Volume 3, Number 2 -- January 19, 2006

IBM Tops U.S. Patent List for 13th Straight Year

Published: January 19, 2006

by Timothy Prickett Morgan

The United States Patent and Trademark Office has issued its annual ranking of the top patent holders among the global companies that apply for and receive patent protection in the country. The USPTO is a branch within the U.S. Department of Commerce. As has been the case for the past 13 years, IBM got the largest number of patents in 2005, filing for and receiving 2,941 patents. However, IBM's patent count fell by 9 percent from the 3,248 it received in 2004.

While some IT professionals--particularly those in the open source development community and those in Europe who do not want to see U.S.-style patent protection for software--are not interested in pursuing patents, the IT vendors certainly are, because a large patent portfolio (sadly) is the best defense against a patent infringement lawsuit by a competitor. In the software arena, the idea of providing patents has been heaped with scorn by some experts since they believe copyright protections already provide all of the necessary intellectual property protections a software developer is entitled to. That said, the world's major software suppliers are very aggressive in their pursuit of patents. This is not just an intellectual game. This is more like a cache of weapons for both offensive and defensive maneuvers.

The USPTO hinted in its announcement of the patent rankings that it would be working with a new open source-style patent clearinghouse that was proposed last week by IBM, Red Hat, Novell, and Google. The Patent Office is overwhelmed with patent applications, and these vendors are proposing an open patent review system, where people can use a complex search engine (perhaps supplied by Google) to do a better job searching through patent materials and allowing companies to get a better sense of what is already covered by the patents. These companies are also proposing that a patent quality index be created, which would help individuals and companies do a better job of filling out their patent applications and of gauging the quality of any individual patent.

"America's technological and economic strength is the result of its tremendous ingenuity," said Jon Dudas, under secretary of commerce for intellectual property at the Commerce Department. "The USPTO has taken and will continue to take aggressive steps that will enhance quality and improve productivity to ensure that U.S. intellectual property protection remains the best in the world, protecting American innovation and sustaining economic growth." The USPTO has indeed met with representatives of the open source community, and plans to have another meeting will be held on these open patent initiatives on February 16.

The reason why the Commerce Department tracks patents is because it wants to be able to show that American companies continue to innovate and to seek patent protection to secure their innovations from intentional or unintentional theft of intellectual property. This system only works, of course, if you can convince organizations from other countries to play along and seek U.S. patent protections for their innovations, which has the side-effect of making the Commerce Department a quasi-multinational organization. In a way, patent law in the United States controls what foreign companies do, regardless of whether or not the countries where these companies come from have their own patent laws.

According to sources at IBM, about 1,800 of the patents that were issued to Big Blue in 2005 were for software-related inventions, which shows two things. First, IBM is not as much of a hardware vendor as it used to be two, three, or four decades ago, but nonetheless, about 39 percent of its patents in 2005 were still for hardware. IBM says that the percentage of its patents relating to software inventions has been increasing steadily in the past few years. It was 51 percent in 2003, 58 percent in 2004, and 61 percent in 2005. Just as significantly, the number of software patents that IBM received in 2005 was larger than the number of patents earned by Microsoft, Oracle, BEA Systems, and SAP--combined. These companies may rule software sales in one way or another, but IBM is, if patents awarded is any indicator, more of a software innovator. IBM has over 50 software labs worldwide and over 25,000 software developers, creating operating systems, middleware, development tools, and other code. By the way, none of those vendors made the top ten patent list in 2005.

Number two on the list was Japanese electronics and printer maker Canon, which had 1,828 patents, up slightly from the 1,805 patents it had in 2004. Hewlett-Packard came in number three on the list, with 1,797 patents, up a smidgen from its 1,775 patents in 2004. Japanese conglomerate Matsushita Electric Industrial (which people know by its brand name, Panasonic) had 1,688 patents this time around, falling from its number two ranking last year with 1,934 patents secured. Korean conglomerate Samsung Electronics was issued 1,641 patents in 2005, compared to 1,604 in 2004 and raising it from the number six to the number seven ranking. U.S. memory maker Micron Technology ranked sixth on the 2005 list, with 1,561 (after a decline of 11 percent compared to last year), and Intel was seventh with 1,549 patents (down a tiny bit from the 1,601 it got last year). Hitachi, with 1,271 patents, Toshiba, with 1,258 patents, and Fujitsu, with 1,154 patents, rounded out the 2005 top ten rankings.

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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik,
Shannon O'Donnell, Timothy Prickett Morgan
Publisher and Advertising Director: Jenny Thomas
Advertising Sales Representative: Kim Reed
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