BASF SE (Deutsche Börse: BAS) and The Dow Chemical Company, have jointly come forward to support the Patent Asset Index (PAI), a new methodology that measures research and development (R&D) effectiveness, innovation strength and how these factors lead to sustained competitive advantage.
Reportedly, the new PAI created by professor Holger Ernst of the WHU – Otto Beisheim School of Management is a science-based metric that overcomes the key limitations of current patent analytics by offering a global perspective, transparency and quality measurement for the assessment of patent portfolios. In comparison to other methodologies, it takes into account the total global patent portfolio of a company and is not restricted to a just a single country or a limited period of time. He said: “We now have an important indicator for the sustainability of innovative strength, especially with regard to technology and R&D oriented companies on a global level.”
He added that the PAI is comprised of several sub-components and measures the overall strength of a company’s patent portfolio. It is based on two factors: Portfolio Size (the number of worldwide active patent families) and Competitive Impact, which is the combination of Technology Relevance and Market Coverage. Technology Relevance measures the number of citations a patent receives in other patents, and Market Coverage measures the extent of patent protection in global markets. Thus, the PAI offers a more detailed, accurate and robust perspective than current methodologies used to measure innovation strength.
William Banholzer, executive vice president and chief technology officer of DOW, said: “The nature of R&D has changed significantly in the past decade, however the methods for analyzing the performance of R&D organizations have not changed. We are in complete support of this new method, which takes into account the quality and quantity of innovation and provides a result that not only allows a company to benchmark itself against its peers, but also provides an accurate, overall view of the impact and efficiency of an enterprise’s investment in innovation.”
Andreas Kreimeyer, member of the board of executive directors and research executive director of BASF SE, said: “The essential role that patents play in the chemical industry is often ignored, and we are happy that we now have a better method to compare the patent portfolios of global companies even more accurately. The method is valuable not only to demonstrate the importance of our patent portfolio to investors, but also to internally evaluate our patent strategy over time.”