IBM has held the top spot for more than 22 years, but unless it is granted a slew of patents by the end of the year, which experts say is extremely unlikely, Samsung will claim the top spot. The Korean company has been No. 2 for almost a decade.
So far this year, the two companies have been neck and neck: Samsung has been granted 7,679 patents and applied for 4,443 others. The comparable figures for IBM are 7,005 and 4,126, respectively.
These numbers reflect patent applications filed this year and patenting activity from prior years, and combine patents granted to the parent company and its subsidiaries. It takes an average of three to four years for patents to make their way through though the system.
The number of patents held by a company is impacted by many variables, including in-house research and development, mergers, acquisitions and divestitures. About 90 percent of the patents issued by the office are utility patents, also called “patents for invention,” and are the focus of this story.
Patenting is one of several key barometers of innovation, and an important way companies protect themselves from litigation.Samsung’s bruising patent battle with Apple, which forced the company to hand over $548 million to its greatest smartphone rival, may partially explain its motivation for building up its own war chest, experts say.
“The most likely explanation is having been the target in the Apple suit and other suits by U.S companies, they want tools of their own to fight back or at least level the playing field,” said Mark Lemley, director of the Stanford University program in law, science and technology.
“As with many large tech companies in the top 10, particularly the foreign ones, the patents are primarily used for defensive purposes,” he said.
Jack Russo, managing partner of the Computerlaw Group LLP, agreed.
“It will minimize the purchase prices that may otherwise have been paid for patents that are forced on them through third–party “troll” companies seeking larger dollar amounts in the context of otherwise threatened litigation.”
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Samsung’s numbers are up markedly over last year: It has already won2,743 more patents for invention this year compared with 2014, and could pick up a few more over the next two weeks.
Samsung is now in so many businesses in the U.S., from smartphones to dishwashers, that a closer examination of the types of patents is necessary to understand the degree to which it targets mobile and can be seen as a reaction to the smartphone wars.
Companies making physical products tend to top the list when it comes to patenting activity, with the exception of Alphabet. It stands out as the only company whose core business is not associated with hardware that is in the top 10 for patent applications this year.
“They would even have many many more if the rules were more liberalized with respect to protection of software and searching and analytics,” said Christopher V. Carani, partner with Chicago-based IP firm, McAndrews, Held & Malloy.
Alphabet has been particularly busy over the past six months — filing over 1,000 applications to bring its year to date total to 1,539. The company has already won 3,103 patents this year.
“They are working on a lot of other technologies that they are continuing to pursue intellectual property coverage on, even if they have yet to commercialize those products,” said Carani.
Only a small fraction of Alphabet’s patents will ever be commercialized. As with IBM, acquiring patents has become a key part of Alphabet’s business strategy.
“A large part of their business model has actually been for licensing purposes and then, it also serves to ward off — in case there are any types on complaints, litigation — they have an arsenal of IP that they can counter with,” he said.
Tech companies dominate the world of patents for invention, but there are some serious players that would not be considered technology firms.
General Electric is quietly building a formidable portfolio: This year the company ranked sixth in terms of patent applications, right behind Google, and 13th in terms of patents granted, right behind Apple.
“They do so many things, so they are going to have a lot of different patents in a lot of different areas,” said Mark Terry, a patent attorney for The Plus IP Firm. “They make appliances for homes, they build nuclear reactors, they build turbines, everything. From things that are very small, to things that are very big.”
Toyota is the other nontech company making waves in the patent world. The Japanese carmaker is ranked eighth in applications this year and 17th in actual patents.
Two significant trends that could be driving this: the development of electric car battery technology and the fact that cars are incorporating more technology.
“Cars are increasingly computers with wheels, and so it may be that the same things that are pushing the IT companies to file patents are pushing the car companies,” said Lemley.
Notably missing from top of these lists are the tech giants often most associated with innovation and exciting new products.
Apple ranks 17 when it comes to patent applications and number 12 in patents. So far this year, it applied for 777 new technology patents and has been granted 1,852 patents.
Experts are divided as to the reasons. Some say the Supreme Court’s opinions regarding utility patents had a chilling effect on how much these types of companies are willing to invest in patenting. It has certainly become more difficult to successfully patent software over the past year.
“It’s uncertain right now whether those types of online business commerce sites and business methods are available, are eligible, for utility patent protection” said Carani. “Those are things that have been met with suspicion, that have been refused or invalidated.”
Carani points to the Amazon “1-click” patent the patent office issued Amazon in 1999 — protecting its innovation allowing shoppers to make purchases with the click of a key — as an example of the difficulties around software patents.
“At the time of infancy — with respect to online marketing — it seems novel. But then, as time goes on, these types of advancements could end up stifling innovation. … You still are seeing uncertainty and when you see uncertainty you will see less investment in the area,” he said.
Russo had a different take. “The patents that these folks own and control are held by privately labeled and not well-publicized holding companies. These folks are also very much in the patent game they just choose not to publicize it.”
Design patents, which protect the look of a certain product, make up about 10 percent of the overall number of patents but are becoming increasingly important. So far this year the office has granted 282,977 utility patents, a 1 percent dip over the same period last year. By contrast, design patents are up 10 percent already, at 24,689 year to date. It’s an area that investors should pay more attention to, experts say.
Samsung is king when it comes to U.S. design patents as well. Last year, it was granted more than any other company and is on pace to maintain its top position this year.
“Certainly, Samsung has a very talented team of award winning designers,” said Carani. “With them taking the helm on utility patents, they are taking the throne, or taking the blue ribbon for both utility patents and design patents.”
Experts point to several factors driving the trend.
“Design patents have been on a tear recently,” said Lemley. “The Apple-Samsung case really drew everyone’s attention to design patents because it’s the design patents that really got the attention of the jury,” said Lemley. (Samsung is expected to file a petition Monday in the Supreme Court mostly focused on design patents in the case.)
Design patents have proven easier to defend in court.
“The federal court has approved very wide-ranging damages for design patents using very open-ended damages calculations whereas the law of damages in the area of utility patents has been repeatedly narrowed and constrained by the federal circuit,” said Russo.
“Design patent protection on user interfaces may be a better way to go then simply applying for utility patents on the underlying software itself.”
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Also, companies from start-ups to Fortune 500s are increasingly concerned with differentiating products on how they look and feel. With increasing investment in hiring the best creative design teams, companies are increasingly concerned with protecting those investments.
“We are seeing this insatiable appetite for good design,” said Carani. “They realize that this actually affects the bottom line.”
Perhaps not that surprising but worth noting: The Regents of the University of California, which encompasses nine UC schools, has applied with 251 U.S. utility patents this year. It is number 60 on the list and the only nonbusiness entity identified by Sqoop.