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Intellectual property for the financial sector

Up to 80 per cent of a company’s value is made up of intangible assets, such as trademarks or copyright, which can be hard to identify or quantify. But there’s one intangible that can provide a rich source of corporate information: patents

For more than 200 years, registered patents have built into an encyclopaedia of innovation across the world. Mining this intellectual property (IP) data can tell you where a company is going, what technology is worth an investment and who are the most prolific emerging inventors. It can tell you who your closest rivals are or find technology that could jump industries. It helps you to spot the failing companies or the startups with the brightest prospects. Patent data has predictive power for more than ten years into the future.

When you are looking to invest or advise, patents are the information goldmine you need

But patents are also notoriously messy to analyse, not only very data heavy, but also fiendishly complicated. Companies put a good deal of effort into disguising their patents by registering in different jurisdictions or under different subsidiary names. They dream up ways to hide what technology is being revolutionised, for example a pen is renamed a scribing device or a cylindrical ink delivery mechanism.

It takes time and effort to clean the data enough to use it. PatSnap, the IP platform created by its founder and chief executive Jeff Tiong in 2007, has more than 300 data scientists and engineers dedicated to this task. Mr Tiong’s vision was to develop a database that demystified the complexity of the data and allow any business professional, scientist or research and development engineer fast, simple and direct access to global IP data.

The sheer quantity of information is astonishing; Apple has more than 65,000 patent applications and Samsung has over 789,000. Each patent will have up to 110 datapoints that need to be aligned and standardised. With more than 134 million individual patent records, and over 10,000 added a day, the scope of this dataset is vast. PatSnap enables you to search for highly specific data without any prior knowledge of IP using powerful advanced machine-learning and semantic and image-searching.

Patent data can yield astonishing insights. Looking at where patents are registered can help identify where a company’s geographic focus lies or which locations it believes are set for growth. By focusing on the technology, it’s possible to determine when a company steps outside its core competencies, which could indicate a strategic shift towards diversification or a move into a new tech space.

While patents can offer this insight, levels of knowledge about how to use the information to strengthen innovation remains low. To address this gap, organisations are encouraged to raise awareness and understanding of IP. It is one of the reasons why PatSnap offers an online academy available to everyone with an interest in this area.

Every patent has a globally recognised taxonomy, which enables you to see the exact industry areas which a company is moving into. For instance, 52 per cent of Glaxo’s patents fall under medicinal preparations with organic active ingredients, whereas Pfizer has 67 per cent of its portfolio in this area. Patents bring clarity to a company’s core competencies and help build a better picture of the business.

Dive a little deeper and you can find even more. A patent is legally required to cite the technology on which it was built, so you can map the connections between companies. Patent data can show which companies are close in terms of technology – invaluable information for investors trying to diversify a portfolio – or which patents are the most influential or have the furthest global reach.

Following patent data over time can provide key business insights, such as preparing for an initial public offering or expanding into new markets. For example, Apple began filing patents for wearable technology in 2013; the Apple Watch went on sale in 2015. It took Dyson four years from its 2012 patent filing for hair dryers to launch the Supersonic Hair Dryer. Looking at patents can enable product trends to be spotted ahead of commercialisation.

Patent analysis is particularly useful when looking at startups. According to the US Patent and Trademark Office, startups that win a patent have, on average, 55 per cent higher employment growth and 80 per cent higher sales growth five years down the line. Winning a first patent facilitates access to funding from venture capitalists, banks and public investors.

Turn this on its head: for startups looking for funding, a strong intellectual portfolio can be a big tick in the venture capitalists’ box. Showcasing a comprehensive IP strategy and being able to articulate how it stands up to the competition may be the difference between success and failure.

Sometimes creative patent analysis has cross-industry applications. Who would think that technology developed by a peanut butter manufacturer to stop oils collecting at the top of the jar would have an application in the paint industry? But that technology enabled one premium paint producer to develop a range of paints that did not need to be vigorously stirred before use.

Mining this intellectual property data can tell you where a company is going, what technology is worth an investment and who are the most prolific emerging inventors

The sheer wealth of information that can be gleaned from patent data is astonishing, but even more incredible is it is still an underutilised resource, particularly by the financial services industry. Although, according to Richard Edwards, financial services director at PatSnap, the level of standardisation that is possible through machine-learning techniques means this area is growing fast with both asset managers and sell-side researchers.

“We have seen an increasing interest in the potential value of this virtually untapped resource among investors and data-hungry researchers,” he says.

With so much information it’s easy to see why it has been hard to slice and dice in the past, but with the development of PatSnap’s machine-learning and the patient establishment of a global databank of patents, the analysis is simply a few clicks away. When you are looking to invest or advise, patents are the information goldmine you need.

For more information please visit www.patsnap.com

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