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Competitive intelligence (CI) is the process of monitoring the competitive business environment. CI enables managers in companies of all sizes to make informed decisions with the best possible information. Effective CI is a continuous process involving the legal and ethical collection of information, analysis that accepts unwelcome conclusions, and controlled dissemination of actionable intelligence to decision makers.

The steps involved in the competitive intelligence effort conducted by a company imply first identifying the competitors, deciding what needs to be known about these competitors, refining sources of that information and evolving methods of extracting and interpreting it. The information is used to develop appropriate proactive tactics to win and maintain a better position of the company in the marketplace.

Numerous CI questions can be answered by analysing patent data. For example, if the CI specialist wants to know what new products a competitor will launch on the market he or she needs to look at their pending patent applications. To discover which products a company is discarding, he must review abandoned applications and expired patents. Information on companies buying patent rights can be found from patent assignment transfers, information that is available on some online patent databases. The history of the alliances a company has pursued over time or is still pursuing is found in the co-assignment information of the patents they filed together.

The bibliographic information of a patent record usually includes the following:

1. Title and abstract of the invention.
2. Name of the inventor and the assignee (owner) of the invention (typically the inventor's employer.)
3. Date of application, date of publication of this application, and date of issue of the granted patent; date of priority is also included.
4. Application number and patent number.

One point to note is that many databases do not record "after issue" actions. It may often be important to know whether patents are litigated, reexamined, or abandoned due to failure to pay fees. Often patents are assigned or licensed to new owners, information which may not always be available.

An important term to understand in patent language is the definition of a patent family. In conformity with the Paris Convention, to which a large numbers of countries have adhered, an assignee can file a patent application in one country followed by other foreign applications for the same invention within one year. Thus, protection will be granted to those foreign patents going back to the filing date of the first application which is called the priority date. The patent family record will usually include the patent/application numbers from all the patent family members in all the countries where patent protection has been sought

Patent analysis indicators of the above mentioned patent characteristics could be used to build the technological and competitive intelligence of a company as follows

Level of technological activity

A good indicator in measuring the level of technical activity is the number and breadth of patent families. The most reliable and comprehensive patent information of this kind can be found using the Derwent World Patents Index which is provided by Dialog, STN and Questel Orbit. and contains over 11 million inventions represented in patent documents from 40 patent-issuing authorities around the world.

The level of R&D activity of a company is often reflected by the number of inventions, and the geographic distribution of the patent families for these inventions. If this data is mapped over several years according to the priority date or date of first application then the history and trends in patent activity of that company over time may be viewed and analyzed. The patent activities of a particular assignee should be compared to that of other entities for the same technology for relative differences in velocity of change.

Technology profile

Patents are catalogued in a specific technology classification according to the subject matter claimed in the invention. These technological classifications, either International or National, can be used to develop technology profiles for companies. They indicate in which particular areas of technology a company concentrates its efforts. Such profiles may also used to compare and contrast one company's technological directions with another, providing information for mergers, acquisitions, collaborations and strategic alliances.

One strong indicator of technical strength as revealed in a patent classification profile is the number of patent families in given patent classes.

Commercial potential

A patent only offers protection in the country in which it is issued. It is costly to patent an invention in many counties. Therefore one can safely assume that a company will seek protection in multiple countries only if the invention is perceived as having high commercial benefits. The economic value of a company's patents can consequently be ranked according to the number of countries where it was filed and most importantly where the patent prosecution is maintained active. Many patents and patent applications treated as technology options, and are abandoned if markets prove unfavourable. Study of a corporate patent portfolio may indicate aged and expiring patents which do not protect the current products under development.

International market

The patent family information is also useful for identifying the patent filing pattern of a company meaning the countries where patent protection is sought over time. Studying these patterns the analyst can identify the markets towards which a company is directing its commercial efforts. The analysis of a company's foreign filings over time will reveal the changes in its geographical marketing interests.

Patent importance or value

In theory, a company will only spend money in filing patent applications worldwide for inventions that are perceived as important commercially. One estimate of anticipated economic value of a patent is given by the number of countries where protection has been sought.

Several studies have found that the number of subsequent citations and the number of international patent family members are correlated. Also there is a high correlation between the number of times a patent was cited and the expert ranking of its technological importance. However, this correlation applies only to patents cited more than 10 times.

These theories are based on the fact that the "background of invention" in a patent description contains references to previously patented inventions that are similar with the proposed invention and are known to the inventor. Similarly, when examining a patent application the patent examiner will compare the analyzed invention to the previous issued patents that are close to the described subject matter. These references are usually listed on the cover page of the issued patent, and termed the "prior art."

Citation analysis should be used with caution. Concerning US patents, a distinction must be made between the patents cited by the applicant himself and the citations referenced by the examiner. Usually the applicant tends to cite his own patent applications as prior art because he has not performed a state of the art patent search and is unaware of other inventions similar to his own. The citations an examiner makes are more objective, but the level of expertise and the time allocated to a patent search may vary considerably.

Another factor to be considered when comparing patents is that more recent patent applications tend to be less cited, even if technologically important, because it takes time for more citing patents to issue. Many databases allow citation searching. The Derwent Patent Citation Index (DPCI), a database available on STN, Dialog and Questel Orbit is one of the best. DPCI contains all up-to-date bibliographic patent family data from Derwent World Patent Index and all patents and literature cited by examiners, as well as references to citing patents. Coverage includes all patent-relevant areas of science and technology.

Alliances between companies

A patent can have more than one assignee (owner). Not all databases record this data. A search of the Derwent WPI will list all the co-assignees appearing on a company's patents for different countries. An analyst can then establish that company's alliances, partners, and areas of collaboration.

Inventors

A good CI strategy is to monitor the most prolific inventors of a company over time to review changes taking place. If more researchers are assigned to a particular field of technology or if they have been reassigned somewhere else it may mean that the company is giving a more or less importance to a certain field of technology.