Patent Citation Analysis

One technique for measuring the quality of patents is patent citation analysis. This technique is based on the examination of the citation links from a patent to other patents and scientific literature. There are two main sources of citations on a patent: the inventor (or applicant) and an examiner of the patent application. In some countries, the inventor and those involved in the patent application are under a duty to disclose any material (such as patents and scientific literature) that is material to patentability – and these disclosures are recorded as citations. Also, when the patent application is examined, the patent examination will also add citations that are found during examination.

The idea behind patent citation analysis is that patents cited by many later patents tend to contain important ideas upon which many later inventors are building. A company with a large number of cited patents is thus likely to possess technology that is central to developments in its industry.

Not all important patents are highly cited, nor is every highly cited patent important. However, numerous validation studies have revealed the existence of a strong positive relationship between citations and technological importance. Other studies have revealed a positive relationship between patent indicators and stock market valuations and between highly-cited patents and increased sales and profits in the pharmaceutical industry.

The citation links among patents also indicate the speed at which a company is innovating. Companies whose patents cite relatively recent patents are likely to be innovating faster than companies whose patents cite older patents.

The link between patents and scientific papers reveals the extent to which companies are building on scientific research. Companies whose patents cite large numbers of scientific papers are assumed to be working closely with developments in scientific research. Strong links to science are particularly important in industries such as biotechnology and pharmaceuticals. Many important advances in these industries are developed in universities, and are reported in the scientific literature.

One possible criticism of citation analysis is that it may not work in fast-moving industries, due to the time lags involved in the patent process. It is certainly true that it takes time for a patent to accumulate a large number of citations from later patents, so highly-cited patents may not represent the cutting-edge of technology. However, this does not mean that citation analysis cannot be used in these industries. A company with a large number of highly cited patents has exhibited the ability to produce innovative technologies that have had a strong influence on later developments in its industry. This shows that the company has a strong R&D capability, which is likely to increase its ability to produce important technologies in the future.

An expert in patent search can help you explore the value that can be derived by citation analysis.