1.7 How patent information can be used; some case studies
The following examples demonstrate real-world scenarios in which patent information has been used effectively. They illustrate how patent information may be used in different ways by individuals and organizations seeking solutions to specific technical or commercial problems. The strategic use of patent information demonstrates how developing countries can benefit from patent information and from developing IP policies to support economic growth.
1.7.1 Case study 1: Licensing agreement
The untapped market potential of a novel medication led Pfizer to establish a mutually advantageous licensing agreement with the Croatian patent-holding company Pliva. Nigel Keegan, an analyst at the Daiwa Institute of Research Europe in London, estimated that royalties and the margin on bulk azithromycin sales to Pfizer accounted for over 75% of Pliva’s operating profit in 1999. Pliva, the most profitable company in Croatia and the country’s largest pharmaceutical manufacturer at the time, had previously faced significant commercial challenges.
Subsequently, the company’s situation changed dramatically following its discovery of azithromycin. Patented by Pliva in 1980, the drug was later licensed to Pfizer, which markets it under the brand name Zithromax. Sales of Zithromax exceeded US$1 billion in the late 1990s and were projected to increase further. The substantial income generated from the licensing agreement enabled Pliva’s rapid expansion across Croatia, Poland, and Russia. Notably, this collaboration began after Pfizer’s researchers identified Pliva’s patent in 1981 while reviewing patent documents at the United States Patent and Trademark Office.
1.7.2 Case study 2: Patent information research
During the 1990s, generic drug manufacturers in India emerged as major suppliers of generic medicines to developing countries. The manner in which this development occurred is not widely recognized but merits examination here. Essentially, pharmaceutical manufacturers in India made extensive use of the patent system to develop their technical capabilities by analyzing patent documents. Their approach provides an instructive example for other developing countries that have not yet fully leveraged the benefits of patent information.
Over several decades, domestic pharmaceutical companies in India developed their knowledge and capabilities to manufacture essential medicines largely without substantial formal technical assistance from abroad. They achieved this by studying patent documents published in other countries. Certain patent applications had never been filed in India, primarily because the patent holders had limited commercial interest in the Indian market. The technical information disclosed in those patent documents was therefore available for lawful use by local industry. Indian firms made effective use of this body of knowledge, and similar approaches may be adopted in other innovation-oriented environments where awareness of patent information resources is promoted. Source: Carsten Fink and Keith Maskus, Intellectual Property and Development, published by Oxford University Press and the World Bank (2004), page 230.
1.7.3 Case study 3: Patent information and marketing/investment strategy
IG Kogyo Co., Ltd. holds the leading domestic market share in metal siding (heat-insulating metal material for home exterior walls) and also exports this material internationally. President Takashi Ishikawa observed that extremely low winter temperatures were associated with a high incidence of cerebral apoplexy in the region where he lived. Motivated by this observation, he resigned from his position as a carpenter specializing in shrine and temple construction and established a startup company.
Mr. Ishikawa hypothesized that the interior of houses could be made warmer if insulated metal plates were used for exterior wall construction. He therefore explored what type of insulating material could be combined with metal plates to achieve this objective. One snowy morning, while resting on a traditional Japanese futon, he noticed that the bedding retained warmth effectively. He learned that the filling material consisted of urethane foam, although he initially had limited technical knowledge about the material.
Mr. Ishikawa travelled to Tokyo and consulted publications of unexamined patent applications at the Japan Patent Office, where he obtained valuable technical information regarding urethane foam technology. Urethane foam is produced by introducing a foaming agent into resin materials known as polyol and polyisocyanate and mixing them mechanically. The fundamental patent covering this technology was held by a foreign manufacturer, but its term was scheduled to expire in June 1971, while related patents were expected to expire in June 1973. After the expiration of these patents, the disclosed technology became available for public use without the need for licensing fees. Although mattresses typically use flexible urethane foam, rigid urethane foam can be produced by modifying the catalyst used in the reaction process.
Mr. Ishikawa concluded that combining metal plates with urethane foam could create a highly innovative exterior wall material. He presented this concept to several companies, including major steel manufacturers; however, none expressed interest at the time, as the concept was considered unconventional within the construction materials industry.
With limited alternatives available, Mr. Ishikawa established his own company to commercialize the new construction material. His initial attempts were unsuccessful, and he nearly abandoned the project on several occasions. However, after an extended period of experimentation and technical refinement, he succeeded in 1976 in developing a method to significantly increase the solidification rate of urethane foam while reducing production costs. After the product was introduced to the market, it achieved strong commercial success. Since then, the company has continued to improve the product’s functionality and design. It has established a new product category (metal siding) in the residential construction materials sector and has developed into a nationally recognized manufacturer.
Mr. Ishikawa later noted that although patent information previously required visits to the Japan Patent Office, it can now be accessed easily via the Internet. By systematically analyzing patent information, companies can identify not only industry trends but also broader technological and societal developments. With structured access to patent information resources, companies located outside major industrial centers can compete effectively.
The number of industrial property rights currently held by IG Kogyo exceeds 10,000, including pending applications. This represents a notable achievement for a company with capital of approximately 150 million yen (about US$1.25 million). IG Kogyo has therefore been recognized as a company with a strong patent strategy orientation. This case illustrates that patent information enables individuals and companies to learn from earlier inventions and to use that knowledge as a basis for developing new technical concepts.
1.7.4 Case study 4: Using patent information to solve a technical problem
Malaysia-based Rica Industries was a representative small and medium-sized enterprise (SME) employing fewer than 150 workers and generating annual turnover of less than US$8 million. The company produced and sold chemical products and also provided consultancy services to clients on production processes and quality control.
The company initially began operations by acquiring chemical formulations and technical know-how from international technology providers, with a significant portion of its revenue allocated to royalty payments to licensors. In order to reduce royalty expenditures and improve profitability, the company later established its own research and development (R&D) department to develop proprietary chemical formulations and to manufacture and market new chemical products.
As part of this effort, the R&D team explored the strategic use of patent information, as reflected in a remark by its lead chemist: “I find patent information stimulating. Different patents demonstrate alternative approaches to solving technical problems.”
The company progressively achieved several successes in developing new chemical formulations with the support of patent information. One example involved the metal cabinet manufacturing sector. Traditionally, mild steel sheets are treated using an iron phosphate solution in a heat-treatment chamber operating at temperatures in the range of 50–70°C. After this treatment, the metal sheets are painted. However, the installation and operation of such heat-treatment chambers are costly. The challenge was therefore to eliminate the need for a heat-treatment chamber by developing a chemical formulation capable of treating mild steel sheets with iron phosphate at ambient temperature.
The R&D team collected information from technical journals and patent documents and, based on this knowledge, developed their own technical solutions and obtained patent protection for them; for example, see US 3060066, US 4017335, US 4149909, and US 5137589. The importance of patent information is reflected in several company observations:
- “Some examples proved effective; others did not. However, what matters are the ideas and concepts presented in the patent documents.”
- “Throughout the process, we accumulated many useful ideas and technical clues for solving the problem.”
- “We combined the useful concepts identified in patent documents with our own research and experimental work. In this context, patent information provided multiple possible approaches to solving the problem and helped shorten the development process.”
Fundamentally, familiarity with patent information enabled the researchers at Rica Industries not only to avoid duplicating existing efforts but also to develop more effective and potentially patentable solutions by comparing their technical results with those disclosed in earlier patent documents.
1.7.5 Case study 5: Patent information as an ingredient in policy making (US Bayh–Dole Act)
Patent information is important not only for enterprises seeking to maintain market competitiveness but also for governments developing policies to support innovation and economic growth.
An example of the use of statistical data derived from patent information for policy development is the enactment of the Bayh–Dole Act in the United States in 1980. By that time, the federal government had accumulated approximately 30,000 patents resulting from federally funded research, of which fewer than 5% had led to the development of new or improved products. Because the government generally lacked both the institutional mechanisms and a clear strategy for commercializing these inventions, many patents remained unused.
To address this gap in the commercialization of federally funded research, Senators Birch Bayh and Bob Dole introduced legislation that later became known as the Bayh–Dole Act. The primary objective of the Act was to strengthen national competitiveness and promote economic development by improving the transfer of academic research results into the broader economy.
The legislation allowed universities, small businesses, and nonprofit institutions to retain ownership of inventions developed with federal funding, subject to certain conditions, in order to encourage research investment and commercialization. The ability to retain intellectual property rights and negotiate exclusive licenses was considered essential for stimulating private-sector participation in the development of publicly funded inventions. The Act also encouraged universities to pursue commercialization activities, particularly through licensing to small businesses, and included provisions designed to support inventors.
Since 1980, thousands of startup companies have been formed based on licenses from academic institutions. University technology licensing activities are estimated to contribute tens of billions of dollars annually to the United States economy and to support a substantial number of jobs. The Act is also associated with the commercialization of technologies such as advances in magnetic resonance imaging at the University of Wisconsin–Madison, lithography systems supporting nano-scale device manufacturing at the University of Texas at Austin, and medical treatments for aneurysms developed at the University of California, Los Angeles. More broadly, many widely used technologies have emerged from university research environments supported by public funding.
The Act is therefore widely regarded as an important catalyst in strengthening collaboration among government institutions, universities, and private-sector organizations.
The development of this legislation, supported in part by analysis of patent-related statistics concerning federally funded inventions, illustrates how patent information can contribute to evidence-based policy making. Two decades after its adoption, the Act was described by some commentators as “possibly the most inspired piece of legislation enacted in the United States over the previous half-century.”
The Secretariat of WIPO assumes no liability or responsibility with regard to the transformation or translation of the original content. World Intellectual Property Organization (WIPO) (2023). WIPO Patent Drafting Manual, Second edition. Geneva: WIPO. DOI: 10.34667/tind.44657