Patenting Activity as an Indicator of Revenue Growth - Computer ...

lessfrustratedBiotechnology

Oct 23, 2013 (3 years and 7 months ago)

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By: Kin Tat Lay

Chapter 15

I. Introduction


Patents are a significant
factor

in the success of an
enterprise for many industries


Patents are
assets

that
enabling companies to
generate their revenues by
selling the unique products of
their research


Patents are evidence of
innovation
, an indication of
something worth defending
from others


(
Pic
) Patent Certificate

Factors that determine the
success of a company’s portfolio:


Timing


Demand for the inventions covered


The quality of the proprietary rights and
how they are managed

Introduction

Question

Can patient activity (usually refer to the
number of patents that a company
filed and accepted) helps to predict
income growth and future stability?

II. Finding the Growth Areas: Five
Industries

Five areas of technology:




Business methods


Telecommunications


Semiconductor manufacture


Molecular biology or biotech


Drugs

Finding the Growth Areas: Five Industries


The relationship between patenting activity
and growth of revenue varies depending
on the nature of the technology and the
products


It is important for companies to keep pace
with competitors by maintaining a similar
rate of research and patenting activity in a
growing industry

III. Semiconductor Field

Characteristics:


Short product cycles


Innovation protected from
patent may become outdated
before the terms of the patent
expires


If patenting rate declines
consecutively over the years,
it’s an indication that the
company might be in danger

Semiconductor Field


Sample companies in semiconductor
area:


Micron Technology, Advanced Micro Devices,
Intel, National Semiconductor Corp.

Semiconductor Field

Our samples provide evidence to support the fact that if the patenting rate
of a company remains flat or continues its downward trend, it suggests the
future revenue growth to be in danger. Also, it suggests that increasing in
patenting usually accompany with increase income.

IV. Drugs


Longer product cycles


Potentially longer payback period than a
patent for semiconductor chip
improvement


Drugs are marketable for many years,
even after their patent protection expire


IV. Biotechnology


Relatively few non
-
U.S. companies


U.S. is leading in biotechnology
patenting activity


Most biotech products fall into one of the
three categories:


1) Treatments for disease


2) Agricultural products


3) Equipment, methods, and databases

for doing genetic research

Biotechnology


Sample companies in biotechnology
area:


Incyte

Pharmaceuticals,
Affymetrix
, ISIS
Pharmaceuticals, Chiron, Human Genome
Sciences,
Genzyme
, Inc.,
Immunex

Biotechnology


Biotechnology

The case study provides evidence that for
biotech firms, an increase in patenting activity
does not guarantee an increase in income
growth. Although both
Incyte

and
Affymetrix

have shown steady patenting growth over the
past five years, they will have to continue the
trend to maintain a secure position in their
businesses and stay ahead of the competition

V. Telecommunications


Patents are a good indicator of
technological strength for companies in the
telecom business


Smaller companies should focus on
patenting within a narrow specialty to lock
in as much profit as possible


Companies with larger diversified patent
portfolios are less vulnerable if improved
technology replaces the need of a certain
patented system as compared to small
companies.

Telecommunications


Sample companies in
telecommunication area:


Nokia, Motorola, Ericsson, Qualcomm

Telecommunications

Our case study shows that patents are a good
indicator of technological strength for
companies in the telecom business. The
relationship between patenting activity and
revenues growth is similar to semiconductor
businesses in which rises in patenting usually
accompanied by rising income.

VI. Patents for Automated
Business Methods


In U.S., one can obtain a patent on computer
-
implemented method of doing business


Most of these patents are owned by large,
well
-
known tech companies


This patent can be sold to others who need
the new technology


Owning patents in the computer
-
aided
business area shows that the companies are
starting to invest in intellectual property and
are using the benefits of networking and
computerization that will be a requirement for
success n almost every business I in the future

VII. Conclusion


A rise in patenting activity does not
guarantee a growth of future income, but
a continuous decline or
flat motion in
patenting activity would signals a
company's revenue maybe at risk.