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Eugen Tarnow


    Predictive analytics software used to size up patent targets, preparing a hedge fund for attack

    Eugen G Tarnow  April 8 2015 08:31:03 AM
    By Eugen Tarnow, Ph.D.
    Avalon Business Systems, Inc.

    In today's Wall Street Journal, http://www.wsj.com/articles/hedge-fund-manager-kyle-bass-challenges-jazz-pharmaceuticals-patent-1428417408, a hedge fund is going after pharmaceutical patents and, at the same time, shorting their stock.  The idea is to use a legal channel, "Inter Partes Review", invented to invalidate patents of patent trolls, against pharmaceutical companies.

    How do they find the pharmaceutical companies they think are vulnerable?  Apparently "Mr. Spangenberg [consultant to the hedge fund] sizes up potential patent targets, using a predictive analytics software program he acquired several years ago."

    There is no description of the analytics software but here is a guess.  According to the article, the Inter Partes Review process invalidates about 77% of the patents before it.  The software, with the help of a patent lawyer, searches all those decisions for commonalities.  An analytics model is trained on those commonalities to see if it would pick out the correct 77% of invalidated patents.  Once the model is optimized it is then applied to the full patent database (which can easily be downloaded). The model then predicts which patents are most likely to be invalidated.  The hedge fund leadership then selects which companies are most vulnerable to the predicted patent failures and attacks those.

    A new business model in the making, created on analytics.  We can do it!

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