BASF, Dow announce support for new patent asset index

Date:10-13-2009

BASF SE and The Dow Chemical Company, the worlds two largest chemical companies, today jointly announced their support for the Patent Asset Index, a new methodology that measures research and development (R&D) effectiveness, innovation strength and how these factors lead to sustained competitive advantage.

Findings based on 2008 results rank BASF first in the overall Patent Asset Index. Dow ranks first in a critical measurement of the Patent Asset Index - Competitive Impact(TM). These results show that BASF and Dow are among the most innovative companies in the global chemical industry.

The new Patent Asset Index created by Professor Holger Ernst of the WHU - Otto Beisheim School of Management is a science-based metric that overcomes the key limitations of current patent analytics by offering a global perspective, more transparency and a more robust quality measurement for the assessment of patent portfolios.
In comparison to other methodologies, the Patent Asset Index takes into account the total global patent portfolio of a company and is not restricted to a just a single country or a limited period of time.

"We now have an important indicator for the sustainability of innovative strength, especially with regard to technology and R&D oriented companies on a global level," said Ernst.

Ernst, Chair of Technology and Innovation Management at WHU and renowned expert in the area of measuring innovation, has initially applied his new methodology to rank the innovation strength of large, global chemical companies and plans to rank companies in other industries in the future.

The Patent Asset Index is comprised of several sub-components and measures the overall strength of a companys patent portfolio. It is based on two factors: (1) "Portfolio Size" (the number of worldwide active patent families) and (2) "Competitive Impact," which is the combination of Technology Relevance and Market Coverage. "Technology Relevance" measures the number of citations a patent receives in other patents, and "Market Coverage(TM)" measures the extent of patent protection in global markets. Thus, the Patent Asset Index offers a more detailed, accurate and robust perspective than current methodologies used to measure innovation strength.

According to the 2008 results, Dows patents are the most cited in other patents, placing Dow first in the Technology Relevance measurement and thus also in the related Competitive Impact metric. BASF clearly leads the overall Patent Asset Index showing the companys global innovation strength.

"The nature of R&D has changed significantly in the past decade, however the methods for analyzing the performance of R&D organizations have not changed," said Dr. William F. Banholzer, Dows Executive Vice President and Chief Technology officer. "We are in complete support of this new method, which takes into account the quality and quantity of innovation and provides a result that not only allows a company to benchmark itself against its peers, but also provides an accurate, overall view of the impact and efficiency of an enterprises investment in innovation."

Comparing companies on the strength of their patent portfolio is an important measure of innovation, especially in the chemical industry where competition occurs at a global level.

"The essential role that patents play in the chemical industry is often ignored, and we are happy that we now have a better method to compare the patent portfolios of global companies even more accurately," said Dr. Andreas Kreimeyer, member of the Board of Executive Directors and Research Executive Director of BASF SE. "The method is valuable not only to demonstrate the importance of our patent portfolio to investors, but also to internally evaluate our patent strategy over time."