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IT companies pile on patents in the US

In a recent Lightbulb post, under the heading "30 years of IP for IT (1977-2007)", I provided an analysis of why there has been a significant increase in Australia and elsewhere of patents for IT. See Fox in Socks: A parable for 30 years of IP for IT.

Statistics from the United States further confirm that trend. IP strategy involves knowing what to register or protect, what to license and what to give away

1.  How many patent applications do US IT companies file?

Up to 2005 IBM held the record for about a decade as the top recipient of US patents.

More recent patent application and registration numbers for IBM, Microsoft and HP are provided in a 27 March 2007 article. Marketwatch reporter, John Letzing, gathers them in "Tech companies pile on patents". Letzing reports or cites sources which indicate that in the last three years:

  • Microsoft has filed 10,500 patent applications, "more than three times the number it had filed in the preceding three years";
  • HP (Hewlett-Packard Co) filed roughly 10,000 patent applications, which is "nearly twice the number it received during that period"; and
  • IBM (International Business Machines Corp) filed at least 12,300, "nearly a third more than its total awards during the period."

Presumably these reported figures are just for filings in the United States, but that is not made clear by Letzing.

2.  How many patent applications are for software versus business systems?

Also, the figures don't break up the numbers between software patents and business system patents (AKA business method patents or business process patents). So here are US figures for them from credible sources.

The US Patent Office received 330 business system patent applications in 1995. This increased to 2,800 in 1999, 7,800 in 2000 and an estimated 10,000 in 2001. These figures come from "Patenting of Business Systems" [PDF] a July 2002 Issues Paper by the Australian Government's Advisory Council on Intellectual Property.

Turning to software patents, using information derived from patent classification data published in August 2005 by the US Patent Office, William R. Haulbrook of Goodwin Procter, a US law firm, has estimated that the number of software patents issued per year in the United States increased almost every year since 1990. The number for 2004 was five times the number issued in 1990 (about 11,600 versus 2,400 patents). The updated 2006 US Patent Office figures are here [PDF].

3.  What are the damages awards?

Patent litigation damages awards are also rising as indicated in these two prior Lightbulb posts: Grappling with fallacies: music formats and DRM and Patent infringement damages skyrocket.

4.  How many patent court cases go all the way?

Only one in 10 patent lawsuits in the US go all the way to a decision at trial. IP Law360 reported in February 2006 that an "in-depth survey of federal court dockets" shows that this ratio has hardly changed in the past decade. The same survey indicates that from 1994 to 2004 patent litigation matters nearly doubled in the US.

5.  What revenue is earned from IP licensing?

patent_filing_us

IP revenue earnings from patent or intellectual property licensing are hard to come by. They are also hard to compare as companies categorise revenue classes differently. With this caution, as regards revenue earnings from patent and IP licensing or "custom development", Letzing cites figures for IBM and Microsoft.

IBM earned US$900 million in 2006, according to company filings. While Microsoft's figure is not indicated in its filings, its general manager of IP & Licensing, David Kaefer, is said to have commented that Microsoft is gaining on IBM.

As for HP, an October 2005 article in The Economist claims that HP's licensing revenues then were US$200 million. It also states that "One rule of thumb is that tech companies file almost two patents for every US$1 million they spend on research and development." Making reference to that article, and providing some very useful graphics and further information from an EU perspective, is a paper here [PDF] published on the website of the Universita degli Studi di Pavia. The graphic above is drawn from that paper.

 


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