AISTEMOS announced today the official launch of CIPHER, which is being billed as the first business intelligence product to aggregate, analyse and visualise data relating to patents and related events including litigation and licensing. To coincide with the launch of CIPHER AISTEMOS, a London-based IP business intelligence and strategy company, also released The trillion dollar tipping point: Exploiting the untapped value in patents, a report assessing the barriers, and solutions to the monetisation of intellectual property assets which now account for up to 70% of enterprise value.
In an initial post discussing the CIPHER beta a brief description of the features of the tool, and the data sources included were provided. The conclusion of that post promised a closer look at the functionality of the system, and to celebrate the launch AISTEMOS has provided extensive details on exactly how CIPHER delivers on its stated goals to provide immediate and actionable insight into the drivers of patent value and risk for the millions of patent owners, and their tens of millions of patent families. The following series of screenshots demonstrate each of the visualizations associated with CIPHER, and how they can be used to provide insights to its core user base.
The Cipher Grid is a proprietary visualisation of all data within Cipher insofar as it relates to the selected Target, and all companies owning similar portfolios (referred to as Comparables).
The Cipher Grid represents Risk on the x axis and Value on the y axis. HIGH RISK is to the left and HIGH VALUE is towards the top – such that a company with low risk and high value (the notional ideal) would be depicted in the top right.
It is important to note that the Cipher Grid is a visualisation of relative risk and value, and not absolutes. If the Target is represented to the right of a Comparable, it means that it has less risk than the Comparable – not that it has no risk. Similarly, the centre of Grid is not zero – just a central point around which the Target and its Comparables are arranged.
The starting point when analysing a portfolio is the Activity view, and users are able to navigate across the 5 levels of analytics (the Tabs across the top):
- Activity – a chronological view, showing the annual patenting activity and status of the portfolio (the default view depicted)
- Size – a chronological view, showing the aggregate number of patent applications and granted patents at any point in time
- Territory – charts showing the breakdown of granted patents in the US, Europe, APAC and ROW (rest of the world)
- Score – a distribution of the scores associated with patent families
The approach taken by Cipher to clustering (identifying a grouping of patent families that relate to a similar technology) is unique. Cipher calculates clusters using machine learning algorithms, and is primarily driven from citations within the patent data, and also relies on a range of other information, including keywords, inventors and IPC codes. The clusters are named using a separate NLP (natural language processing) algorithm, which is applied after the clusters are formed. All clusters are, therefore, unique to Targets and are not generated from a predetermined taxonomy.
The focus throughout Cipher is on visualisations – and this is seen clearly in the approach taken to comparing the Target with similar companies. A specific feature, built as a result of feedback and demand from the Cipher pilot group, is the so-called “cluster-to cluster” analytics (depicted). The functionality enables users to find out how many patents a Comparable owns that are similar to any cluster within a Target, instead of comparing entire portfolios.
As an example, if Bose is compared to Harman at a portfolio level, the Harman portfolio has been larger than Bose year-on-year for more than two decades. However, when comparing Harman at the active noise reduction cluster level, the position is very different – with Bose having the larger portfolio.
The Risk section includes both visualisations and tabular views of US litigation against the Target and its Comparables, with a distinction been made between litigation brought by operating companies (OpCo litigation) and litigation commenced by non-practising entities (NPEs).
Two of the charts are depicted:
- Active litigation timeline: shows the number of active litigations against both the Target and its Comparables by year
- Litigation detail: provides a visualisation of either the Target or any of the Comparables, with coloured codings for won, lost settled or active. By hovering over the bars, an additional level of detail is provided
The Value section includes a breakdown of the value drivers that feed into the Cipher Grid (and a tabular representation of known licences granted by or to the Target and its Comparables). The contributors to Value are: Licences and Litigation (companies that licence or successfully litigate their patents), Applications and Grants (portfolio size and characteristics) and Score (the score attributable to patent families). The visualisation scores Target as 100%, and the Comparables are described relative to the Target.
In a press release accompanying the launch Nigel Swycher, CEO of AISTEMOS said the following regarding the role CIPHER has in the development of a marketplace for patents:
We believe CIPHER has the potential to change the way intellectual property is understood and exploited, so that all organisations can participate and realise the enormous value of IP, by making better decisions, creating new opportunities, and managing risk.
Ultimately, by providing access to trusted and comprehensive data, CIPHER can play an important role in helping to create a new marketplace for patents – a marketplace valued at many trillions of dollars – and which could help to drive economic growth by providing SMEs access to vital finance.
To underline these points AISTEMOS also released The trillion value tipping point report with a description of its key findings. The report is backed by organizations such as ARM, EY, Deutsche Bank, UK IPO and Allied Security Trust, and it identifies a range of trends that strongly suggest that the development of patents as a functioning asset class has reached a critical phase, including:
- The exponential rise in patent applications, grants and licensing over the past ten years
- The surge in IP litigation and the emergence of ‘patent trolls’ represents a move towards rational pricing
- Financial markets now recognise the substantial value associated with intellectual property, and patents specifically
- Intellectual property strategy is a boardroom issue, as both a key risk and value driver
- The banking community still requires education and support to start lending to SMEs secured on innovation and patents
- The US is developing new business models faster than Europe, and the time for the business community to engage is now
AISTEMOS CEO Swycher also discussed the critical need for the insights generated in this report:
We are fast approaching a tipping point in the evolution of intellectual property. Over the next few years, we will either see the emergence of rational markets for patent trading, which have the potential to deliver trillions of dollars in value, or an opportunity lost as markets fail to engage effectively.
If this opportunity is to be realised, patent owners, lenders and insurers must have immediate access to trusted business intelligence relating to patents as the basis for rational decision making, pricing and intellectual property trading.
The report, featuring comment from Tony Clayton, chief economist at UK IPO and Kelvin King, a co-author of the UK IPO’s Banking on IP? report, points to a lack of accessible data on patent value and risk as a major barrier to the effective monetisation of IP.
Scott Bell, Head of UK Investment Banking at Deutsche Bank, also commented:
Without data about value and risk, including fundamentals such as ownership, strategy and information to support comparisons, it is hard to see how a functional and active market can be developed; and while data is not the only ingredient, the demand for data and analytics to facilitate a better understanding must be met and is an essential starting point.
AISTEMOS also generated an infographic summarizing the key findings from the tipping point report which can be downloaded here.
This blog has suggested for some time that it is far past time that patents be recognized as a functioning asset class. With the release of the tipping point report, and the launch of CIPHER significant progress is being made on making this goal a reality.