If you want to know what a company is up to, act like a corporate spy and dig through its patents

By Adam L. Penenberg , written on July 23, 2013

From The News Desk

Almost every major corporation engages in “competitive intelligence” (or CI) to find out what rivals up. Dow Chemical, General Electric, and P&G employ staff for digging up dirt on other companies — 3M actually has a director of competitive intelligence – while some years ago Motorola hired away a star from the Central Intelligence Agency to create its corporate intelligence division. Coca-Cola, in its Code of Business Conduct, crowdsources its collection activities, encouraging all employees “to collect, share and use information about [its] competitors,” emphasizing that it must be done “in a legal and ethical manner.”

Other businesses outsource their intel-gathering activities, retaining firms like Ernst & Young, which has a competitive intelligence arm, to do the dirty work, and there’s even a trade organization of “Strategic and Competitive Intelligence Professionals.” Meanwhile, nations like France and China are notorious for corporate spying. For a long time, consultants would tell executives flying Air France never to talk about work, because their conversations were likely being recorded. China has for years treated the US like one giant research and development lab.

The industry grew out of the end of the Cold War, when former CIA and KGB spooks were pounding the pavement in search of jobs after the Berlin Wall fell in 1989. They had to go somewhere, so it’s not surprising there are times that companies cross the line. In 2001, Procter & Gamble’s competitive analysis department hired an outside firm that spied on Unilever, attaining about 80 documents that detailed its rival’s plans for the next three years, including products, launch dates, pricing, and margins. The corporate spies went dumpster diving, sifting through unshredded Unilever trash, and engaged in “pretext” calls, phoning Unilver personnel and misrepresenting themselves to elicit key information. Oracle was also once outed for “rubbish archaeology,” looking to glean information about Microsoft.

Now, there’s nothing illegal about rummaging through someone’s garbage, as long as you aren’t trespassing, nor is it against the law to misrepresent who you are if you don’t impersonate a member of law enforcement or Congress. But it’s certainly slimy, and those in the industry, for example, members of SCIP, the trade organization, bristle at being depicted as spies. They claim they adhere to a strict set of guidelines that, like at Coca-Cola, restrict information gathering to publicly available sources. And it’s true that there’s a lot of material that an enterprising researcher can attain from public sources.

As a journalist, I often rely on patents, trademarks, and other public filings to help me figure out what a company is up to. I learned this while researching and writing "Spooked," a book on corporate espionage that was published in 2000. (An excerpt was published in The New York Times Magazine.) By connecting the dots, cross-referencing patent applications in both the US and Europe, looking at trademark filings, reviewing domain registrations, and pulling up information from trade journals, corporate press releases, analyzing job postings and the like, you can sometimes predict what a company’s next product will be.

Let’s take, for example, Apple’s iPad. Seven months before the company announced its existence in early 2010 and putting it on sale a couple of months later in April, I published a cover story for Fast Company that explored Amazon and Apple’s impending battle over ebooks. Now, the fact that Apple didn’t even have a device (or store for that matter) that consumers could use to view ebooks didn’t stop me from writing the story. There were clues all over.

For years, rumors of an Apple touch-screen media tablet abounded, even though Steve Jobs had vociferously denied it: “It doesn't matter how good or bad [the Kindle] is, the fact is that people don't read anymore,” Jobs once said. “Forty percent of the people in the United States read one book or less last year. The whole conception is flawed at the top, because people don't read anymore.”

I didn’t believe him. In fact, this made me more confident that he must be hatching a device that would offer e-reader capability. Jobs had also in the past downplayed video on the iPod, claiming that no one would bother to watch a movie on a two-inch screen. He denied that Apple was working on a phone and said that anything less than a full-featured laptop wasn't in the cards either, until Apple released the MacBook Air. When Jobs took issue with competitor's products, downplayed their importance, or blithely claimed that Apple wouldn’t pursue a given market, that's when the company took the exact opposite tack.

But it was Apple’s patents and trademarks that sealed the deal for me. The previous year, Apple had filed a trademark application to revise the goods and services covered under its iTunes Store trademark, adding books for the first time. A patent application, listing as lead inventors Steve Hotelling, the man behind Apple's multitouch-screen patents for the iPhone, and Jonathan Ive, the company’s lead design visionary, included multitouch ebook technology. US patent application No. 20080204426 ("Gestures for Touch Sensitive Input Devices”) describes a method to "simulate a finger turning the page in an actual paper-bound book.” The invention also made it possible to “whisk through” a large chunk of pages. A second patent application, for a docking station to be used with a tablet-like device, also covered e-books.

Of course, speculation had been rife in the blogs that Apple planned to release a multimedia tablet. Based on the patent, I wrote:

An Apple media tablet with a 10-inch color multitouch screen, Wi-Fi, and perhaps 3G access to boot, could make the Kindle’s gray scale screen, cramped keyboard, and one-note functionality seem mighty drab. Apple could also use the existing iTunes infrastructure as a virtual storefront to distribute the e-books -- it already sells audiobooks.
I then tied it all to rumor published in the Chicago Sun-Times, which claimed “trucks stuffed with books have been arriving on the Apple campus and leaving empty.”  I turned to some publishing sources, all of which were contractually obligated to maintain secrecy, but Maja Thomas, senior vice president of digital and audio publishing at Hachette Book Group, told me that she had “heard the same rumor from very good sources,” and neither she nor any other publisher would confirm or deny whether Apple had licensed its books.

I’ve also used patent and trademark filings, as well as domain registrations and lots of other publicly available information, to out Dean Kamen’s Segway scooter when the world was abuzz over this mysterious invention that would change the world. (Click here to see a mockup of what we imagined it would like – published in the now-defunct [Inside] magazine nine months before Kamen appeared on "The Tonight Show with Jay Leno" to unveil it.) Actually, if you read the story, you’ll see that the patent filings and domain registrations indicate that Kamen was hoping to not only create a super scooter but power it with hydrogen fuel cells and mini-Stirling engines. Now that would have yielded a game-changing technology. I suspect he never got them to work and resorted to battery power, which has lessened its appeal.

For another story I looked for bitcoin’s mysterious creator, Satoshi Nakamoto, by extracting a phrase from the famous bitcoin paper and tracing it to a patent that was filed within days of the domain being registered. Curious coincidences, I guess.

As for Apple, which is always under the microscope, reporters have noted that several patents could be repurposed into its much anticipated iWatch, and it has filed trademarks in several countries. Others own the trademark in the United States, but you can expect Apple to buy one or more of them out, or sue them. The company obviously has plenty of cash. Or perhaps Apple retained a law firm to file the application on its behalf to throw people like me off the scent.

At any rate, entrepreneurs and researchers needn’t leave patent sifting for competitive professional pros, journalists or Apple fanboy bloggers. All you have to do is log on to the United State Patent and Trademark Office and start searching. Then use the information to help you connect the dots.

You’re bound to find something interesting. You just have to keep looking.

* The PandoDaily series “Patent Troll Smackdown” is brought to you by the Application Developers Alliance. To join the fight against patent trolls and tell Congress that innovators need patent reform please visit (Sponsored message.)

[Image Credit: opensourceway]