How to evaluate patent news for their real market impact.

Analyse information hidden in patents for your market advantage.

Patents are a large, unavoidable, often divisive part of the modern corporate world. They are the nexus to an organisation’s competitive advantages (via proprietary product features), billion dollar litigations, patent portfolio transactions and speculations on future product plans. They are searched for, read, analysed and extrapolated on by the competition, the media and fans.

Examples of patent-driven headlines

So, it is no surprise that organisations regularly look to take advantage of new additions to their patent portfolio by issuing accompanying press releases.

The (not-so) implicit message to the market is that the new patent (or application) has just increased its ability to leverage their innovations, whether it be by litigating, transacting, or simply monetising the feature.

I will mostly refer to issued patents and patent applications as “patents” here for simplicity.

What is a surprise, however, is that these press releases are often unclear and offer little real information to the reader.

As an investor, a competitor, or any other interested party, the ideal scenario would be to make informed decisions based this new patent. But a necessary and critical ingredient to making an informed decision is high quality information. The limited information presented by the press release often falls very, woefully short of this bar.

Regularly, they barely offer enough information with which you might be able to find the actual patent document. Sometimes even that doesn’t happen, and I’ve personally seen cases where the press release is just plain wrong, citing incorrect patent numbers, or misleading to the reader.

Even when these amateur mistakes are avoided, these press releases definitely do not provide any contextual information. This is a problem, because not all patents are made the same.

As simple examples, a patent that has issued is usually going to be far more valuable than one that is still an application, and a patent protecting a significant, breakthrough invention is worth ten patents protecting an incremental, also-ran widget.

This is a problem, because not all patents are made the same.

So how do we take the paltry morsels of information regarding a patent, and turn it into actionable intelligence?

I view it as a three-step process, involving:

Step 1: Understand the invention.

Step 2: Put it into context.

Step 3: Evaluate the market impact.

Let me explain in further detail.

Step 1: Understand the invention

This is pretty self-explanatory, but also difficult to do. When a patent application is filed, the applicant is not intending to patent the broad subject matter that is described in the application.

Instead, it is filed with certain aspects that the inventor or the attorney forms the crux of the invention. Therefore, to get an idea of how valuable a particular patent is, the patent must be reviewed to identify these ‘keys’, usually from some combination of the ‘Claims’, the ‘Summary’ section and the figures.

This advice is not to say that it is necessary to completely understand every detail of the patent. But, it is very helpful to know broadly what new technical aspect(s) the patent brings to the table, so that the evaluation is limited to the novel aspects and how they fit in as a whole, rather than to the individual pieces.

In this example patent application (“Head-Mounted Device with an Adjustable Opacity System”), Apple’s attempt at patent protection appears to relate to this photochromic layer set up to darken portions of the real-world light.

Given this information, it is now possible to assess how valuable this aspect might be, by looking at the broader technical and competitive field — how attractive is this feature, what alternatives exist, who owns them, and what is their relationship to the current patent owner (Apple in this case).

Step 2: Put it into context

This general process is referred to as patent “landscaping”, where patent data is collected, analysed and visualised in any number of ways. As the name suggests, sometimes the outputs are in forms of “maps” of patents in a similar fashion to topographical maps, with peaks, valleys, plateaus (and presumably dragons). Luckily, most visualisations are in quite well-known and standardised forms.

Whatever form the outputs take, you want them to answer questions that are relevant to you. In my view, there are three most significant contextual factors to help answer the questions of how “valuable” a patent is.

One is the size of the patent activities in the field, another is the velocity of the field (is it growing? stagnant? shrinking? how fast?), and last is the organisations involved in the field.

Let’s look at the size and velocity of patent activities first.

An example of large & high velocity patent activities

The graph above (for this patent application by Medtronic) at a glance shows the overall size of the relevant patent activities, and velocity. It indicates that it is a large field, with almost 500 new US patent publications to date this year, and growing almost exponentially for the last years.

In this situation, individual patents may not be as significant as if the field was smaller. But, the escalating patent arms race and the likely growth of this sector would mean that filing patents should be viewed favourably, to keep up with the others in the field and to position oneself to be a significant player in the growing market.

An example of small but high velocity patent activities

This graph (for this patent application by Microsoft) above is interesting for slightly different reasons. Although the absolute numbers here are small, the graph shows a steady and high growth rate for what may be an emerging (and perhaps speculative) field. In this scenario, each patent may be even more valuable for having gotten in early where there may be more room for innovation and patent protection. The caveat being, of course, that the field would have to take off.

Look at the size of the patent field that the patent fits into, the velocity of the patent field, and the organisations involved in the field.

In some cases, you might be looking at a small and low (or negative) velocity patent activity, which is a bad first signal for the patent’s value.

An example of small and low velocity patent activities

This graph, despite the spike in 2017/2018, shows very little patent activity or growth in interest. When I look at this, I would question myself why the interest level hasn’t been raised to lead to increased filings, and whether the patent really confers much of a competitive advantage.

Now onto patent owners.

Analysis of the organisations involved in the field can also yield a great deal of unique and valuable information. Let’s take a look at some examples below.

This graph shows an assignee analysis output related to an Apple patent application. Just looking at it, however, it’s Qualcomm’s world and everybody else is just living in it. When looking at a patent landscape such as this one, I would consider what the patent owner’s relationship with Qualcomm is, and how that dynamic might manifest itself in the future.

An example of a patent space dominated by one entity

Whereas, if a more diverse range of actors were found, it would be a great opportunity to identify potential partners, acquisition targets, or even competitors that had been under the radar.

This data can be further drilled into, by looking at a heatmap of publication data by year.

Heatmap showing organisations’ activity levels by yea

This graph is a part of our patent landscape for a Microsoft patent application on fraud detection. Looking at it, one can not only identify the lay of the land, but also quickly visualise how a company’s strategy, and more broadly the competitive landscape may be subtly shifting.

The landscape here is dominated by the incumbents MasterCard, whose activities seem to have peaked in 2017, and Visa and PayPal, who appears to be still increasing their activity to date.

A look at Microsoft’s row shows that this has been an area of recent interest for them. It would suggest that Microsoft sees this area as one of strategic importance to them, and has stepped up their R&D activities which is in turn adding to their patent portfolio. This graph suggests that in this domain at least, MasterCard, Visa and PayPal should be looking at Microsoft as a new market entrant or a threat.

It would be worth keeping an eye on the field to see who becomes the technology leader in this space.

These are just some of the examples through which intelligence can be gained to put individual patents into a broader context.

Finally, we get to the last step.

Step 3: Evaluate the market impact.

The two categories of information above should be now combined to assess the potential impact of the patent in the marketplace.

By collecting and evaluating the information presented above, it should be possible to critically evaluate what impact the patent might have on the market.

If you’d like to really dive into the weeds and conduct further detailed analysis, many search engines (including our patent insight tool) offer filtering tools. With these the user may assess how one portfolio may differ with another by reviewing individual filings. You can even export the list of search results patent documents from our site and conduct your own analytics.

Filter / navigate search results

The above tools and analysis should fairly quickly get you to a great starting point in analysing the lay of the land behind each patent document.

With these, you should be able to evaluate their technical content, assess the size of the patent landscape, its velocity, identify key players and their patent position, assess how this patent fits into their strategy (or not), including whether the organisation may be trending towards or away from this technology.

That’s all for now; thanks for reading.

In later articles, I will detail how some of these principles might be applied for real-life examples and analyses of brand new patent publications. For updates, you can follow me here, on twitter via @hindsights_io, or sign-up for free on my website hindsights.io.

See you next time.