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Prolific Patenters

And a lot is changing. A comparison of the 1999 leaders against the five-year averages shows that the firm occupying the top spot has changed in seven of eight industry groupings: Only IBM has rested undisturbed at the head of its class.

Even more telling than the shuffling of leaders are the dramatic gains or losses in technological strength that a host of companies have experienced in recent years. Take AT&T. The company ranked fourth in the telecommunications sector in 1999-behind Lucent, Motorola and Ericsson-just where its five-year average puts it. But last year’s projected technological strength rating of 1551 is more than five times its average for the previous half-decade-enabling it to close the gap on the leaders. The movement reflects to a great extent the forces put in place following AT&T’s 1995-96 trivestiture, which saw it split into AT&T, Lucent Technologies and NCR. “At the time of trivestiture…a much greater percentage of the patents that were held between the combined companies stayed with Lucent,” says intellectual property executive George. That made sense, he says, because Lucent is a hardware and manufacturing concern, while AT&T operates as a long-distance and services company-and few patents had traditionally been granted in the service sector.

The rules have been rewritten in recent years, though, with the awarding of patents for seemingly not-so-inventive service ideas such as “experts online” (see “Software Patents Tangle the Web”). In early 1998, the new service-friendly patenting environment helped spur chairman Armstrong to launch his campaign to bolster AT&T’s patent output-not just for its traditional long-distance business, but in cable systems, wireless communications and Internet telephony.

Among those tapped to bring about this new era was AT&T fellow Roy Weber, who back in the old AT&T days had won the basic systems patent covering the use of 800 numbers to handle customer-service calls. Weber, now a research vice president, oversees a variety of service-related investigations. Among other things, AT&T is pushing his scheme for a customer service operation called Wide-area Internet Sales Link (WISL-pronounced “whistle”). The idea is to improve on the current geographically based call centers spurred by his 800 patent by creating virtual centers in which service agents share data over the Internet and phone calls are automatically routed to agents who are free.

The advantage, says Weber, is flexibility. Many companies needing to expand their service centers are struggling to find skilled people and construct buildings fast enough. “What WISL does is give them a degree of freedom. They can build centers anywhere-strip malls, satellite offices-or let people work from their homes,” he says. AT&T has field tested WISL with a telemarketing service bureau in Florida and a Detroit-area travel service. Commercial rollout is planned for this year.

Another sign of the dynamic nature of invention these days is the way relative small fries can crack the big-boy ranks. In the biotech/pharmaceuticals arena, tiny Incyte Pharmaceuticals, a Palo Alto concern with about $150 million in sales, soared from 17th place in the five-year tech strength averages to tenth in 1999-surpassing notables such as Abbott Labs and Glaxo Wellcome. A big part of this rise came via sheer patent volume, as last year’s estimated total of 248 easily outstripped its average of just 27 annually for the previous five years. Indeed, the estimated total for 1999 came close to putting Incyte in a tie for first place in its sector, along with Merck, Roche and SmithKline Beecham.

Incyte’s main area of patenting: human genes. Around 1993, Incyte realized that advances in automatic sequencing and characterization were making it possible to affordably identify and patent human genes or pieces of genes. This genetic information, Incyte reasoned, would be a valuable commodity to other companies striving to create diagnostics and drugs. So the firm quickly abandoned its own drug-development business to become a supplier of genetic data.

Things moved slowly at first, as the company ramped up technologically. By late 1998, however, Incyte’s patent pump was primed, and it announced plans to spend $80 million to $90 million over the next two years to beef up its intellectual-property portfolio. The results have been impressive. At the beginning of 1999, Incyte had filed patent applications on just under 2,000 genes, reports general counsel Lee Bendekgey. By year’s end the figure was between 6,500 and 7,000.

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