Dow, BASF Top New German Patent Quality Index

Is it possible to evaluate the value of a company’s patent portfolio? A German professor says yes and has developed a “Patent Asset Index“, which is based on the number of worldwide active patent families for companies and something called “Competitive Impact,” which takes into account the technical relevance of the patents and market coverage.  ”Technology Relevance” measures the number of citations a patent receives in other patents, and “Market Coverage” measures the extent of patent protection in global markets.

Two big chemical companies are giving the new index very big thumbs up today. They are Dow Chemical and BASF. An examination of patents in 2008 indicates that Dow’s patents are the most cited in other patents, and that makes Dow number one in the Technology Relevance measurement, and also in the related Competitive Impact metric. BASF leads the overall Patent Asset Index.

The new index was developed by Holger Ernst of the WHU - Otto Beisheim School of Management in Vallendar, Germany.

There are plenty of ways to evaluate the quality of patents, and there is little consensus on the right way to do it. Efforts to improve analysis are intensifying because some 85 percent  of the market capitalization of the S&P 500 companies are attributable to intellectual property, according to Andy Gibbs, CEO of PatentCafe, which also issues software analyzing patent quality.

Source: WHU-Otto Beisheim School of Management