Research Background

“Knowledge-based economy” was referred to be the combination of information and knowledge, of which “information” means those data which could be read and understood while “knowledge” indicated the accumulation of messages, techniques, and experience done by using knowledge. From the “Organization for Economic Cooperation and Development (OECD)”, “knowledge-based economy” was also referred to be “an economy with the most important output factor which is to own, allocate, produce, and use knowledge resource.” The core knowledge, which contributed most to the competency, was often taken as invisible intellectual property such as technological knowledge. Furthermore, “patent” was used to protect their core technological knowledge by most firms all around the world. Patent is a kind of property right of assignee granted by the government for protecting and developing their invention and competitiveness. Moreover, there is a strong relation between patent and invention, which means with more patents, comes more ability of invention.

Therefore, it is very critical that technology-based organizations can make more competencies by applying for a patent approval in their industries.

For a technology-based organization, continually technology progressing and changing leads to not only disruptions in the industry, but more uncertainties to this organization as well. So an executive manager has to face the change, understand what the most important and related patent information is, and then making timely and right decisions (Kayal & Water, 1999). Additionally, from the definition of European Patent Office, “patent information” is usually considered as the information of technique,

market, law, and all other information relates to its own company from patent office publications. Based on the World Intellectual Property Organization (WIPO) report, patent information is the only document among those technical development data, such as journals, magazines, and encyclopedia that can fully disclose the core technique.

Nowadays, it could be observed that patent specifications contained about 90 to 95 percent of the research and development (R&D) results all over the world, however, 80 percent of them were not yet recorded in other publications. From WIPO investigation, R&D time could be shortened up to 60 percent by using patent information effectively, and consequently the cost in R&D could be cut up to 40 percent. Especially, patent data is the information, which was most frequently used by R&D staffs. Not only could this

stimulate new research directions, but promote new usage of present techniques and predict industrial growth as well.

Recently, patent-based technology indicators have been developed to the elaboration on measuring the technical strengths of firms, industries and countries.

Griliches (1984) was the first person trying to analyze patent data and considering the numbers of granted patents as R&D performance. Also, Griliches (1990) pointed out that using patent information could be the most useful indicator. Choung (1998) also used the patent data to recognize the different technological progress between Taiwan and Korea, then comparing their competitiveness.

Meanwhile, researchers started to focus on and to analyze patent data then tried to find some beneficial information. CHI research, Inc., a consulting company had already developed some considerable technical indicators based on patent citation. The patent citation indicators developed so far were included as follows:

z Current Impact Index (CII): CII shows the citation rate of patents in the last five years being cited during the most current period. CII means the owner of the target patents has more competitiveness when CII is greater than 1.0.

Breitzman and Narin (2001) also proposed that a higher citation rate of the patent revealed that the patent was more significant with a higher technological impact.

z Science Linkage (SL): SL shows the number of reference per patent to other scientific publications. The owner of those patents cited a large number of scientific papers possibly appear to work closely with the latest scientific development.

z Technology Cycle Time (TCT): TCT presents “the median age in years of prior patents cited, which provides an indicator of the pace of technological change”. Narin (1993) found that different technological industry had different TCT value and demonstrated “in a fast changing area such as electronics, the cycle time may be as fast as three to five years, whereas in some of the very old technologies such as ship and boat building, the cycle time may be in the 15 to 20 year range. Deng et al., (1999) thought TCT indicator was the “backward looking and industry dependent” indicator, that is, it took advantage of cited patents from a given patent to calculate the given patent’s TCT value, and the value from different industries represent unlike value.

We can identify characteristics in a group of patents to measure patent quality by seeing patent citation. It can also establish linkages between patent documents. Patent citation was also recognized as the technology flow or change and R&D spillover. One

patent cited another patent means the knowledge or technology contained in a patent was transited to the other patent. Jaff et al., (1992) conducted a research of the extent to which knowledge spillovers were geographically localized by comparing the geographic location of patent citations to those of the cited patents.

Furthermore, researchers also take advantage of patent citation to analyze corporate competitiveness, technology life cycle, competitor analysis, and predict industrial growth. Tomas et al., (2001) also used TCT indicator and other technological indicators as a patent portfolio to measure and predict future stock market performance of a company, and finally they found this investment model did better than the Standard and Poor’s (S&P) 500 indexes. Moreover, Pouris (2005) conducted a study to detect the performance of transport research in South Africa and finally observed that research performance of South Africa was relatively well when comparing with other Africa countries, but did very weak comparing with other countries, like Great Britain, Australia, and South Korea and so on. Three main usages in patent citations were proposed by Gay and Le Bas in 2005: (1) Patent citations were used as a measurement of the value of technological inventions; (2) Patent citations were used as a measurement of the origins or the “knowledge base” of inventions; and (3) Patent citations were used as an evaluation of technological knowledge flows.

In recent years, the number of issued patents is growing rapidly, but some of them are useful and valuable while others are not. Valuable patents that contain crucial technology can often help firms to produce more research outcomes and result in more profit to the entire organization. However, less valuable patents have no practical usage and would be disregarded quickly. Therefore, if a criterion could be set up for helping sieving out what valuable patents are, then furthermore we can just spend time to focus

save more resource. It would be a great contribution to many researchers in carrying out patent analysis. Therefore, it’s very useful to find the criterion of recognizing the important and valuable patents.