With R&D, Innovation in Decline, IEEE Examines Patent Power


For the last couple years, the IEEE has taken a lot of raw data about patents in a variety of industry segments, added a bit of massaging and come up with what it calls an Adjusted Pipeline Power number in an attempt to illustrate which companies wield the most influence and prowess around the world, based on their patent portfolio.

Here's how it works. The raw number of patents a company was awarded in a year -- 2007, in this most recent report -- is multiplied by the product of these variables:

  • Pipeline growth is patent activity for the year compared to the average of the five years previous.
  • Pipeline impact indicates how often all patents cited a company's patents from the five years previous.
  • Pipeline generality indicates the variety among technologies citing that company's patents.
  • Pipeline originality indicates the variety among technologies that a company's patents are based upon.

Adjusted pipeline impact then takes into account self-citation, or a company's citations of its own patents which, as it increases, causes the resulting estimation of patent power to decrease. The result is the Adjusted Pipeline Power, which estimates the company's "overall patent power."


Though they don't give a window directly into the quality of these patents, of course, the rankings are particularly interesting this year, given the fact that from auto makers to tech startups, short-term profit taking has devastated the type of R&D that once kept American companies the innovation leaders.


As IT Business Edge's Ann All wrote, the need for those profits, along with reduced R&D tax credits, mean that what R&D is being carried out is more development than research. And taking away the research foundation quickly squeezes the quality out of resulting products.


IT Business Edge's Carl Weinschenk says that in terms of which companies will survive the crisis and which won't, startups and smaller companies will necessarily perish first, since their cushion against realizing those short-term profits is so much smaller and their access to potential capital investments from larger companies has disappeared. But innovation across the board will fall along with revenues.


IEEE points out a couple of bright spots that are bucking that trend for 2007; electronic ink firm E Ink made the list last year and has seen its technology frequently cited by a high number of industry peers and used in Amazon's Kindle e-book reader, and semiconductor manufacturing company Novellus rose in its segment ranking from 17 in 2006 to 3 in 2007. It also is seeing its technology patents cited by the likes of IBM, Intel, NEC and Samsung. Both are U.S. firms.


Patent-protecting Microsoft takes the top spot in the rankings for Computer Software, which is not surprising. However, you may be surprised to find that, aside from number-two Germany-based SAP AG, the rest of the top 20 spots are also filled by U.S. firms.


Semiconductor Equipment Manufacturing rankings are led by FormFactor Inc., another U.S. company, and Semiconductor Manufacturing is led by U.S.-based Intel. The U.S.'s Cisco leads the Telecom Equipment rankings, with the rest of the top 20 spots dotted with a few European companies. And Computer Systems is led by IBM and HP. Japan-based Fujitsu Limited is in the third spot there; Japanese firms make their strongest showing in the Electronics segment.


And in looking at the entire set of results, Microsoft received the highest Adjusted Pipeline Power rating of any company in any segment. But you know what they say about statistics.