State of Innovation

Patents and Innovation Economics

Competitive Analysis and Patent Portfolios

The only asset that technology start-up companies have is their intellectual property.  Creating a strong patent portfolio and understanding the competitive landscape are critical to maximizing the market value of technology companies.  A strong patent portfolio is also the company’s best barrier to entry.

Creating a strong intellectual property portfolio, starts with a competitive analysis of your competitor’s and your market space’s patents.  A systematic analysis of the patent landscape starts by defining your major competitors and also defining your product or service in a block diagram having 3-6 blocks.  Alternatively, you need to define your market space into 3-6 market segments.  Your prior art search should first focus on the patents of your major competitors.  Next you should focus on the prior art related to your product or service and then the components in your block diagram.

Once you have completed your prior art search it is time to categorize the patents in a matrix or graph by competitor and area of technology.  This will let you know where the minefields are in your company’s technology space as well as areas of technology to exploit.  Each of the prior art patents need to be examined for both patentability issues and infringement issues.  This process will ensure that your company is not hit by any surprises and focuses its patent resources in the areas with the biggest returns.  It will also likely improve the design of your product or service.

Let’s look at an example in order to illustrate how this process works.  Edison invents the high resistance incandescent light bulb and wants to build the strongest patent portfolio possible to protect his light bulb business.  The main blocks of the incandescent light bulb are the filament, the glass bulb, the vacuum, and the electrical socket.  As it turned out Joseph Swan, a British scientist and inventor, had a patent on a incandescent light bulb with all these major elements.  However, Swan’s light bulb had a low resistance filament that was impractical to commercialize, while Edison had invented a light bulb with high resistance filament.  So in creating our matrix, we need to include Swan’s English patent.  There were other inventors who had worked on incandescent light bulbs and arc lamps, so these would need to be included in our matrix.  We also need to look for patents on filaments, since this is a critical component of the light bulb.  For instance, there may be patents on how to carbonize bamboo or other materials.  Note that after Edison invented his light bulb another inventor Hiram Maxim invented a method of coating carbon filaments with hydrocarbons that extended the life of his light bulbs.

Assuming our main competitors are Swan, electric arc company – 1, and electric arc company-2, our matrix would look like:

Light Bulb High Resistance Filament Glass Bulb Vacuum Electric Socket
Joseph Swan



Electric Arc Co-1


Electric Arc Co-2


A1 is the English patent to Joseph Swan.  The “A” stands for active.  Notes about this would be provided here.

E1 is an expired patent to the first electric arc lamp company.

E2 is an expired patent to the second electric arc lamp company.


The only active patent in our matrix is the English patent to Joseph Swan.  It turns out that his claims may read on our light bulb.  One solution is to not produce or sell light bulbs in England.  Another solution may be to take a license to Swan’s patent.  A third solution is to design around Swan’s patent.  Note that Edison tried to sell his light bulbs in England and was sued by Swan.  Swan won the lawsuit and this lead to a merger between Edison’s light bulb company and Swan’s light bulb company.


Our matrix shows that no one has a patent on a high resistance filament.  This is important, because this is the key to making our invention practical.  Our matrix shows that no one has focused on the electrical socket for the light bulb, so this is an area that we should focus our research and patent efforts.

Using this tool your company can explain to investors the patent landscape, where the potential minefields are as well the areas of opportunity.

September 15, 2009 - Posted by dbhalling | -How to, Innovation, Patents | | 1 Comment

1 Comment »

  1. [...] in your marketplace.  For more information on how to perform a prior art survey please see Competitive Analysis and Patent Portfolios .  This analysis will show you where there are gaps in the prior art that can be exploited and also [...]

    Pingback by How to Build a Patent Portfolio that Dominates Your Marketplace « State of Innovation | September 28, 2009 | Reply

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