend to be located. Somewhat unexpectedly, the largest federal district court cluster for highly important patent litigation spans the southern-central United States. Future studies will attempt to address a number of additional questions that arise out of our findings in this article.

Keywords: patent, patent value, patent law, patent economics, United States Patent & Trademark Office, USPTO, citation, imprimatur, network, network analysis, patent importance, importance, and valuation, patent analytics, and empirical patent analysis

JEL Classification: D85, K10, K41, K42, L43, O30, O31, O32, O33, O34