Tuesday, November 27, 2018

Judging Patents by their Rejection Use

The quest for an objective measure of patent quality continues. Scholars have attempted many, many ways to calculate such value, including citations, maintenance fee payments, number of claims, length of claims, and so forth. As each new data source has become available, more creative ways of measuring value have been developed (and old ways of measuring value have been validated/questioned).

Today, I'd like to briefly introduce a new one: the use of patents rejecting other patents. Chris Cotropia (Richmond) and David Schwartz (Northwestern) have posted a short essay on SSRN introducing their methodology.* The abstract for the cleverly named Patents Used in Patent Office Rejections as Indicators of Value is here:
The economic literature emphasizes the importance of patent citations, particularly forward citations, as an indicator of a cited patent’s value. Studies have refined which forward citations are better indicators of value, focusing on examiner citations for example. We test a metric that arguably is closer tied to private value—the substantive use of a patent by an examiner in a patent office rejection of another pending patent application. This paper assesses how patents used in 102 and 103 rejections relate to common measures of private value—specifically patent renewal, the assertion of a patent in litigation, and the number of patent claims. We examine rejection data from U.S. patent applications pending from 2008 to 2017 and then link value data to rejection citations to patents issued from 1999 to 2007. Our findings show that rejection patents are independently, positively correlated with many of the value measurements above and beyond forward citations and examiner citations.

The essay is a short, easy read, and I recommend it. They examine nearly 700,000 patents used in anticipation and obviousness rejections and find that not all patent citations are equal, and that those citations that were used in a rejection have additional ability to explain value, even when other predictors, such as forward citations and examiner citations are included in the model. The only value measure that had no statistically significant relationship to rejection patents was use in litigation (even though forward citations did). This may say something about the types of patents that are litigated or about the role of rejection patents in litigation.

That's about all I'll say about this essay. The paper is a brief introduction to the way this new data set might be used, and this blog post is a brief introduction to the paper.

*At least, I think it's theirs. If you know of an earlier article that measures this on any kind of scale, please let me know!

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