Report on Patent Information Services

1. Scope of the Report

This report provides an analysis of the patent information services market. Various
patent information service providers have been analyzed and compared, to provide a
comprehensive analysis of the tools and services offered by them.
Further, this reports elaborates on the role of Knowledge Management (KM) and
Information Technology (IT) tools in the provisioning of tools and services offered by
patent information service providers. We have also analyzed various KM and IT tools
pertaining to this in the report.

2. Executive Summary

Patents are important sources of technical and business information. They provide
an insight on technology, business, and competition, and have the potential to affect
key decisions, such as those related to the Research and Development (R&D)
strategies and business strategies of an organization. Strategies that are based on
the effective utilization of patents and patent information can significantly boost the
profits of an organization.

Researchers in research, development and corporate organizations, as well as those
in universities, utilize the technical information obtained from these patents as
starting points for their research. The use of patent information helps them in
avoiding the ‘reinvention of the wheel’, because they can potentially license and use
patented technologies instead of wasting time and money in developing identical
technology.

Additionally, technology landscape analysis based on patent information helps in
identifying niche areas where the return on research investment may be higher.
Hence, most corporations and research enterprises use available patent information
while formulating their R&D and business strategies, and they particularly utilize this
information while conducting competitive analysis and ‘due diligence’ with respect to
mergers and acquisitions.

Finally, research analysts often use patent information to benchmark the
innovativeness of a company, in comparison with that of its competitors. Similarly, its
patent filing trends are used as indicators of its research focus.

The key challenge faced in utilizing patent information effectively is sifting relevant
information from a multitude of data. Patent data is spread across multiple databases
and is written in multiple languages. Moreover, an organization needs to engage the
services of experts to identify and analyze the relevant information.

The patent information services market comprises companies that provide products
and services related to searching, mining, analyzing, and managing patents and
patent-related information. The common products and services offered by these
information service providers include:

• Advanced patent databases: These databases combine patent information from
  multiple sources. Additionally, the providers modify and enhance this patent
  information to provide more refined information.
• Search tools for accessing the patent information stored in the patent databases
• Analysis tools for analyzing patent information
• Visualization tools for presenting the analysis
• Multilingual services for patent information in different languages
• Readymade or customized reports based on the requirements of users

Users choose service providers based on their requirements. Patent information
service providers use various parameters to differentiate their services from those of
others. As of now, the deciding factor for most users seems to be the cost. However,
considering the growing importance of patent information in making critical decisions,
and with an increase in the availability of tools providing complex analysis, it is likely
that other factors will gain in importance.

In the current patent information services market, the technology barriers faced by
any new player intending to provide services are quite low. The key challenge is to reach the end customers. Users tend to become accustomed to a particular service
provider, making it difficult for new players to create a market for themselves. Hence,
overall, we believe that the basic searching model will be commoditized and the
prices charged by the players will go down in the future.

In general, Knowledge Management (KM) and Information Technology (IT) tools
enable patent information services and software solutions. The scope of the patent
information services provided by various service providers are largely limited by the
inherent capabilities – or their lack – of underlying KM and IT tools. Although the
current state of the art demands significant human intervention for a meaningful
analysis, a host of advanced KM and IT tools are likely to be used in the near future.
Even though many available tools are currently not customized for patent information
services, some of the features offered by them are relevant for their potential use in
the patent information services area.

Overall, our analysis indicates that advances in KM and IT tools will help in providing
better patent information services, since they will reduce the level of human
intervention involved in analyzing patent information. Moreover, with the
enhancements provided by these tools, the deciding factors for choosing a patent
information service provider will move from cost and familiarity to search
methodologies and services supported by the service provider. Together, these will
lead to the emergence of new business models in the patent information services
market.

3. Are You Deriving Maximum Value from Patent Information?

3.1 Strategic Importance of Patent Information

Patents are important sources of technical and business information. They provide
insights on technology, business and competition, and have the potential to affect
key decisions, such as those related to the R&D strategies and business strategies
of a company, research organization and/or university.

There are several examples that validate the strategic importance of patent
information. The following are a few of these examples.

In recent years, many technology-based companies have increased their profits by
developing their business strategies around patents and patent information.

IBM generated US $ 562 million by the sale and other transfers of intellectual property (IP) in
FY ending December 2003 [1]. IBM pursues an aggressive IP-based strategy. For the past 11
years, it has been the largest recipient of US patents worldwide.

Hoffman La-Roche established Roche Molecular Systems Inc. in 1991, to develop and
commercialize the patents covering the Polymerase Chain Reaction (PCR) technology.
Hoffman La-Roche acquired the rights to basic patents covering PCR from Cetus Corporation
in 1991 as a part of a US $ 300 million deal. Currently, Roche Molecular Systems holds rights
to more than 130 US patents related to the PCR process. According to an estimate, in 2000,
the company’s revenues from the PCR technology totaled US $ 470 million [2] and were
expected to grow at a rate of 26% annually.

Amazon.com protected its business method by patenting its one-click method. This not only
aided the company in protecting its methodology from competitors, but also helped it in
creating a niche for itself amongst a multitude of online shopping portals [3].

Recent years have also witnessed cases where companies had to pay a heavy price
for neglecting patent information in their business strategy.

British Telecom’s (BT) failure in identifying and analyzing the true potential of the hyperlink
patent (US 4873662 [4], filed in 1976 and granted in 1989) not only resulted in a lost
opportunity but also led to a legal battle, which BT eventually lost. BT claimed to have
forgotten about this patent until 2000, when it was unearthed in a routine update of the
company’s 15,000 global patents [5]. One of the allegations made against BT was that “had
the company piped up when those first Web pages were published and informed people that it
owned hyperlink technology, then businesses and Web publishers could have chosen whether
to use hyperlinks or not. Showing up now, more than a decade after the party started, has
effectively killed any chance of collecting prior-usage fees.”

3.1.1 Some Thoughts to Mull Over

• We have estimated that typically about one-third of the patents of a large portfolio
  are triage patents (i.e., those patents that are better sold off, donated or
  abandoned), and one-third of these patents are totally worthless. They do not
  provide any advantage to the assignee company; in fact, the maintenance fees
  paid to patent offices to keep these patents alive adds significant costs to the
  organization’s total expenditure. A company can save more than US $ 6,000 per
  patent by discontinuing the maintenance of a patent beyond 3.5 years (if these
  patents are deemed to be no longer useful).
• The cost of drafting and filing a utility patent at the USPTO is approximately US $ 6,0001. It is estimated that many patent offices reject almost 34 percent [6] of all patent applications. These rejections are mainly attributed to a lack of novelty and the existence of a similar prior art. Conducting a patentability analysis prior to filing the patent application can increase the success ratio of the grant substantially. The estimated cost of a patentability analysis is approximately US $ 1,200.
• More than US $ 4,800 can be saved (per application that gets rejected by the USPTO) by analyzing available patents and patent information before filing a new patent application. If a similar analysis were undertaken before investing in R&D, the savings would be even greater.

3.2 Deriving Value from Patent Information: Key Challenges and Solutions

Clearly, the potential of patent information is immense, and the coming years are
expected to witness a rise in the influence patents and patent information exert on
business decisions. This is so because the number of patents is on the rise, and
enhanced tools and services that help in analyzing and interpreting patent data are
becoming available. The key challenge faced in utilizing patent information effectively
is sifting the relevant information from a multitude of data.

Even at the risk of being called clichéd, we would like to re-emphasize the difference
between data and knowledge. Data is a mere collection of facts, whereas knowledge
is the inference based on the analysis of this data. Information based on data can be
used to make decisions but not vice versa. It is very important that the right inference
is drawn from patent data before any decision is based on it.

Figure 1 below details the increasing value of patent information.

The growth in the magnitude of data increases the complexity of analyzing it;
therefore much more time is required to derive the right inferences.

Espacenet estimates that all the patents put together contain more than 80 percent
of the world’s technical literature [7]. The quantum of this data is expected to rise at 8
percent per year.

Figure 2 below depicts UPSTO’s patent filing and granting trends.

Apart from the magnitude of the patent data available, there are some other
concerns associated with the use of patent information. These include the following:

• There are very few experts who can analyze and draw inference from patent data.
• Patent data is spread across several databases, and a comprehensive analysis involves accessing and analyzing the information stored in multiple databases.
• Patent data is spread across multiple languages.
• One cannot search for information stored in the form of images.

Currently, several tools and services are available in the market, which help in
deriving relevant information and indicators based on patent data. These tools and
services facilitate access to and the analysis of patent information. Examples of such
tools and services include advanced patent databases, tools for analysis,
visualization of patent information, and various customized services. They reduce
human involvement in analyzing and utilizing patent information. Though they are not
perfect, intelligent usage of these tools and services can enhance productivity while
using and analyzing patent information.

3.3 Checklist: Are You Deriving Maximum Value from Patent Information?

1. Do you use patent information while making strategic R&D and/or business decisions?
2. What is the percentage of expenditure on R&D and/or IP in your company’s total budget?
3. What percentage of your IP budget is spent on maintaining your own patents?
4. Do you have an in-house facility to manage your own patent portfolio? Have you analyzed the value of your own patent portfolio?
5. What percentage of the patent applications filed by your company is granted by the patent office?
   • 80 percent-100 percent
   • 60 percent-70 percent
   • Less than 60 percent
6. Do you maintain all granted patents for their complete term?
7. Does your company practise the following strategies to benefit from patents?
   • Evaluate and donate patents: If your answer is in the affirmative, what is the percentage of the total number of patents donated?
     • 2 percent
     • 5 percent
     • > 5 percent
   • Evaluate and complete patent licensing deals: If your answer is in the affirmative, what is the percentage of the total number of patents licensed?
     • 5 percent
     • 5-10 percent
     • >15 percent
   • Evaluate assertion and infringement: If your answer is in the affirmative, then how often does this process take place?
     • Regularly
     • Occasionally
8. Do you have an in-house IP/KM department? Do you outsource IP analysis?
9. Are you aware of any advanced KM and IT tools that can be used to search, analyze and manage patent information? Do you use the services of any external patent information service provider? If yes, how would you classify this service provider?
   • Database provider
   • Database and analysis tools provider
   • Customized analysis provider
   • Other
10. What methodologies does your service provider offer?
    • Patent-searching options
    • Patent analysis tools
    • Visualization tools
    • Customized analysis

4. Accessing and Using Patent Information

4.1 Patent Information and its Uses

Researchers in corporate and academic organizations use the technical information obtained from
patents as starting points for their research. By using patent information, they can avoid reinventing
the wheel because they can potentially license and use patented technologies instead of wasting
valuable time and money in developing identical technologies.

Additionally, technology landscape analysis based on patent information helps in identifying niche
areas, wherein the return on research investment may be higher. Hence, most corporations and
research enterprises use available patent information while formulating their R&D and business
strategies. They utilize this information specifically while conducting competitive analysis and ‘due
diligence’ with respect to mergers and acquisitions.

Finally, research analysts often use patent information to benchmark the innovativeness of a
company, in comparison with that of its competitors. Similarly, a company’s patent filing trends are often used as indicators of the research and business focus of the organization.

4.2 Patent Information Services

The patent information services market comprises several companies that provide tools and services
to facilitate the searching, mining, analysis, management and utilization of patent information.

Players in the patent information services market can broadly be classified in the following
categories:

1. 1. • Patent database providers
      • Patent information providers

Patent database providers provide access to various patent databases and offer tools for analyzing
and presenting the data. Some patent database providers also provide patent information services as customized services. Patent information providers, on the other hand, analyze patent data obtained
from patent database providers and offer this analysis to clients. They do not provide access to
patent databases, although some offer delivery services for patent documents.

Table 1 illustrates the difference between the services provided by patent database providers and
patent information providers.

4.3 Patent Database Providers

As Table 1 suggests, patent database providers offer users access to the patent databases of
various patent offices. They also provide some analytical and visualization tools for various kinds of
patent data. Most database providers offer at least one value-added service to differentiate
themselves from other providers.

The following are common products and services offered by patent database providers:

1. 1. • Advanced patent databases that combine patent data from multiple sources
      • Additionally, some providers modify and enhance this patent data to provide more refined
        information
      • Search tools for accessing the patent information stored in the patent databases
      • Analysis tools for analyzing the patent information
      • Visualization tools for presenting various kinds of analysis
      • Multilingual services for patent information in different languages
      • Readymade or customized reports based on user requirements

Some factors that differentiate one patent database provider from another include:

1. 1. • The number of patent databases covered
      • The search and analysis tools offered
      • Searching through non-patent literature
      • Globalization (in terms of translation services and interface languages)
      • Specialized content such as refined patent abstracts5
      • Searching with the help of chemical structures and diagrams, e.g., ‘Markush Structures’
      • Subscription costs

4.3.1 Types of Search Tools

Search capabilities often have a great impact on the analysis that can be derived from patent data.
Two kinds of errors usually plague search services – the inclusion of unnecessary information and
the exclusion of relevant information. A good search facility should be able to counter errors of both
types and should allow identification of the relevant information from a multitude of data, with
minimum (preferably zero) errors.

The search methodologies currently supported by patent database providers include keyword- based search, natural language search, and concept-based search.

In keyword-based search, the occurrence of exact keywords in the patent text is searched. Natural language search is an extension of keyword-based search, wherein variations and extensions of keywords are also searched. In concept-based search, the search for patents is carried out on the basis of the concept defined by a search query. Concept-based search reduces the probability of missing a relevant patent during the search. For example, in a concept-based search, the keyword ‘computer’
will also identify patents that contain various words and phrases such as ‘data processing system’.

Based on the above-mentioned methodologies, database providers offer various kinds of search
services. These include quick search, standard search, special search and complex search.

Quick search is based on a single keyword provided by a user. The keyword can be
a patent number, an assignee’s name, a technical word, or an inventor’s name. The
search engine uses the provided keyword to search the associated database(s); and
returns the search results ‘as is’ to the user.

Standard search is based on multiple keywords provided by a user. Users can
search the text by using Boolean operators along with these keywords. The search
engine uses the keywords provided, as well as the given Boolean function, to search
the associated databases; and then returns the search results ‘as is’ to the user.

Special search is an extension of Standard search, wherein the user further refines
the obtained search results by using additional criteria provided by him/her. The
patent database provider works in collaboration with the user in refining the search,
since it requires some amount of human intervention.

Complex search is based on an idea, concept, figure, diagram or picture provided
by the user. Using the search services described above, the user is usually not able
to search for these. Examples of a complex search include searches based on the
structure of chemical compounds and mathematical formulae. This search involves
an interaction between the user and database provider.

4.3.2 Analytical/Visualization Tools and Services

Analytical and visualizations tools and services enable users to derive important inferences from the
obtained patent data. For example, they facilitate the identification, comparison and analysis of
trends from the obtained patent data. Further, visualization tools allow users to represent this
information in a user-friendly format.

Tools-based analysis often utilizes predefined criteria (such as the assignee’s name, the year of the
grant/publication/filing, the International Patent Classification (IPC) code, the inventor’s name, etc.)
for analysis, and, is therefore limited in its applicability. Hence, manual intervention is usually
required to analyze patent data. Some patent database providers offer offline manual analysis
support along with their analysis tools.

4.3.3 Globalization Support

Patent information is distributed across multiple languages, and for a comprehensive
analysis, data from all these languages should be taken into account. Patent
database providers often provide support in multiple languages, as a part of their
services.

Globalization support can be based on machine translation, where computer-aided
translations of patent text are used to search for and analyze data. This could also
involve manual intervention in searching for, translating and analyzing data in
multiple languages. Patent database providers sometimes provide manual
intervention-based translation support as a customized service.

4.3.4 Key Players and their Comparison

The key players among patent database providers include the following:

• MicroPatent
• PatentCafé
• Questel Orbit
• STN
• SurfIP
• Thomson Delphion
• Thomson Derwent
• Thomson Dialog
• Univentio
• WIPS

Table 2 provides a summary of the comparison of services offered by these patent
database providers. This is based on the following criteria:

• Type of search tools
  • ­ Quick search
  • Occasionally
  • Standard search
  • ­ Special search
  • ­ Complex search
• Language support
  • ­ ­ Machine translation
• Analytical/visualization tools and services
  • ­ Analytical tools
  • ­Visualization tools
  • ­Customized manual analytical services

Table 2 provides a summary of the comparison of services offered by key patent database providers.

Further information regarding these patent database providers is available in
Appendix A of this report.

Currently, in most cases, the deciding factor for selecting patent database providers seems to be the
cost of the subscription. However, considering the growing importance of patent information in
making critical decisions, and with an increase in the availability of tools providing complex analysis,
it is likely that other factors will gradually gain importance.

Table 3 provides a comparison of the patent database in terms of subscription costs.

4.4 Patent Information Providers

Patent information providers use the results of patent data and provide an analysis
as per the needs of a user. Therefore, these providers act as an interface between
patent database providers and actual users of patent information. Figure 3 illustrates
the relation between patent database providers, patent information providers, and
users of patent information.

As mentioned earlier, most tool-based services allow search and analysis based on certain pre-
defined criteria. Although certain tools allow a certain amount of flexibility to the user to re-define these criteria, these services are very limited in their scope.

Manual intervention helps in overcoming these limitations by customizing search and analysis, as per
the needs of the end user. These services often require experts, to analyze the problem and develop
a framework for solving it.

4.4.1 Value-added Patent Information

Examples of value-added patent information provided by patent information
providers include:

Patentability analysis: An analysis of the novelty of an invention in light of existing
patent prior art

Patent portfolio analysis: The identification of the value generation potential of a
patent portfolio, by identifying the diamond, medium value and triage patents in the
portfolio

Patent infringement analysis: The identification of patents and/or products that
may map onto to a set of patents – based on the analysis, infringers can be detected
and appropriate action initiated

Patent licensing analysis: The identification of the licensing potential of a portfolio
of patents, which usually also involves a valuation of the patents

Potential licensee identification: The identification of a list of potential licensees for
a given set of patents

Technology landscaping: The identification of patent gaps in a technology domain,
which also includes an assessment of the major players and a comparison of their
patents

Value-chain analysis/Technology chain analysis: The identification of the value
/technology chain of an industry and mapping the existing patents onto this value
chain, which also involves identifying potential areas for R&D investment and/or IP
acquisitions

Competitor analysis: The monitoring of the patenting activity of competitors and
identifying their research focus

Patent watch: The identification of new patents in a technology domain, or
monitoring a competitor’s patenting activity

4.4.2 Key Players and their Comparison

The key players among patent information providers include the following:

• CHI Research
• Evalueserve
• Global Prior Art
• LexisNexis
• Nerac
• RWS Group
• Teltech
• TPR International

Table 4 provides a detailed comparison between patent information providers on the basis of the
services offered.

Further information regarding these patent information providers is available in
Appendix B of this report.

5. Role of KM and IT Tools in Patent Information Services

KM and IT tools facilitate the provisioning of various services by patent information
services providers. These tools help in creating and managing patent databases,
searching these databases, and analyzing and representing the results.

The KM and IT tools used in patent information services can be broadly categorized
under the following categories:

• Database management tools
• Search engines
• Analytical tools
• Visualization tools

Database management tools are required to create and manage databases in
which patent information is stored. Search engines facilitate the identification and
extraction of relevant information from these patent databases. Analytical toolshelp
in analyzing extracted patent data to identify relevant information, which can then be
used to make strategic decisions. Visualization tools help in representing patent
data or the results of the analysis in a user-friendly format.

At present, one cannot completely rely on these tools for an intelligent analysis of
patent information, but they are very important because they reduce the quantum of
data that needs to be analyzed manually.

Current trends in utilizing patent information involve a mix of human expertise and
KM and IT tools. These tools are used to perform basic operations on patent data
such as first-level filtering of patent data and statistical analysis. Thereafter, experts
perform the required analysis of this data.

With patent data increasing rapidly and continuously, the role of KM and IT tools is
gaining importance. It is no longer feasible to manually analyze a large quantum of
data, due to cost and resource constraints.

The growth in patent information and its usage is fuelling the need for enhanced KM
and IT tools, which will facilitate the effective handling and use of patent information.

5.1 KM and IT Tools

The key players in the KM and IT tools market (related to patents) include:

• Autonomy (IDOL)
• BizInt (Smart Charts for Patents)
• ClearForest Tools
• Entrieva Product Suite
• IBM (Intelligent Miner for Text)
• Micropatent (Aureka)
• MineTech (Search Incite)
• MNiS (MAPIT)
• OpenDX (Open source)
• TextWise Tools
• Verity (K2 Enterprise)

Table 5 provides a comparison of existing (and potential) KM and IT tools used to
search for, mine and analyze patent-related data. This comparison is based on the
various functionalities provided by these tools.

5.2 Limitations of KM and IT Tools

Most complex and high-end patent information analyses require human intervention,
due to the limitations of contemporary tools. The following are the key limitations of
KM and IT tools:

• These tools allow analysis based on certain pre-defined formats. This
  necessitates human intervention and limits their usage to a large extent.
• Multi-lingual facilities are restricted due to the limitations of machine-based
  translation services.
• Most search and analysis tools are based on the natural language or keyword- based approach. Both these approaches are limited in their capabilities.
• The concept-based search is in its nascent stage. Most current concept-based technologies are dependent on human intervention to create and update concepts.

6. Future Outlook for Patent Information Services

Patent information continues to play an important role in technical and business
decisions. Evalueserve (EVS) analysis indicates that advances in KM and IT tools
will facilitate the provision of better patent information services, since this will reduce
human intervention in identifying and analyzing patent information.

Moreover, with the enhancements provided by these tools, the deciding factors
involved in choosing a patent information service provider will move from cost to the
search methodologies and services supported by the service provider.

The need for human involvement will, however, still remain. Human intervention will
be directed more towards the analysis of patent information, instead of searching for
and identifying information.

This will lead to the emergence of new business models in the patent information
services market. We believe that in the long run service providers will work in close
collaboration with users, to identify and use relevant patent information. Hence, they
will function more as external research centers than third-party service providers.