Patent Filing Data: A Sneak Peek into Emerging Technology

Patent Filing Data as a Business Intelligence Tool

Article by Dr. Kathryn Paisner, PhD
Director of Research, Analytics, and Business Development

IP Checkups, US

In today’s high-speed, global economy, the ability to acquire up-to-the-minute intelligence is often paramount to an organization’s success. Early identification of risks and opportunities allows organizations to make smart, sustainable decisions, gaining an edge over their less well-informed competitors. Because such competitive analysis often depends exclusively on current trends, common wisdom now concludes that January’s data will reach obsolescence in mid-June.

Although certainly pertinent to many areas of competitive intelligence, this common wisdom does not accurately describe the long-term value of patent filing data, especially in areas of emerging technology. Published up to eighteen months after their filing dates, emerging technology patents nevertheless offer contemporary—even predictive—intelligence on competitors' goals, including R&D priorities, product development efforts, and overall business objectives.

The reason for this is simple. New technologies usually require significant investments of time and capital, in order to become commercially viable. Even in the absence of major technical or financial issues, transforming a working prototype into a marketable product can take years. Funds must be raised or allocated, manufacturing facilities must be contracted or acquired, scale-up operations must be engineered and fine-tuned, and management teams must be assembled, to oversee various elements of the product development cycle. This is especially true for start-ups, which are often built around pre-existing (if unproven) technologies.

Most people know that patent data provides a window into competitors’ activities; however, these same people often remain unaware that this data can be used to gain insight into broad market trends—especially in emerging technologies like cleantech. This is because patent filings tend to reflect technological valuation. As a technology becomes more valuable, more resources are devoted to improving it, and, consequently, more patents are filed.

What makes patent data especially interesting is that, at least at the macro level, patent filing rates are a good indicator of near-term market growth. People do not invest resources, en masse, in a technology that has no commercial value. Individual organizations or investors might make this mistake, in certain instances, but the market as a whole tends to be largely self-correcting. Therefore, when patenting in a particular technology area increases substantially—and consistently—over a period of a few years, it is very likely that the market for that technology is poised for significant growth.

Recent developments in the solar industry clearly exemplify this trend.  Overall patent filing increased 7% annually, from 2000-2005, then jumped suddenly by 42% per year, from 2006-2009. Market growth in this industry followed a similar path, increasing steadily from 2000-2007 (35% annual growth) before accelerating in 2008 (45% growth) and skyrocketing in 2010 (97% growth, an increase of $40bn).

Patenting in this industry began to decrease after 2009, and, although full records for 2011 are not yet available, it is likely that this trend will continue in 2011. Previous studies have shown that market growth tends to increase at a relatively rapid pace, for at least a few years after patenting begins to ebb—and this is exactly what we are beginning to see, in the solar industry.

Patent Filing Data: Trends in Cleantech Innovation
Taking a look at the broader cleantech landscape, the correlation between patent filing and market growth can be observed in a variety of industry sectors. Renewable energy patenting increased substantially from 2005-2009, in tandem with the increased interest (and investment) in such fossil fuel alternatives. 
chart
Figure 2. Number of Renewable Energy Patents Filed Worldwide, 1992-20111

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Figure 3. Number of Renewable Energy Patents Filed in Various Sectors, 2001-20111

In the energy storage industry, patenting increased dramatically from 1997-2004. From 2005-2007, patenting efforts in this space were essentially flat, and patenting began to decrease in 2008. Not all sectors of the energy storage industry experienced the same patenting rate changes, however. Fuel cell patenting decreased noticeably after 2004, but advanced battery patenting exhibited significant growth through 2008. Hybrid systems patenting, which had increased steadily through the mid- to late-1990s, did not grow significantly during the 2000s.


Source: CleanTech PatentEdge, www.cleantechpatentedge.com

Source: Clean Edge’s Clean Energy Trends 2012 report, http://www.cleanedge.com/sites/default/files/CETrends2012_Final_Web.pdf

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