Patent News

Jan. 14, 2014

Bloomberg: IBM wins most U.S. patents for 21st year in a row, by Alex Barinka

This article originally appeared in Bloomberg on January 14, 2014.

International Business Machines Corp. (IBM) amassed more U.S. patents than any other company for the 21st straight year, helped by its push into big-data services, which glean insights by mining large quantities of information.

IBM’s 6,809 patents in 2013 scored an annual record, the company said today in a statement. With inventors from 41 countries, more than 31 percent of the patents came from overseas. South Korea’s Samsung Electronics Co. and Tokyo-based Canon Inc. (7751) ranked second and third. While computer-related patents can take almost three years to process, the annual list shows where companies are seeking growth opportunities.

As sluggish demand for computer hardware has dragged down revenue, IBM is focusing more on fast-growing areas such as analytics and cloud computing. Last week, IBM said it’s forming a separate division for its Watson tool — a so-called cognitive technology that can analyze vast amounts of data and answer questions in plain English. Bernie Meyerson, vice president for innovation at IBM, said the unit relies on recent patents.

“The work on cognitive is based on numerous of the patents that were just issued related to Watson,” Meyerson said in an interview from IBM’s headquarters in Armonk, New York. “That new division is now a major commercial focus. By funding research in that area, you will fund patents in that area.”

Watson Bet

Watson, known for beating humans on the television game show “Jeopardy!,” is proving to be one of IBM’s most high-profile bets. The company will invest more than $1 billion in the new division, which will have 2,000 employees, and give the unit its own headquarters in New York City.

The move is meant to spur growth as the company tries to get ahead of an industrywide shift to the cloud era, where information is stored online instead of onsite. The transition has stifled demand for traditional hardware and spawned a new crop of competitors. Even as IBM has held the top spot for patents issued for more than two decades, the company’s revenue has fallen for the past six reported quarters.

To cope, IBM has spent more than $6 billion a year on research and development globally from 2010 to 2012. More than 8,000 inventors in 47 U.S. states and 41 countries contributed to last year’s patents, which give their owners the rights to block others from using the invention.

Fielding Questions

The latest batch of patents underscores the kinds of markets IBM is trying to enter. One invention allows Watson to better assess questions posed in natural language and determine confidence in the accuracy of an answer. In cloud computing, the company patented the ability to analyze encrypted data without compromising its security.

Samsung (005930) claimed the No. 2 spot in the U.S. patent tally, which it has held since 2007. It received almost 4,700, an 8 percent drop from the previous year.

Once again, only two other American companies made the top 10 in addition to IBM. In 2013, it was software maker Microsoft Corp. and phone-chip maker Qualcomm Inc.; the year before it was Microsoft and General Electric Co. (GE)

Google Inc., which ranked 11th, and Apple Inc., coming in at 13th, both rose into the top 20 for the first time together, research firm IFI Claims Patent Services said in a statement. BlackBerry Ltd. was 20th in 2013, up from 29th the previous year.

Amazon Agreement

Patents help protect a company’s products from competitors and knockoffs. Even so, IBM rarely files infringement lawsuits. It spent four years talking with Inc. before suing over Internet commerce-related patents in October 2006. The companies settled seven months later, with Amazon paying an undisclosed amount.

IBM sent a letter to Twitter Inc., “alleging that we infringe on at least three U.S. patents held by IBM, and inviting us to negotiate a business resolution of the allegations,” according to a filing by the social-networking company in November. The patents relate to a networking technique based on common contacts, a way to show advertisements without interfering with an interactive site, and using interconnected computers to reduce Web traffic.

Meyerson said the company pursues negotiations like the one with Twitter when there’s a question of infringement to figure out a reasonable and nondiscriminatory licensing agreement. IBM’s trove of patents lets the computer-services giant generate about $1 billion a year in licensing revenue.

“We want to maintain leadership,” he said. “You want to get the innovations out there that will lead the next field.”

The Top 10 U.S. Patent Winners of 2013:
1) IBM 6,809
2) Samsung 4,675
3) Canon 3,825
4) Sony 3,098
5) Microsoft 2,660
6) Panasonic 2,601
7) Toshiba 2,416
8) Hon Hai 2,279
9) Qualcomm 2,103
10) LG Electronics 1,947
Source: IFI Claims Patent Services