Report Compares Patent Assets of GM, Ford and Chrysler

President Obama’s Task Force on Autos today received a copy of the Automaker Patent Assets Intelligence Report (2009 APA-Intel Report) prepared by PatentCafe.com.  The report compares the patent portfolio assets of General Motors, Ford, Chrysler, Toyota and Volkswagen, and concludes that GM, Ford and Chrysler may be sitting on patent assets that could be directly exploited for immediate revenue and market share increase, perhaps well in excess of $100 million. The Report also hints that US automakers may be sitting on many sub-quality and non-core patents that could be divested to immediately cut costs.  Special thanks to Philip Brooks for finding this story and bringing it to our attention.

As financial markets based on traditional assets continue to collapse, patents are emerging as the single most important asset class upon which sustainable economic recovery will depend. The APA-Intel Report presents findings that show how the US automakers have managed innovation, and their patent assets over the past decade. The new information comes just in time for Task Force consideration as automakers prepare to present their recovery plans at the end of the month.  Below is a chart summarizing how each of these automakers stack up against each other in a variety of categories.

The report explains:

Annually, U.S. companies waste $1 trillion dollars in patent assets. Smart management of patent assets correlates to a more vigorous competitive position, and perhaps even survivability during an economic downturn.

Corporations that create and leverage patents to protect commercially important technologies and markets enjoy stronger economic growth, higher employment rates, and create higher stakeholder value.

On the other hand, improperly managed patents, or more importantly, the lack of strategic patent management, exposes corporations to market share loss, escalating unemployment, the risk of shareholder and patent infringement lawsuits, and in extreme cases, the collapse of a company.

Patents are the threads of the economic fabric of the United States economy, and promote corporate innovation and vitality within an industry.

Long term financial performance within an industry can be traced back to a company’s earlier commitment to investment in strategically important innovations, and their protection of those innovations via patents.

In terms of green technology, the report finds that Toyota and Ford are far ahead of the other car companies, both in terms of the number of patents covering green technologies and the overall percentage of patents held that relate to green technologies.  See chart below.

Andy Gibbs, Chairman and Chief Executive Officer of PatentCafe said:

The APA-Intel Report on patents is the first of its kind that provides an in-depth comparison of the quality of patent portfolios owned by Chrysler, Ford, and General Motors, against their largest Japanese and European counterparts. High quality patents provide huge revenue opportunities, and low quality patents increase operational risk. With an estimated 80% of the market cap of the S&P 500 attributable to intangible assets, it’s now critical for the Task Force, as well as stakeholders, to question how well GM and Ford are managing their patent assets. This report provides those measurements.


About the Author

Eugene R. Quinn, Jr.
President & Founder of IPWatchdog, Inc.
US Patent Attorney (Reg. No. 44,294)

B.S. in Electrical Engineering, Rutgers University
J.D., Franklin Pierce Law Center
L.L.M. in Intellectual Property, Franklin Pierce Law Center
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Gene is a US Patent Attorney, Law Professor and the founder of IPWatchdog.com. He teaches patent bar review courses and is a member of the Board of Directors of the United Inventors Association. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, CNN Money and various other newspapers and magazines worldwide

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3 comments so far.

  • [Avatar for Gogalthorp]
    Gogalthorp
    March 28, 2009 10:13 am

    Most patents are economically worthless. You can get only what you can get. And since most patents owned by car companies are of any value to other car companies who also have patents their only value is in patent swap agreements. I can not see how you could come up with any monetary figure from a simple list of patents.

  • [Avatar for John Smith]
    John Smith
    March 28, 2009 12:47 am

    If one company gets a $10,000,000 patent settlement, then another one loses it. The only thing this does to the economy is to divert say 30% of R&D funds to lawyers.

    The money spent on R&D could have reduced production costs or increased a product’s value. That quickly turns into money through the door of the manufacturer and all their customers. In real life, copying an invention takes months at best, more likely a year. During that time, the some of increased revenue can feed back into R&D to create the next generation of product.

    Instead of funding R&D, a company can spend money on lawyers, get patents, spend lots of money defending patents. After a few years of expensive arguments, it is far more likely that the result will be a cross licensing agreement than any money actually changing hands. During all this time, there is no extra income to boost new R&D, and customers do not share the benefits of old R&D. There is no boost to the economy, and patent licensing forms a barrier to innovation and vitality within industry.

    Companies get rich in a market that is not bogged down with patents. Once patents control an industry, it becomes stagnant and companies decay until they are too set in their ways to adapt to the next big change in technology. The real way to boost the economy would be to dispose of the entire patent system.

  • [Avatar for Dick Troll]
    Dick Troll
    March 27, 2009 02:28 pm

    Gene:
    I find it astounding that a report would conclude that the US auto industry wastes 1 trillion dollars a year in assets. Wouldn’t it be fascinating to see a list of the law firms that represent the auto industry on patent matters. And what conclusions should we reach about the in house decisionmaking process that has allowed a trillion dollars a year to go out the barn door.
    Are there lessons for other industries here?