The world of intellectual property litigation and patent valuation can be a murky one—it is hard for the law to keep up with technology, and many issues arise when trying to determine damages and what profit formulas are appropriate. One law professor has just developed a new system for evaluating patents and their value, and its implications may be quite substantial in the field.
Andrew Torrance and Jay West, both law professors have co-authored an article that offers a statistical way for determining the value of a given patent, a patent lawsuit, and even analysis on where suits are being filed. See Mike Krings, “Law professor develops big-data approach to patent value,” Kansas University News, Apr. 11, 2017, available at http://news.ku.edu/2017/04/05/law-professor-develops-big-data-approach-patent-value-challenges-long-held-legal (last visited Apr. 12, 2017). According to one publication, the authors of the article “have just published a study that offers a new and powerful method to evaluate patents, either individually or grouped together into gigantic portfolios. Their new approach, based on network and big-data analysis, can instantly determine which patents are the most important, whether overall, or by owner, inventor, attorney, patent examiner or technology. Doing so allows the authors to probe for answers to previously unanswerable questions about patent law, and their novel approach to “patent analytics” has the potential to open up a new area of legal study of patents, innovation, economics and policy.” Id. The precision with which the professors conducted their study may impact intellectual property (IP) litigation in substantial and material ways. For instance, attorneys who familiarize themselves with the professors’ approach may be able to predict certain trends, which will, in turn, help them to decide where their focus should be and what types of cases would be most lucrative. This report has implications for experts as well, as the more certainty patent and IP experts can give to attorneys in the consulting phases of a lawsuit, the better equipped attorneys will be. Moreover, theories from the statistical analysis can be developed and expanded upon by testifying experts in court, which might even change the complexion of patent litigation. Judges and juries may be more apt to listen to various theories if the article explains the logic behind them. In terms of what experts and attorneys can glean from the new study, the following example is instructive: “When Torrance and West plotted the average value of litigated patents on a map depicting all the federal judicial districts in the U.S., they discovered something surprising. Not only do the average values of litigated patents vary widely from district to district (Nevada and Connecticut host litigation of extremely valuable patents), they also noticed that the largest concentration of districts with litigated patents of especially high value, occurs in a “patent hotspot” in the southern central portion of the U.S., comprising Texas, Colorado, Kansas, Missouri and Arkansas. By contrast, the northern central U.S. districts tended to host litigations of low-value patents, forming a sort of ‘patent tundra.’ Received wisdom would suggest that districts on the East and West coasts would see litigation of the most valuable patents, while the middle of the country would be ‘patent flyover country.’ However, careful and powerful analysis of big patent data decisively refutes this assumption.” This is particularly important, as this expert analysis offers attorneys assistance on where to file patents and lucrative data about where other litigation is being filed. It is conventional wisdom that the Eastern District of Texas is typically a “friendly” forum when it comes to patent cases, but the analysis used in the report may suggest other options. Moreover, a pending case in the Supreme Court may alter the East Texas’ grip on patent litigation, and whether or not it does so, the expertise of the data and analysis provided by the authors will be helpful to litigators. See, e.g., Tony Mauro, “Supreme Court May Preserve EDTX Grip on Patent Cases,” Law 360, Mar. 27, 2017, at http://www.law.com/sites/almstaff/2017/03/27/supreme-court-may-preserve-edtx-grip-on-patent-cases/?slreturn=20170312120301 (last visited April 12, 2016). One way in which the authors’ analysis will be helpful to experts is in harnessing massive amounts of patent data and creating new research approaches. To wit, “The approach not only can answer questions that were previously simply not answerable, it can help formulate new research questions.” Mike Krings, supra. In helping to create new approaches towards research, the article may actually make patent experts even more accurate in terms of their predictions and theories, which could, in turn, affect a case’s outcome.
For attorneys, there is also an implication from the study. “A burgeoning field, data analytics in regard to law could open a new avenue of careers for aspiring lawyers and even change some of the skills deemed valuable in the law. The field has long been viewed as an art in which rhetorical and writing skills, for the purposes of producing strong, persuasive arguments, were considered the most valuable traits, Torrance said.” Id. In any event, the study will likely prove of value to both attorneys and experts in the field of patent law, and it can be hailed as a boon to those in the industry.