The State of Innovation: 2012

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Mining Patent Data for Tomorrow’s Breakthroughs

By Bob Stembridge

Ever since the writer Damon Darlin coined the phrase “innovate or die” in his 1997 Forbes story about postage equipment manufacturer Pitney Bowes, the term “innovation” has come to symbolize all that is good in the world of business.  It’s gotten to the point where it’s hard to turn on a television news program or open a newspaper without seeing an executive quoted about his or her company’s laser focus on innovation.

According to a Wall Street Journal analysis, the word “innovation” has become so ubiquitous among corporate managers that it was mentioned 33,528 times in quarterly and annual reports in 2011 [1].  The trend led one Forbes commentator to surmise: “’Innovation’ has become the ‘awesome’ of corporate speak.” [2]

But are all of these executives and their companies actually innovating at the same pace as their rhetoric would suggest?

It all depends on how you define innovation.  Just as there were over 33,000 known uses of the word in 2011, there is no shortage of definitions.  To get at the real root of innovation, we prefer a definition of the word that proves companies are putting their money where their mouths are.  For that reason, when we measure innovation, we measure patents.  By analyzing corporate patent portfolios, we are able to identify the sweet spot of innovation where pure R&D meets corporate strategy for protecting intellectual property.

Based on this criteria, global corporations are indeed cranking up the pace of innovation consistent with their use of the word.  According to our 2012 State of Innovation report, which tracks patent activity in bellwether technology areas using the Thomson Reuters Derwent World Patents Index® (DWPISM) database, global innovators increased their patent filing activity in nearly every industry between 2010 and 2012.

So, where is this innovation occurring, and which companies are leading the way?  The goal of our report is to take a snapshot of key technology areas that are known hotbeds of innovation and then dig down into the individual patent profiles of each to glean insight on what tomorrow’s hot spots of technology might look like.

Computers, Telecom and Autos Lead Patent Volume in 2012

The top three industry sectors showing the largest overall patent volume in 2012 were Computers & Peripherals, Telecommunications and Automotive.  Within the Computers & Peripherals sector a total of 232,549 patents were filed, an increase of 9.4% over the totals we saw in 2010.  The Telecommunications sector saw the next-largest volume in 2012, with 95,516 total patents filed, a 7.5% increase over 2010.  The Automotive sector followed in a close third place, with 90,816 patents filed in 2012, a 2.2% increase over 2010.  Following is a breakdown of all 12 sectors covered in the study:

[1] Source: “You Call That Innovation?” The Wall Street Journal, May 23, 2012

[2] Source: “Has Innovation Become the Awesome of Corporate Speak?”, Forbes, May 29, 2012

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According to the 2012 data, a total of 759,298 patents were filed in key sectors in 2012, with growth shown in every category except Semiconductors, which showed a 2.8% decrease between 2010 and 2012 and Cosmetics, which logged a 2.1% decrease over the same period.

The top three industry sectors showing the largest growth in overall patent volume between 2010 and 2012 were Medical Devices, Aerospace and Domestic Appliances.  Within the Medical Devices sector a total of 60,300 patents were filed, an increase of 15.7% over the totals we saw in 2010.  The Aerospace sector saw the next-largest growth in 2012, with 36,837 total patents filed, a 12.9% increase over 2010.  The Domestic Appliances sector followed in a close third place, with 41,249 patents filed in 2012, a 12.0% increase over 2010.

For a further deep dive, we’ll focus on the top three sectors in terms of total patent volume for 2012.

Computing & Peripherals

It should come as little surprise that the Computing & Peripherals sector would lead the way in patent totals.  With new tablet-style computers launching almost daily and the ever-present push to deliver more storage in smaller, faster packages driving constant R&D, the sector lives in a perpetual state of growth.  Within the sector, the subsectors with the greatest number of patents were Computing (201,608), Printers (21,415), Scanners (3,709), Screens (5,286), Smart Media (9,195) and other peripherals (17,686):

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Within the category of Smart Media, which has been a key area of focus for computing manufacturers looking to drive faster start-up and processing times, the leading companies worldwide were IBM and Apple in North America; Giesecke & Devrient and Siemens in Europe; and Canon and Dainippon Printing Company, Ltd. In Asia

Telecommunications: The Smartphone Battleground

As anyone who has picked up a newspaper in the past year can tell you, smartphones and patent litigation seemingly go hand-in-hand.  While mobile telephony category was indeed the largest subsector of the Telecom sector, with 44,454 patents filed in 2012, it is not the only heavy-hitter from an IP standpoint.  Data Transmission Networks followed closely behind with 44,151 filings in 2012 and Telephone Subscriber Equipment came in with 36,023 patents filed in 2012:

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Despite the high levels of activity elsewhere in the sector, however, mobile telephony is where the action is for patent-watchers.  Among the top patentees for 2012 were Qualcomm and Research in Motion in North America; Ericsson and Nokia in Europe; and Samsung and LG in Asia.

Auto Industry Patent Activity Shifts into High Gear

 

As global fuel economy standards grow increasingly stringent, the auto industry has invested heavily in fuel efficiency, with Alternative Power sources leading the way.  By far, the fastest growth area in automotive technology patenting has been Alternative Power, a category that covers everything from hybrids to hydrogen-powered vehicles.  Alternative Power patent activity increased 42.6% from 2010 to 2012, followed by Seats, Seatbelts and Airbags and Steering Systems.

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Within the Alternative Power category, the top filers were General Motors and Ford in North America, Bosch and Daimler in Europe and Toyota and Honda in Asia.  Toyota was the clear overall leader in the category, with 1,660 patents filed in 2012 alone.  Its next closest competitor, Honda, filed 495 Alternative Power patents for the year.

Innovation: More Than a Word

So, should global business leaders get a pass on their frequent use of the i-word?  If their patent portfolios look anything like the ones we’ve seen in our analysis of bellwether industry sectors, executives should feel well within their rights to celebrate their innovative accomplishments.

That does not mean that every patent will change the world.  Quite the contrary, many of the 750,000+ patents found in our research will never see the light of day in end-user products.  But they will serve as springboards to other ideas and levers to further exploration that will ultimately help their owners conquer new challenges.

By using the patent as a proxy for innovation we are capturing not just raw volume of document filings, but, more symbolically, the culture of organizations who believe they can always improve and grow their businesses as a result.  In essence, we are measuring the root of innovation that management consultant Peter Drucker described in his seminal 1985 book Innovation and Entrepreneurship, when he wrote: “Innovation can be defined as the task of giving human and material resources new and greater wealth-producing capacity.”

As we’ve seen repeatedly in the headlines chronicling the smartphone patent fight between Apple and Samsung and new proposed legislation in the U.S. to limit the power of non-practicing entities, the cleanest path from an idea to wealth-producing capacity is through a patent.  The patent is the vehicle through which global innovation is realized and, based on our assessment of the current patent landscape, we are indeed emerging from the ashes of the economic downturn into a golden age of new innovation.

About the Author:

Bob Stembridge, IP Patent Analyst, Customer Relations Manager,

Thomson Reuters IP Solutions

Bob graduated from the University of Sussex, UK with an Honours degree

in Chemistry. He joined Derwent (one of the founding components of the

IP Solutions business of Thomson Reuters) in 1980 and has held various

roles in editorial, marketing, sales and product development over the years.

Leaving in 1988 for interludes working as Senior Information Analyst