Signals for emerging Technologies in Paper and Packaging Industry The original paper under the same name by M.Karvonen & T.Kässi published in internet, publishing pending The International theretical and practical conference ”THE XXXIX WEEK OF SCIENCE AND ACADEMIC RESEARCH AT SPBPU” Lecture by Professor Tuomo Kassi

Themes of presentation 1) Introduce one special case of technological change  concept of convergence  the stage of convergence 2) Provide insights to the future competition between paper/printing and electronics  How technological competencies are evolving in convergent environments 3) Using patent data in the industry analysis

Using patent data in industry analysis Advantages and Opportunities Limitations and Challenges -Include citations to previous patents and to the scientific literature -  Possibility to o study spill-overs o evaluate the value of innovations o evaluate the “originality” and “generality” of innovations -Possibility (regardless of the challenges) to integrate data with other complementary information (financial data, alliance data etc.) -Highly detailed information on the invention -Homogenous measure of technological novelty and available for long time series -Largely available stock of patents -Data contained in patents are supplied in voluntarily basis -Not all innovation are patented o not meet patentability criteria o strategic decision to patent vs. other means of approbriability -Inter-industry and inter-firm differencies in the propensity to patent -Filing patents under different names (eg. subsidiaries) -Differences across countries in economic costs and benefits of patents -“Truncation“ problem (especially forward citation data)

Types of convergence and evolutionary phases Adapted Stieglitz, 2003; Hacklin, 2008

Types of convergence Industries/Firms (Supply) Needs (Demand) Technology Converging Markets Complementary Convergence Competitive Convergence ”Coopetitive paradigm” ”Cooperative Paradigm” dominating ”Substitutive paradigm” dominating ”Established vs. Entrants”

Examples of convergent developments (book ch.) Pulp and paper industry Process engineering, chemicals, logistics Information technology Electronic tagging, identification, item intelligence Intelligent packaging Paper/printing industry Mechanical engineering (R2R), material development, chemicals Electronics industry Silicon electronics, display technologies Printed intelligence Telecom industry Messaging, radio, phones Camera technology Optics, precision, processing Camera phones Food industry Food, beverages, catering Life sciences Medicals, drugs, biotechnology Functional foods Adapted Hacklin, 2008

Convergence process

Phases of convergence Curran & Leker, 2008

Patent classification, the IPC system -Hierarchical classification system of technologies -8 sections -120 classes -628 sub-classes -approximately subdivisions (main groups and subgroups)

Example of patent classification G06K19/067; H05K3/38 “The present invention relates to a label to be attached to a surface, the label comprising a transponder. The label comprises a non-adherent flap which contains the transponder. The invention also relates to a web comprising a backing web and labels, and to a system comprising a surface and a label...” SectionClassSub-classGroup G 06K19/00 19/067 main group sub-group Section GPhysics Class G06Computing; calculating; counting Sub-class G06KRegognition of data; presentation of data; record carriers; handling record carriers Main group 19/00Record carriers for use with machines and with at least a part designed to carry digital markings Sub-group 19/ with conductive marks, printed circuits or semiconductor circuit elements, e.g. credit or identity cards

Patents and citations Time Generation -1 Backward citations/ Citations made Generation 0Generation +1 Patent Forward citations/ Citations received CitingCited Knowledge spilloversValue of innovations

Citations and future competition - Self-citations indicating  CAPABILITY - Distinguishing within and cross-industry citations - External citations within industry  COMPETITION -External citations beyond (cross-industry)  DIVERSIFICATION

Citations and future competitive area “ Within industry ”“ Beyond industry border ” “ Convergence beyond industry border ” Backward citations Spill-over within industry Spill-over from extra industry Spill-over effects from extra industry increases Self-citationCapability development in own fields Capability diversification Gradual capability merging External citationCompetitionDiversificationDiversification to the new fields Forward citations Value of within industry inventions Value of beyond industry inventions Value of technology Self-citationCore competenceCompetence in new fields “ Strategic duality ” External citationTechnology dominance within industry Technology dominance in new fields Value of within and beyond industry technology

Upstream Electronics Players-26 Downstream Software Players-17 Paper and Printing Players-18 Vertically Integrated Electronics Players-23 Data from PATSTAT We analyzed the RFID value chain

Empirical analysis: Descriptives Industry / IPC group Paper & Printing (N=18) Upstream electronics (N=26) Vertically integrated (N=23) Downstream players (N=17) Patent count TOP50 IPC (%/all) 84.7%87.6%91.7%98.0% I Electrical engineering - Electronics & electrics (1,5,8) - Computer & Communication (2,3,4,6,7) 22.3% (7.2 %) (15.1 %) 80.8% (46.1%) (34.7%) 88.7% (24.3%) (64.4%) 95.8% (2.2%) (93.6%) II Instruments - Optics - Measurement - Control 16.5% (13.4%) (1.8%) (1.2%) 16.2% (4.7%) (5.4%) 6.9% (3.3%) (2.5%) (1.1%) 3.3% (0.4%) (1.1%) (1.8%) III Chemistry - Macromolecular chemistry, polymers - Basic material chemistry - Surface technology, coating 18.5% (3.9%) (2.8%) (11.4%) 0.5% - (0.5%) 1.6% (0.5%) - (0.8%) 0.0% - IV Mechanical engineering - Handling - Paper machines - Other special machines 41.4% (15.0%) (20.7%) (5.7%) 2.5% (0.8%) - (1.2%) 2.9% (0.4%) (2.1%) (0.4%) 0.9% (0.2%) (0.4%) -

Paper/printing patents distribution

Citations made (”backwards”) Focused research Cabability diversication Knowledge spill-over diversication

Citations received -”forwards” New fields Capability development Traditional fields capabilities Market power

Paper & printing firms forward citations

Paper & printing self citations

Patents and citations of converging areas Industry / IPC group Paper & Printing (N=18) Upstream electronics (N=27) Vertically integrated (N=24) Downstream players (N=18) Patents (IPC4) 1978 – 2006 Computer technology15,31444,196175,96555,915 Audio-visual technology18,95821,72082,8578,099 Semiconductors12,065126,732131, Optics30,99914,45721, Citations made/patent (average) 1978–2006 Computer technology Self-citations (%) 0.37 (8.3%) 1.61 (8.6%) 1.18 (21.4%) 1.36 (5.6%) Audio-visual tech. Self-citations 0.62 (10.3%) 2.51 (5.4%) 1.82 (13.1%) 3.25 (1.6%) Semiconductors Self-citations (%) 0.59 (5.6%) 2.10 (9.5%) 1.83 (15.9%) 3.60 (1.3%) Optics Self-citations (%) 0.47 (16.0%) 2.19 (6.2%) 2.10 (9.8%) 3.33 (2.9%) Citations received / Self-citations (%) Computer technology0.55 (5.2%) 1.73 (10.0%) 2.24 (14.8%) 1.41 (12.8%) Audio-visual technology0.86 (8.7%) 1.98 (7.7%) 3.05 (9.2%) 2.41 (5.1%) Semiconductors0.82 (4.0%) 1.89 (13.3%) 3.19 (11.9%) 5.99 (1.8%) Optics0.63 (10.3%) 1.88 (7.2%) 3.44 (5.9%) 3.39 (6.8%)

Case: Paper/printing and electronics Paper Industry Electronics Industry ”Competitive Convergence” ”Complementary Convergence” Substitution effects dominate Complementary / Substitution effects (# Technological Convergence) Electronics Industry 2008 ”Paper Electronics” Printed Intelligence/ RFID Paper Industry Complementary effects dominate ”Spill-over effects” Value chain deconstruction/ disintegration Consolidation / Vertical integration - Value chain reconfiguration - Incentives for collaboration (alliances, joint ventures, mergers) - Competence-enhancing - New players (offensive) -Incentives for defensive vertical and horisontal mergers - Creative destruction and business model collision - Importance of complementary assets (Electroninics industry) - Horisontal integration Value chain convergence

PATSTAT Central Database APPLICATION Classes Applicants / Inventors Publications Citations Prioritities Families - Application Authority - Application number - Kind of application - Filling date of application - Type of intellectual property rights - Title of application - Abstract of application - Applicant / Inventor name - Applicant / Inventor address - Applicant / Inventor country code - DocDB standard name - Identification of claimed priority - Identification of designating international application - Identification of parent application - Identification of technically related application - IPC classification symbol - National classification symbol - Publication Authority - Publication number - Publication kind - Publication date - Identification of cited patent publication - Cited non-patent literature text - Category of the citation - Origin of the citation INPADOC legal status

Disscussion & Conclusions Summary –Assessment of overlapping technologies of distinct industries on the basis of patent data –Exemplary results (citations made and received) demonstrate partial convergence between paper/printing and electonics industries –If monitoring can be achieved automatically from the patent data and without expert knowledge, then should be interesting for also analysing other industry settings Limitations –Mostly evaluating technology development in ”converging environments” –Difficulties to combine IPC citations analysis and market evolution directly –Choice of database important –Country and industry spesifics need to be taken account Future views –If independent firm and technology field analyses, search-term, could be conducted from patent data, approach should be unique - at least to our knowledge –Further testing of IPC-based analyses and possible proxies for convergence –Analyses of other areas of potential convergence

Disscussion & Conclusions Knowledge spillovers from electronics to paper & printing firms suggests that industries are becoming more technologically convergent (backward citations) - Challenging to evaluate exact competitive consequences only based on patent data –Paper & printing companies play a part in the competition (coopetition) with electronics fields (  Complementary convergence) –Will paper/printing players come tomorrows electronic giants? –Business models collision in next 3-5 years? –Mergers and aqcuisitions of giant electronics industry players? - Using patent and citation data in industry analysis –  Possibility to get an idea of the stage and effects of convergence phenomenon –  Recognising trends early important –  Patent and citations analysis can help