A method to predict the likelihood of patent disputes

An article in Fortune, April 9, 2012 at 16, describes an ingenious method to quantify the possibility that companies will tangle over their patents. An analyst needs to compare how often companies cite each other’s patents in their own applications. “If each company’s patents are of equal quality, and each cites the other at about a 1:1 rate, then one would not expect litigation, since each company seems equally reliant on the other’s technology.”

The article analyzes Facebook, Yahoo, Amazon and Google in these terms and forecasts the likelihood the companies might clash. The article leads you to believe there is empirical work on the possible amounts of settlement that could eventuate should there be litigation, depending on the degree of imbalanced citation – if one cites the other much more, that company is more vulnerable.

Look into the future. One can imagine a comprehensive system like this that analyzes large numbers of patent-intensive companies, integrates an algorithm for estimating their patent-related litigation expenses, and thereby contributes an important driver of total legal expenditures.

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