IBM loses top patent spot following decades as leader

(Bloomberg) — International Business Machines Corp. dropped from the top spot for US patents in 2022, the first time in decades Big Blue hasn’t claimed the most in a year, signaling a strategy shift at the longtime intellectual property leader.

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IBM’s patent count declined 44% to 4,743 patents in 2022, falling to No. 2 behind Samsung Electronics Co.’s 8,513, according to Harrity LLP’s Patent 300 list. The largest decline in IBM patents was for semiconductors and hardware memory, but the decrease was not limited to these two technologies.

The decline reflects a strategy shift begun in 2020 to focus the IP portfolio on IBM’s core businesses and free engineers from the time-consuming patent process, said Dario Gil, head of IBM Research, in an interview. “We decided to no longer pursue numeric patent leadership, but remain an intellectual property powerhouse and continue to have one of the strongest portfolios in the world in our priority technologies.”

The Armonk, New York-based company has long prided itself on patent leadership — it said it had the highest number of patents for the last 29 years. IP development and licensing has been lucrative. According to filings, IBM has earned more than $27 million in IP income since 1996. However, this money has been slowing down in recent years as some companies resist licensing fees.

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But IBM isn’t done monetizing its intellectual property, Gil said. “On the priority areas — hybrid cloud, AI, semiconductors, cybersecurity, quantum — we will continue to patent and defend that aggressively.”

The shift mirrors IBM’s broader transformation away from hardware and legacy infrastructure toward cloud services and software. Under Chief Executive Officer Arvind Krishna, the company has made more than 25 acquisitions since April 2020, including artificial-intelligent software powerhouse Red Hat. In November 2021, IBM spun off large portions of its infrastructure services business to Kyndryl Holdings Inc. The spinoff, however, wasn’t a reason for the patent decline in 2022, Gil said.

IBM has been a relative safe haven during the tech market crash, rising 5.4% in 2022 against a 33% drop in the Nasdaq 100 Index. The company’s most recent earnings report beat sales estimates and confirmed its cash flow forecast.

Samsung has long been the runner-up before last year, being issued more than 8,000 new patents a year since 2017, according to Harrity’s list. It has been awarded patents for visual display systems and voice communications.

The list saw the highest increases in patent issuances from Chinese technology companies like TikTok parent ByteDance Ltd., and Baidu Inc. ByteDance, for example, has filed for a patent to add special effects to human bodies via video. This is commonly used in TikTok filters. Tencent Holdings Ltd. as well as Alibaba Group Holding Ltd. both saw substantial increases.

“Patent filings in china have been exploding for years,” Harrity analytics chief Rocky Berndsen said. “So as more of these companies do business in the US we would expect the numbers to increase here as well.”

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