Patents Used in Patent Office Rejections as Indicators of Value

ABSTRACT This paper introduces a novel approach to measure a patent's economic value by examining whether the patent's disclosure leads to rejection of another pending US patent application. This approach considers the use of the patent by the US Patent and Trademark Office (USPTO) in office action rejections on the grounds of novelty or obviousness, as well as its citation as an X or Y reference in a European Patent Office (EPO) search report, which provides analogous information. Unlike conventional citation metrics widely employed by economists, the novel metric is arguably more closely tied to private value, as it is centered on the examiner's rejection of another patent application based on the patent in question. As this metric is not directly influenced by potential strategic behavior by patent lawyers or patent applicants, it is more directly tied to private value. This study evaluates how patents used in novelty and obviousness rejections, and comparable EPO information, correspond to common measures of private value—specifically patent renewal, the assertion of a patent in litigation, the number of independent patent claims, and classification in multiple technological subject matters. We examine rejection data over a defined time period for US patents issued from 1999 to 2007 and then link value data to these patents. A similar analysis is also conducted for EPO search reports. Our findings reveal that rejection uses, as well as X and Y EPO search citations, independently exhibit positive correlations with all of these value measurements. Moreover, when information from both the USPTO and EPO concerning a given patent is combined, further insights about that patent's value are obtained. We also find that rejection uses provide unique insights into additional measures of private value such as the patent being listed in the Orange Book or as a Standard Essential Patent. Accordingly, these rejection use metrics provide another independent tool for evaluating a patent's value.