As global stock markets continue to struggle, savvy investors looking to capitalize on relatively cheap share prices are looking for promising investment opportunities. Unfortunately, however, most investors are likely to rely on the same investment information sources that have failed to accurately predict the current state of the stock market. If the predictive nature of this information has been wrong time and time again, why do investors continue to trust it? The answer is quite simple: investment professionals do not know that there are alternative sources of information.
One such alternative approach to making investment decisions involves the use of patent landscape analysis to assess existing investment in a particular product or technology area. My research demonstrates that properly done patent landscape analysis can effectively predict the future trajectory of companies’ product development.
For example, the fact that Google and Yahoo intended to invest significantly in Internet-based television technology was entirely predictable from their patent filings many months before Google and Yahoo made their respective public announcements of such plans. AT&T’s launch of its U-Verse Internet television service was equally predictable given the volume of patent applications in this area of technology.
Someone looking to invest in a company or mutual fund with offerings in the area related to Internet television would have benefited from using this information to decide to proceed with caution. Namely, the respective deep pockets of Google, Yahoo and AT&T should serve as a sign that competition in this area will be fierce for the foreseeable future. This means that even if a company or technology emerges that is superior to what is currently offered, these “big fish” can still win in the market. Therefore, a potential investor in Internet television technology must be very careful not to fall in love with a superior technology or an apparently brilliant initial business plan, because the patent landscape shows that the Internet television market will be a difficult place to play.
Of course, the above example is a look in the rearview mirror because Internet television has already been introduced to consumers. More interesting would be the application of patent analysis to products and technology that have not yet reached the market in any significant way. One such area is biofuels, where examination of patent applications can show which companies are investing in technology.
For example, corn-based ethanolic biofuels have gained market acceptance in recent years. However, this technology now appears to be on the decline due to the huge increase in food prices that occurred during 2008 due to increased demand for ethanol. Market forces have clearly shown that biofuels should not be made from food sources, such as corn. As a result, biofuel technology appears to be moving towards non-food bulk feedstocks.
One such source of non-food dough starting material is switchgrass. Not only is this plant unsuitable for providing food, so its use will not redirect food to fuel production, but recent research shows it to be a more efficient source of ethanol than corn. Therefore, it would appear that switchgrass biofuel technology has good investment potential. However, before getting excited about investing in switchgrass biofuel-related technology, a smart investor should look to see if any companies hold patent rights in this area of technology.
To this end, a patent search reveals that there are only 7 patent applications that mention “switchgrass” and “biofuel” in the claims, all patent applications. The earliest filing date for any of these applications is late 2006, meaning this technology is just emerging. This information demonstrates that anyone looking to invest in this area should examine these patent applications in more detail. This investigation should focus not only on the scope of the claim and the “quality” of the technology, but also on whether the claims owner has the deep pockets necessary to make their technology more likely to succeed in the marketplace. In addition, after investing, relevant patent application information related to switchgrass biofuels should be periodically re-verified to determine if investment assumptions and projections remain viable.
There are undoubtedly many other examples of how patent analysis can improve the quality of investment decisions in emerging technology areas. While investment professionals may find patents a mysterious and unknown source of information to include in their research and selection processes, recent events in global financial markets indicate that a change in the way people invest is needed. money in companies and technology. The integration of patent information in investment decision-making could be a necessary innovation.