KHONG PohWah

Patent Technology for Competitive Intelligence

KHONG PohWah

Division of System Engineering & Management School of Mechanical & Production Engineering

Nanyang Technological University Singapore 639798

Email: mpwKhong@ntu.edu.sg

Abstract

Patent in the broad sense means legal

rights arising from intellectual activities in the industrial and scientific fields. Patent law aims to protect the inventors by granting them the rights to control the use of their creations for a certain time limit. There are numerous definitions for technology and the most popular among them is this definition - “technology is the practical use of scientific information”.

To stay ahead of competition,

organizations have to constantly update their existing processes, products and technology. One strategy to improve these is to make use of existing available technology through searching patent information from the Internet, then to spend time and resources on developing new technologies that may not benefit the company at all. The aim of this paper is to explore the patent technology and present patent information so that these “raw” data can become part of a company’s competitive strategy.

Keywords:

Invention and Patent, Management of patent technology, Business Intelligence, Product Development, Data Storage Technology

1. Introduction

In today's rapidly changing

environment, organizations may find emerging market opportunities and threats, which none can imagine and to which the organization may be hard-pressed to respond. Companies may find customers demanding better quality products, more features or customer service levels; or rapid technology advances which offer greater opportunities for product proliferation and product obsolescence. This fiercely competitive environment is characteristic of the new business reality. To survive in this environment many companies have adopted new principles such as inviting customers to participate in the development of winning products. For others, in response to fierce global competition, speed is the new competitive weapon. One has to identify the right time to introduce an appropriate technology, and constant development is crucial to business success. Thus it is important to employ appropriate technology management. Knowing the basis of competitive intelligence is the difference between information and intelligence, Larry Kahaner [1] has reported that what competitive intelligence can do for organizations. How it will help organizations get on the road to more efficient decision

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Patent Technology for Competitive Intelligence marking in their competitive environment of business.

Conventional wisdom in the business

world says intellectual property (such as a patent) is vital since it is a stimulus to innovation, a vehicle for technology transfers and a magnet for financing. In other word, an intellectual property system is a crucial part of an organization’s economic infrastructure. It enhances the ability of any organization to strengthen and advance its technological base in a sustained way. It also helps to build human resources and it conditions priorities in allocating financial resources simultaneously. It fosters the movement of technical knowledge across borders. Hence the ability of the innovator to capture the surplus generated by his innovation benefits competition in the long run by encouraging others to innovate as well.

2. Development of Patent Technology An invention is often defined as

something that did not exist previously. There is a long and rich history of innovation in America attesting to the encouragement and promotion the progress of science and useful arts. In 1790 the United States Constitution grants inventors’ rights for a limited term in their inventions. Patents are authorized by Congress and encourage innovation by permitting patent owners to reap rewards for technical creativity. The United States Patent Office was created with the Patent Act of 1790. Secretary of State Thomas Jefferson, Secretary of War Henry Knox, and Attorney General Edmund Randolph headed the three-member Patent Commission. The first US patent was granted in 1790 to Samuel Hopkins of Pittsford, Vermont for an improvement in the “making of Pot Ash by a new apparatus & process”. The three-member Patent

Commission then established the requirement that a working model of invention be produced in miniature.

To be patentable, an invention must be

new, useful, fully disclosed and must not have been previously abandoned. The patent should also relate to a new and useful process, or machine, or method of manufacture, or composition of matter, or new improvement, or in certain cases a method of testing. Between 1790 to 1880, inventors applied to the U.S. Patent Office were required to submit a working model of their invention. Patent models were to be no more than 12 inches square, with paperwork and diagrams explaining the object's purpose, construction and operation. Since submissions of working model of the invention were deemed impractical, the US Congress abolished the legal requirement for patent models in 1870. However the US Patent Office kept its requirement for models until 1880, and the law was changed to permit models only when required by the Commissioner. Some models were still being submitted at the turn of the century. Pictures of these patent models are available from the Internet. The Inventors Museum (see figure 1) is the web site where one can learn the history of patents and the past development of patent models.

3. Frontier of Patent in Knowledge-Based Era It is broadly acknowledged that the use

of modern technology has transformed the condition of mankind. It is an achievement that spans barely more than two centuries or less than a dozen generations of our relatives. It is the result of inventing, developing and refining new products. The new products, new processes and new technologies that constitute intellectual

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Figure 1 http://www.inventorsmuseum.com/

property now form the economic bedrock of international trade and national wealth. Unlike finite raw materials that drove the industrial revolution and fueled the engines of imperialism and colonialism, intellectual property is an infinitely renewable resource whose power is constantly enhanced by an ever-expanding knowledge base and more and more effective tools. New promising technology created within an organization is a window of opportunities to generate large amount of profits for organization, and hence the organization must find ways to prevent others from making use of them without permission or licensing. One way is to seek for an intellectual protection. In this case the protection will be a patent.

In principle, requirement of novelty

means that the invention should not have been used, sold, or details published, prior to filing an application of a patent. Many nations in the industrialized world have recognized the need for protection of their new technologies and have amended their patent and copyright laws accordingly. The

increased number in patent filings is a measure of the increased efforts made by those countries in research and development. Another part of that increased number is simply a means of staking out claims to future technological breakthroughs.

A research by Helen Schofield [2] from

the University of Manchester Institute of Technology of her survey on usage of patent information among academics in the chemistry department at UMIST, found that 80% of information in patents is not reported in research literature published elsewhere with the other 20% from technical journals and marketing materials. In fact too few people are doing basic research in patent technology relative to the number of people working on technology applications. The ratio basic/applied is less in patent technology than in the others sciences generally. Some nations, especially in the less-developed world, have not and in fact do not recognize intellectual property as being owned by anyone. Software and medicine are technologies that is costly and risky to

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Patent Technology for Competitive Intelligence develop and quite easy to copy. In a sense this is simply a taking of products and not an appropriation of technology. Those who copy do not normally learn anything about producing software or medicine. The skills applied in copying are not useful in the transition to innovation. This is unfortunate, because reaching social level patent technology will require fundamental conceptual advances. Even the applied goals proposed by various legal bodies for the next ten years are not just patent law extrapolations from the present state of art. Their realization will require more basic research than is now being done. The field of patent law and the many technologies it covers is even more complex than most. The knowledge acquisition in this field needs to be not only expert, but also patient.

4. Is Patent A Product? Organizations in competitive industries

need to continuously upgrade and improve their development process for better survival chances. And for some, in response to shorter product life cycles, products are increasingly designed and distributed for broader, even global markets, to extend appeal and improve the likelihood of economic success. Each of these actions is effective, but it is the company that reaches back into product creation and looks for improvement opportunities that often reaps the biggest benefit. For many of these proactive companies, redesigning the product development process can be an important element in improving one’s business performance. World class organizations have learnt to recognize the importance of monitoring the competitive environment and market conditions, the factors which drive profit and cost, the importance of customers and cross-functional cooperation, and the benefits of renewing their product and

process development process and technology. Business performance can benefit from renewing product and process development process and implementing target costing.

As the importance of intellectual

property has grown in international trade, contributing more than 50 percent of U.S exports as translated into computers, software, movies, aircraft, etc. Intellectual property can be treated as a product for the business of buying, owning, and licensing patents. Technology, patent laws, technology-based business development and their interaction are dynamic and complex. The principals of patent technology have a unique blend of technical, legal and business experience that maximizing the potential value of patents. Patents can be treated as products (or assets). It can be formulated as part of the business process and it can be leveraged on its commercial values (see figure 2).

5. Patent and Information Search The main reason for conducting a patent

search prior to filing a patent application is simple: obtaining a patent is expensive. One should not commit all the time and money that pursuing a patent requires without having a reasonable expectation of success. Generally a patent search costs far less than obtaining a patent. It is thus always wise to conduct a patent search first and use the results of the patent search to decide if one wish to commit the resources necessary to obtain a patent. One might ask "Can't I do the patent search myself?" The answer is, yes, to a limited extent one could. Patent data is freely available to public and anyone who wishes to look through it. In fact, as a service to inventors and attorneys, numerous portals on the Internet provide patent Database

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search on their web sites. A review of existing patents, patent applications, and non-patent literature (journals, trade publications, etc.), can give one a good idea

of whether or not one’s invention is novel. One popular web site as shown in the following figure is providing this effective search services (see figure 3).

Figure 2 http://www.techsearch-llc.com/

Figure 3 http://www.uspto.gov/main/patents.htm

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Patent Technology for Competitive Intelligence

One probably stand a good chance of getting a patent, if one have an expert patent search done, proving novelty of one’s invention is far and away the most difficult part of obtaining a patent, and no patents are found that are similar to one’s invention. On the other hand if the patent search locates previous inventions that are identical or extremely similar to one’s invention, one may decide not to pursue a patent at all. Since it is likely that the patent office would deny one’s request for a patent based on the fact that one’s invention is the same as, or just an obvious extension of the existing inventions. Of course when a patent search turns up very similar inventions, it can be disappointing. However it is much better to know that up front rather than spending numerous thousand dollars in legal fees, and waiting two years for the patent office to make a decision, only to then have your patent application denied.

6. Professional Patent Search In practice patent searching is very

complicated, one must be an expert on the

subject matter (such as new or high technology) so that one can evaluate accurately and effectively. One must also know the nuances of the patent office filing system, as they do not always file things where one might expect. In addition one needs to know quite a bit about patent drafting and patent law. Without this knowledge, it is impossible to determine the relevancy of other patents that one find during a search. It is a risky proposition if one is conducting patent search without the appropriate knowledge, experience, and data. If one misses a single patent relevant to one’s invention, one may find himself spending thousands and thousands of dollars in legal fees to secure a patent, only to have the patent office deny one’s application. Now that one understands the benefit and important of having a professional patent search, the service providers have access to the proprietary data sources that are much more accurate and comprehensive in comparison to the freely available patent data from the web. One of such service provider on the Internet is given in the following figure.

Figure 4 http://www.patentcomplete.com/

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7. Patent Information and Translation (Japanese) The basic patentability requires any new

and useful process, machine, manufacture, or composition of matter, or any new and useful improvement but there are ongoing changes in patentability standards, especially as biotechnology and software are concerned and will require expert assessment to determine patentability for a particular technology. Finding a new use for material or machine, mere substitution of materials, and substitution of elements to perform the same task (function) do not qualify as inventions. Similarly, product or design embodiment is given to misguided enthusiasms in which large numbers of

people make the same errors. For example, some of the invention in technical know-how processing seems misguided to user. There is too much emphasis on syntax and not enough on the semantics. Technical know-how front ends on text descriptions that convert between technology and English could miss the essential information. What one can learn from technical know-how is not how to express in English what we already know how to express in technological knowledge. Besides English language, web services on the Internet for Japanese patent search and patent translation are available (see figure 5) providing accurate and prompt translation services by professions with extensive technical background.

Figure 5 http://www.ohashi-ht.com/

8. Patent Mapping for Business

Intelligence Though patent information is a gold

mine, making the best use of it is a challenge. In order to extract valuable information from patent database, there is a

need for a systematic method known as patent mapping so as to build a navigational knowledge base for technology and business intelligence. Patent mapping is well known and widely used in Japan and Taiwan by science and technology strategists from major industries and the government sectors.

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Patent Technology for Competitive Intelligence

The technique of patent mapping can be engaged in all functional groups across an enterprise. R&D group, for example requires patent information to validate innovations, make decisions about buying or make-in-house technologies, and better understand competitors’ plan. Legal group seeks information to pursue patent infringement litigation or protect the enterprise’s interest from infringement. Finance group seeks patent information to identify revenue-generating licensing opportunities. Human resource group uses these information from patents to identify leading scientists and engineers for strategic recruitment purposes. In general patent analysis involves extracting data from a patent document literature and analyzing these data by different criteria. The type of map that is created depends upon the question that is trying to be answered. There are two broad categories in patent mapping [3], namely data mining and text mining. Data mining involves the extraction of fielded data and the analysis thereof. Mining or mapping this information can provide someone an idea of who are the major

players in the relevant technological field, and what type of work they are generally focusing on.

Patent mapping software and services are readily available. Company like Delphion Inc provides user with full access to U.S. patent office collections and analytical tools for research when users subscribed as a member. Subscription cost varies from US$75 - US$200 [4]. Additional cost will be incurred if value added services like text clustering and Patent-Lab II are used. Patent-Lab II can be engaged as a tool for Data Mining application. The Patent-Lab II is developed by Wisdomain Inc [5], and it can be downloaded from IBM Intellectual Property Network (IPN) (http://www.delphion.com) free of charge. Patent-Lab II requires user to purchase patent document (with file extension of *.LAA) in order to perform any analysis. 200 patent data will cost US$17, with an additional US$1 for each 100 patents [4]. Demonstrated with 50 sample data, Patent-Lab II first extracts essential information from the patent documents. The converting process is shown in the following figure.

Figure 6 Demonstration of Patent-Lab II, Data mining software There are various types of analysis can

be engaged by the Patent-Lab II for patent analysis. In Table 1 different types of these analysis are illustrated. After completion of the required analysis, the Patent-Lab II

software allows users to select numerous types of output formats, such as Matrix Chart, Report, etc. If Matrix Chart is selected, user then needs to choose the field contents for the row and column. A chart

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will be generated as shown in figure 7. By using PC-mouse drags over cells of interest, the graphic that representing the region of interest will be shown. Alternatively if user prefers to obtain a report type output (see figure 8) displaying all relevant information in the form of table, he can choose one

heading from the following options.

a) Overall Summary b) Assignee Summary c) Assignee Detail d) Patent Classification e) Country Summary

• Function • Find the partnership between assignees • Discover which company is concentrating on which field

Assignee Analysis

• Infer in which stage of development life cycle an assignee is. • Find the degree of consolidation between technologies by investigating

which developers are working together • Infer who is active in which field

Inventor Analysis

• Trend of technology development by developer • Infer development trend by understanding the degree of consolidation

between technologies. Find unexplored technology areas. • Get information about competitors' research and development.

Patent Class Analysis

• Understand which technology is mature or fading out. Priority Year • Which stage of lifecycle is the technology placed Priority Country • Which country is the invention first patented

Table 1 Type of analysis available in Patent-Lab II

Figure 7 Output Chart Generated by Patent-Lab II

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Patent Technology for Competitive Intelligence

Figure 8 Report Table by Patent-Lab II

9. Case Study

Based on international patenting

activity, Raffaele Paci and Antonio Sassu [6] offer some methodological guidelines as a national technological indicator. Their research results confirmed the utility and importance of analyzing paten data in building an overall picture of a country’s state of technology.

Focusing on information data storage

technology among the electronic manufacturers, 3 companies namely Maxtor, Seagate and Western Digital Corporation are selected. In this study their technical capability and intellectual asset are measured and evaluated. Conducting patent and information search process as described in the previous section, number of patents filed and granted to these 3 companies at various countries are given in table 2

Maxtor Seagate Western Digital

Authority No. of Patents No. of Patents No. of Patents WIPO-PCT 13 0 0

USPTO 188 1423 244 UK Patent Index 0 142 0

EPO 0 16 0 IPO Singapore 3 461 0

Taipei Patent Index 0 2 0 Canada 8 0 0 Total 212 2044 244

Table 2 Number of patents filed by the respective company in various countries

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Subsequently the numbers of patents filed by these 3 companies are given in table 3. Between 1993 to 2001, for the first 74 records, a sample of patent documents assigned to Maxtor as well as its competitor, Seagate and Western Digital Corporation were analyzed. The results were obtained and the corresponding graphical presentations are shown in figure 9.

From these figures, Maxtor illustrates a

largest number of patent had been filed in year 1999. This was likely due to the major corporate event that Maxtor merged with his competitor, Quantum Corporation. As the outcome of this merging process, numerous Quantum’s inventions might now be filed under Maxtor’s name. The small number of patents filed in 2000 and 2001 respectively does not indicate the number of inventions has gone down. Since many of the patent applications are pending, they will not be reflected in the search results until approval are granted by the relevant authority. Relatively large number of patents are filed with the USPTO, which implies that most of Seagate’s, Maxtor and Western Digital research and development work are conducted mainly in the U.S.

10. Conclusions New product development is essential

for every company in order for them to maintain their competitive edge in the respective industries. In today’s context, it will be inefficient and cost ineffective for one company to launch a new product on its own. Even if a company manages to achieve this, its standing in the industry will definitely fall behind its competitors. This is because its competitors have strategic alliances with other parties to introduce new products which are of higher quality and with a shorter time-to-market. Moreover, as technologies today are fast changing, it will be even difficult to try and keep track of them, let alone to determine the ones that are commercially profitable. Hence help and support from partnering companies is definitely required. Nowadays, new products compete not only on price and volume but also largely on the features and capabilities that they offer. The development of new products is increasingly becoming a focal point of competition. Doing it well has become a requirement, doing it extraordinary well is a competitive advantage.

Maxtor Seagate Western Digital Year No. of patents filed No. of patents filed No. of patents filed 1993 1 0 0 1994 0 1 0 1995 8 1 0 1996 8 1 0 1997 11 0 13 1998 12 18 35 1999 30 30 20 2000 3 18 5 2001 1 4 1

Table 3 Number of patents filed by year

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Patent Technology for Competitive Intelligence

Seagate

Maxtor

Western Digital

Figure 9 Number of patents filed by year

The field of patent law and the many

technologies it covers is even more complex than most. Patent documents provide information about one’s competitors and

their products that are not available anywhere else. Management of patent technology is thus essential, since patents are the one place that one’s competitor is forced

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to reveal in public critical information that it never would let out otherwise. Last but not least, effective patent technology management will certainly create valuable interface between technical innovation and economic rewards.

Acknowledgment The author thanks Mr. Tay Chee

Thong who has provided valuable assistance in building up the enclosed case study.

References [1] Larry Kahaner. (1996) Competitive

intelligence. Simon & Schuster [2] H. Schofield. (1996) “Patent information

usage by chemists in universities”. Proceedings of the 1996 International Chemical Information Conference, 21-23 October 1996, Nîmes, France, p. 111- 120. Infonortics

[3] Anthony Trippe. (April 1999) Patent

Information Users Group, Inc. The International Society for Patent Information Software tools for analyzing patents [Online] Available: http://www.piug.org/pattools.html [10 March 2002]

[4] Delphion Inc. (2002) [Online] Available:

http://www.delphion.com [23 March 2002]

[5] Wisdomain Inc. (1998) Patent-lab II

software, [Online] Available: http://www.delphion.com [5 August 2001]

[6] Raffaele Paci and Antonio Sassu. (1997)

“International patenting and national technological specialization.” Techno-vation. 17(1), 25-38

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