Earlier this year TheWall Street Journal published a list of 'unicorns' – start-ups valued at $1 billion or more. By July 2015 there were more than 100 and as at August 27 2015 there were 115. The companies are spread across 11 sectors: software, hardware, consumer internet, e-commerce, financial services, healthcare, gaming and entertainment, energy, education, aerospace and defence and real estate.
Taking a closer look at the importance of patents to these companies, the headlines are as follows:
More than over half own patent rights and US unicorns lead the way.
Counting does not count when trying to understanding IP strategy.
Youth counts against unicorns and almost one-third have bolstered their position through acquisition.
Unicorns are prime targets for non-practising entities (NPEs), but it is not long before the hunted learn to hunt.
Where do you find a unicorn that likes patents? The companies with the largest portfolios are Chinese smartphone vendor Xiaomi and drone maker DJI. However, the largest concentration of patent owners is based in the United States (49 of the 67 patent-owning companies).
The fact that 45% of the companies own no patents at all may seem surprising. However, this is not as extreme as it seems when appreciating that many (22 out of 41) e-commerce and consumer internet companies outside the United States exist in jurisdictions where software patents can be much harder to secure. Even in the United States, companies such as SpaceX place significant emphasis on trade secrets – a reminder that there are many ways to protect innovation.
How do you measure the strength of a unicorn’s patents? There are many ways of using IP analytics; when considering unicorns, there is a big difference between counting and what counts. DJI has the largest granted portfolio (171 families) and Xiaomi has the most applications (1,912 pending patent families). But both of these companies focus entirely on China, which has implications for those with plans to compete globally. Of the top 10 in terms of portfolio size, only Jawbone, Intarcia Therapeutics and Proteus Digital have a global patent strategy.
Overall, the data shows that US-based unicorns focus more on patents – which tells you something about both the US patenting (and patent litigation) system and the mindset of those who invest in and advise these companies.
If you want to read more, you'll find further data and analysis on IAM's Industry Report, "Billion dollar start-ups: do unicorns like patents?", here