New York – It is not known if Einstein thought about the economic value of any particular patent when he worked at a Swiss patent office, but it is clear that analysis of patents has become lucrative equity research endeavor. Patent Analysis is one of the more interesting niches in the equity research space. Even over the past several years the development of patent analysis has developed very quickly.
A brief frisk of out database turns up five firms engaged in the patent analysis space: focused on equity valuation and individual patent valuation are 1790 Analytics and Ocean Tomo; focused on patent litigation and expected results are IPD Analytics and Litigation Notes; and focused on the financial market securitization of patenet analysis is Claymore Securities which has launched a ETF based on the Ocean Tomo IPQ score.
The following profiles the main firms in the space:
1790 Analytics is a consulting firm, specializing in patent analysis and intellectual property. It provides customized reports to corporations, government and financial firms utilizing quantitative and qualitative approaches, which they call Art & Science. There reports are traditionally in the technology, telecommunications, software, automotive technology and biotechnology spaces. The company also authors white papers in the area of patent research and its application to the equity portfolio management. As well as its custom work, the firm produces Patent Power rankings and a Pipeline Quality measure which analyze how frequently patents are cited in reference to other patents, the patent’s originality, its applicability to different fields, and the growth trend in a company’s patent activity. 1790 has a sister firm that manages a hedge fund namely 1790 Capital Management LLC.
Ocean Tomo has developed indices that track patent activity, patent quality and patent relative value. The firm “IPQ” scores and rates patent assets based on a statistical methodology. IPQ scores are similar to the familiar IQ score for rating human intelligence. IPQ Reports provide a statistical assessment of the value of individual patents. IPQ scores provide a simple way to measure and compare patent quality based on the cumulative characteristics of patents that make them statistically either more likely or less likely to produce economic returns.
IPD Analytics LLC provides independent research and analysis on patent litigation for the pharmaceutical and medical-technology industries. The firm offers strategic intelligence for predicting the probable outcome of each case and forecasting the launch of new generic drugs and other competitive products. Institutional investors depend on IPD Analytics, LLC to: a) research and analyze ongoing patent litigation in the pharmaceutical and med-tech industries; and b) anticipate court decisions with a significant binary impact on the stock prices of the parties. IPD Analytics subscription-based service includes two parts: (1)Patent Litigation Reports, which is an internet site carrying a series of reports analyzing particular ongoing patent cases, breaking down the relevant issues and giving the subscriber estimates of the outcome of the litigation; and (2) The Patent Litigation Database, an online database of all of the existing patent litigation throughout the U.S. involving public companies giving the subscriber the ability to determine what stage the litigation is in and when they should expect an outcome.
Litigation Notes is a publication of Calvert Crary which analyzes patent litigation predominately in the pharmaceutical industry, but also in the technology space. While the firm is a one-man operation, Calvert Crary has an excellent reputation for being able to assess the likely judgments and their impact on the share prices of the big pharma companies. The pharmaceutical industry, in particular, is often influenced by patent litigation pertaining to its blockbuster drugs, and the technology industry is also affected by patent litigation, as well as antitrust issues and breach of contracts, all of which are covered in the research. About half of the written work published by the firm is customer-driven. Litigation Notes produces about 40 reports a year. After graduating from the Northwestern Law School, Mr. Crary worked as an analyst at Bear Stearns, Prudential Securities and Legg Mason, specializing in litigation analysis.
Claymore Securities has a number of investment products available to clients, one of which is the Large Blend Ocean Tomo ETF, which features the investment strategy of Intellectual Property.