Author: Oppfinnarn

Say that you got a brilliant idea that you believe is novel and inventive. Now you need to write an invention disclosure, which is a confidential document for use by a company’s patent department, or by an external patent attorney, to determine whether patent protection should be sought for the described invention. But how to write such an invention disclosure?

I used to say, start with a flow chart (or block diagram). I have, during my professional career reviewed many invention disclosures with a huge amount of text; long background, long summary  and a long description, but it was quite hard to understand what the inventor believed to be novel and inventive.

By starting with a flow chart or block diagram (or other drawings depending on what type of invention) and pin pointing the “combination of boxes” in the flow chart, or block diagram that might be novel and inventive, and then writing the text document and highlight these parts, you will gain two things;

1. It will be much easier for you to write the entire invention disclosure
2. It will be much easier for the patent engineers/boards or patent attorneys to review the disclosure and by that determine whether patent protection should be sought on the invention.

Below I show an example based on a fictive invention:

You have realized that to determine an estimate of a characteristic of a received signal comprising of two received signal streams, you need to perform a compensation of a mean value estimate over the two received signal streams, where the compensation value is a function of the received signal to noise ratio. The characteristic value of the received signal is then used in the further processing of the received signal.

Then, the flow chart in your invention disclosure might look like the below example

(100) receive the first and second signal stream

(110) compute an average value over first and second received signal stream

(120) estimate signal to noise ratio, SNR

(130) determine compensation value based on SNR

(140) determine characteristic value of received signal based on average value and compensation value

(150) use characteristic value in further processing of the received signal

Here, (120) “estimate SNR” is not new, but I believe the combination of (100), (110), (130), (140) is the really novel and inventive thing. Adding further a block diagram over the different blocks involved with then further give insight over your idea.

Hence, the quote; “A picture is worth a thousand words” is valid also in the area of inventing and patent creation.

 

In the last post, I showed that around 30% of the patents created in large companies within the area of digital communication, such as Huawei, Ericsson, Qualcomm, Nokia etc. originates from the top 100 inventors. Hence a very large part of the patent portfolio is created of less than 1% of the R&D employees, and therefore these top-inventors will create a large value for the companies.

Below I will do some back-of-the envelope calculation of the value of top-inventors. I will focus on Ericsson, mainly due to that they invest a lot in R&D and patents, and have a lot of patents (42000+ ) and license their developed technologies in open standard, such as the cellular communication standard LTE (“4G”) to other players in the market, and have been quite successful in their patent licensing business during the last 10-15 years and have a quite significant patent licensing revenue stream.
All the calculations below are based on open sources and clever guesses, and patent statistics is based on search using lens.org.
According to the annual report , Ericsson made 10 BSEK in patent revenues 2016, and during the last 5 years the revenue have been 7-15 BSEK, so hereinafter we use 10 BSEK/per year in patent revenues. Furthermore, Ericsson claims to have 42000 granted patents world wide (I guess they mean valid, still paid). Using the 30% created by the top 100 inventors, we have that 12600 patents, or 3 BSEK/year of the patent revenue originates from the top-100 inventors. That is 30 MSEK per year o average (Looking at the patent distribution between top 100, it is very skew, meaning top 10 inventors produce approx. 3-8 times than the inventors #90-100, but for easiness we take the average) the top 100 inventors “create” in patent revenues for Ericsson per year! Of course, creating patents and keeping patents alive come with a cost, so everything is not a profit.

But how much of these 30 MSEK is pure profit? Let us do an estimate. According to the annual report, the R&D spending is around 34 BSEK/year and with 24000 employees that gives an average cost per employee of 1.4 MSEK. The top-inventors are senior persons and hence the cost for such a person is, say twice the average number, say 3 MSEK/year. Patent maintenance and cosst associated to patent development are included in the R&D numbers, but to be conservative, we add the cost of creating and maintaining patents to the 3 MSEK number. How much is that? When looking at the Swedish patent office, PRV, a typical cost for a patent family (including 10 patents) over a life length of 11 year is around 700kSEK rounded to, say 1 MSEK. Hence the cost per patent per year is 1M/10/10=10 kSEK, and on average, a top-100 inventor at Ericsson has contributed with 126 patents, which means 1.26 = 1.3 MSEK per year.
So; A top 100-inventor at Ericsson generates patents giving a revenue stream of 30 MSEK/year, while the yearly cost of one of the top 100-inventor is upper bounded by 3+1.3 =4.3 MSEK.
That is quite good margin, I will say. Again, as a suggestion to all companies out there investing heavily in Research and Development; keep your top-inventors happy and loyal to the company, they are extremely valuable.

In the last two blog updates I have discussed the most prolific inventors in the world. But how does it look when looking into specific companies? For instance, how large fraction of the patents in a company are created by the top-inventors? Let us do some quick studies based on open information that can be found on the internet.

I will restrict the back-of-the-envelope calculations made in this blog post to the top 10 patent applicants for EP patents during 2016 in the field of digital communication   (I will check the statistic for other areas in a later post). The companies are (in the order of amount of filed EP applications 2016); HUAWEI TECHNOLOGIES CO. LTD, L M ERICSSON AB, QUALCOMM, INC., NOKIA CORPORATION, ZTE CORPORATION, INTEL CORPORATION, SONY CORPORATION, LG GROUP, SAMSUNG GROUP, NEC CORPORATION.

All these companies are known to invest heavily in Research and Development and have as a strategy to invest a lot in inventions and patents used for licensing their own technology and by that receive a return of investment of the R&D spending. All the companies above, as far as I know, have at least more than 10000 employees working with R&D.

Furthermore, I have used the search engine lens.org, and restrict the search to granted EP patents, which publication date was 2000-01-01 and later (up to March 2017). Then I have checked how many of the granted EP patents that the top 100 inventors were co-inventors on (again according to the patent search engine lens.org). This gives an indication of how large fraction of the company’s total patent portfolio that is created by the top-100 inventors. Below you can find the result.

Company             #Granted EP       #Top

……………….                 00-17                    100 inventors

Huawei                3729                      1244      33%

Ericsson              8661                     2656      31%

Qualcomm         4246                     2308      54%

Nokia                    4842                     1466      30%

ZTE                          904                      403        45%

Intel                       1735                       515        30%

Sony                     7038                     1656      24%

LG                          4330                     1433      33%

Samsung             8159                     1555      19%

NEC                      3674                     990        27%

Total                     47314                   14226    30%

As can be seen the fraction is surprisingly close to 30% in all the companies (with some few exceptions) and is probably a result of the Lotka’s law (I have to check, but that will be in another blog post ?).

Anyhow, one can conclude that patent creation is not evenly spread over the entire R&D, but instead made by a smaller amount of people. As an example, Huawei has 80,000 R&D employees , and 1/3 of the patents originates from 0.12% (!) of the R&D employees. For the second applicant on the list, Ericsson, who claims to have 24,000 R&D employees , 1/3 of the patents originates from  0.42% of the R&D employees.

Hence, from the above one can conclude that the top inventors, which may be less than 1% of the total R & D  employees generate approximate 1/3rd of the total patent portfolio (and patent value) for these high-tech companies!

Finally, as a suggestion to all companies out there investing heavily in Research and Development; keep your top-inventors happy and loyal to the company, they are extremely valuable. In the next blog post I will do some back-of-the envelope-calculations for estimate the value of prolific inventors, so hang on …