using patent analytics to engage senior management in corporate strategy

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Data Driven DecisionsPatent Strategy and Analytics Services

Using Patent Analytics to Engage Senior Management in Patent Strategy Moving Patent Information up the Value Chain

Anthony Trippe, Managing DirectorEuropean Patent Office Patent Information Conference Warsaw, Poland – November 3, 2014




Why is patent analytics critical from a business perspective?

•  Too many decisions are made without proper intelligence or analysis•  “if all you have is a hammer, everything looks like a

nail” – Abraham Maslow, 1966•  The “old boy” network or rolodex model applies

•  Too often analysis is being done by individuals who do not understand the nuances of patent information

•  Analytics lower the risks associated with business decisions and ensure higher returns




Why is patent analytics important from an R&D perspective?

•  It’s a tool to assist with long term strategic technical planning

•  It involves work processes for helping technical decision makers make smarter decisions faster

•  It’s an analytical process that transforms disaggregated technological information into relevant strategic knowledge about your competitor’s, or a subject’s technical position, size of efforts, and trends




What’s so special about patent analytics?

•  Also from 1966 -”We have the choice of using patent statistics cautiously and learning what we can from them, or not using them and learning nothing about what they alone can teach us.” – Schmookler, Innovation and Economic Growth pg 56




So why should organizational strategy be influenced by patent information •  80% of the information in patents is never published

anywhere else•  “Eighth Technology Assessment and Forecast Report” –

USPTO, 1977•  Actually, 95% of the substances from the patent

collection in CAplus did not have a corresponding non-patent literature reference associated with them

•  “Over the next few years, we will either see the emergence of rational markets for patent trading, which have the potential to deliver trillions of dollars in value, or an opportunity lost as markets fail to engage effectively.” – AISTEMOS CEO Nigel Swycher




The world’s patent offices are on board•  The rise of the Chief Economist•  WIPO and the UK Patent Office have devoted significant

resources to the development of patent landscape reports, infographics and patent analysis workshops

•  IP ValueLab will promote and develop IP management and strategy, IP commercialization and monetization, and IP valuation in Singapore

•  European Patent Office efforts•  EPO & USPTO collaborate for Patent Statistics for Decision

Makers•  Releases PATSTAT•  "Patent information is a top priority for the EPO” – EPO

President, Benoît Battistelli – 2013 EPO Patent Information Conference


AN ANALYSIS OF THE PATENT POSITION AROUND PERSONAL FITNESS MONITORS

A practical example of putting these ideas into practice


Patent information is required to make informed decisions about your company’s IP strategy

•  IP strategy has to play a role in overall business strategy

•  The two have to be considered simultaneously

•  Patent information can provide input to establish business direction

•  Who has Company Z assigned patents to without a press release or financial disclosure?

•  Who are the major technology stakeholders in a given industry or within an industry vertical or segment? Are these the people I should partner with as I move into a new market?


Law of Linear Patent Analysis

•  Develop a Collection of Analysis Tools

•  Understand the Need Behind the Need

•  The Need Drives the Question

•  The Question Drives the Data

•  The Data Drives the Tool

Why is this important?

“if all you have is a hammer, everything looks like a nail” - avoid this at all costs


A holistic view of patents, as they pertain to corporate strategy requires an integrated approach

•  Like a three-legged stool there are different elements to an integrated strategy

•  Business goals

•  Financial analysis

•  Patent considerations

•  All three elements have to be considered or the item won’t stand


What is a personal fitness monitor?


Using patent analysis to drive corporate strategy•  Project objectives

•  Complete a high-level competitive analysis of the fitness monitor IP landscape

•  Look at components and techniques

•  Assess company’s specific position in fitness monitors

•  Especially compared to competitors

•  Identify the main IP strategy opportunities, and threats to company’s business


Components associated with fitness monitors

•  Battery

•  Connector / Communications

•  Casing

•  Accelerometer

•  Memory

•  Processor

•  Charger


Techniques associated with fitness monitors

•  Flex membranes

•  Testing/Programing

•  Rigid Flex Boards

• Waterproofing

•  Power management

•  Activity algorithms


We find the following in some of the Jawbone (Aliphcom) patents


COMPANY IP ASSESSMENTS – FITBIT & JAWBONE (ALIPHCOM)


Breakdown of FitBit portfolio by Technology Category

0"

1"

2"

3"

4"

5"

6"

7"

8"

Monitoring"System" Monitoring"System"with"Display"

Ac?vity"Algorithm"

Pending"

Allowance"

Granted"


Observations on FitBit portfolio

•  Very narrowly focused on activity monitoring device primarily for counting the number of stairs that a user climbs

•  US only

•  Reasonable number of granted patents but no depth

•  Nothing on established chokepoints or components of the device

•  Calorie burning calculations were still pending


Observations on FitBit portfolio

• No forward citations

•  Fair number of independent claims but several steps and all on small variations on same theme

•  Should consider an IP buying program to protect themselves as market and share increase

•  Already been sued by SportBrain – dismissed and hopefully the corresponding patent was licensed


Breakdown of Aliphcom portfolio by Technology Category

0"

1"

2"

3"

4"

5"

6"

Ac+vity"Algorithm"

Device"Control"

Health"System"

Power"Management"

Coa+ng"

Comm

unica+ons"

Data"Security"

Health"Algorithm"

Protec+ve"Overmolding"

Medical"Diagnosis"

Nutri+on"Algorithm"

Sleep"Algorithm"

2012"

2011"


Observations on Aliphcom portfolio

• Most applications have not granted yet!

•  Potential for foreign coverage

•  Coverage on power management

•  Coverage on manufacturing

•  Coverage on variety of activities, wellness and sleep

•  Device control could be very interesting


Observations on Aliphcom portfolio

•  Have Bluetooth elements in other products but don’t use it in Up product, why?

•  Few forward citations

•  Should consider an IP buying program to protect themselves as market and share increase

•  Have already had to recall first generation and re-issue product due to issues with waterproofing


THE BROADER IP LANDSCAPE


IP Landscape – Documents by Organization, Kind and Application Year

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1 4 2 9 2 3 2 1

12 16

1 2 1 5 1 4 4 3

2 2 1 3 2 3 2 2 2 1 1

2 1 2 1 1 1 1 1 1 2 1 1 1

1 1 5 5 2 1

3 1 1 3 4 1

1 3 4 1 2 1

5 5

4 3

2 2 1 2

1 4 1

1 1 1 3 1

1 2 1

1 1 1 1 1 2

1 1 1 1 2

1 2 1

1 2 1 1

2 1

1 3 1

1 3

3 1

0 10 20 30 40

Philips

Aliphcom

Theranos

Seiko Epson

BodyMedia

Nike

Adidas

Polar Electro

Fitbit Inc.

Georgia Tech

P&G

Ya Man

Ci5zen Holdings

Tensys Medical

Valencell

Omron

Univ of Wollongong

Apple

Healthtech

Suunto

Univ Hong Kong Polytech

Xybernaut


A word about applications vs. grants

•  Some people suggest that applications should not be included since they are an unknown quantity

•  I believe they should be included since they demonstrate intent and investment but they should be segregated from the grants

•  Applications are an option play since you don’t know what they are going to look like after prosecution

•  Check the file wrapper and whether abandoned


Which companies have the most forward citations?

0"

100"

200"

300"

400"

500"

600"

700"

800"

Philips"

Aliphcom"

Theranos"

Seiko"Epson"

BodyMedia"Nike"

Adidas"

Polar"Electro"

Georgia"Tech"P&G"

Ya"Man"

CiHzen"Holdings"

Tensys"Medical"

Valencell"

Omron"

Univ"of"Wollongong"

Apple"

Fitbit"Inc."

Healthtech"

Suunto"

Univ"Hong"Kong"Polytechnic"

Xybernaut"

Sum$of$Count$of$Ci+ng$Patents$by$Company$


Thematic mapping of the domain can also highlight areas of focus

Red – AliphcomGreen – FitBitYellow – Nike

Light Blue – PhilipsDark Blue – Polar Electro


Can we begin to draw some conclusions on the industry?

• Nike – They have partnered with Apple and were willing to acquire IP from Phatrat – good portfolio for wristband

•  Adidas – Partnership with Polar and acquired Vivometrics – also have a strong portfolio but more involved with clothing than wristband

•  BodyMedia – Probably the best portfolio with regards to maturity, breadth and depth


•  Should also run searches and perform similar analysis for chokepoint area – power consumption & Bluetooth connectivity for instance

•  Early priorities for low power consumption and low power Bluetooth or alternative short distance communication standards will be very important in this area

•  Buying programs should focus on this

Additional analysis areas to consider


A few weeks after this case study was originally developed Aliphcom bought BodyMedia

•  Case study completed on April 17th 2013 and presented during a workshop at the 2013 PIUG Annual Conference on April 27th 2013

•  On April 30th 2013 Aliphcom d.b.a. Jawbone acquired BodyMedia for $110 million dollars

•  BodyMedia was suggested in this study as having one of the best portfolios in this area and that Aliphcom was exposed

•  It is widely reported that the acquisition is primarily driven by Aliphcom’s desire to own the BodyMedia patent portfolio


RISK AND DIVERSIFICATION - A PATENT STRATEGY FRAMEWORK

A suggestion for engaging senior management


• One way of viewing innovation strategy at a corporate level is by framing the discussion in terms of portfolio risk and diversification

•  Executive staff and Board Members traditionally have a finance background and will immediately recognize the concepts of risk and diversification and how they apply to investment strategy

Patents are an investment - literally


•  A key attribute to identifying corporate goals and defining a strategy for leveraging patents within a company is deciding on the performance expectations associated with those assets

•  Traditionally, in order to increase the amount of return or profit from an investment, a higher level of risk must be assumed by the organization

•  The decision on how much risk is acceptable, weighed against the potential for gain from patent assets, should be made at the highest levels of a company

•  In the best case this is done with understanding and approval from the executive staff and board

Growth potential and risk tolerance are corporate issues


• When patents are treated as investment vehicles

•  They can be managed using techniques that Boards and Executives are familiar with, and can relate to

•  Executive management can be engaged to play a meaningful role in patent strategy development

Patent strategy based on investment principles


Technology Categorization Financial Investment Compariable

Sustaining Technology (improvement to Existing Market)

Bond: low risk/return

Sustaining Technology ��(applied to New Market)

Stock: moderate risk/return(diversifying industries can lower correlation)

Disruptive Technology Early Stage Venture Investment: high risk/return

Technology Investments: Portfolio Risk and Diversification


•  Sustaining Technologies (Applied to Existing Markets) - Making incremental improvements to existing technologies

•  Can be thought of like a bond, low risk and familiar

•  Does not normally provide large returns.

•  Sustaining Technologies (Applied to New Markets) - Using existing technology in new markets

•  Similar to a stock investment in a correlated industry, some risk involved

•  Growth comes from making investments in alternative industries that offers low correlations

•  Disruptive Technologies - New technologies for existing industries, or for likely high-value markets for the future

•  High risks associated with early-stage investments

•  Similar to a venture fund or angel investment where the earlier the investment is made, the larger the opportunity for explosive growth

Technology investments categorized by inherent risk and unfamiliarity


•  In the financial world, investors seeking steady, long-term growth use diversification strategies to buffer themselves

•  They will select diversified asset classes, such as stocks versus bonds

•  For example, traditionally, when one of the classes begins to decline, the portfolio is compensated for with an increase in the other

•  Diversified financial portfolios also contain a mixture of investments where there is no correlation between the businesses associated with each

•  Depending on how risk averse an organization may be, it will choose its financial portfolio to deliver an expected return with the least amount of risk

Diversification as a framework for patent strategy


Technology Categorization

Startup New Entrant(moderate size)

Leading Co.(high mktshare)

Sustaining Technology (improvement to Existing Market)

10% 20% 50%

Sustaining Technology ��(applied to New Market)

20% 50% 35%

Disruptive Technology

70% 30% 15%

Technology Investments: Portfolio Risk and Diversification


• When examining a competitors portfolio look specifically at how much investment a competitor makes in each category

•  Studying the mix of technologies pursued by a competitor can provide key insight into the level of risk they are willing to maintain while still concentrating on their core businesses

•  Companies that have employed a long-term growth strategy with their patent portfolios can be identified by the level of diversification they pursue

Risk tolerance should be influenced by the competitive environment


•  Companies can meet corporate expectations for returns on intellectual property and determine the right mixture of technology investments if they consider which combination of these categories they will try to achieve with their research initiatives

•  Once the strategy is developed, it can be employed by both research managers and participants within the organizations patent committee to ensure that the resulting patent portfolios are maximized to achieve their stated objectives

Aligning the organization around a patent strategy




Have a look at:

http://www.patinformatics.com

•  Deals with patent analysis issues at all different levels and utilizing all of the different techniques

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