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Up to date on: 29.1.2008
Provided by: Hungarian Patent Office
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Qualitative evaluation methods

Qualitative methods provide a value guide for the subject IP through the rating and scoring of different factors related to the IP.  These factors or “value indicators” can influence the value of the IP both positively and negatively.  In the same way as factors such as location, numbers of rooms, nearby schools etc. affect the value of a house, a combination of these IP related factors acts as a proxy for the value of the IP.

·        Patent information related value indicators

In the case of patents, there is evidence to suggest that there is a strong correlation between patent value and standardised indicators observable in patent information documents.  For example, the number of references to prior patents generated during the search and examination process, and the number of citations a patent has received indicate its importance scientifically and therefore its relative value.  The observable result is a network of links called a patent citations network which is a useful qualitative evaluation tool.

Likewise the number and quality of claims, the patent family size and the outcome of oppositions to the patent application can also be an indication of value.

·        Evaluation of value indicators: IPScore

An example of this type of qualitative valuation method is the IPScore software developed by the Danish Patent and Trademark Office.  The IPScore method is used to value technology, patents and patent portfolios internally, within companies.  The tool provides a framework for evaluating and strategically managing patents.

The IPScore assessment of a patent consists of five categories: legal, technology, market, finance and strategy, each of which has 5-10 associated index questions.  Each question relates to a different value indicator.  Each question is rated 1-5 according to the patents strengths and weaknesses.  Together, the 40 or so value indicators form a whole picture of the patent and its relative risks and opportunities. These are then displayed in various tables and graphical forms to be used by management for making strategic decisions.  

Advantages and disadvantages of qualitative evaluation methods

The main advantage of patent information related and non-patent value indicators is their relative simplicity.  Once the relevant information has been researched and is available in a useable form its relatively easily to classify and evaluate the IP without the need for complex methods.  Another advantage is that the data for the evaluation is often publicly available. With sufficient expertise it is possible to value IP belonging to other parties. As a result, these qualitative methods facilitate the comparison and ranking of IP within a company’s own portfolio or against competitors’ IP.

Valuing IP using patent information related value indicators have many drawbacks. For example simply counting citations avoids taking a stand on questions such as how and why citations arise and what type of information they convey.  Focusing on simple counts deliberately ignores any added information within the network of citations.  Using value indicators as a proxy for value is only as useful as the level of expertise of those who are conducting the valuation.  One must also decide which indicators are relevant to the value of a particular IP, and which are not.  The quality and realism of the qualitative evaluation in IPScore, for example, is greatly dependent on the quality of information used.

When are they used?

Qualitative evaluation methods are most often used for the purpose of internal IP management.  They are most useful for comparing, categorising and ranking IP within a portfolio or vis-à-vis competitors’ IP.  They are also useful for assessing the risks and opportunities of IP.

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