Introduction to IPlytics Patent Valuation Indicators
- Technical Relevance (TR)
- Market Coverage (MC)
- Radicalness (RA)
- Legal Breadth (LB)
- Patent Scope (SC)
- Cooperation (CO)
- Team Size (TE)
Introduction to IPlytics Patent Valuation Indicators
IPlytics uses statistical patent valuation indicators to analyze the strengths, weaknesses, and positioning of patent portfolios. Developed in collaboration with the Technical University of Berlin, Mines Paris Tech, and Northwestern Chicago, these indicators are based on scientifically validated methods.
The seven indicators are:
- Technical Relevance (TR)
- Market Coverage (MC)
- Radicalness (RA)
- Legal Breadth (LB)
- Patent Scope (SC)
- Cooperation (CO)
- Team Size (TE)
To assure accurate results, IPlytics normalizes each indicator by benchmarking the value of a patent to other patents that meet the same criteria. A detailed explanation can be found here.
Technical Relevance (TR)
Technical Relevance (TR) is a citation-based indicator of technological relevance.
IPlytics calculates TR for individual patent publications by counting later patent publications that cite them. These are called forward citations, or subsequent art.
Each distinct citing publication counts once for the publication being assessed. Citations from the patent owner and its subsidiaries are included.
IPlytics adjusts the count for publication age, patent office citation practices and technology field, using the main IPC/CPC classification. It then transforms the result into a displayed TR score between 0 and 20.
High TR: A higher score indicates stronger citation-based technological relevance after the adjustments described above. It may help identify publications influential in later patenting.
Low TR: A lower score indicates weaker citation-based technological relevance after these adjustments. It does not necessarily mean that the invention is unimportant or has little commercial value.
Each distinct citing publication counts once, including publications from the patent owner and its subsidiaries. The raw count is then normalized and transformed into the displayed TR score.
Market Coverage (MC)
MC is calculated by counting the number of countries a patent is filed in, weighted by each country’s GDP. Finally, counts are normalized by year, country of authority and main IPC/CPC.
High MC: Reflects a global strategy and high perceived value.
A high MC value reflects a global internationalization strategy and a wide legal market protection. Furthermore, a high MC value reflects a high perceived patent value for the applicant. Patent application and patent maintenance fees create considerable costs at each patent office. The more countries a patent has been filed for the higher the perceived international market potential for the patented invention.
Low MC: Reflects a local strategy and lower perceived market potential.
A low MC value reflects a local internationalization strategy and a narrow legal market protection. The less countries a patent has been filed for the lower the perceived international market potential for the patented invention.
Radicalness (RA)
RA is based on the number and nature of backward citations. It considers how often the cited patents themselves are cited.
High RA: Indicates novelty; the patent was filed in a “white space” with little prior art.
A high RA value indicates a high degree of novelty in a certain technological area. The patent was filed in a so called “white space” where very little prior art existed.
Low RA: Indicates the patent is in a “patent thicket” with dense prior art.
A low RA value indicates a lower degree of novelty in a certain technological area. The patent was filed in a so called “patent thicket” where a dense web of patents already protected a certain technology.
Legal Breadth (LB)
LB is calculated by the word count of the shortest independent claim. Fewer words indicate broader legal protection.
High LB: Broad claims, wide legal scope.
A high LB value (small number of words used in the shortest claim) indicates broad claims and thus a wide legal scope of the patented technology.
Low LB: Narrow claims, limited legal scope.
A low LB value (high number of words used in the shortest claim) indicates narrow claims and thus a restricted legal scope of the patented technology.
Patent Scope (SC)
SC is determined by the number of distinct main IPC/CPC classes a patent is classified under.
High SC: Wide technological applicability, cross-over technologies.
A high SC value reflects a wide technological applicability of the patent. Patent portfolios classified in several main IPC/CPC classes can be interpreted as cross-over technologies.
Low SC: Narrow applicability, specific solutions.
A low SC value reflects a narrow technological applicability of the patent. Patent portfolios classified in a few main IPC/CPC classes can be interpreted as specific technology solutions.
Cooperation (CO)
CO is based on the number of legally independent co-assignees (excluding subsidiaries).
High CO: Indicates collaborative development with other companies.
A high CO value reflects a tendency to develop technologies in cooperation with other companies. IPlytics makes use of corporate tree information to rule out subsidiary and parent company cooperation.
Low CO: Indicates internal development without external partnerships.
A low CO value reflects a tendency to develop technologies without cooperating with other companies but conducting research rather internally.
Team Size (TE)
TE is calculated by the number of inventors listed on a patent.
High TE: Larger research teams, often linked to higher R&D investment.
A high TE value reflects that the patent portfolio was developed by larger research groups. The indicator helps to benchmark research activities e.g. in connection to R&D spending of other market players.
Low TE: Smaller teams, possibly more focused or resource-constrained.
A low TE value reflects that the patent portfolio was developed by smaller research groups.
Normalization
In order to provide comparability of different patent portfolios, all indicators are normalized by averages of patent control groups of the same patent office, same IPC/CPC class and the same publication year. Normalized indicators allow comparing patent portfolios of different age, technological focus or country.
For all indicators except Technical Relevance, normalized values can be interpreted as follows:
Value >1 indicates a patent value above technology, country and year average
Value <1 indicates a patent value below technology, country and year average
Normalization of Technical Relevance
For TR, normalization adjusts citation counts to account for differences in publication age, patent office citation practices and technology field.
For example, a publication from 2010 filed in the US with the IPC/CPC H04W that receives six forward citations is compared with the average forward citation count of all US/2010/H04W publications. With a control-group average of three, its normalized citation ratio is two.
| Stage | Example |
| Raw citation count | 6 |
| Control-group average | 3 |
| Normalized citation ratio | 6 ÷ 3 = 2 |
| Displayed TR score | Obtained after the further transformation; not calculated in this example |
This is an intermediate calculation. A further transformation produces the displayed TR score between 0 and 20. The displayed score should not be read as a direct multiple of the average, and the above/below 1 interpretation does not apply to TR.