April 2018 Aerospace & Defence Innovation under attack
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Chart 1A: Top 10 A&D patent owners (granted and pending patent families)
Chart 1B: Top10 A&D patent owners by technology (active patent families)
Chart 2: Analysis of Top 5 A&D patent owners
25,703
16,526
14,844
11
,391
10,887
8,795
6,841
5,478 4,973
4,705
45,747
11,188
9
,114
8,668
6,449
4,441
4,871
4,592 4,240
4,056
110,143 families
110,143 families
Motorization
FuelAir traic management& cockpit layout
So�ware & interface
Materials & Processes
Navigation &positioning
Electric systems
Miscellaneous
Wireless & communicationAircra� design & chassis
GE
UTC
HoneywellAirbus
Boeing
Safran
MitsubishiHeavy Industries
Rolls-Royce
RaytheonLockheed Martin
25,703
16,526
14,844
11
,391
10,887
8,795
6,841
5,478 4,973
4,705
45,747
11,188
9
,114
8,668
6,449
4,441
4,871
4,592 4,240
4,056
110,143 families
110,143 families
Motorization
FuelAir traic management& cockpit layout
So�ware & interface
Materials & Processes
Navigation &positioning
Electric systems
Miscellaneous
Wireless & communicationAircra� design & chassis
GE
UTC
HoneywellAirbus
Boeing
Safran
MitsubishiHeavy Industries
Rolls-Royce
RaytheonLockheed Martin
Chart 1A looks at this position through a patent lens. Over the last 10 years, there has been a constant growth in patenting, and the Top 10 A&D companies own over 110,000 patent families (this excludes patents owned by GE and Mitsubishi in unrelated areas).
Chart 1B analyses the anatomy of these huge portfolios. Chart 2 applies this clustering to the Top 5. Cipher, our AI enabled patent analysis software makes it easy to analyse both the macro and micro views.
The top A&D companies are all major patent owners
It must be tempting as the CEO of a major A&D company to believe that your position is unassailable. The industry is large - over $700bn. You have relationships with MoD and DoD that go back decades, and there are always wars to fight. You have a long history of R&D, and leadership in innovation and technology. Best of all you have cash.
GE UTC Honeywell Airbus Boeing Top5 Total
Motorization 12,433 10,247 2,970 3,279 2,187 31,1166
Materials & Processes 825 313 229 1,205 1,235 3,807
Miscellaneous 2,472 949 1,945 559 585 6,510
Aircraft design & chassis 1,585 829 772 3,490 2,205 8,881
Electric systems 2,189 757 949 283 591 4,769
Temperature management 190 1,073 131 41 36 1,471
Air traffic management & cockpit layout 508 148 1,157 794 899 3,506
Wireless & communication 2,076 300 2,110 646 1,150 6,282
Fuel 609 150 2,627 69 85 3,540
Navigation & positioning 506 83 668 486 740 2,483
Optics & imaging 1,238 73 241 123 268 1,943
Software & interface 1,024 232 1,019 377 857 3,509
Elevator systems 36 1,356 21 8 16 1,437
Payload & ammunition 12 16 5 31 33 97
Total 25,703 16,526 14,844 11,391 10,887 79,351
www.cipher.ai
Chart 4: Litigation against Top 20 A&D companies (ex GE and MHI)
Chart 3: 3D Printing, Drones and Cybersecurity, Top 10
Chart 4 is a chart of the litigation against the same Top 20 A&D companies. Apart from the rise (and fall) of NPEs (aka patent trolls), there has been very low levels of patent litigation.
Chinese Acad of Science
458
State Grid Corporation
of China
620DJI
171
University of Beihang
Amazon
155
142
127
124124
110
12,631 families 23,323 families
248
164
154
123118
113
108
93
9089
HP
Stratasys
GEPrint-Rite
Ricoh
EOS
Xerox
UTC
Compal
26,934 families
IBM
Microso�
Symantec
Intel
QIHoo 360
Cisco
Huawei
Tencent
Mcafee
Dell
799
793
617534
415
395
327
325
300267
Guangdong Rongqe
Northwestern PolyUniversity
NanjingUniversity
206Boeing
Ewatt Tech
SeikoEpson
OpCo NPE
0
5
10
15
20
25
30
35
40
45
50
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3D Printing Drones Cybersecurity
Disruption impacts A&D in the same way as many other sectors. For example:
▶ IoT, sensors and connected devices are leading to more efficient maintenance and support▶ Wearables are essential for a range of military applications▶ 3D printing (Additive Layer Manufacturing) is transforming the way parts are made and supplied▶ Cybersecurity is fast becoming both a shield and a sword
Chart 3 includes an analysis of the Top 10 patent owners in three of these areas.
The A&D tech of tomorrow is very different
Litigation is likely
The reality is stark. While A&D companies have their toes in the water some of the time, the investment is being led by other companies (e.g. IBM, HP, Microsoft) and in other geographies (e.g. China, in the case of drones).
This makes it imperative to monitor patenting trends. While few can handle the onerous requirements of being a defence contractor, we have witnessed the impact of an era of GAFA (Google, Apple, Facebook, Amazon), across a number of sectors and technologies and A&D is not immune. The US DoD has been critical of the levels of R&D (c.2% in A&D compared to over 7% in tech) and have signalled their willingness to engage with smaller tech companies.
The signal emitted from patent information improves screening for potential acquisitions and collaborations. A&D would not be the first sector that struggled with the innovator’s dilemma. Big pharma have been tacking this for years and have a tried and tested model for in-licensing (and acquisitions). It can also help counter the impact of Silicon Valley.
In 2015, the Pentagon set up DIUx in Moffett Airfield in Mountain View California to increase access to innovative, leading edge technologies from high-tech start-ups and entrepreneurs. Airbus was quick to follow suit by setting up a West Coast VC fund in the same year.
[email protected] To learn more about our approach and the industries we support, contact us today
April 2018
Airbus
Boeing
Lockheed Martin
UTC
Raytheon
Google Microso�
Qualcomm Ericsson
Nokia
0
25
50
75
100
0 5000 10000 15000 20000 25000 30000 35000
O�en
sive
Litig
atio
ns
Size of portfolio
Chart 5: Offensive litigation vs portfolio size, A&D vs technology companies
Cipher has a fresh and powerful approach to analysing patent information. By harnessing the power of artificial intelligence, Cipher is able to provide actionable insight about technology and innovation trends.
Patents are important when combating new forcesWhile patents have historically been important to A&D, the way in which they have been understood and exploited is about to change. There are a variety of reasons.
First, the legacy A&D portfolios will need to adapt to disruptive technologies. Secondly, patents are currency in technology deals - in traditional A&D supply chains the role of patents has been largely passive. Thirdly, litigation
risk in A&D has traditionally been low. This is likely to change in a connected and autonomous world, where the fight has already started for intellectual property supremacy.
Analysis of patent information is a valuable source of competitive intelligence and Cipher is already being used by many companies in the sector.
This good news is outweighed by the fact that the absence of IP risk often equates to lack of attention in the boardroom. As A&D feels the impact of disruptive technologies, expect to see an increase in litigation activity. Chart 5 compares the Top 5 A&D with a selection of tech companies. Tech portfolio sizes are larger and they tend to litigate more often.
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