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Strategic Use of Patent Information in Business
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Strategic Use of Patent Information

~Andy Gibbs, first published in April, 2009,

Companies that practice faster R&D cycles develop higher quality patents, gaining competitive advantage in the marketplace.

Defining Innovation

For the purposes of this paper, innovation is defined as the "Advancement of Applied Technology".

At the lowest level, innovation is a process used by engineers and inventors. However, from a higher level, innovation is a process that can drive a corporation's overall process of R & D and corporate strategic development.

Still further, the innovation process spills over into many operational areas within an organization other than R&D, namely, marketing, legal, finance, and corporate strategy.

Each of these organizational departments, as well as the engineers and inventors, benefit greatly by applying patent information to the various R&D to corporate strategy processes.

What is Patent Information?

"Patent Information" is the information contained
- within a patent
- about a patent or group of patents

Patents comprise an archive that documents the progress of applied technology through history. An estimated 80% of the information contained in patents is available nowhere else, establishing patents as one of the move valuable technology rich information resources.

Patent information can be (a) Explicit, and (b) Implicit, or "inferred".

EXPLICIT patent information is that which is readily discernable by a person reading a patent.

Such explicit data fields include:

  • Patent Title,
  • Patent Number,
  • Patent Filing and Issue Dates,
  • Inventor Name,
  • Applicant Name,
  • Patent Abstract,
  • Patent Citations / References,
  • Description of the Invention,
  • Patent Claims,
  • Drawings.

IMPLICIT patent information is more difficult to extract from patent documents, but in many ways is much more valuable to the innovation process. Implicit information derived from patent analysis is typically:

- Qualitative: information closely tied to a particular patent document.
- Quantitative: information derived primarily through the application of a statistical process that's usually applied across a group of patents.

Examples of implicit patent information include:

  • Number of Patents Owned by the Same Applicant,
  • The Number of Patents Competing Within Particular Market Opportunity,
  • The Quality of a Patent - or of a Portfolio of Patents,
  • The Scope of Protection Afforded by the Claims,
  • Industry Trends
  • Intelligence Regarding Competitors' R&D Activity, Cycle Times or Focus.

Patent Information may take the form of table data, graphs, pie charts, bar charts, patent "maps" of other graphic presentation. Visualization is an effective method of viewing and interpreting the result of an analysis of a large group of patents.

Why Use Patent Information to Promote the Innovation Process?

Since patents establish the "state of the art" in any particular applied technology, at any point in time they


define the starting point for subsequent innovation advancement. When patent prior art is deeply assimilated throughout the organization, higher quality innovations will emerge more quickly.

The World Intellectual Property Organization (WIPO)i has found that patent information is used:- To Promote Creative Thinking and Problem Solving

  • To Guide Strategic Management of Research and Development (R&D)
  • To support management decisions related to Licensing and Litigation Strategy
  • To Value Intellectual Assets for Mergers and Acquisitions (M&A)

Companies are often slow to build innovation strategies that rely heavily on patents, many times because patents appear to be too complicated to understand, because management thinks too much time will be spent reading patents and not inventing, or management thinks that access to patent information is too costly.

The earliest patents received by a company within any particular technology area typically deliver the highest long-term value. Nagaokaii shows us that a company committed to systematically using prior art will realize a faster R&D cycle, and will obtain more valuable patent protection on higher quality innovations.

Since the first-to-file rule determines who wins the technology race, it's important to quickly produce inventions that obtain the broadest patent claims.

A recent study commissioned by the European Patent Organization (EPO)iii showed that the innovation leaders in US and Europe that relied heavily on the use of patent information developed higher quality innovations, and gained competitive advantage over their counterparts that used patent information rarely, or not at all.

As the leaders continue to develop higher quality patents and gain more market share, 80% of them said that they need even more information on competitors and markets, followed by information on innovation.

The most innovative companies are most interested in (decreasing order):
1. Technology watch
2. Competitor watch
3. Market watch
4. Alerting services
5. Advisory services

This report also showed that over 80% of all companies regard patent information as being of moderate or high value, primarily using patent information in predevelopment (68%), development (62%) on checking infringement (48%) or continuously as part of their business process (29%).

Although patent offices provide free Internet access to patent data, around 60% of the 1,900 companies interviewed during the EPO study believed that paying for commercial services that could deliver the Implicit Patent Information is justified given the strategic value of the integrated analytics and visual information tools.
On the other hand, many SMEs (small to mid-sized companies with fewer than 500 employees) had little understanding of how they would actually use the patent information; they had no idea what contribution patent information can actually make to their innovation process.

"Patent Information" is much more than "Patent Data"
The following case study briefly illustrates how explicit patent information is extracted from a patent database, then shows how implicit information maybe derived from those patents.

One scenario then shows how this patent information can be strategically applied to the innovation process.

Patents contain a wealth of TECHNICAL, COMMERCIAL, and LEGAL information - most all of which can be applied to accelerate the innovation process. Before patent information can be appropriately mined and applied, the objectives must first be established.