The Patent Asset Index Methodology

• Introduction
• How the Patent Asset Index is Calculated
• Why It Matters
• Further Reading

• Related Articles

   

Introduction

The Patent Asset Index is an objective measure of global technological strength and innovation. This indicator captures an entire global patent portfolio and considers both the number of patent-protected inventions (patent families) in this portfolio and their quality. The methodology has been developed and validated in scientific research and many years of advising companies on patents and innovation strategy.

The Patent Asset Index methodology allows for identifying patent gems that businesses can leverage to create value from innovation. It is therefore a key element in our unique databases, business intelligence software, and expert services. The Patent Asset Index is also used by major companies to illustrate the strength of their patent portfolios in annual reports and further investor communication.

For example, a portfolio with a Patent Asset Index of 500 is, in aggregate, twice as strong as one with a Patent Asset Index of 250 reflecting a combination of more patent families, higher-quality inventions, or broader market coverage, or some mix of all three.

How the Patent Asset Index is calculated?

The Patent Asset Index is calculated on the patent portfolio level. It is the sum of the Competitive Impact of all patent families in that portfolio. It can be calculated for an entire portfolio of a company, for a set of patent families belonging to a given technology, or for any other population of patent families.

The Competitive Impact is calculated on the patent family level and represents the relative business value of each patent family. It is obtained for each patent family by multiplying the → Technology Relevance  (the technical value based on the number of citations a patent family has received) and the → Market Coverage (the market value calculated based on the GNI of all authorities in which the patent family is active). Thus, active patent families have a Competitive Impact that is higher than zero, while the Competitive Impact of inactive patent families is always zero.

Since the Patent Asset Index is the sum of the Competitive Impact of all families in a portfolio, the Patent Asset Index of only one patent family equals the Competitive Impact of this patent family.

Why It Matters

Because the Patent Asset Index combines both quantity and quality into a single, comparable number, it allows you to benchmark portfolios fairly, whether comparing your own company against competitors, tracking your portfolio's strength over time, or evaluating a specific technology area or business unit. This makes it a useful headline figure for investor communications, M&A due diligence, and portfolio strategy discussions, while the underlying Competitive Impact, Technology Relevance, and Market Coverage indicators let you dig into what is driving that strength.

Further Reading

You can learn more about the analysis method in the corresponding scientific article:

• Ernst, H., Omland, N. (2011): The Patent Asset Index – A New Approach to Benchmark Patent Portfolios. World Patent Information 33, pp. 34–41.

For further details, you can also refer to the following patent:

• US20190324978A1
• US10380147B1

Related Articles

• Competitive Impact
• Technology Relevance
• Market Coverage
• Understanding Patent Strength
• Turning PatentSight+ Metrics into Business Insights — for guidance on applying this metric to business questions