Citation Weighting, Patent Ranking, and Apportionment of Value for Standard-Essential Patents

J. Gregory Sidak & Jeremy O. Skog

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In patent-infringement litigation involving standard-essential patents, one must apportion the value of the patents in suit by deriving an appropriate measure of each patent’s value relative to the value of other patents that are also declared essential to the standard. Using data on patents declared essential to the LRDIMM standard, we have analyzed multiple methodologies that purport to measure the relative value of patents. We conclude that the choice of a particular patent-valuation methodology is secondary to the apportionment inquiry. In other words, we find that the particular weighting method that a researcher chooses to use is of secondary importance to the researcher’s decision to use some weighting method, rather than none. A simplistic patent-counting methodology that assigns each patent equal value relies on assumptions that are rarely satisfied in the real world. It produces a result that meaningfully differ from the results of any of the methods that rely on forward citations to measure a patent’s value.

We propose a half-life citation-weighting method that researchers might decide to use, in addition to adjustments for technology fields or unweighted citation counts. By placing greater weight on more recent citations, our proposed method attempts to account for the increasing number of citations and patents over time and the importance of speed during the standard setting process. Our proposed method might be particularly appropriate for standards in which the declared-essential patents cover similar technologies or in cases where innovation (and, consequently, the standards-development process) occurs rapidly.

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J. Gregory Sidak & Jeremy O. Skog, Citation Weighting, Patent Ranking, and Apportionment of Value for Standard-Essential Patents, 3 Criterion J. on Innovation 201 (2018).

J. Gregory Sidak is the chairman of Criterion Economics. He testifies as an expert economic witness in complex business disputes throughout the Americas, Europe, Asia, and the Pacific, and he has twice served as Judge Richard Posner’s court-appointed neutral economic expert on patent damages. Sidak held the Ronald Coase Professorship of Law and Economics at Tilburg University in The Netherlands and the F.K. Weyerhaeuser Fellowship in Law and Economics at the American Enterprise Institute for Public Policy Research. He has also been a senior lecturer at the Yale School of Management and a visiting professor at Georgetown University Law Center. Sidak received A.B. and A.M. degrees in economics and a J.D. from Stanford University. He was Judge Posner’s first law clerk, served on the senior staff of the Council of Economic Advisers in the Executive Office of the President, and was deputy general counsel of the Federal Communications Commission. Sidak has published six books and roughly 200 articles or book chapters. The Supreme Court of the United States, the Supreme Court of Canada, the European Commission, state supreme courts, the U.S. Courts of Appeals, and many other courts and regulatory bodies have cited his writings approvingly.

Jeremy Skog is a Vice President at Criterion Economics. He received his Ph.D. in economics from the Wharton School at the University of Pennsylvania. He also holds an A.B. from Dartmouth College with a double major in physics and economics and an M.A. in economics from Tufts University. He specializes in the use of econometrics and quantitative methods of risk analysis to value complex assets, such as patent portfolios and innovative financial instruments. He previously worked at the U.S. Census Bureau as a subject matter expert in assets and retirement saving where he worked with a variety of survey and administrative data, as well as redesigning the pensions and retirement expectations section of the Social Security Administration Supplement to the Survey of Income and Program Participation.