SUMMARY OF Chapter 2:
This chapter has three main topics.
First, there are many different ways to evaluate a patent, but all these ways may be organized into two main categories, which are “fundamental” patent evaluation and “financial” patent evaluation. The focus of this book is fundamental analysis, which considers the technology protection achieved by the patent. and which serves as the basis of financial value. The second broad patent evaluation category is quantitative or financial evaluation of patents, which answers the question, “How much money can you make in licensing or litigation?” This second category, financial patent evaluation, is mentioned at several points, but it is not the focus of this book.
Second, there are two kinds of fundamental analysis. One kind is what I call “expert fundamental analysis” (“EFA” for short), which is analysis performed by an expert human patent evaluator reviewing the claims, the written description, and the prosecution history of the patent. The other kind is what I call “proxy fundamental analysis” (“PFA” for short), which is the use of pre-defined factors in an automated manner to attach a quality score to the patent. Both types of fundamental analysis are important, and both are explained, but the focus of this book is on expert fundamental analysis. In actual practice, analysis of a patent portfolio will probably include proxy fundamental analysis for all or most of the patents in the portfolio, and also expert fundamental analysis for the relatively few patents deemed worthy of a human evaluation.
Third, several key concepts are explained, particularly Point of Novelty (or “PON” for short), which is the specific innovation in a patent claim that is new and that creates value. In a formal sense, nothing in a patent is really “new”, since everything in the world is either pre-existing or is based on pre-existing pieces. However, a Point of Novelty is the introduction of some structural component or procedural step into an environment that people did not consider prior to the introduction – in that sense, it is the specific component or step that is the Point of Novelty, and therefore the reason for which the patent was granted by the patent office.
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