Thursday, 14 January 2016

Patents: quantity is vanity, impact is sanity

Top again ...
If we had a web page headed "Things We Wish We Said First", the sentiment expressed by the title of this blogpost would guarantee that it would be among the first axioms to feature in it.  The original line comes from a tweet by Tangible IP (alias patent attorney Nick White) in the course of a Twitter conversation sparked off by the spate of news items, articles, blogposts and tweets on the recently-published US patenting statistics for 2015. 

Much has been made of the fact that fewer patents were granted in 2015 than had been secured the year before; notwithstanding this, IBM kept a firm grip on bragging rights, retaining top spot in the granted patents chart for the 23rd year in a row. Indeed Big Blue received around 50% more grants than second-place Samsung. Techno-heavyweights Canon, Qualcomm, Google, Toshiba and Sony all scored well. Apple didn't even make the Top Ten, crawling in 11th -- and there were no pharma innovators in the list at all.  Isn't this all hugely significant?  The answer is: by itself, no.
 2 hours ago2 hours ago Patent Quantity Is VANITY. Patent Impact is SANITY.
The reality is that annual patent grant and application statistics are not great indicators of anything, except perhaps how busy the United States Patent and Trademark Office was in the course of the year and what sort of fee revenue it might be earning.

In many if not most sectors in which innovation is capable of generating patentable inventions, the patent grant statistics are likely to indicate the nature and extent of research and product or process development that took some time earlier, often several years.  Many patents granted in 2015 will therefore be able to trace their origins to the period between 2008 and 2012, when the industrialised world was struggling to cope with a major international economic recession and investment funding was tighter than it is today. 

Sahara: plenty of it,
but how much is it worth?
Apart from that, the value of a patent lies principally in what it covers. A large number of patents for small, incremental advances over a mature and perhaps even declining technology may be worth far less in commercial terms than a single key patent for a new medicinal formulation, for example.  Patents can also be useful commercially within the context of the licensing of bundles of rights from a portfolio of patents that stretches across all or part of a technological sector -- but even then it is not the number of patent that counts, so much as their industrial focus and actual or potential interrelation.  The quantity-quality dichotomy is not unique to patents, since it applies to all other types of property too.  To put it another way, it's better to own one square mile of real estate in Manhattan or down-town Hong Kong than 10,000 square miles of rubble in the midst of the Sahara desert.

In any event, even if a single year's data regarding patent applications and grants could be said to carry any major significance, that would only be in relation to a wider picture. The 2015 data is just a snapshot, which is devoid of value if it is not framed within the continuum of data relating to other years, the maturity or novelty of the technologies in which patents are sought and granted, the extent to which patents are used in conjunction with other registered and unregistered rights, regulatory data and transactional information concerning open and closed licensing practices.  So the bottom line is this: don't allow yourself to be carried away by the headlines.


  1. While the popular media may be distorting the importance of annual stats, it's good to see patents being written about in a context other than that of patent trolls and greedy monopolists.

  2. Surely even bragging rights in having large numbers of patents annually are a sort of intangible asset in their own right. Won't they attract investment and customer confidence?

  3. Having lots of new patents and applications is also a liability since their owner incurs much higher renewal and maintenance costs, the greater risk of facing oppositions in Europe and IPRs in the US, and a bigger chance of being involved in expensive litigation, ADR and/or attritional dealings with antitrust and competition bodies. Since most patents aren't money-spinners anyway, the US 2015 stats aren't the good news they may appear to be.