Spot Innovation Trends, Opportunities, and Risks by Digging into Patent Data
Loyal readers (and anyone caught in an elevator with me) already know my passion for Patent Analysis. Inventors, entrepreneurs, and other innovators should pay close attention as the process is low risk and the results are always educational.
As a quick recap, Patent Analysis leverages the approximately 5 million patent applications and granted patents published worldwide annually [1]. For a quick refresher on the mechanics of Patent Analytics, see these posts: Data Mining: 4 Ways to Use Patent Analysis for Any Size Business and Data Mining: Take a 3-D Tour of Patent Analysis.
Since the purpose of each patent application and granted patent is to lock others out of a future market, each one will provide dozens of valuable clues surrounding innovations. With large numbers, they make a rich data set to sift through and interpret.
Traditionally, the typical users of Patent Analysis are large companies that are already familiar with the method and have the right tools and knowledge to leverage the results for maximum benefit.
However, smaller companies and inventors should consider Patent Analytics more closely, as this research offers several benefits: it is fast, relatively low-cost, utilizes real data, minimizes risk, and helps direct money and other innovation resources into the most appropriate direction. Accordingly, companies can find maximum benefit from this method when they identify areas where they need to innovate today, not tomorrow, or when they choose to redirect their R&D efforts.
Digging a little deeper into innovation territory
Patent publications can reveal unexpected information about innovations. Here are some quick examples.
1. Global perspective. When your competitors are filing IP for their innovative ideas, in which country is the first filing? What is their advantage in using this methodology, assuming that it’s part of their strategy? Do other trends come into focus when you take an international view? Uh-oh, not looking beyond the U.S? This would be a mistake since U.S. patent applications only represent 25 percent of the world’s total. [1] Identifying your competitor’s methodology early also allows you to refine your competitive intelligence program to spot their innovations even earlier. Improving your early warning radar helps ensure your innovation teams’ efforts are directed for maximum benefit.
2. Expert identification. People change jobs, but they don’t leave their knowledge behind. If you need a subject matter expert to improve your current innovation or to come up with new ideas for your next innovation, look at the inventors behind the IP being filed. It’s common to see people working in the same area but at different companies. Heads up to companies that like to poach employees!
3. Tip-offs from the big dogs. I don’t claim that patents are a perfect predictor of future markets. They do, however, provide some insight into the types of opportunities others see in a given space. Accordingly, if you see companies known for their early due diligence filing large numbers of patent applications in a particular area, they likely feel that there’s appreciable opportunity for their innovation(s) to fill that future market opportunity rather than a casual poker bet. On the other hand, they may have already beaten you to the punch. Be mindful of each company’s strategy, as some companies are known to file patent applications on every idea they have to support their patent cloud.
4. Licensing and financial information. Companies looking to start a new R&D project, scouting for innovative technologies, or investors seeking the next great opportunity need to know the overall trends of patent filings in a specific area. The tool that shows activity can be compared to the familiar S curve shown here [2]:
In case you’ve never seen this curve before, it shows how technologies are slowly accepted in their early years (on the left side of the graph) but then are purchased at increasingly faster rates (in the middle of the graph), which then slow down again as they near market saturation (on the right side of the graph).
Businesses often use the S-shaped market adoption curve to help them assess when a potentially innovative technology is starting to be adopted or is nearing maturity. So, the more activity, the more likely people are to see a technology space as innovative and more of an opportunity. Conversely, a declining level of activity may signal that future market opportunities are diminishing or that fewer innovation opportunities are remaining in that area. If so, it may be time to redirect your innovative activities and investments elsewhere.
5. What innovations are your competitors up to these days? Just like the S-curve description for a particular technology, looking at this information constrained to one or more of your competitors can indicate where they’re spending their money today and where they wish to be tomorrow. Accordingly, their innovation path may be somewhat predictable, but you should monitor for unanticipated deviations in their innovation program. Ultimately, you will have more time to react if you can spot these variations early. You can then choose whether to beat them to the punch with the same type of innovation, alter your innovation process to provide a different solution, or decide not to change your current R&D process.
Values of Patent Analytics for Innovators
• Helps identify new competitors, technology maturity, risks, and opportunities.
• Brings together the relationship between technology, IP, and markets.
• Ensures that our view of the future is verifiable with data.
• Brings lots of real data points into focus quickly and at a reasonable cost since it eliminates or minimizes the tedious process of reading lots of patents or patent applications.
• Helps identify trends quickly.
• Can be used on many business segments.
• Should not be used to the exclusion of other data, but can round out information from other sources.
Would this type of information affect your company’s strategy? Are there other areas of Patent Analytics you’d like to see discussed in a future column? Please drop me a note in the comments below.
[1] WIPO IP Facts and Figures (2014 Edition)
[2] Alanf777 (Wikimedia)
Apart from patent competitive analysis from external perspective, Patent analytics are also used for investment decision making in the areas of technology advancement programs or expansion or event adoption and exploitation. But what are the indicators used to assess the quality of the patents?
Patent quality is something that’s interpretive. Some people/companies use an automated means to help them access a patent’s or group of patent’s value via factors such as the number of patents, the assignee’s history of bring value to their IP, number of citations made back to those patents, the technology area, etc.