Competitive Intelligence – Keeping An Eye On The Competition By Tracking IP & Patent Activity

In our last post we talked about a popular notion that anything to do with patents is relevant only to those who need to file them and those who have legal vested interests in them. We concluded that if analyzed in the right perspective, patent activity can provide actionable intelligence across business functions. The fact is, patent activity is a great indicator of global business in general. By tracking the right sets of patents, you can actually get an overhead view of ‘what is happening in the economy?’ ‘what is happening in your industry?’ ‘where are things headed?’ and the question that’s on the mind of every business development head or management executive “what are my competitors up to?”.

If you are able to pull the right data , the intelligence that analysis software like Patent iNSIGHT pro can generate can be invaluable in studying the competition. The WIPO statistics published on patent activity last year stated:

Worldwide patent activity increased by 4.9% between 2005 and 2006, mostly due to increased filings by applicants from China, the Republic of Korea and the United States of America

* The total number of applications filed across the world in 2006 is estimated to be 1.76 million, representing a 4.9% increase from the previous year. Between 2005 and 2006, the number of filings worldwide by applicants from China, the Republic of Korea and the United States of America increased by 32.1%, 6.6% and 6.7% respectively.

At a macro level, this indicates that businesses in Korea and China need to be monitored more closely as the IP activity levels there are on a rise. However, when you can narrow down and track activity on smaller sub-sets of patents, you can get a much clearer picture of what competitors are doing. It can be used to spot trends and ascertain interest areas of competitors. It can be used to monitor their interest in various markets across the world and help identify their entry or interest in new markets. It can even be used to see if a competitor is planning a change in the direction of the company or diversifying into new areas. Any intelligence which helps you stay a step ahead of them is useful and patent activity can be a very revealing source.

Let’s look at the digital camera space as an example. If you study the bigger players within the industry you’ll probably observe a trend during the last few years where focus has been on developing the CCDs used to capture images. It was the megapixel race where each firm would develop a better CCD with more pixels squeezed into the same space so that their companies would launch the next camera with more megapixels taking a bite out of the competition’s market. More recently, you’ll observe a drop in activity around that area and that should be an indicator to companies in the industry that the focus has shifted from CCDs and moved to other areas. The innovation section of New Scientist Magazine online published an article which suggests that’s exactly what happened in the digital camera arena when they say:

Akira Watanabe, head of Olympus’ SLR planning department, said that 12 megapixels is plenty for most photography purposes and that his company will henceforth be focusing on improving color accuracy and low-light performance.

That will surely raise the quality of most home snaps, but his admission suggests something much bigger for the future of photography. As most of the technological hurdles of capturing still and moving images on consumer-grade cameras have been met, the real frontier of innovation now lies in what happens to images after they have been captured.

Now, from the point of view of someone heading this business unit and responsible for its future, trends like this indicate to the marketing, business development as well as R&D groups that it’s time to sit down and start looking at where that focus has moved. Being able to spot that simple trend at the right time could have saved the business a considerable amount in time and R&D costs by re-aligning their objectives and keeping pace with competition. The real challenge with simply looking through patent data is the vast amount of data which exists which alone, is impractical. This is where text mining technology and patent analysis come to the rescue. In the hands of business development and management executives, it can work as a competition insight software application to spot movements and make smart decisions based on accurate intelligence. Contrary to the belief that you need to have a deep legal understanding of patents to analyze such things, patent analysis technology enables executives to pull the kind of intelligence that they need to go through without really having to look into the legal data at all. It can be used effectively just to keep tabs on the competition and contribute to the decision making process. So if you haven’t considered the value of IP intelligence beyond science and law, you may want to give it a closer look. After all, you never know which competitors may just be keeping an eye on you.