Sunday, December 20, 2015

Patent Power 2015: Who Has The Most Valuable Patent Portfolios

We've looked at Intellectual property as an approach to investing but didn't really pound the table because the results of, say the Ocean Tomo 300 index (OTPAT) versus the S&P 500, although showing a slight nod to the patent portfolio leaders, is difficult to tease out in any meaningful way,

The issue is further clouded by the fact that, among tech companies anyway, the companies that spend the least on R&D as a percentage of sales do better than those that spend more.
See: Bernstein Research's "Do High R&D Spenders in Tech Generate Stock Outperformance?" for example. Also last year's "Putting a Price on Innovation: Measuring a Firm’s Ability to Adapt".

That said there is some possible profit to be gleaned from the work of the brainiacs at IEEE Spectrum:

Patent Power 2015: Social Media and Smartphones Score Big
Our annual roundup of who has the most valuable high-tech patent portfolios
The smartphone patent wars may have cooled in recent times, but this doesn’t mean that the leading players are reducing their focus on building formidable patent portfolios. If anything, the opposite appears to be the case. This year’s Patent Power Scorecards reveal that Google and Apple head their respective industries by healthy margins, the former in Communications/Internet Services, the latter in Electronics. Along similar lines, as the market share for its own brand of smartphones dwindles, Blackberry has placed great emphasis on the central role that its patent portfolio will play in the company’s future. The scorecards suggest that this is indeed an area of relative strength for Blackberry amid all its other struggles, with a solid 5th place in Communications/Internet Services.
graphic link to the interactive patent scorecard page
This year’s scorecards also point to the growing importance of patents related to social media. Over the past few years, Facebook has consistently punched above its weight in the scorecards, given its relatively small patent portfolio, but it is no longer the only social media company to make its presence felt. Zynga—developer of social network–based video games such as FarmVille and ChefVille—enters the scorecards for the first time this year, debuting in 7th place in Computer Software. Meanwhile, mobile messaging and social media company Seven Networks does even better, debuting in 4th place in the same scorecard.

Among all these new names rising fast, some older companies also saw notable improvements in their rankings this year. For example, Celanese rose from 13th to 1st in Chemicals, while Western Digital advanced from 14th to 2nd in Computer Peripherals and Storage. Looking beyond the commercial world, Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO) entered the Government Agencies scorecard for the first time in 2nd place, while MIT, Harvard, and the University of California system continued to lead the way among universities.
The Patent Power Scorecards are based on objective, quantitative benchmarking of the patent portfolios of more than 6,000 leading commercial enterprises, academic institutions, nonprofit organizations, and government agencies worldwide. This benchmarking—carried out by 1790 Analytics, based in Haddonfield, N.J.—takes into account not only the size of organizations’ patent portfolios but also their quality, as reflected in characteristics such as growth, impact, originality, and general applicability. The focus on both patent quantity and quality enables smaller high-quality portfolios, such as those of Zynga and Seven Networks, to fare well against much larger portfolios owned by their competitors.
(See “Constructing the Patent Power Scorecards” for a detailed explanation of our methodology.)

About the Authors
Anthony Breitzman and Patrick Thomas are cofounders of 1790 Analytics. They specialize in technology assessment and intellectual property evaluation, publishing widely on the subjects and working with leading commercial, governmental, and financial organizations worldwide.