Unleashing the Economic Potential of Patents in Conversational Artificial Intelligence
By Roya Ghafele, OxFirst Ltd. info@oxfirst.com
With a rapidly growing market that offers both, attractive returns on investment and the genuine ability to transform the way humans and machines interact, I was keen to understand the economic value of patents reading on Conversational Artificial Intelligence.
Patents offer strategic insights, yet they are often overlooked by the business and investor community. Classified primarily as an esoteric field of law, the economic analysis of patents has gone by and large unnoticed.
I we see things differently. I look at patents as an economic asset that helps generate income. Patents offer key intelligence, which is nowhere else available. Combined with our cutting-edge economic competence, this allows us to forecast tech and market trends based on patents. It also opens up opportunities to monetize patents. Such commercialization opportunities can be detached from the classical approach of investing in companies, which may or may not be solid from a patent perspective.
Conversational AI – Exciting Upward Potential
Conversational Artificial Intelligence is on the rise. The market for Conversational Software is a prime example of platform businesses that thrive in the spirit of Open Innovation. Players, such as Apple or Google focus on digital assistants, but the market is also populated with Chatbox and voice experience technology.
The advantages for consumers are important. Say you want to book a holiday in Spain. Instead of filling out complicated forms online, you can simply have a chat with your computer, which can then point you to the holiday of your dreams, following a brief chat.
Analysts estimate a deal volume of 15.7 USD Billion and a Compounded Annual Growth Rate (CAGR) of 302% by 2023. (data does not reflect potential effects of Covid19).
While companies in the space seek to monetize also on data generated during this process, patent ownership remains instrumental to fence one’s tech space.
A Brief Description of the Patent Space
The OxFirst analysis suggests that there is tough competition between the United States and China, with patents filed in the Republic of Korea emerging also as a key region.
Top Countries where Patents were filed in the last 10 years
Countries | Count |
United States (USPTO) | 7615 |
China (SIPO) | 5581 |
Republic of Korea (KIPO) | 1387 |
The market also remains dominated by big tech. In particular, IBM and Microsoft have been aggressively filing patents in this area.
A look at the key patent trends makes it apparent where companies focus primarily on. An economic patent analysis suggests that machine learning, semantic analysis, the interconnectivity between as well as neural combinations are top trends companies pursue in their patent strategies.
Untapped Economic Opportunities?
Based on this information one can quite easily undertake a valuation of patents in that space. Patents on conversational AI can probably fetch licensing rates of 15%. Combined with an analysis of patent distribution in this space, as well as an expected market volume of 15.7 billion US, one can likely argue that even a small patent portfolio could fetch around a hundred million US Dollars.
Even just an over the envelope assessment like this suggests that a concerted patent strategy can allow firms to maximize revenues and allow investors to make educated investment decisions. Companies can enter into strategic alliance, re-assess their position vis-à-vis competitors and it can also allow them to re-mortgage their debt or review their relationships with their equity investors. From an investor’s point of view again it can help make better decisions. After all, every investor is keen to maximize returns while keeping risks minimal. An economic assessment of patents can just provide the necessary toolkit to do so. Against the many opportunities provided by assessing patents through an economic lens, it is time to embrace patents as economic assets.
The Author’s Background
Dr Roya Ghafele is the Managing Director of Oxfirst Ltd, a law and economics consultancy. She has held lectureships (called ‘Assistant Professor’ in the US Academy) in law and international political economy with Oxford and Edinburgh University and served as an economist to the United Nation’s World Intellectual Property Organization, the OECD and McKinsey