How Siemens transformed its approach to IP for the digital age

As a world leader in indus­tri­al research and devel­op­ment, tech­nol­o­gy and engi­neer­ing con­glom­er­ate Siemens con­sis­tent­ly ranks num­ber one or two in the quan­ti­ty of patents filed in Europe, cur­rent­ly hold­ing more than 100,000. But a chang­ing intel­lec­tu­al prop­er­ty (IP) land­scape has caused it to shift from a quan­ti­ty-based approach to a high­ly val­ue-dri­ven strat­e­gy. 

His­tor­i­cal­ly, large tech­nol­o­gy com­pa­nies like Siemens have used patents to estab­lish IP rights and block com­peti­tors from ben­e­fit­ing from basic inno­va­tions. When Beat Weibel joined the com­pa­ny as chief of IP coun­sel and group senior vice pres­i­dent, how­ev­er, he recog­nised that the dig­i­tal age was trig­ger­ing an urgent need to divert from this reliance on sim­ply accu­mu­lat­ing patents as quick­ly as they can be acquired. 

“In a dig­i­tal world, patents are more often used to doc­u­ment a company’s con­tri­bu­tion to a dig­i­tal ecosys­tem in which busi­ness­es cre­ate solu­tions through part­ner­ships and licens­ing,” says Weibel. Com­pa­nies can only share and license what they own, so IP rights allow them to pro­tect their com­pet­i­tive advan­tage and abil­i­ty to mon­e­tise their con­tri­bu­tions. “We need­ed a dif­fer­ent approach and under­stand­ing of how to cre­ate these IP rights,” he adds.

Siemens pri­or focus on quan­ti­ty over qual­i­ty meant inven­tors would invent first and then call on their IP col­leagues to pre­pare and file patent appli­ca­tions. By not eval­u­at­ing the qual­i­ty of the inven­tions before fil­ing patent appli­ca­tions, the company’s IP group was in reac­tive mode, with lim­it­ed knowl­edge of whether they rep­re­sent­ed val­ue for the busi­ness.

Weibel and his team set out to change this, start­ing by inte­grat­ing IP activ­i­ties in the company’s inno­va­tion process. Rather than wait­ing for inven­tors to bring good ideas to their patent attor­neys, the lawyers were instead sent to talk to the researchers and devel­op­ers to under­stand how the inno­va­tions they were work­ing on might con­tribute val­ue to Siemens’ busi­ness­es. It took time, but the patent attor­neys rose to the chal­lenge.

“It required our patents attor­neys to under­stand our busi­ness­es and busi­ness mod­els so they could recog­nise the inven­tions with the most poten­tial to add val­ue and active­ly place IP rights on these sweet spots,” says Weibel. The new strat­e­gy was suc­cess­ful­ly imple­ment­ed, with Siemens’ inno­va­tion and IP activ­i­ties ful­ly aligned behind a val­ue-dri­ven IP strat­e­gy and the IP group proac­tive­ly involved in the organisation’s inno­va­tion process.

That was just the begin­ning, how­ev­er, as Siemens still required proof that the qual­i­ty of its patents was improv­ing over time. To deter­mine whether the shift from quan­ti­ty-based patent­ing to a more val­ue-dri­ven strat­e­gy was ulti­mate­ly suc­cess­ful, it need­ed a met­ric. 

“You can only improve what you can mea­sure,” says Weibel. “The best mea­sure of the qual­i­ty of a patent is going to court, but just 5 per cent of patents ever go. We need­ed an indi­rect mea­sure and a tool that would help us mea­sure the qual­i­ty of each patent and our entire patent port­fo­lio, and track qual­i­ty changes over time com­pared to our com­peti­tors.” 

For this, Siemens turned to PatentSight, a Lex­is­Nex­is com­pa­ny that pro­vides busi­ness intel­li­gence soft­ware, ana­lyt­ics tools and insights into the strength, qual­i­ty and val­ue of patent port­fo­lios. 

PatentSight is known for its Patent Asset Index™, an objec­tive mea­sure of glob­al tech­no­log­i­cal strength and inno­va­tion. The mea­sure takes into account both the num­ber of patent-pro­tect­ed inven­tions and their qual­i­ty, enabling busi­ness­es to iden­ti­fy and pro­file the patent gems that can be lever­aged to cre­ate val­ue from their inno­va­tions. 

The Patent Asset Index can cal­cu­late the total com­pet­i­tive impact of all patents in a port­fo­lio, patents relat­ed to a cer­tain tech­nol­o­gy or any oth­er group of patents based on select­ed cri­te­ria. Its data qual­i­ty, recog­nised as world lead­ing, is pow­ered by a pro­pri­etary glob­al patent data­base, which PatentSight pop­u­lates with patent data from more than 95 author­i­ties world­wide, includ­ing more than 100 mil­lion patent doc­u­ments, 700 mil­lion draw­ings and illus­tra­tions, and 100 mil­lion PDFs, which can be quick­ly searched and down­loaded.

“PatentSight is quite a good match for Siemens,” says Weibel. “The tool came out of a uni­ver­si­ty and has an aca­d­e­m­ic objec­tive, not just a com­mer­cial one. It allows us to track patent qual­i­ty over time com­pared to our com­pe­ti­tion, tak­ing changes such as acqui­si­tions and divesti­tures into account. And the indices used to mea­sure qual­i­ty take into con­sid­er­a­tion dif­fer­ences in mar­kets such as the Unit­ed States, Ger­many and Chi­na.”

Siemens’ new IP strat­e­gy has sup­port­ed its ascent in the high­ly lucra­tive and com­pet­i­tive inter­net of things (IoT) mar­ket, which ana­lyst firm Gart­ner val­ued at $14.7 bil­lion last year. Between 2016 and 2020, Siemens increased its IoT patent port­fo­lio strength in this bur­geon­ing field by 47.2 per cent, the only play­er in the mar­ket that showed a clear aver­age patent qual­i­ty improve­ment, as objec­tive­ly mea­sured by the Patent Asset Index.

Sup­port­ed by PatentSight and its new val­ue-dri­ven IP strat­e­gy, Siemens now realis­es a bet­ter return on invest­ment for its patent port­fo­lios, which are of a high­er qual­i­ty and con­tin­u­al­ly improv­ing. More­over, patents now play a much larg­er role in the strate­gic devel­op­ment of the busi­ness. The IP team can now make rec­om­men­da­tions on where the com­pa­ny should invest more in research and devel­op­ment to cre­ate new oppor­tu­ni­ties, such as acquir­ing new cus­tomers or joint-ven­ture part­ners or improv­ing com­pet­i­tive advan­tage in key regions.

The trans­for­ma­tion of IP strat­e­gy from a nec­es­sary cost to a strate­gic tool for cre­at­ing busi­ness val­ue and com­pet­i­tive advan­tage has also caught the atten­tion of the Siemens man­ag­ing board. After he report­ed ini­tial results of the change in approach to patents, Weibel is now invit­ed back to present to them once or twice a year.

“It is easy to go into the board­room and say we’re num­ber one in the num­ber of patents we have,” he says, “but I would rather report on how we can bet­ter pro­tect our com­pet­i­tive advan­tage even in places like Chi­na. That makes a big­ger dif­fer­ence to the busi­ness. I was lucky that the man­ag­ing board trust­ed me and the PatentSight tool when I told them we could har­vest more valu­able inven­tions and cre­ate broad­er and more impor­tant patents by chang­ing our strat­e­gy and mea­sur­ing qual­i­ty improve­ment com­pared to our com­peti­tors. Of course, now the board expects to see qual­i­ty improve­ment every time.”

For more infor­ma­tion on how PatentSight can sup­port your IP strat­e­gy, please vis­it patentsight.com

Pro­mot­ed by PatentSight