What Patents Really Reveal Before Markets Do

In order to stay competitive in your technological domain, you need to  constantly strive to anticipate the next big breakthrough. Relying solely on market trends, hype cycles, or analyst reports can result in even large organizations playing catch-up. 

Why? Because these indicators often reflect established successes or widely acknowledged shifts, by which time the early movers have already gained a significant advantage. The true leading indicators of innovation lie not in the rearview mirror of market data, but in the forward-looking signals embedded within global innovation data. 

Patents, often overlooked as mere legal documents, serve as the earliest, global, and meticulously timestamped records of technological progress, revealing the trajectory of innovation long before it manifests in market dominance.

Too much data, too late to act.

R&D leaders today face immense pressure to drive innovation under tight budget and time constraints. They must navigate an overwhelming landscape of emerging technologies, with the number of distinct technology domains exploding from just 215 in 1900 to 265,000 by 2023. This sheer volume creates “too much data to process and not enough time” for even the most astute human experts. Traditional methods of staying informed, such as attending conferences and reading scientific papers, are no longer sufficient in the face of this exponential growth. Furthermore, relying on trend reports often means following the herd, which as GetFocus notes, “is often wrong”. By the time a technology becomes a widely recognized trend, the window for early strategic action may have already closed. Market data inherently reflects past performance and current adoption, offering limited insight into the nascent stages of truly disruptive innovation.

Patents reveal the future before the market does.

In contrast to lagging market indicators, patents offer a unique vantage point into the future of technology. Before an invention hits the market, its core concepts and underlying mechanisms are meticulously documented in patent applications. This makes patents the earliest available evidence of technological progress. Moreover, the patent system is inherently global, with filings occurring across numerous jurisdictions, providing a comprehensive view of innovation efforts worldwide. Each patent application carries a precise timestamp, creating a chronological record of invention and improvement over time.

The very structure of a patent provides valuable information. It typically includes a description of the invention, an explanation of how it improves upon existing technologies, and citations to prior art (older patents). This standardized format, while legal in nature, inadvertently creates a rich dataset that reveals the evolutionary progress of technology. As the MIT research underpinning GetFocus recognized, these seemingly dry legal documents hold the key to understanding the dynamics of technological advancement.

Citation patterns reveal knowledge flow + rate of iteration = Technology Improvement Rate (TIR).

GetFocus’ methodology is rooted in the analysis of patent citation patterns. By examining how new patents cite older ones and how frequently a new patent is subsequently cited by others, two crucial metrics emerge: cycle time and knowledge flow.

• Cycle time measures the average age of the older patents cited by a new patent. A short cycle time indicates that inventors are building upon recent advancements, signifying a rapidly moving field.
• Knowledge flow assesses how often a new patent is cited by later patents within a short timeframe (e.g., three years). High knowledge flow suggests that the new invention is influential and represents a significant step forward, inspiring further innovation.

GetFocus leverages AI to process vast quantities of patent data, automatically calculating these metrics. By combining cycle time and knowledge flow, GetFocus estimates the TIR for any given technology domain. The TIR is comparative, indicating how quickly one technology is improving relative to its competitors. The delta or difference between the TIRs of competing technologies can be a powerful predictor of which technology is likely to dominate in the future. 

“Historically, the technology with the fastest improvement rate tends to win out in the long run.”

Several GetFocus case studies illustrate the power of this approach. For instance, the analysis of patent trends could have indicated as early as 1983 that digital photography was improving at a faster rate than film, suggesting its eventual dominance over film, almost two decades before the significant decline in film sales. Similarly, GetFocus analysis of patent trends in SSDs and HDDs revealed that SSDs were improving more rapidly, even though the price gap remained significant, indicating the long-term cost-effectiveness of SSDs despite short-term predictions. The predicted rise of LFP batteries for EVs, with early signals detected in 2011 and broad adoption by 2019, further underscores the predictive capability of patent analysis. Even in areas like medical technologies, Philips utilized GetFocus' AI forecasting based on patent analysis to make informed investment decisions and understand the competitive landscape more efficiently than traditional methods.

Use patent signals to act before the market moves.

The insights derived from patent analysis, particularly the TIR, offer a crucial advantage for R&D leaders and strategic decision-makers. By understanding which technologies are demonstrating the most rapid progress, organizations can:

• Identify promising emerging technologies early.
• Validate product development roadmaps by assessing the global innovation landscape.
• Make more informed investment decisions by understanding the future potential of emerging technologies.
• Anticipate market disruptions and proactively adapt strategies.
• Gain a competitive edge by betting on winning technologies before the rest of the market realizes their potential.

GetFocus provides the capabilities to scout, compare, and forecast technologies by analyzing patent data at scale, reducing analysis time from months to minutes. This enables organizations to move beyond reactive trend following and embrace a proactive, data-driven approach to technology strategy. By learning to read the early innovation signals embedded within patent filings, businesses can position themselves to act decisively before the market fully understands what's coming, ultimately leading to more confident and successful technology investments.