Patenting activity

Solid state lighting is a rapidly evolving technology, with many application areas, a lot of active companies, a diversified value and supply chain, hence many patents. It is very interesting and revealing to take a look at the patenting activity of the first layer in that chain, the LED manufacturers.

To start with, cenogent compares the activity in two different countries, Germany and Switzerland. As a first proxy, we only look at one class in the IPC system, the International Patent Classification: H01L33. While find a total of 10599 patent documents in Germany, there are only 1428 in Switzerland. This sounds reasonable, with Osram (-Opto), one of the top LED makers being located in Germany. Plus Germany has a very active lighting industry.

Since we are only interested in the current level of protection, we limit our results to the patents still in force or in the application phase. Here, we find 2832 patents in Germany, while there are only 532 in Switzerland. So the number of active patents in Germany is more than 5 times larger than in Switzerland! These numbers encompass all patents which took either way national, EP-, or via the PCT-procedure. The picture does not change if we include another IPC for LEDs, H01L27/15: 465 vs 33 patents in force, or more than 14 times as many in Germany as compared to Switzerland.

There are striking differences in the patent strategy of the most important assignees. They seek in general a much higher protection level in Germany as compared to Switzerland. For Osram, this is most obvious, having more than 10 times as many patents in force in Germany than in Switzerland. But also for other players like Lumileds or Toyoda Gosei, the difference is still of the order of 6-fold. Others, like Nichia or especially LG Innotek strive for a more balanced protection level.

Going into more detail, we could more closely evaluate the details of the patent portfolios of different assignees. There is a wealth of information available, such as:

What is the distribution of the maximum duration of protection? Are there many "old" patents in the portfolio or is the company up to date with its technology and efforts to protect it? This is one of the key questions in patent portfolio valuation!
What is the ratio between patent applications and patents in force? For how long do they keep protection and how does this depend on the technology and geographic coverage?
How many active inventors are there? Who are the key people? Are the same names being mentioned over a long period of time, meaning, is the company able to retain talents?
What technology the company is working on? How do they think the future will look like?
Have those patents been challenged in opposition procedures or in court? As search for prior art is never exhaustive, there is a chance that a patent can be (partially) invalidated by appropriate and timely published technical information.

These are just some of the points that can be used to characterise a company's patent portfolio and win valuable insights. Solid state lighting is already very active in business transactions. Patent portfolio valuation plays an important role in such transactions.

cenogent has a lot of experience in patent portfolio and technology valuation. We stand ready to support you in your investment, M&A or takeover decision!