Patent Prowess

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Tech stocks may still be dropping in markets around the world, but that isn’t because companies are running out of new ideas, to judge from the compilation IEEE Spectrum is publishing here for the third year in a row. Last year inventors and their employers continued to file patent applications at an ever-increasing rate: there were 456 154 applications for U.S. ”utility” patents—those for inventions as opposed to design ideas, new organisms, and so on—an increase of 7 percent over 2006. That was more than twice the number filed a decade ago, according to the data compiled by 1790 Analytics, which specializes in evaluating intellectual property.

Over the years, the companies appearing in the top ranks of the major patent categories tend to be the same, which is not a surprise considering the importance that the biggest multinational technology companies attach to intellectual property. But here and there striking changes occur, and sometimes they signal new technology trends. Last year, for example, E Ink, a pioneer in electronic ink technology, suddenly showed up in the top ranks of Computer Peripherals and Storage, trailing only Seiko Epson and Ricoh in overall Pipeline Power, despite having a much smaller patent portfolio.

Our Pipeline Power metric is derived by adjusting the number of patents owned by organizations to reflect various measures of patent quality. It is designed to show the overall strength of each organization’s patent portfolio.

If you happen to know that it’s E Ink technology that’s used in Amazon’s very hot electronic book, the Kindle, perhaps you won’t be surprised to see it throwing so much weight. In fact, it’s not the only company of its ilk to find itself surrounded in Computer Peripherals by very large companies with broad technology interests. SiPix Imaging, a direct competitor to E Ink, appears for the first time in the scorecard in 2007 and is ranked 10th.

The presence of two electronic ink companies, both relatively small, in the top 10 of such an important category shows just how much interest there is in this emerging technology area. And that’s not all it shows.

Looking in more detail at the patent metrics of E Ink and SiPix reveals that both companies have very high Pipeline Impact values (5.00 for E Ink; 3.42 for SiPix). This means that their patents have been cited much more frequently than expected, given their age and technology. E Ink and SiPix also have high Pipeline Generality values (5.00 for E Ink; 3.45 for SiPix), suggesting that their patents are attracting citations from patents describing a variety of technologies.

Many of the citations to the patents of E Ink and SiPix come from subsequent patents granted to the companies themselves. As an example, SiPix has highly cited patents describing microcup arrays that can be used in electrophoretic displays. These patents are referenced in large numbers of subsequent patents assigned to both E Ink and SiPix. They have also been cited by patents assigned to large technology companies such as Fuji Xerox, HP, SAIC (Science Applications International Corp.), and 3M.

Separately, E Ink has a series of highly cited patents describing displays that contain particles suspended in a fluid and also describing details of these particles. These filings underpin E Ink’s electronic ink technology and figure in large numbers of subsequent patents of both E Ink and SiPix, and also patents assigned to large technology companies such as HP, Philips Electronics, and Xerox.

This pattern of citations to the patents of E Ink and SiPix suggests that electronic ink is still a relatively self-contained technology, with competing companies building extensively on each other’s patent portfolios. Having said this, we should also note that large technology companies are also starting to build on the patents of E Ink and SiPix, reflecting electronic ink’s status as an emerging technology with broad potential application.

Companies first appearing in the scorecard or moving up significantly in the rankings are of particular interest. One such company is Novellus, whose ranking in Semiconductor Equipment Manufacturing improved from 17th in 2006 to third in 2007. The patent metrics for Novellus reveal that its patent portfolio is growing at an increasing rate (high Patent Growth Index) and has had a strong impact on subsequent technological developments (high Pipeline Impact), as seen across a range of technologies (high Pipeline Generality).

Novellus has a series of highly cited patents describing its chemical vapor deposition (CVD) technology, in particular high density plasma CVD. More recently, the company has been granted patents related to supercritical solutions for wafer cleaning and methods for using these solutions in chip fabrication. These patents are already attracting significant numbers of citations from subsequent patents assigned to large technology companies including ATMI, IBM, Intel, NEC, and Samsung. This suggests that the wafer-cleaning technology developed by Novellus has had a significant influence on subsequent developments in chip manufacturing.

Another interesting company that appears for the first time in the 2007 scorecard is Gentex, which is known for its vehicle safety devices, such as rearview mirrors and lighting systems. Gentex has the highest score in the Automotive and Parts industry for Pipeline Impact, indicating that its patents have been cited particularly frequently by subsequent patents. Gentex also has the highest Pipeline Generality score in the Automotive category, suggesting a broad influence stretching beyond its immediate industry.

Looking at Gentex’s patents in more detail reveals that it has highly cited patents related to advances in rearview mirror technology and to LEDs with thermal protection. Both of these sets of highly cited patents contribute to Gentex’s strong Pipeline Impact. But in Pipeline Generality, Gentex’s LED patents are the most interesting. Subsequent patents describing a range of technologies have cited them. Many of these citing patents are assigned to companies outside the automotive industry, including very large technology companies such as Fuji Xerox, GE, LG Electronics, Philips Electronics, Sharp, and Toshiba.

Dominating electronics once again are Hitachi, Matsushita, Xerox Corp., and Sony, just as it was in 2006. Cisco, Nokia, and Motorola remained at the top in Telecom Equipment, and General Motors, Nippnondenso, and Toyota led the way in the Automotive category. These are industries where the barriers to entry are so high that the leading companies change very little year by year.

But in other industries, changes can occur rapidly. Medical Equipment/Instruments and Scientific Instruments have seen major changes between 2006 and 2007, while MIT and Caltech have taken over at the top of the universities/education/training ranking.

For the first time this year, our scorecard includes Computer Software as a separate industry (previously, hardware and software companies were listed in the same industry). Perhaps not surprisingly, Microsoft has a significant lead in Computer Software, with an overall Pipeline Power score five times as high as any other software company’s. Other well-known names that figure prominently in the Computer Software category include SAP, Oracle, and AOL.

AOL appears in the scorecards for the first time this year, and the same is true of Apple in the Computer Systems industry. These companies have both seen increases in their overall Pipeline Power scores, suggesting that their patent portfolios are becoming increasingly influential. AOL has a series of highly cited patents covering technologies such as instant messaging and online purchasing. Meanwhile, Apple has highly cited patents in a range of technologies, from media players with touch pads to user interfaces for time-based data.

Significant changes in international trends are showing up, even though the percentage of U.S. patent applications from foreign organizations and individuals has barely changed: it increased from 44 percent in 1997 to 47 percent in 2007. In particular, European companies are becoming much more prominent in life sciences. While 17 out of the 20 leading Biotechnology and Pharmaceuticals companies in 2006 were U.S.-based, this number fell to 11 in 2007, with the other nine leading companies all being European. American companies remain as strong as ever in information technologies, however, particularly in Software, a new category in this year’s scorecard.

Both of these findings—the continuing strength of the United States in information technology and the growing strength of Europe in life sciences—reflect trends reported in the recent study ”Emerging Clusters Project,” produced by 1790 Analytics for the Department of Commerce.