AmberBlog

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The collective intelligence of crowds is an increasingly recognised within the business community, partly inspired by the 2004 book on ‘The Wisdom of Crowds’ by New York journalist James Surowiecki. A number of examples of this collective wisdom are given, such as ability of a fairground crowd to estimate the weight of a bull in an agricultural fair (the average guess of the crowd was very close to the actual weight of the bull). And in the patent world some websites are being set up with the purpose of accessing this wisdom, for example by requesting that contributors help uncover prior art for patents being litigated.

But what if there was a way to tap into this collective wisdom of (patent) crowds without even asking them? And a method that also avoided the various risks of crowds as discussed in the now seminal 1841 book “Extraordinary Popular Delusions and the Madness of Crowds”, by Scottish journalist James Mackay?

We believe that Network Patent Analysis (NPA) may be that method. As discussed on the Ambercite website, NPA analyses the collective intelligence of patent applicants as expressed by their choices to file patents for particular types of inventions. These opinions are grouped by patent citations. Up to a million patent citations can be analysed in an NPA study, and the result is a grouping and ranking of up to 250,000 patents. NPA is an objective means of grouping and summarising many subjective opinions.

But how can we be sure that NPA is drawing upon the wisdom and any the madness of (the patent filing) crowds? According to Surowiecki, a wise crowd shares the following characteristics:

•         Diversity of opinion

•         Independence of opinion

•         Decentralisation

•         A mechanism to aggregate diverse opinions of the crowd

Do patent applicants share the first three of these characteristics? It is easy to believe that, on the whole, patent applicants act and think independently of each other, particularly in commercially sensitive areas where they try not to share information with each other. Some of the independence of the patent data might be comprised by large organisations filing lots of patents in some areas, but important technology areas are full of patents filed by a range of different and competing organisations.

And as for the fourth characteristic, aggregation of opinions, this is exactly what NPA does. NPA aggregates vast amounts of patent citation data to create a collective opinion on grouping and ranking of patents and their related technologies.

Want to know more? Check out our white papers available on the Griffith Hack or Ambercite websites, or download copies of reports including a recently prepared analysis of a new patent litigation against hybrid car market leader Toyota, along with our popular report on litigated smartphone patents. All reports are now available without registration – but feel free to contact us if you would like to apply the benefit of NPA to your business.

A very well written article in The Deal Magazine last week has highlighted the rapidly changing value of patents. David Marcus reminded us that the recent very high prices being paid for some patent are a new phenomenon, peaking at the $750,000 paid per patent for the recently sold Nortel portfolio.

Among other things, these sorts of prices have led to some to criticise the apparent divergence of patent owners into ‘good’ patent users and ‘bad’ non-practising but patent owning entities, but of course divisions such as this are never that black and white. For example the non-practising entity NTP who famously sued RIM in the earlier part of the last decade were asserting patents developed by the inventors when working at an earlier but failed telecommunications firm. This makes sense when you considering that developing patentable inventions is hard, and normally needs strong knowledge of the underlying technology in a field.

In the final paragraph of this article, Marcus notes: 

Focusing on the excesses in the patent system obscures how the separation of manufacturing from product development has inevitably made intellectual property a much more liquid asset -- and, just as inevitably, increased the importance of lawyers and valuation experts in a region that still doesn't know quite what to do with them

The ongoing value of patents is no doubt a topic that will lead to a lot more debate going forward. However one factor that may help this situation is improved transparency of the patent system and patent data. This is an area where the high quality insights available through the application of NPA may be able to make a real contribution.