Analyzing Innovation 
Patent Research Shows Improved Products 
are More Common than Brand-New Ones 
by Michael Collins

A number of factors drive the need for innovation in the door and window industry. These include industry consolidation, changing customer demands, the need to reduce costs and foreign competition. It is absolutely critical that door and window companies innovate in order to thrive in the current market. Research by Ocean Tomo, an intellectual property valuation firm, has found that companies that focus consistently on creating intellectual property through innovation outperform those who do not. The patent information maintained by the U.S. Patent and Trademark Office provides a rich source of data to use in analyzing the trends of innovation in the door and window industry, as measured by patent activity.

It is a common misconception that patents give their owners the right to produce a given product. In fact, ownership of a patent gives one the right to exclude others from making the patented product or from using a patented process for a fixed period of time. Patents are useful, though, beyond simply excluding others from manufacturing a given product or invention. They also prevent one from being excluded from using an invention by another company that may develop the product independently and seek a patent of their own. Patents also are helpful in licensing products, since licensees may be willing to pay more for products covered by a patent. Finally, patents may be transferred to another party, as is usually the case in the sale of a company.

Disadvantages of Patents
Securing a patent, though, is not always the optimal solution for a company’s need to protect its intellectual property. Since patents cover a limited time period of 20 years following the date of publication of the patent, many companies prefer to treat their inventions as trade secrets. A trade secret’s life is limited only by a company’s ability to maintain the secrecy surrounding the idea. The recipe for Coca-Cola is the classic example of a trade secret that has been kept for a hundred years, where a patent would have offered the company a far shorter period of exclusivity. The product description required in the wording of a patent creates opportunities for competitors to reverse-engineer products, especially if the claims in the patent are not worded properly. Finally, some companies spurn the patent process because of the expense involved. They believe that, in addition to the cost of receiving the patent itself, companies utilizing the patent system must be willing to pay large sums of money litigating patent infringement if and when it is discovered. 

Patents by Product Category
Despite these shortcomings, patents are used by door and window companies quite commonly. In analyzing patent use in the door and window industry, we began with the patent database compiled by Speyer Door and Window Inc. in Boca Raton, Fla. Speyer Door is in the process of commercializing doors and windows with a unique locking and sealing mechanism. In preparing to market its products, the company has made a significant investment in a thorough search of 2,800 patents to ensure that its ideas would not infringe any existing patents. This type of search is recommended for any company that will rely heavily on a unique feature in bringing a product to market. This is especially important in the case of features that may have been patented by larger companies in the industry. These companies have ample resources and a demonstrated willingness to litigate patent infringement. Following a thorough search of existing patents, Speyer Door and Window undertook the process of obtaining patents on its ideas, with 14 U.S. patents currently pending.

The patent database utilized in our analysis does not include every door and window patent in existence. However, since more than 1,100 currently valid patents were analyzed, it is possible to draw worthwhile conclusions regarding the use of patents in the door and window industry. The chart (top right) illustrates the distribution of the patents analyzed by product category. While most patents covered either a door or a window, some 14 percent of patents in our study covered both a door and a window, or components thereof, in the same patent. The patents analyzed did not include those for skylights, sunrooms, overhead doors, curtainwall or other product areas. These product segments will likely be addressed in future analyses.

Patent Holders
Door and window patents are held by a wide variety of organizations, ranging from General Electric to the U.S. Navy. The table above contains the organizations with more than five patents in the database analyzed. Fifteen of the companies are located in the United States, while the remaining seven are headquartered elsewhere. The list ignores past acquisitions that have occurred, in order to demonstrate the lineage of patents granted in the past. The 12 patents analyzed that were granted to CertainTeed, as an example, are now presumably owned by Ply-Gem as a result of that company’s recent acquisition of CertainTeed’s window business.

Product Subsegments
The second level of analysis explored product sub-segments within the larger door and window categories. Patents were separated into roughly 25 sub-segments, based on the patented aspect of the product. There were fewer categories in the combined Doors and Windows segment, since there are fewer products that can be used in manufacturing both doors and windows. 

In all three categories it was common for the patents to cover the whole product (rather than a component) or to cover the frame for the door or window. Interestingly, there were more patents covering door closers and dampers than covering whole door products. 

Another interesting aspect of the categorization process was the relative ease of summarizing more than 1,100 patents into a relatively small number of categories. It appears that most of the patents analyzed could be considered “me-too” patents, covering adaptations of existing products or components. There were few, if any, patented products that were so radically different from existing products that their classifications were difficult. 

Another patent area that was noticeably underrepresented was product installation. Of the 1,100 patents analyzed, only a handful covered the installation of products. This is surprising, considering that builders and homeowners mention proper installation as a critical aspect of satisfaction with door and window products. It appears that significant opportunities exist for companies to innovate in the areas of installation, possibly protecting their work with patents. As an example, a company able to patent a method of installation that saved a significant amount of field labor for its builder customers would find itself with an important and sustainable competitive advantage.

Patent Holders by Location
Since companies or individuals located in the United States or elsewhere may hold patents, we have considered the patents held by all of these groups. As may be seen in the charts below, the dominant patent holders are U.S. corporations, followed by U.S. individuals. Corporations located outside the United States are the third most numerous group, followed by individuals in other countries. These groups remained in relatively consistent proportions each year in the period from 1988 to 2006. 

While the total number of patents has increased over time, the number of door and window patents issued each year has declined somewhat from its peak in 2001.While the majority of U.S. patents in the door and window industry are held by domestic companies or individuals, international groups own roughly one out of four door and window patents analyzed. Roughly 45 percent of these patents are held by companies in Europe, primarily in the United Kingdom and Germany. Countries in non-China Asia—primarily Japan—own the next largest portion of U.S. patents, at 20 percent. Canadian companies make up the next largest group, followed by companies in Taiwan and China. 

It is interesting to analyze the ownership of patents by geographic regions. However, we do not believe that patent holding is a good measure of the interest of international companies in the U.S. door and window market. In many cases, imported products— particularly those from China and Taiwan—are designed for the commodity end of the market. Products in these areas are much less likely to be patented. In other cases, international competitors simply work around or outright infringe U.S. patents without seeking patents of their own. Previously published door and window import statistics paint a much more accurate picture of the increasing penetration of the U.S. market by global companies.

Conclusion
Forces at work in the door and window industry demand that companies continue to innovate in order to prosper in the future. Unfortunately, our analysis of a sample of door and window patents indicates that many of them cover products or processes representing only incremental improvements over existing products. Every company in the industry, however, has at its disposal a trove of information regarding the types of innovations that will allow the company to differentiate itself from competitors in the years ahead. This information is held by each company’s distributors and end customers. These groups can share, at little or no cost, their ideas, challenges and problems and the features they seek in door or window products. By focusing more closely on innovations designed to meet their customers’ needs, companies will leap to the next level of success, maybe even securing a patent or two along the way. 

Michael Collins is with Jordan, Knauff & Company, an investment banking firm that specializes in the door and window industry. He may be reached at mcollins@jordanknauff.com.

DWM
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