scanning technologies & competitors

Scanning technologies & competitors:

Patent analysis Lecture for “Tools for the Management of Innovation“

2007-11-19

Olof EjermoCIRCLE

olof.ejermo@circle.lu.se

Overview of lecture

What is innovation? Innovation indicators – what are

the options? What is a patent? Quality-adjustment of patent data:

what are the options? Some applications of

invention/innovation data

What is innovation?

The invention-innovation dichotomy, Bozeman and Link (1983, p. 4):

“The concepts commonly used in connection with innovation are deceptively simple. Invention is the creation of something new. An invention becomes an innovation when it is put in use.”

The ’schumpeterian’ trilogy

Inspired by Schumpeter:

1. Invention – creation of new technological knowledge, i.e. the creation of things previously non-existent

2. Innovation - the application of inventions in a commercial production process.

3. Diffusion - the process by which innovation spreads into the economic environment.

Some thoughts about what would characterize an ’ideal’ innovation indicator: The measure should be all-encompassing –

i.e. we should not have to look for many indicators The measure should be as close as

possible to innovation – preferably commercialized; if not: as close as possible

The measure should be as comparable as possible across:1. countries2. over time3. sectors4. regions5. firms, etc.

The linear model

NOTE: The way this is depicted should be look upon as a rough guideline not necessarily indicating causality (innovation may also cause invention and so on...) (cf. Rothwell, R. (1994), "Towards the fifth-generation innovation process", International Marketing Review, Vol. 11 No.1, pp.7-31.

InnovationInvention

a) commercialized

b) put into use

’Diffusion’

Different related indicators Research and development (R&D) Patent data Quality-adjusted patent data Innovation counts Innovation expenditures Imitation expenditures

Underlined = most commonly used

Measurement of invention: R&D 1

Research & development “Research and experimental development

(R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications.” (Frascati Manual 1993 OECD, my italics)

1. basic research2. applied research3. experimental development

Measurement of invention: R&D 2

Advantages:• long time-series• harmonized throughout OECD, i.e.

reasonable degree of comparability• increasingly possible to distinguish

between process and product, basic vs. applied research, research vs. development

• possible to divide between industries, government, higher education, non-profit, source of finance

Measurement of invention: R&D 3

Disadvantages:• focus on early stages of innovation process –

may not lead to innovation• not the only input into the invention process:• bias against small firms - may have less

formal innovation processes• bias against more service- and/or

organizationally-oriented innovation• sometimes hard to pin-point to location of

actual activity: in particular regions and sometimes countries (the ’Singapore’ effect)

• Confidentiality prevents us from knowing which are the companies.

Patents - What is a patent? legal purpose: awards intellectual property

right, a time-limited (usually 20 years) monopoly to a region/country• requirements on I. novelty; II. inventive

activity; III. industrial applicability. Main important patent awarding offices are

the ’triad’: USPTO (the United States Patent and Trademark Office), EPO (the European Patent Office) and JPO (the Japan Patent Office)

Patents are costly to apply for and must be renewed

Why do we have patents? Knowledge tends to ’leak out’ and be imitated

(spillovers), therefore inventors may be more reluctant to invent. A patent therefore has two objectives

1. It gives a monopoly -> potentially higher rewards to inventors

2. In return, all information about the patent has to be disclosed, i.e. when the patent expires it is relatively easy to imitate the invention for others.

innovation study purpose: patent counts can be useful as inventive/innovative indicators

Patents - What is a patent citation?

applicants required to reveal prior artIn USPTO more patents are cited than

in EPO• Everything that is remotely related is cited

-> risk of getting sued• ”According to EPO philosophy a good

search report contains all the technically relevant information with a minimum number of citations” (Michel and Bettels, 2001)

Patents - invention indicators

Somewhat more indicative of (esp. technological) inventive activity than R&D: the actual effort has resulted in

• an application -> a granted patent

Note: R&D may not lead to patenting, nor does patenting require R&D!

Yet: high correlation between R&D and patents -> patent counts may be used as proxies for ’inventiveness’

Advantages of patent data Highly detailed information on:

date of invention (filing date of application, granting date)

high geographical precision -addresses of inventors (and applicants) -> cy, region, zip code

information on technology Long time-series Highly available – all patent info. is put

online!

Disadvantages of patent data not all innovations are patentable not all patentable innovations are patented there are biases/differences in the propensity to patent

depending on: industry firm size (threshold costs for patenting favors large firms,

although studies seem to indicate that patents are less size-sensitive than R&D)

invention type (e.g. product-life cycle position) what can be patented has evolved over time the cost of imitation technological opportunities

substantial share of patenting is for strategic, preemptive, competition

secrecy may be more efficient protection mechanism no exact technology-industry concordance

Two potential uses of citations for studying innovation:

1. More citations to a patent indicates it has been useful [at least for developing new technology]

2. Citations indicate directions of knowledge flows -> may show: diffusion, spillovers, social networks, knowledge ’clubs’

Innovation counts – the ’object’ approach ’Important’ innovations – 100 Trade,

engineering and technology journals. Small Business Administration. US, only 1982.related efforts in the Netherlands,

Austria, Ireland and Finland. Expert appraisal – the SPRU (Sussex)

database. British innovations for 1945-83

Advantages: expert opinion of what is an innovation no no-response problem addresses of innovators may be available

Disadvantages: only important enough innovations. Largely

ignores incremental, and process innovations.

Very time-consuming work and only few countries where this has been done.

which journals? which experts?

Innovation surveys – the ’subject’ approach Innovation surveys – Yale survey (Levin et

al. 1987) – asked managers about - sources of knowledge (spillovers)- appropriation of knowledge, effectiveness of patents

Community innovation survey – EU similar. In addition: innovation expenditures (R&D + other

efforts) Sales of imitative and innovative products production innovation, process innovation?

Advantages: makes for richer distinctions (innovative/imitative) non-R&D inputs addressed service industries addressed data on: organizational innovation, technological

collaboration, obstacles to innovation Disadvantages:

low response rates (~40-50 %) for EU countries share of innovative products sensitive to stage of

business cycle difficult to answer to what is an innovation

expenditure firms are asked to provide information on whether goods & services

are new to the ’market’ – which market? (specified in later CIS versions)

Confidentiality prevents us from getting to know which are the companies.

An attempt to put measures along our invention-innovation line

InnovationInvention

a) commercialized

b) put into use

’Diffusion’

Spillovers

Imitation

R&D Patents

Imitation exp.

Innovation counts

Citations – and related

R&D in OECD I

1. 1998.2. 1999.3. 2000.4. 2002.

Source: OECD, STI Scoreboard

R&D in OECD-countries II, 1999

Country Business enterprise Higher education Government HE+Govt Bus./(HE+Govt.) Business enterprise Higher education Government HE+Govt Bus./(HE+Govt.)Australia 0.65 .. .. .. .. 17 .. .. .. .. AustraliaAustria .. .. .. .. .. .. .. .. .. .. AustriaBelgium 1.4 0.47 0.06 0.53 2.64 8 6 25 15 5 BelgiumCanada 1.06 0.53 0.22 0.75 1.41 13 3 14 6 14 CanadaCzech Republic 0.78 0.15 0.3 0.45 1.73 16 23 9 19 12 Czech RepublicDenmark 1.42 0.43 0.32 0.75 1.89 7 9 8 6 10 Denmark

Finland 2.2 0.64 0.37 1.01 2.18 2 2 3 2 8 Finland

France 1.38 0.37 0.4 0.77 1.79 9 11 2 5 11 FranceGermany 1.7 0.4 0.34 0.74 2.30 6 10 6 8 7 GermanyGreece 0.19 0.33 0.15 0.48 0.40 25 16 21 18 24 GreeceHungary 0.28 0.15 0.22 0.37 0.76 23 23 14 23 20 Hungary

Iceland 1.12 0.5 0.72 1.22 0.92 12 5 1 1 19 IcelandIreland 0.87 0.28 0.07 0.35 2.49 15 20 24 24 6 IrelandItaly 0.51 0.33 0.2 0.53 0.96 18 16 17 15 18 Italy

Japan 2.08 0.44 0.29 0.73 2.85 3 8 10 9 3 JapanKorea 1.76 0.3 0.36 0.66 2.67 5 18 5 12 4 KoreaMexico 0.11 0.11 0.19 0.3 0.37 27 25 19 25 25 Mexico

Netherlands 1.14 0.53 0.33 0.86 1.33 11 3 7 4 15 NetherlandsNew Zealand 0.31 0.35 0.37 0.72 0.43 21 14 3 10 23 New ZealandNorway 0.92 0.47 0.25 0.72 1.28 14 6 11 10 16 NorwayPoland 0.31 0.21 0.23 0.44 0.70 21 22 12 20 21 PolandPortugal 0.17 0.29 0.21 0.5 0.34 26 19 16 17 26 PortugalSlovak Republic 0.42 0.07 0.18 0.25 1.68 20 26 20 26 13 Slovak RepublicSpain 0.46 0.27 0.15 0.42 1.10 19 21 21 21 17 Spain

Sweden 2.74 0.78 0.12 0.9 3.04 1 1 23 3 2 SwedenSwitzerland .. .. .. .. .. .. .. .. .. .. SwitzerlandTurkey 0.24 0.35 0.04 0.39 0.62 24 14 26 22 22 TurkeyUnited Kingdom 1.25 0.37 0.23 0.6 2.08 10 11 12 13 9 United Kingdom

United States 1.98 0.37 0.2 0.57 3.47 4 11 17 14 1 United StatesEuropean Union 1.19 0.39 0.26 0.65 1.83 European UnionTotal OECD 1.53 0.38 0.24 0.62 2.47 Total OECD

EPO patenting 1993-99 – fractional counts

1 patent –

2 inventors:

a) France

b) UK

France -> ½ patent

UK -> ½ patent

EPO patenting per capita

EPO patenting – weighted counts

Same thing, but counted with weights. Example a patent gets 2 citations -> it gets a count of 2

EPO weighted patenting/capita

EPO citations per patent

Revealed technological advantage of European countries

PP

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The share of patenting in sector i in all countries in relation to total for all countries

The share of patenting in sector i in a country in relation to total for the same country

Same thing, but counted with weights. Example a patent gets 2 citations -> it gets a count of 2

Higher than 1 -> the country is relatively specialized in the sector

RTA in European countries (weighted measures) AUSTRIA: Lightening equipment 4.57, Basic metals

4.20, Other transport equipment 4.05 BELGIUM: Soaps, detergents, toilet preparations 7.77,

Other chemicals 5.42, Paper 5.38 SWITZERLAND: Watches, clocks 8.89

Food, beverages 2.58, Agricultural and forestry machinery 2.44

GERMANY: Man-made fibres 2.05, Wood products 1.83, Pesticides, agro-chemical products 1.52

DENMARK: Food, beverages 9.36, Agricultural and forestry machinery 4.79, Non-specific purpose machinery 2.01

SPAIN: Other transport equipment 3.72, Domestic appliances 2.18, Fabricated metal products 2.01

Source: CIDER – CIRCLE Innovation Databases for Economic Research

FINLAND: Signal transmission, telecommunications 6.03, Paper 2.85, Man-made fibres 2.63

FRANCE: Petroleum products, nuclear fuel 1.79, Leather articles 1.54, Electric distribution, control, wire, cable 1.53

GREECE: Paper 7.65, Pesticides, agro-chemical products 6.00, Rubber and plastics products 4.39

IRELAND: Wearing apparel 16.38, Electric distribution, control, wire, cable 9.05, Other chemicals 4.56

ITALY: Leather articles 4.59, Wearing apparel 3.27, Furniture, consumer goods 2.32

LUXEMBOURG: Petroleum products, nuclear fuel 8.73, Rubber and plastics products 4.84, Accumulators, battery 3.70

NETHERLANDS: Paints, varnishes 4.72, Food, beverages 3.42, Agricultural and forestry machinery 3.37

NORWAY: Petroleum products, nuclear fuel 8.86, Other transport equipment 6.92, Electric motors, generators, transformers 5.90

PORTUGAL: Domestic appliances 7.30, Fabricated metal products 4.70, Non-metallic mineral products 3.44

SWEDEN: Medical equipment 4.52, Machine-tools 2.52, Signal transmission, telecommunications 2.50

UK: Tobacco products 3.71, Petroleum products, nuclear fuel 2.33, Soaps, detergents, toilet preparations 2.29

Lafou.shp0 - 48.83349.833 - 194.157195.157 - 424.808425.808 - 1544.5761545.576 - 3481.667

Granted patents, fractions

Lafou.shp0 - 1819 - 6465 - 184.967185.967 - 554.917555.917 - 1742.869

Grants, weighted by citations received

Lafou.shp0 - 0.2160.216 - 0.5810.581 - 0.8840.884 - 1.2391.239 - 2.72

Grants, weighted by citations /unweighted grants

Weighing by citations, patents become more geographically concentrated as compared to unweighed patents -> innovations are more concentrated

Indicators of patent quality Forward citations – citation impact. How many cites are

going to a specific patent? Because of truncation, recent patents cannot be

compared with old ones. (Why?) Backward citations – how much information is used.

Rationale: More information -> better quality Backward citations with science links = citations to

journal papers -> Family size – the number of offices where a patent is

filed. More offices -> more widespread and valuable Claims - How many claims are there?

One claim roughly correspond to a patent in itself Litigation (USPTO)/Opposition (EPO) – If tried in court a

patent is likely to be more valuable. Technology cycle time – median age of cited patents.

Rationale: new patents are more useful

©2005 Joe Tidd, John Bessant and Keith Pavitt

When to use patent data?

Patents are especially effective and indicative of technological innovation when...

• ...in sectors close to science -> codifiable inventions (e.g. formulas as in chemicals, pharma etc)

• The invention is primarily protecting products rather than processes – i.e. indicate primarily product innovation