Global data of patents can provide insights into technological trends and company strategies; you have to systematically collect it first...

Global data of patents can provide insights into technological trends and company strategies; you have to systematically collect it first...

Aistemos is an analytics company that specialises in providing a view of the technology and innovation landscape through the lens of patent data. It says that through the use of AI, it has harnessed the worlds patent data to create a source of insights into companies and technology outlooks. In an exclusive article for just-auto, they illustrate an analytics solution designed specifically for those needing competitive intelligence about the automotive technology landscape.

There is no shortage of announcements on the road to electrification, connectivity and autonomous driving. This could result in a position by 2050 where there are no fossil fuel combustion engines on the road, and full (Level 5) autonomous is the norm.

It is therefore no surprise that the OEMs and Tier 1s are facing a period of disruption that can be characterised as nothing short of epic. This is illustrated well by the market cap of Tesla ($60bn) now overtaking BMW (it did this to General Motors and Ford several months ago) when usual business metrics tell a different story: BMW sold 2.4m vehicles in 2016, while Tesla delivered less than 80,000. In the same period, Tesla lost c.$725m and BMW made $7.7bn. The question we consider is not whether this makes sense to the financial markets, but whether you get a different picture when you view the technology landscapes through the lens of the patent system. 

Who cares about the patent system?

Intangible assets account for over 70% of the value of companies in the automotive sector. While this is not a new phenomenon for those familiar with pharmaceuticals or even the technology, media and telecoms sectors, the balance has only recently shifted for retail, financial service and now the automotive sector.  Whether it is hyperbole or not, there is some truth conveyed by the Economist that cars will be "smartphones on wheels" (cover, September 2014). 

Within the broad umbrella of intangible assets sits intellectual property (IP) and at the heart of the IP system are patents, which are quasi-monopolies lasting for up to 20 years conferred on those who invent. The importance of patents cannot be overstated. They lie at the heart of every significant technology revolution e.g. the electric light bulb (patented by Thomas Edison), AC motors (patented by Nikola Tesla) and flight control (patented by the Wright brothers).  For this reason, who owns the world's patents is a question synonymous with who will play what role, both technically and economically, on the road to next generation mobility.

How do you read tea leaves?

There are over 80 million patents owned by 1 million people recorded in over 100 international registries. The original of each document is in one of over 50 languages. The good news is that most of this data is public and somewhat accessible. The bad news is that for the last 30 years, access to the data has been confined to specialists (patent attorneys) who help their clients file and obtain another patent.

With the recent developments in data science and the advent of cloud computing, the position has changed, and IP-powered business intelligence can now be delivered as a resource in exactly the same way as Bloomberg, Thomson Reuters and FactSet have done for the financial services sector for decades.

Answering two important questions

Competitive intelligence is a critical function for all companies, and particularly in times of change.  For automotive companies, the question can be posed in one of two ways. What is company X, Y, and Z doing (whether competitors or new entrants)? and what's going in technology A, B, and C (so-called technology landscapes)? Cipher, the AI analytics solution from Aistemos, was the first to develop a product that focusses on these two questions. 

To illustrate the point, Chart 1 answers the question by reference to General Motors:

Chart 1: General Motor's, size/growth (2012-2017)

This Cipher visualisation illustrates size, but activity also - so in the 5 year period depicted, GM have grown in the area of Telematics (green) and shrunk in the area of Seats (red). 

Moving from the company view to the technology view, Chart 2 uses the recent demise of Takata as a reason to look at the major owners of airbag technologies.

Chart 2: Takata and its competitors (airbags and crash sensors)

While Joyson's (its KSS division) acquisition was not triggered by Takata's market share of patented technology, this type of information provides a unique perspective on the market.

Without data, you are just another person with an opinion.

There is no shortage of evidence (or quotes) that establishes that more information presented at the right time to the right people leads to better decisions. For the automotive sector, it is the number and magnitude of the questions that is at the heart of the challenge. At what point to switch from combustion to EV?  Should the focus be on hydrogen fuel cells or batteries, or both?  Who to select as a technology partner?  What route to take to standardisation? 

Strategic questions like these are made at the most senior levels within an organisation and will ultimately dictate who will triumph over Tesla and who will be the next Kodak or Nokia.

It is against this backdrop that Aistemos has developed Cipher Automotive. This enables Strategy and R&D Teams to harness the rich seam of data locked within the patent system. Nigel Swycher, CEO of Aistemos puts it this way "Over 30% of the information and patents is not published anywhere else.  There is not an automotive decision maker on the planet who won't want this data at their fingertips".

What lies ahead?

We conclude with a brief review of the automotive trends that will be influenced by the answer to the question "who's doing what?"

  • China, the largest automotive market, with its eyes on globalisation (Geely, Joyson). Chinese companies have historically not invested in international protection of patented technologies. But This position is rapidly changing (China is already top of the global patenting league tables) and will have significant implications for the sector going forward.
  • Litigation and risk, not something which traditionally been a material issue for the autonomous sector. But electrification, connectivity and autonomous technologies will involve technology giants such as Microsoft, Intel, Apple and Google (including Waymo). Understanding the IP landscape will be critical to risk management.
  • Standard Essential Patents, underpin all telecommunications standards, e.g. 3G, 4G and forthcoming 5G. The owners of these technologies will be demanding a royalty directly from the OEMs - an IP topic which has simply not been relevant until now.
  • New entrants, including start-ups will be important. The traditional OEMs/Tier 1 relationships will continue, but identifying and screening will be helped by analysing opportunities through an IP lens.
  • Deals, inevitably will start as bolt-ons, e.g. Intel/Mobileye, Ford/Cruise but will evolve into consolidation. IP will be a key input into both selection and valuation.
  • Infrastructure, may be the ultimate decider. Without hydrogen stations or power plugs, there is no ability to scale. Little wonder that both Tesla and Toyota uses "open" pledges to facilitate infrastructure and ecosystem development. 
  • The transformation of mobility is acting as a catalyst for significant improvements in the evolution of IP analytics. The patent system dates back to the 17th Century, pretty much the same time as feudal times gave way to ownership and trading in land. Against this measure, it's certainly about time that industry derives more benefit from data that sits at the heart of invention.

Nigel Swycher, CEO Aistemos

About Aistemos and Cipher Automotive

Aistemos is a leading provider of IP-powered business intelligence. Cipher Automotive is the first analytics solution designed specifically for those needing competitive intelligence about the automotive technology landscape. By aggregating, analysing and visualising global patent, litigation and licensing data, Cipher Automotive provides strategic insight to teams responsible for navigating complex technology landscapes.

Read more about Cipher at www.cipher.ai. To learn more please contact info@cipher.ai