Patent Analytics

One of the great things about patents is that each and every patent possesses all kinds of data. There is data about the invention in the patent; there is data about the patent itself; and then there is data about patent data (metadata). For data hungry investors, the wealth of data within patent databases is intriguing. Several firms have created patent rating methodologies that incorporate regressions, data mapping, and other statistical techniques to help determine which patents do or do not have value, and which companies have the best patents.

In my book I discuss methods that firms use to do the statistical analysis, and of course this is an evolving area that is changing. Many investors are highly skeptical that patent data can provide useful information, yet many analytics firms are hired to perform detailed statistical analyses before an investment. Other investors believe that you can't really trust a statistical model because it really is all about the strength of a claim in litigation, and yet the Ocean Tomo 300 ETF (AMEX:OTP) has outperformed the S&P 500, DJIA, and the Nasdaq since its inception. Supporting all of this, Thomson Reuters, Bloomberg, and Google have all started patent data initiatives that are inevitably going to give investors the ability to combine patent analysis and financial analysis from a single source.

I'll be moderating a panel this month on Patent Analytics at the IP Business Congress in Amsterdam and I'm sure I'll learn more when I'm there about what is the next evolution of the space.