Pelent Blog

Patent Ratings

Patent Ratings

Posted by Yardstick Administrator on Jul 3rd, 2018

The value of any given portfolio of patents cannot be measured by the quantity of patents alone. Rather the number of valuable patents within the portfolio determines its value. Valuable patents are patents that provide substantial economic benefit to their owners. Therefore, as the first step, the valuation determination requires that each patent be rated accordingly.

The Pelent Patent Rating System is a quantitative system that analyzes each claim and rates each patent using a scale A through D. A-rated patents represent patents with the highest economic value, B-rated patents have medium value, C-rated patents have low value and D-rated patents are unlikely to have value.

Our Approach

We start with the basic assumption that patents that are licensable are valuable. While not every valuable patent ends up being licensed, the relationship is sufficiently strong to posit that licensable patents are a good proxy for valuable patents. The relationship is bidirectional, that is valuable patents are the ones that are used for licensing and licensed patents are valuable. Licensing potential is further determined by two primary prerequisites:

  1. The probability that a patent has commercial value.
  2. The extent of effort required demonstrating use of the claimed invention — referred to as “Detectability.”

Commercial value entails both that the patented invention is used in the industry as well as has significant revenue attached to its use. The revenue attributed is mandatory in determining the commercial value. A granted patent bears no guarantee that the invention has commercial importance; most patents will never achieve significant commercial relevance. Furthermore, while many inventions may be used, they may not have economic value and the distinction is important for valuation purposes.


Detectability measures the probability and the amount of effort required for detection. Regardless of a patented invention’s commercial value, if demonstrating that practising all of the elements cannot be done, the value of the patent is significantly diminished. Thousands of valuable patents are probably being infringed all the time but cannot be asserted because evidence of use is economically unjustified. Hence, patents for which demonstrating infringement is very difficult and/or expensive have low or unlikely value.

Consequently, the patent is rated according to is Commercial Value and Detectability. The system analyzes each patent claim. While ratings are determined for all independent claims, the overall patent rating is determined by the rating of the independent claim with the highest score. Both Commercial Value and Detectability are individually scored and combined to formulate the patent rating.

While Commercial Value and Detectability are widely accepted valuation criteria, the common practise is to hire technical and patent experts — a slow and error prone process. Pelent is the only system that identifies patent value. Rather than relying on individual subjectivity, our AI system leverages the collective knowledge of thousands of legal, technical and business experts combined with real-time data. Results are data driven and accurate.

Patent Value & Patent Quality

Patent value and patent quality are used interchangeably and are often confused and misunderstood. While one cannot completely divorce quality and value, it is important to understand the distinction between the two.

Patent quality is driven by legal criteria, key considerations include:

  • Disclosure (35 U.S.C. § 112)
  • Non-obviousness (35 U.S.C. § 103), and Novelty (35 U.S.C. § 102)

Simply stated, quality is no guarantee for value. A patent with valid yet extraordinarily narrow claims may be considered a “quality patent,” however, it may have little or no commercial use. Moreover, the issuance of a patent doesn’t guarantee that the patented invention has commercial value or substantive importance. This is often overlooked in the financial sector, where granted patents are universally considered valuable. In fact, the overwhelming number of granted patents has little or no value (95% by some estimates).

Therefore, a quality patent may or may not have value. Conversely for patents determined to have little or no value, the question of quality may be inconsequential. Therefore one could argue (at least from a business perspective) that priority should presumably be given to value versus quality.

Patent value is driven by different criteria. The three key questions in determining value include:

  • Is the patented technology used in products?
  • Is there significant revenue attached to those products?
  • Can the use of the patented technology be detected and proved?

Pelent is the only system that identifies patent value. Patent ratings provide critical insight for a given portfolio. Raw data results are compiled in an MS Excel spreadsheet format. The format includes, the overall patent rating, Detectability and commercial vale scores, best claim and the claim element count for the best claim as well as related patent bibliographic data. The raw data format is useful for specific requirements, for example in reducing maintenance renewal costs, the Detectability score can be used to identify patents that should be allowed to lapse.

If you have any questions about Patent Ratings or require more information about any of our services, please call 1-613-884-0172 or contact us for a FREE TRIAL.