Cisco Systems Patent Portfolio

Company Overview and Patent Portfolio

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Cisco Systems (Cisco) is a North American company founded in 1984. They specialize in network equipment and had 66,639 employees in 2011. Despite their low employee count compared to the sample average, Cisco has a R&D expenditure that is close to the average at $ 4.2 bn and sales that are slightly below average at $ 35.6 bn.

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Region and Number of Patent Application

Cisco had experienced an upward trend in patent applications before the financial crisis, which led to a drop; since then, the number of patent applications has risen again with 6,654 published between 2011 and 2013 compared to only 4,642 applications published between 2007 and 2012. Cisco is only publishing a fraction of the sample average applications and their high fluctuation in 2007-2012 indicates that they are more severely affected by changes in the market than their larger competitors. When adding their R&D expenditure to the calculation, it is obvious that Cisco produces a relatively low amount of published applications relative to their R&D expenditure.

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Citation Analysis

Given the low amount of published applications, it is important to make a citation analysis to see if the low number is caused by much higher patent quality, or if their R&D department is not as efficient as their competitors’ when it comes to turning R&D investment into patent applications.

The total of 135,252 forward citations is below the sample average, thus they are not dominating the IT industry. Their ratio of 8.21 forward citations per published application, however, is only surpassed by IBM and two times higher than the sample average of 4.11. Nevertheless, when looking at who is citing their patents, figure 10 shows that Cisco has a strong capability to internalize their knowledge and further develop their own technologies. Even though this could be a sign that other companies are not so interested in Cisco’s technologies, it is rather due to the fact that Cisco has a narrow technological focus because of their specialization in network equipment.

Even though Cisco is not dominating the IT industry, when looking at their absolute amount of forward citations, it can be assumed that they are dominating the networking part of the IT industry, as they are the only networking specialized company in the top 10 list of R&D expenditure in the IT industry. The majority of Cisco’s patents are fairly recent, but their top 10 patents are mainly older patents. Cisco does not have a high immediacy because they only have a few recent top patents and an overall slowdown in applications published.

Since these measures are relative, the conclusion would most likely be different if Cisco was only compared to their direct competitors within the network industry, where it can be expected that they have both a high relative activity and dominance. This impression is supported by Cisco’s narrow R&D focus that is reflected in the ratio between patents in the top 5 technological areas compared to their total amount of applications. In this context, Cisco’s ratio is the highest ratio in the whole sample.

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Conclusion

The above analysis shows evidence that Cisco is a smaller player in the high end of the IT industry. However, their R&D investment is large compared to their sales and they manage to produce high quality patents within their narrow technological field. It is definitely a strength that Cisco has found a narrow field in which to dominate, but it also means that they have had to invest significantly in R&D without being able to produce the massive amounts of patents that their competitors in the IT industry are capable of producing.

Analysis of the Patent Portfolio (PDF)

You can find the complete patent portfolio analysis of Cisco Systems below:

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