SIEMENS

How can you measure the value of a company like Siemens? You might, for example, look at its share price, sales, real estate and facilities, or brand value. “But the most important added value for a company like Siemens, which is striving to be a technological trendsetter, is its employees’ expertise,” says Prof. Winfried Büttner, Head of Corporate Intellectual Property and Functions and thus the guardian of the company’s greatest assets — its patents. As of September 30, 2010, Siemens owned 57,900 patents, a figure that has been steadily increasing in recent years. In the past decade the average number of inventions registered per researcher and developer each year has doubled. In 2010 the company registered 8,800 inventions for the first time and applied for 4,300 patents.

But one shouldn’t imagine that this huge number of patents is like a steadily growing pile on top of which new patents are continually being showered. Instead, the active management of patent portfolios is more like working on a house that is continuously being modified and expanded. That’s because the approximately 2,000 patents added in fiscal year 2010 actually constitute the difference between the 8,000 patents that were granted during the year and the 6,000 patents that either expired after the usual term of 20 years or were discarded because they had lost their relevance for the company.

Each year, approximately 220 patent specialists who work for Siemens Corporate Technology worldwide collaborate with their counterparts in the Groups to examine all of the company’s patents that are older than five years and weed out those that are no longer needed. In this way, Siemens continuously adjusts its patent portfolio to the current business situation and keeps its overview up to date. Another important factor is Siemens’ patent strategy. Here, the crucial issue is to determine how business will develop in the various sectors in coming years and what technologies will be required. “We try to protect our products by obtaining key patents years before production actually starts,” explains Andreas Müller, who is responsible for Strategy at Siemens’ patent department. To do this, the company identifies trend-setting technologies, for example. The patent-related activities of competitors can also provide valuable information, for example when there is a sudden increase in the number of a rival company’s patent applications.

Once these questions have been clarified, the department develops a customized patent strategy that identifies technologies worthy of patent protection and recommends appropriate research and development measures. Patent experts at Siemens are currently conducting focused patenting work for around 500 key technologies. They don’t wait until an invention has been completed, but instead begin supporting and managing the development process in close cooperation with experts from associated departments long before a patent is applied for. If the pace of invention in a specific area of technology is slower than expected, patent specialists work with developers to organize invention-on-demand workshops, where participants discuss the strategy that can support a new technology with a view to identifying developments that might be patented. Another possibility is to do IP benchmarking, in which the team analyzes the technological status of a competitors’ patents and works together with developers to come up with suitable measures.

Patents for the Environment. Innovation and the pioneering spirit are key elements of the Siemens mindset, producing impressive technological advances that benefit the company’s customers and the environment. Siemens is therefore rapidly expanding its environmental portfolio and the range of products and patents it has in this area. As a result, it was able to sell €28 billion worth of especially efficient technologies in fiscal 2010. These solutions have reduced the amount of CO2 emitted into the environment by around 270 million tons. Some 18,200 patents currently protect Siemens’ environmental portfolio. A particularly successful development in this field is the world’s largest and most powerful gas turbine (375 megawatts), which has been undergoing testing in Irsching, Bavaria, since 2007 (see Pictures of the Future, Fall 2007, Unmatched Efficiency). Once its expansion into a combined cycle power plant has been completed in 2011, the turbine, which is designated SGT5-8000H, will have an efficiency of over 60 percent — a world record.

Siemens has submitted patent applications for this turbine since 2001, applying for an average of one patent every month during peak periods of the development process. One of the patent applications is for new compressor blade profiles, which were previously based on those found in airplane engines. Given that the turbine has the output of 17 passenger jet engines, these profiles are not optimal. Using simulations, Siemens developers found that the leading edge of each blade must be made thicker so that compressed air can reach its maximum speed sooner. Tests in a wind tunnel were so positive that developers were able to eliminate some of the rows of blades, thus saving around €100,000 in manufacturing costs while at the same time increasing efficiency.

The resulting 8000H gas turbine is also a good example of a successful acquisition strategy. When Siemens purchased Westinghouse’s power plant business in 1998, it also acquired ownership of all associated patents, including those for a can combustion chamber in which several separate combustion chambers are arranged in a ring. “We couldn’t have taken this step without the Westinghouse patents,” says Willibald Fischer, Head of 8000H Development.

More Light. Another example of successful patenting is the Ostar light-emitting diode from Siemens’ Osram Opto Semiconductors lighting subsidiary. This tiny LED has a luminous efficiency of over 100 lumens per watt, which makes it far more efficient than incandescent lamps (12 lumens per watt). The product’s luminous flux can be increased via measures that channel as much light as possible from its components to the outside. In Ostar-LEDs, patented precision drilling and locking pins allow the optics to be positioned to within five hundredths of a millimeter above the tiny chips — larger deviations would substantially reduce the amount of usable luminous flux. The light generated by such chips used to be reflected several times within the chip so that only part of it could get outside and become visible. Osram Opto Semiconductors solved this problem by developing a thin-film technology that was awarded the German Future Prize in 2007. In this manufacturing technique, a metal coating is applied to the inside of the LED. The coating acts as a mirror that reflects the light generated within the chip to the surface, where it is outside without any loss. More than 40 such inventions are contained in the Ostar-LED. In fact, the rapid pace of development at Osram has helped to transform such light emitting diodes into affordable, universal lighting systems.

Siemens does not deliberately create patents in order to allow other companies to use them for a fee. Instead, says Büttner “We primarily patent things that we can use ourselves,” But Siemens is nonetheless part of large licensing networks. For example, the company is involved in telecommunications, where it has developed many technologies for the 3G mobile communications standard. These still play an important role on the market even though Siemens no longer sells cell phones. As a result, the company still makes money from a technology it no longer uses.

Siemens also has a clear policy with regard to “blocking patents,” which are designed primarily to obstruct market development by competitors. “Putting roadblocks in other people’s way is not part of our strategy,” says Büttner. Siemens nonetheless uses patents to help protect itself in certain areas such as ship propulsion technology. For example, Siemens experts have developed a drive system that dramatically reduces ship vibrations and the flickering of lighting. Anyone who has ever been on a cruise ship is familiar with such inconveniences, which are due to rapid changes in the output of diesel engines as they respond to minor fluctuations in the rotation of the ship’s propellers. Siemens therefore developed a rotational speed control system that changes engine output more gently in order to prevent vibrations in the ship’s hull and fluctuations in the onboard electrical system while at the same time reducing engine emissions. This invention and its use are protected by seven patents. In this field Siemens is also applying for patents that it currently does not use, but that “act as barbed wire against alternative solutions,” explains Wolfgang Zeiler, who is responsible for Siemens Marine Solutions’ patent portfolio.

Siemens’ patent experts are watching the up-and-coming Asian markets especially closely. Chinese companies in particular use everything that isn’t legally protected and sometimes even go a bit further. Yet Büttner is convinced that patent violations will decrease in China in the future, because Chinese companies will increasingly apply for patents themselves and thus have an interest in effective protection. “If you have property of your own and something to lose, you’ll also respect the property of others,” he says.