An analysis of the world’s patents that contribute to the creation of decarbonization in society, shows that Toyota is second only to Samsung in terms of overall portfolio strength. It is the leader in the number of applications filed and is ahead in patents related to hybrid vehicles.
However, in the last five years, Ford and Hyundai have been rapidly catching up. In the electronics field, Panasonic ranked seventh, but companies from the U.S. and South Korea are catching up remarkably. Japan needs to accelerate its efforts to acquire intellectual property.
The analysis was conducted using LexisNexis® PatentSight®, a proprietary patent analytics solution. Fifty ESG-related technology fields were defined and these parameters were used to search for patents pertaining to the field. This includes not only technologies that directly contribute to climate change mitigation, but also indirect technologies such as wind power and fuel cells that efficiently manage electricity.
In the past 20 years until 2020, 1.55 million patents worldwide were filed under the decarbonization patent category, and there were about 350,000 companies holding them. Overall strength, measured by PatentSight® Patent Asset Index is calculated as the product of the number of patents and the total average quality (Competitive Impact = CI, another PatentSight proprietary index) of the patent portfolio.
The bubble chart (above) helps us compare the various companies and their portfolios. The position of the bubble on the horizontal axis represents the quantity or number of patent families in the portfolio. Whereas the size of the bubble represents the Patent Asset Index, which takes both the quantity and quality of the portfolios into account.
The bubble on the extreme right represents Toyota’s portfolio. The darker bubble shows the position in 2020 and the light grey bubble shows the position in 2015. In terms of total strength (the size of the bubble), Toyota was No. 1 in 2000, but was overtaken by Samsung Electronics in 2020. Toyota was also leading in the quantity of patents in 2020 (more than 21,000 patents), but their portfolio’s average quality of patents, is only 1.5 (the average of all patents in the world is 1.0), which is only No. 16 among the top 20 companies.
Looking at the top 20. (note: analysis was conducted on data as of Dec. 2020.) there were three Japanese companies: Toyota in second place, Panasonic in seventh place, and Sony in 18th place. Eight U.S. companies, four South Korean companies, three German companies, and two Chinese companies made the list.
When extending the ranking to Top 20, other players such as Ford (5), GM (8) and Hyundai (13) join the group. Toyota had a previous advantage over its peers in decarbonization patents, but its most recent total strength in 2020 is only 4% higher than in 2015. In contrast, Ford, GM and Hyundai are rapidly catching up, with a 2 fold, 28% and 2.7 fold increase, respectively.
There is a similar pattern in the electronics and IT fields, as well. Sony has increased its total strength (indicated by the size of the bubble) in 2020 by 13% as compared to 2015. While the Panasonic portfolio has declined in its strength by 13%. During this same time-period, Samsung, the No. 1 company in terms of Patent Asset Index, doubled its total strength; Qualcomm, the No. 3 company, increased its total strength by 21%; Apple, the No. 11 company, increased its total strength by 70%; and Alphabet (Google’s holding company), the No. 13 company, increased its total strength by 60%.
The investment management industry is moving to use decarbonization IP analysis for making decisions about ESG investments. Federated Hermes says, “ESG investment places a high value on IP information”. They emphasize the importance of IP information in ESG investment because it “clearly shows the potential of each company and its strategy,” said Eoin Murray, Head of Investment. Strengthening intellectual property is now an essential element for attracting investment.
In this decarbonization patent analysis, it was found that the strongest Japanese companies are concentrated in automobile-related areas such as “hybrid vehicles”. On the other hand, Japanese companies are lagging behind the U.S. and China in the fields of the “smart-city” and “bio” areas. More than 1.55 million decarbonization patents were studied, that belonged to the 50 fields defined. In 2020, Japan continues to occupy the top spot in three areas – electric vehicles, hybrid vehicles, and solid-state battery; positions which it already held in 2010. The strength of Japan’s decarbonization patents are in the areas where the major automobile companies have been ahead of the curve and still maintain their advantage.
Japan occupied first place in 10 fields related to ESG technologies in 2010. However, in 2020, it only retained its position in seven fields, after having lost its lead position in “autonomous driving,” “battery charger for vehicle,” and “battery management systems”. In the automotive field as well, Japan’s position is gradually collapsing.
On the other hand, there are 15 technology fields, within the decarbonization landscape, in which Japan is not among the top three countries as of 2020. These are so called “smart technologies” that are focused on sustainability, such as smart cities, smart homes and technologies in biotechnology, such as biomass and biochar torrefaction pyrolysis.
China is the fastest growing country in the world, in terms of portfolio size, with a presence in waste management, water treatment, and recycling. The U.S. also surpassed Japan in 2020 in the field of automobiles, including self-driving cars, and took first place in 34 fields.
Japan is planning to focus its research and development efforts in the broad field of decarbonization, but it will be difficult to maintain its leadership presence unless it engages in strategic “selection and focus”.
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This is a summary of an article that was published in the Nihon Keizai Shimbun (The Nikkei) (Editor, Takahiro Shibuya)
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