Patents are considered one of the best representations of a company’s inventive activity. Patenting an innovation is a crucial step to secure and convert research and development (R&D) efforts into potential economic gains.
“Patents protect the interests of inventors whose technologies are truly groundbreaking and commercially successful, by ensuring that an inventor can control the commercial use of their invention,” according to the World Intellectual Property Organization (WIPO).
Companies compete with one another to file patents and safeguard their rights which helps them lock market share related to an innovation. Thus, the yearly trends in the patent world are closely watched. Here’s an overview of the patent landscape in 2019.
IBM tops the list
International Business Machines Corporation (IBM) continued as the leader for the 27th consecutive year of U.S. patent leadership while achieving a milestone of most patents awarded to a U.S. company in a year. IBM was granted 9,262 patents during the year, compared to 9,100 in 2018, an increase of 2%. In terms of the cumulative patent holdings globally, IBM ranked second with 37,304 active patent families. IBM has experienced multiple technology eras during its lifespan, and the company believes that “the next chapter is ushering in an entirely new era of human-organization-computer interaction—embodied in cognitive solutions and the cloud platform” and IBM’s patent grants are reflective of that.
In 2019, IBM's patents went across a variety of tech, ranging from Artificial Intelligence (AI), blockchain, cloud computing, quantum computing and security. During 2019, IBM was awarded more than 1,800 AI patents and more than 2,500 patents in cloud technology. IBM’s strategic investments in advanced technologies have improved its competitive position and profit dynamics; AI, cloud, analytics and cybersecurity now generate half of its revenue—up from a quarter just four years ago. The company invests around 7% of its total revenue on R&D, “focusing on high-growth, high-value opportunities.”
The second spot belongs to the South Korean conglomerate Samsung
Samsung Electronics Co Ltd (SSNLF) ranked second with 6,469 patents granted during 2019, witnessing an 11% growth from 2018. When seen in terms of cumulative patent holdings, Samsung is the world leader with 76,638 active patent families, which is more than double the number held by IBM. To collaborate its efforts towards advanced research for its consumer electronics, IT and mobile services, Samsung launched Samsung Research in December 2017 by its Software R&D center and Digital Media & Communications R&D center.
With “shape the future with innovation and intelligence” as its goal, Samsung Research has further prioritized its work in the core areas such as AI, data intelligence, robotics and security. The company has 22 research and development centers around the world with a staff of over 20,000. In addition, there is an innovation group within Samsung—dubbed as Samsung NEXT—working on AR/VR, IoT, blockchain and machine learning. Samsung is the largest non-U.S. spender on R&D with $16.06 billion in the previous fiscal*.
The Japanese multinational — Canon—is third place
Canon, Inc. (CAJFF), a well-known global brand of Japanese origin, ranked third for the number of U.S. patents awarded in 2019, becoming the only company in the world to have ranked in the top five for 34 years running. Not only that, Canon ranked first among Japanese companies for the 15th consecutive year. The company is currently in Phase V of its excellent global corporation plan (2016-2020), which has the slogan, “Embrace the challenge of new growth through a grand strategic transformation.”
Canon is focusing on three strategies related to R&D:
- Achieve a cost-of-sales ratio of 45% by establishing a new production system
- Reinforce and expand new businesses while creating future businesses
- Work on open innovation to enhance R&D capabilities
The company is working to accelerate growth across four key business areas: commercial printing, network cameras, medical and industrial equipment. Canon has been allocating 8-9% of its net sales for R&D purposes. The company ranks third globally based on cumulative patent holdings with 35,724 active patent families under its brand name.
Microsoft moved up three places to the fourth spot
With a 31% jump in the patents granted, Microsoft Technology Licensing LLC (MTL) is at the fourth spot with 3,081 patents, moving up from the seventh rank in 2018. When ranked by the active patent families, Microsoft moves one step down to the fifth place with 29,824 patents. MTL owns the vast majority of patents formerly owned by Microsoft Corporation (MSFT). MTL is also responsible for licensing such patents and the remaining patents of Microsoft Corporation and its other subsidiaries.
Microsoft has been committed to R&D across a spectrum of technologies, tools and platforms since its inception. Advanced technologies such as AR/VR, blockchain, AI, machine learning and quantum computing are part of its initiatives. Its outlay towards R&D has gradually risen with each financial year, keeping with rising revenue. R&D spending was $13.03 billion, $14.72 billion and $16.87 billion during 2017, 2018 and 2019, respectively—accounting for 13% of its revenue each year. Also worth noting is that Microsoft acquired 73 companies since the beginning of 2014.
Next on the list is Intel Corporation (INTC)
Just behind Microsoft is Intel with 3,020 patents in 2019, an increase of 10% over 2018. It slides to the ninth place when ranked in terms of active patent families globally. Intel announced a restructuring initiative in 2016 to evolve into a company that powers the cloud and billions of smart, connected computing devices. With this, its initiatives and investments in the field of IoT, 5G wireless connectivity, data center, AI, machine learning and autonomous vehicles have been their focal points.
Intel has intensified its focus on key priorities in product technology while exiting non-core businesses. The company has allocated approximately one-fifth of its revenue towards R&D in recent years, which translated to about $13.5 billion as per the last annual report. Intel expects to generate over $3.5 billion in AI-driven revenue, up more than 20% year-over-year in 2019 (Intel's fiscal year runs from January 1 to December 31).
The rest of the top ten
LG Electronics, Apple (AAPL), Ford (F), Amazon (AMZN) and China's Huawei Technologies round out the top ten list with 2,805, 2,490, 2,468, 2,427 and 2,418 patents, respectively.
When seen in terms of percentage growth over the previous year, some of the other names on the list include:
- Capital One (281%), leaping up by 149 spots
- Walmart (216%), up 192 places
- Kia Motors (164%), up 55 places
- Siemens Healthcare (140%), up 109 places
Overall, the U.S. patent filings touched an all-time high in 2019 with 333,530 patents granted, an increase of 15% over 2018 which strongly signals the focus on innovation by companies globally.
Microsoft's fiscal year runs from July 1 to June 30 while that of IBM, Samsung, Canon and Intel runs January 1 to December 31. The above report is based on the rankings by IFI Claims Patent Services while the figures related to R&D spend are based on company annual reports. *KRW 18,650,384 at an exchange rate of KRW 1160.91 to USD 1.
Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Prableen Bajpai
Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.
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