The Value Of Patent Analytics

Mr. Oldach, Vice President - Advisory Services, leads all the advisory services activities of The Patent Board. He brings over 30 years of services experience ranging from Strategy Consulting and Transformational Leadership, to technology innovation and commercialization. Mr. Oldach has worked in a broad range of industries including Aerospace & Defense, Automotive, Consumer Products & Electronics, Financial Services, Health Care, Energy, Technology, Telecommunications, Retail, and Wholesale. Previously he grew consulting activities within IBM Global Services, where he was one of the founding members of IBM Consulting Group, The MAC Group, Booz Allen and Hamilton and Arthur Anderson.

Mr. Stabinsky, Managing Consultant – Advisory Services, leads large projects and opportunities within the Advisory Services group at the Patent Board. He brings expertise in intellectual property law and management to the team, combined with technical experience in electrical engineering. He consults in various industries, including Medical Devices & Services, Telecommunications, Semiconductors, Information Technology, Aerospace and Defense, Consumer Goods, and Chemicals to U.S., European, and Japanese clients. Mr. Stabinsky previously worked for a boutique High Vacuum Original Equipment Manufacturer (OEM) where he focused on Services and Business Development.

Today, there is a dizzying array of Patent Analytics to help the modern IP professional with decisions both strategic and tactical.  Patents provide voluminous data on innovation and technology evolution.  The value of patent analytics emerges by creating insight from this data and applying that insight to business opportunities.  While patent analytics can improve efficient sifting through data during patent prosecution or other patent transactions, the greater value is through developing and applying insights.  An enterprise’s business model and market position will determine the types of opportunities available through these insights.

In last month’s issue, we defined patent analytics as adding some form of quantification to the semantic knowledge embodied by a patent.  We discussed the general types of patent analytics and their underlying assumptions:  Bibliometric Analysis, Patent Component Analysis, Financial Modeling, and Expert Opinion Analysis.  Bibliometric Analysis quantifies patent citations.  Patent Component Analysis quantifies the various segments of the patent specification, e.g. claims.  Financial Modeling relies upon existing revenue streams to a patent or a set of patents to assess patent value.  Finally, Expert Opinion Analysis uses subject matter experts in business, legal, and or technical fields to ascribe indicators including quality and monetary value to a patent.  In this article we turn to the end user of patent analytics to discuss the value they may receive from patent analytics.

When Investors Turn To Patent Analytics

Investors, both individuals and funds, have only one concern – where is the maximum return on investment.  For these groups, patents analytics identify firms with patent portfolios that provide the foundation to create better than average profit streams into the future.  Patent analysis identifies strong portfolios around a set of technologies, that when commercialized will create strong revenue and profit growth.  The value is not derived from understanding specific patents, but rather identifying companies that are poised with strong or even preeminent positions in a market’s technology.  The assumption is that the technology foundation will be commercialized or licensed to generate the profit stream.  Patent analytics provide benchmarks to identify the company best positioned to capitalize on the evolution of a technology.  Of course there are additional judgments that need to be factored into the decision such as the capacity of management to commercialize the technology with appropriate speed.  Irrespective of the type of analysis, all of this information can add valuable insight when comparing investment targets, and complements the usual financial due diligence.

When Law Firms Turn To Patent Analytics

Law firms have evolved from the legal advisor into the realm of the business advisor.  With this evolution has been a challenge to push beyond the hourly billing machine to build stronger client partnerships.  Law firms now find efficient ways to perform tasks and not just billable hours.  Bibliometric and Patent Component Analyses provide a tool to filter large numbers of patents to identify a smaller set of more critical documents.  This allows the lawyer to spend more time on fewer more critical patents – increasing quality and speed, while potentially lowering cost.  In addition, some firms mine the volume of patent information using patent analysis as a method to create business insight and as a segue to the coveted role as a business advisor.  Of course, for traditional tasks of patent buy/sell or licensing, Financial Modeling and Expert Opinion analyses remain the most effective approaches.  Whether the attorney’s end goal is a sale or a license, these highly individualized and subjective analyses yield the best results for a small portfolios and individual patents.

When Fortune 1000 Companies Turn To Patent Analytics

Large corporate enterprises wish to maximize their return on IP while keeping budgetary control.  For this reason, Fortune 1000 companies put considerable effort into actively aligning their large patent assets with long and short term business strategies.  This requires a precise and unbiased competitive technology knowledge along with a more general understanding of any technology that might influence future business plans.  Coordinating these large organizations to have a clear and common understanding of technology positions, technology developments and IP plans requires ongoing support through all types of patent analysis.  This analysis could support Competitive Intelligence, Research & Development (R&D) targeting, Joint Venture planning, Acquisition targeting, or Product Planning.  In addition, specific IP related transactions (license, buy patents, buy companies, sell patents, and due diligence) may need support.

Bibliometric Analysis and Patent Component Analysis both create insights that help to drive portfolio management, competitive intelligence, and shareholder communication.  The automated and quantitative nature of these analyses allows for objective portfolio prioritization, competitive benchmarking, and effective, impartial communication.  Any sophisticated IP professional can leverage these techniques to create more robust portfolio management, patent prosecution, and competitive intelligence processes.  Moreover, shareholders and executives appreciate any external approach.

When Governments Use Patent Analytics

Governments have a very unique macroeconomic interest in innovation; and patents are a quantifiable tool to explore this interest.  The driving goal of any governmental agency that supports public policy in commerce is to identify an adequate measure of innovation.  Expert Opinion Analysis and Financial Modeling, both highly individualized analyses, are ill suited for the 10,000 ft perspective needed to guide public policy.  However, Bibliometrics and Patent Component analyses are perfectly suited to provide mathematical approaches to answer the economic questions that legislators pose.  These analyses can establish innovation trends, and identify specific economic regions of innovative strength or weakness in any given industry or technology.   The Bibliometric and Patent Component Analysis output can also point to powerful conclusions when tied to data on economic spending and output.  Analyses such as these are currently shaping R&D investment policy in institutions like the National Science Foundation.

When New Ventures Use Patent Analytics

New ventures or startups, particularly those companies dependant on new technology, are always saddled with enumerable problems, and yet all of these troubles are pushed aside as they strive to commercialize their inventions.  Every dollar must be spent wisely.  Every cent must bring them one step closer to launching their business.  Patent Analytics, and indeed a thorough IP strategy, does not traditionally fit into the financial capacity of a startup.  But as these firms spend hundreds of thousands of dollars on lawyers and patents, they often forget that a basic understanding of the competition (both technology and company) is essential.  Who else has this technology or a substitute?  Are they potential customers, partners, competitors, or buyers of the venture?  More importantly, the analytics can provide impartial information for any investor or board member.   As such, the value of patent analytics for a new venture is in defining its product and competitive business plan.  Not all new ventures will have the budget or stomach for patent analyses, but for those that are closely tied to technology innovation, ignorance may cost them more in the long term.

Summary

Patent Analytics, and more specifically Bibliometric and Patent Component Analysis, are only now emerging in a way that supports professional decision-making.   These are powerful automated tools that promise IP professionals real time analytic capabilities and insights. Nonetheless, it is still the IP professional’s job to apply judgment to any analysis.  There is limitless value in the application of patent analytics; but to deliver on the promise, the analysis needs to be tailored to both the business model of the firm and to the business decision at hand.