US Patent Data
It’s a new year and now that 2017 is over, Intellectual Property depatments at corporartions should be reviewing the overall U.S. patenting statistics for the year and analyze the evident trends that may impact the patent industry. In 2017, there were just over 350,000 granted patents, which is an increase of 5.4 % over 2016. This reverses a trend we had seen over the previous three years where grants were essentially flat. However, there were also about 375,000 U.S. applications published in 2017, which is over 7,000 fewer than 2016.
So while there was a jump in 2017 in grants, the slowing trend continues for applications, as it has for the past few years. The numbers indicate, therefore, that the USPTO has reduced its backlog, and the trend towards fewer applications being published could be seen in future years in a reduced number of patents.
So what this all mean? Here are the biggest takeaways from the last year.
- Patentees are Making More Informed Filing & Renewal Decisions
The most interesting trend to watch over the next few years will be what happens with new applications. What we will begin to see over the next few years is a counter trend to the massive patenting acceleration we saw from the 90’s to now, with varying regional timing. We will see some levelling off in patent applications around the world as patentees make smarter, more informed decisions when it comes to filing and renewals; and as there is increasingly a move from quantity to quality. It’s a trend that may well lead in years to come to a decrease in the overall number of new patents filed annually, together with an increase in the number of patents that are allowed to lapse.
There are countless studies that talk about patent quality and a frequently cited statistic is that most patents have little or no value. Obviously there is a “portfolio” effect at play that complicates this calculus, but there is certainly a growing focus on quality over quantity and better stewardship overall of resources directed towards R&D and IP development.
We are already seeing signs of this trend. While the USPTO patenting statistics for 2017 showed a 5.4% increase in patent grants over 2016, there were 7,000 fewer applications published, continuing the slowing trend in patent applications seen in the US in recent years.
A contributing factor to the decline in the number of applications is that patent owners are getting smarter and doing a better job of filing patents that are more useful to their business. These patents align more closely with their broader business strategy, ensuring that patent portfolios do their job of protecting the organization’s products and innovation roadmap, as well as providing strong defensive capabilities, and monetization opportunities via licensing, sales, and enforcement.
Elsewhere, the emergence of huge economies such as China on the IP scene in recent years has led to a significant global increase in patent applications, with China now well established at the top of the list of the world’s leading patent filers.
As economies move from ‘importing’ innovation to developing home-grown innovation, there is a natural tendency to cast a wide net in order to protect that innovation. This can lead to something of a “patent for patent’s sake” approach and a focus on quantity rather than quality. You could also see a bit of the “race to become an IP player” here in some economies that haven’t historically been big IP players – much like we see in corporate IP governance in certain technology areas, you need a certain warchest of IP to “get in the game.”
In time, however, as countries increasingly embrace modern IP management and analytics, the value of a more strategic approach to patent filing and renewals becomes apparent - and this, in turn, tends to lead to a gradual switch in focus from quantity to quality.
Going forward, organizational focus will be on smaller, higher quality patent portfolios to better protect products, provide a good defensive stance, and maximise monetization potential via sales and licensing.
We’ll also see more of a focus on aligning IP with corporate strategy and product portfolio management. Obviously there are a number of ways to monetize or leverage IP assets, but at the end of the day, patents are there to maximize the ROI of R&D investment – the area where this has highest potential is in products (industries that have uniquely coupled IP:Product like pharma understand this well).
As cross-functional teams of IP legal experts, licensing professionals, product managers, and engineering/R&D coordinate better, we’ll see more alignment of product and IP roadmaps – leading to stronger alignment of IP strategy and product life-cycle management.
The backbone of much of this is increasingly data, analytics, and decision support tools armed with AI. ‘Big data’ analytics and AI are transforming the IP industry. Smart analytics provide detailed intelligence on the markets, competitor activity, etc. at a fraction of the time of traditional research methods. This is helping IP professionals make faster, more informed decisions and develop strategies that are better aligned with and more effective in supporting the broader business goals. In this way, they are underlining the critical importance to organizations of ensuring they have the right IP assets in place and a business-led approach to managing those assets.
- Organizations Will Begin to Focus on Smaller, Higher Quality Patent Portfolios
In today’s highly competitive world, there is a balance to be struck between the protection of essential patent assets and the sheer expense of maintaining portfolios that might be bloated with patents that are now of little or no value to an organization. For most IP professionals, their role involves a challenging combination of innovation management and cost management.
The patent process can be very expensive, both in terms of filing new patents and renewing existing patents. On a fixed annual budget, money spent on renewals is money not spent protecting new ideas. While, it is essential to ensure that valuable IP assets are protected, the depth of research and evaluation of markets, competitors and patentability that ‘big data’ analytics bring enables a more informed, strategic and cost-effective view of decisions such as whether to file or not to file a patent in the first place; which patents to keep at all costs; which to license; and which to sell or abandon.
How will this focus provide a good defensive stance?
For patent-holding organizations, one of the keys to success in effectively protecting and managing their IP assets is how well they ‘know’ themselves – both in terms of their patent portfolio and how that supports the broader business. The better that IP professionals know their own business, the better able they are to identify and protect the business against competitor threats.
It probably goes without saying, therefore, that the bigger the portfolio, the harder it is to keep track and to truly know what you have… and why. This is particularly true for companies with more limited IP management resources.
A major benefit of taking a more focused approach is that it allows for improved patent-product mapping, providing a clearer view of which patents protect which products or range of products. That may seem obvious, but it can become complicated, especially where various products and their components are protected by multiple patents (and the reverse).
By tracking patents and the products they protect, IP professionals have better information for making decisions, for example on renewals. The intelligence gained through mapping and ‘big data’ analytics will help determine which patents have most value to the business and should be kept; which may have value to other organizations and represent potential licensing or sale opportunities; and which have little or no value and can be abandoned.
If IP professionals then overlay their own mapping against competitors, they can begin to understand key trends, strengths and potential weaknesses of their portfolios, and take action.
- Hi-Tech Companies are filing the most patents.
The top ten patentees are all hi-tech companies in the communications, computing and data processing sectors. This is not really surprising. It simply reflects the huge amount of innovation required in an age of dramatically increased connectivity, bringing with it ever-growing demands from consumers and businesses for faster and fuller access to information and data.
Leading the way is IBM, a perennial innovator, with over 9,000 patents granted in 2017. This is the first time any patentee has broken through the 9,000-patent barrier. In the past 15 years alone, IBM has received more than 1% of all patents ever granted by the USPTO, a testament to the company’s focus on R&D and innovation.
While communications, computing and data processing continue to be the most patented technologies, it is interesting to note that there have been advances in other classes as well, such as food and drink preparation, tools and hardware, and furnishings. In highly competitive, consumer-led markets, where expectations are higher and choices wider than ever before, innovation occurs across the board, not just in hi-tech and bio-tech.
Take the food and drink industry, for example. Manufacturers are increasingly investing in ‘designer foods’ as new technology and continuing trends towards health and fitness, particularly among younger people, drive innovation in the sector.
Just look at the shelves in supermarkets and health food shops and you’ll see the vast array of ‘new foods’ available, including immunity-enhancing foods; ‘free from’ foods, such as lactose or gluten-free; ‘clean eating’ foods and ‘unprocessed’ health products; ‘nutraceuticals’ such as protein powders and omega-3 products; and ‘functional’ foods, including yoghurts containing probiotic bacteria and breakfast cereals fortified with minerals
In an age of better connected, better informed consumers, we can expect higher levels of innovation through just about every sector. This will put even more pressure on IP professionals to ensure they have effective IP strategies in place and that they themselves can make better, more informed choices when protecting and managing their companies’ or clients’ innovation.
Erik Reeves is CTO of Anaqua, an IP software company. As CTO, Erik Reeves leads Anaqua's technology strategy and long-term plan for integrated IP software and services platform. He oversees the development of the Anaqua, IdeaPoint, and AcclaimIP innovation platforms and their integration, including infusing data intelligence through all software solutions and services. Prior to joining Anaqua, Erik had over a decade of experience in the IP and Innovation field, and he is a recognized thought leader on Patent Search & Patent Landscaping, IP Ecosystem Modeling and Big Data Strategy. As the Co-Founder and creator of AcclaimIP and FreePatentsOnline.com, Erik has provided innovative tools that set a new bar for usability and speed in the IP industry.