Patent Ranking process is used to evaluate and assign value, strength and worth to patents through multiple key criteria. The approach taken in the patent ranking process determines the quality, strength and the strategic importance of the patents included in a patent portfolio.

The patent ranking is an extensive data driven assessment that eventually assists in locating the "star patents” that have been identified within the patent portfolio. In essence, the patent ranking process categorizes patents into three categories based on their value and relevance. That is, patents ranked as high in value, medium in value, and low in value based upon the multiple parameters that have been considered when ranking the patents.

Patent Ranking is very important for companies and inventors because it provides a framework for the strategic management of a company's portfolio of patents. Patent Ranking assists companies or inventors in determining which patents are core assets, weak assets, and also provides opportunities to determine which patents should be prioritized for both financial and time investments for the purpose of conserving costs.

When determining the value of either specific patent assets or the entire portfolio or when acquiring assets or negotiating licensing agreements, Patent Ranking can assist companies or inventors with accurate valuations and fair agreements.

Consequences of not conducting Patent Ranking

• The failure to conduct a patent ranking when acquiring patents and pursuing licensing opportunities may result in an excessive financial burden to the business.
• A business incurs an annual fee for maintaining patents in the patent portfolio. A large number of “weak” patents may lead to a higher cost than if there were a smaller patent portfolio.
• It is possible for a company with a patent portfolio to have patents that are more valuable than others. However, many companies do not recognize these valuable patents, which can be detrimental to that company in terms of lost licensing opportunities or not using a valuable patent in its business strategy.
• During investment and/or funding rounds for a business, the business unable to accurately determine the value of its patent portfolio without reliable information on the quality of those patents, which may limit the amount of capital available for growth.

Foundations of Patent Ranking

Patents serve as the legal foundation for the Patent ranking system and are essentially an exclusive right for an inventor to prevent others from using, selling or otherwise profiting from their invention in the country where the patent was granted for a limited period usually 20 years.

A number of criteria are taken into account in the ranking process, some of the most prominent include:

• Citation Counts: The number of times a Patent has been cited that is, forward citations in other patents. This indicates the level of foundational work represented in the Patent.
• Legal Status: The status of the Patent, including whether it is active, expired, lapsed, or involved in litigation.
• Patent Family: The number of countries in which a patent family is filed generally provides insight into its potential value globally.
• Claim Scope: Broad claims are generally seen to have a stronger position than narrow claims.
• Claim Length: The number of independent claims in and length of individual claims.
• Remaining Patent Life: The number of years remaining until a Patent expires.
• Prosecution History: The history represents how a patent was granted, such as the number of Office Actions and Rejections filed against the Patent.
• Size of the Patent Market Segment.

Importance of Patent Ranking

• Strategic Management of IP: The patent ranking method supports strategic management of intellectual property (IP) assets. It measures the value of a patent or patent portfolio with respect to its marketability and competitiveness, enabling businesses or companies to strategically manage their patents within their respective IP asset management portfolio.
• Asset Maintenance: Patent Ranking supports the maintenance of a company's patent assets by helping to identify the strong and weak assets within its patent portfolio. Therefore, allowing for focused investment on the maintenance of its patents.
• Licensing Opportunity: Patent Ranking provides the value of an individual patent or complete patent portfolio when evaluating the opportunity to acquire or license patents from other companies.
• Seeking Investments: When a company is seeking investment for its patent portfolio, patent ranking measures the value of the patent portfolio in order to secure an investor or a partner.
• Dedicated R&D: Using the Patent Ranking, the research and development (R&D) team of an organization can determine the strengths and weaknesses of the patent landscape and align its R&D efforts accordingly.
• Patent Monetization: Patent ranking positions companies to maximize their monetization potential, since companies with high ranked patents are typically the best candidates for licensing, cross-licensing, or even selling patents. The high ranked patent's proven strength makes it attractive to possible licensees and buyers.

How Patent Ranking is performed

Step 1 Understanding Goals of Client:

Understand what the client wants to accomplish with patent ranking, including their technology domain or category focus.

Step 2 Preparing Taxonomy:

Prepare a comprehensive taxonomy or categorization framework that meets the specific needs of the client.

Step 3 Collecting Patent Data:

Collect and compile the entire patent portfolio of the client for patent analysis.

Step 4 Grouping the Patents into Appropriate Technology Domains:

Organize all of the patents into broad categories based on the primary taxonomy.

Step 5 Comprehensive Analysis of Sub-Categorization:

Each patent should be thoroughly analysed in detail and organised into appropriate subcategories as per the types of the technology, its features and uses etc.

Step 6 Collecting Patent Data and Scoring Parameters:

Collecting appropriate patent data, which includes the number of forward citations, number of independent claims, length of claims, presence of duplicate patents, the customer's targeted market segment and market size etc.

Step 7 Scoring system:

Create a scoring approach that give relative significance as well as scoring for each of these parameters according to their importance to the client. We, at Effectual Services provide two solutions for the scoring approach:

• Semi-Automated Solution: The scoring system takes into account both objective and subjective parameters such as forward citation, number of independent claims, claim length, detect ability of overlap, market segment and size, etc.
• Manual Solution: The scoring solution is based on a completely manual analysis. Such an analysis does include all the parameters used in semi‐automated approach, but also the analysis is extended to more subjective parameters, such as, remaining life, number of foreign family members, availability of alive family member, number of office action responses, etc.

Step 8 Ranking Categories:

Categorize patents into High, Medium, or Low based on their assessed scores.

Step 9 Documentation and Reporting:

Document the entire ranking process, including parameter weightage, scoring, and categorization criteria. We, at Effectual Services finally provide a detailed report that lists patents in each category, with relevant information and analysis comments.

Tools & Resources for Patent Ranking

• In-house tool: We have our in-house tool for patent ranking process, used in semi-automated ranking model.
• Proprietary algorithm: Our proprietary ranking tool considers various parameters while ranking the patents like their forward citation, number of independent claims, claim length, market segment and size, etc.
• Manual ranking approach: For manual ranking process, we have experienced members who have decades of experience in analysing the patent data like their claim scope, technology area, how important the patented invention is, prosecution history, litigation history, etc.
• Standard related: For standards based patents, we have special tools to gain insights in the standard related documentation.
• Technology expertise: We have a versatile team of various technology experts having expertise in different technical domains.

Handling Ranked Patents

The Patent ranking output is the patent marked as High, Medium, Low or the like to show the relative value of each patent. The patents marked as High are the most valuable assets in the portfolio, followed by medium marked patents.

• The low marked patents are the weak assets in the portfolio having relatively lesser value and worth.
• The ranked patents can be used for strategic IP management.
• The patents marked as High or medium can be considered for licensing opportunities.
• The ranked patents can be useful for patent monetization purposes.
• The low marked patents can be dropped for cost saving on the maintenance fees.
• The High marked patents can be further considered for conducting infringement search to identify potential infringers or potential licensees.
• The most valuable patents i.e. High marked patents can be used during investment or funding rounds of companies, to show the values and strength of the patents.

Legal Significance

Legal significance of Patent Ranking arises from its ability to influence and enhance the precision and efficiency in various other legal processes within intellectual property. It provides a data-driven foundation for other legal strategies. Some of the common scenarios are as follows:

Identifying High-Value Patents for Assertion: When a patent holding entity considers suing for infringement, they need to pick the strongest patents from their portfolio that are most likely-to-be-infringed by others. Patent ranking helps in identifying those strong patents, asserting these high valued patents increases the chances of a successful infringement claim and good damages awards.

Valuation of IP Assets: Patents are important assets that constitute a major portion of a company's value, especially in technology driven businesses. Patent ranking provides data-driven insights into the quality and strength of a target company's patent portfolio.

Licensing and Monetization purposes: Since Patent Ranking shows the value and strength of the patent portfolio, hence, this can be used for licensing and monetization purposes. Patent ranking can help the patent holding entity to show the worth and commercial relevance of their patents in the current marketplace.

Industry/Technology Specific Considerations

In patent ranking, while some core parameters like citation counts, legal status, etc. are generally applied, the interpretation and weight age of some other parameters can vary depending on the industry/technology involved.

• Software related: Since Software technology evolves very fast. A patent issued today might protect something that's obsolete in 5-10 years. Hence, a high weight age can be given to patents with significant remaining life and those filed very recently. Older patents, even if they are highly cited, may be losing their commercial relevance in the market until and unless they are foundational patents.
• Standard-Essential Patents (SEPs): If a patent is declared essential to a particular standard (e.g., Wi-Fi), its value would be more due to its unavoidable nature and potential for licensing. Such patents are generally ranked higher irrespective of their other parameters.
• Telecommunications related: Telecom industry is highly reliant on technical standards. Telecom products are often built from many different patented components and technologies. In such industry, Standard-Essential Patents (SEPs) receive a higher ranking. Forward citations, i.e., citations from other major industry players or from patents declared as SEPs are indicators of strong value. Patents involved in high-stakes litigation often indicate their high commercial value.

Real-World Case Studies

Case 1: Once a client approached us for a Patent Ranking project for his portfolio. The client was interested in opting for our semi-automated approach. During our analysis, we used our in-house ranking tool which considers various parameters while ranking the patents like forward citation, number of independent claims, claim length, patent expiry, market size, etc. The output of the scoring model was ranked patents in three categories namely High, Medium and Low. We then provided the client with the ranked patent portfolio as well as the parameters we considered for ranking and their respective weightage in ranking. The client was quite impressed with our output as we were able to find some really good assets from his portfolio being marked as High.

Case 2: A new client once requested us to perform Patent Ranking analysis on his portfolio. The client was interested in opting for a manual approach for his patent portfolio ranking. During our analysis, we used our manual approach in which our team experts consider various objective and subjective parameters. We analyses each and every patent data like their claim scope, technology area, how important the patented invention is, prosecution history, litigation history, etc., apart from the parameters used in our proprietary ranking tool. As a result, we ranked the patents as High, Medium and Low depending on their value and strength by looking at all the stated parameters. We provided our final output in a documented sheet with ranked patents, details of the parameters considered during ranking and their respective weight age. The client appreciated us over the call and was highly impressed by output.

Common Misconceptions

• ‘Patent Ranking is purely an objective process’: One of the common misconceptions about patent ranking is that it’s just an objective process, while patent ranking relies on quantitative metrics (e.g., citation counts, family size, remaining life, etc.), the selection and weighting of these metrics requires qualitative judgment and domain expertise.
• ‘A high-ranked patent guarantees litigation success or enforceability’: While the chances of a High-ranked patent are higher when it comes to litigation and enforceability. However, it is never guaranteed as patent ranking is an indication of potential strength and value, depending on the patent parameters. Further, other criteria like infringement proofs and patent validations are needed for the same.
• ‘Patent ranking is the same as patent valuation’: While closely related and often using similar underlying data, patent ranking and patent valuation are two distinct concepts. Patent ranking assesses relative strength, quality of a portfolio. While on the other hand, patent valuation assigns a monetary value to a patent or portfolio.
• ‘One Patent ranking methodology fits all industries/technologies’: One of the most common misconceptions is that one methodology is suitable for all technologies. However, the relevance and weighting of ranking metrics vary significantly across the industries/technologies depending on if its software related, standard related, telecom related, etc.
• ‘More patents automatically mean a stronger portfolio’: Many companies and businesses believe that if they have larger portfolio then it means it’s stronger. However, when it comes to IP, quantity does not equal quality. A company with 100 highly ranked and foundational patents often has a stronger position than a company with 1000 weak and narrow patents that are costly to maintain.

Way Forward

Patent Ranking transforms a raw collection of patents into clear strategic insight by objectively identifying the most valuable and impactful assets. By highlighting high-value patents and distinguishing weaker ones, it empowers companies and inventors to optimize portfolio management, make informed investment and licensing decisions, reduce unnecessary costs, and strengthen their competitive and financial positions. Ultimately, effective ranking ensures that an organization’s intellectual property contributes meaningfully to its business goals and market value

How can Effectual help - our expertise domain wise in performing Patent Ranking?

At Effectual, we have a huge team of experienced workforce. The team consists of Engineers, Bachelors, Masters and PhDs from various technical backgrounds, including Computer Science and Information Technology, Electronics and Communications, Electrical, etc.

We have our in-house patent ranking tool to determine the patents strength in the portfolio. Our ranking tool determines the value of a patent based on various important parameters. The algorithm of our in-house tool assigns different weights to these parameters depending on the business requirements and hence assesses the patent strength accordingly.

Apart from our in-house ranking tool, we also provide a manual approach for a more subjective and well-reasoned patent ranking, depending on the client requirements.

Many of our team members have Law degrees along with the technical degrees which make our team members an ideal fit for Intellectual Property related services.

We have experienced team members in different domains be it software domain, fabrication domain, standards related domain, telecom or Wi-Fi domain, machine learning domain, etc. which makes us suitable for performing patent ranking in various technical domains.

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