July 30, 2007

Patents Analysis for Competitive Gains

By CXOtoday Staff
Mumbai, Jul 23, 2007

With the emergence of new technologies and market players, many companies face the prospect of being outpaced by their competitors. Finding a way to look over the competition's shoulder and interpreting business strategy - and that of the industry as a whole - is critical to success in an ever evolving marketplace. But, you don't have to infiltrate a rival's secretive Research and Development (R&D) practices to get the information you need. In many cases, patent publications provide the only source of insight into a company's R&D initiatives before a product launch occurs. Once this data is converted into competitive business information, Intellectual Property (IP) professionals can uncover trends and anomalies critical to making sound choices. In these instances, patents intelligence is an essential business tool crucial for forecasting and overcoming competitive pressures. The study of patents publications provides an all too often under utilized window into market dynamics.

Patents analysis offers a company the opportunity to benchmark itself with respect to the competition. However, for this to work, the company must first understand the status and positioning of its own portfolio. By assessing various trends, strengths and weaknesses, and more importantly the potential implications of IP rights on the overall business strategy, companies become well positioned to deal with threats and opportunities. One of the most important aspects of competitive intelligence is the opportunity it creates for monitoring emerging technologies. The results may indicate the innovation habits of major conglomerates, smaller niche companies, and academia.

The pace of emerging players, diversification rates of organizations, and the influx of non-core competitors can assist in evaluating changes to "IP market share" to support white space analysis projects prior to entering new markets. Trend analysis can reveal the most viable route to market or when trying to squeeze products into an already crowded space. With a picture of the competitive landscape in-hand, an organization can gauge its chances of success by locating a strategic route between its rivals.

Such detailed knowledge enables a company to make more informed business decisions and align its IP practice with its strategic goals. If its competitors are diversifying into new markets, this raises questions about their own international and technical coverage.

The benefits of competitive intelligence data extends into a company's boardroom, enabling decisions to be made more effectively and precisely. This may allow marketing strategists to gain product positioning insight, or R&D personnel to stay abreast of key innovations. Information available from the interrogation of patent landscapes is versatile and can be used to reveal the following:

o Identification of industry leaders, their trends, and the density of patent rights within a particular field. This assists in assessing freedom to operate, ability to compete, barriers to entry, justification of patent threats, and other critical factors for strategy judgment.
o Merger and acquisition support as well as due diligence of portfolios can benchmark and apportion significance to a target's portfolio. Management can, therefore, become more informed before investing.
o Litigation and licensing support for narrowing and categorizing large quantities of patents, with the ability to filter and drill down to key findings. This helps with risk assessment and commercialization opportunity studies.
o Alignment of IP holdings based on organizational configuration, product lines, or business units provides executives a view of their IP rights mapped in the same fashion as corporate structure.

All these benefits are of significant value and, from experience, we've seen instances where a target's portfolio is close to expiration, the original inventors are no longer employed by the company, and future innovation upon core technologies has dwindled as a result. These findings are often vital in deciding the validity of the merger or acquisition. Similarly, by employing competitive intelligence techniques, companies have been able to identify whether rumors of rival developments are in the process of being realized - creating a level of awareness necessary to cope with ever-changing market dynamics.

As with any type of detailed analysis, staying on top of this information and organizing it into actionable knowledge can be a daunting task without proper patents analytical capabilities. As each technology differs, trends may take years to develop and the identification of them can take just as long to untrained analysts. Auditing patent publications and then gathering a team together to analyze their meaning is difficult and often expensive to justify for even the largest organizations. Even after companies have obtained the published details of their competitors' innovations, the commercial potential and threat level is not always apparent at first glance. A fair amount of analysis and brainstorming from all departments of the organization is required to build a concrete shape of any industry and there are tools available to assist with data extraction, as well as the analytical process. Yet, companies who don't take advantage of these capabilities run the risk of playing catch-up or worse, of being blocked out of the market and reliant upon third party licenses to stay in the game.

By merging IP and business strategy, companies are able to understand how to use competitive information - thereby ensuring that their own developments are in synchronization with external industry developments. Only by identifying market trends and rival innovations will a company be able to refine its future research to ensure success. Ultimately, patents intelligence is a piece of a puzzle. When combined with other forms of competitive knowledge, a comprehensive view of the landscape can be provided and the benefits are often extraordinary.

By Jason Resnick, Patents Expert at CPA

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