Thursday, 30 March 2017

Encryption, cryptography and the current state of patents

The recent terrorist attack in London's historical Parliament zone, Westminster, has again thrown into the limelight the keen debate over personal privacy versus public security. The British government has called for decryption of messages on the perpetrator's WhatsApp account and is insistent that the law should not enable terrorists to invoke encryption as a shield for their activities.  This sudden interest suggests to us that it is time, with the assistance of Cipher, to take a look at encryption and decryption technologies in terms of who currently owns them: who holds the patents?  Much has happened in the nearly ten months since this weblog published its profile of patents generally within the cybersecurity sector (here), so the data offered below is timely.

First, let's take a look at the chart below which quantifies active Encryption patent families, giving an idea of their growth over the past decade and a half:

Active encryption patent families over time

• In cultural terms, the history of cryptography goes back to the ancient Greeks who are said to have known of ciphers.  However, modern cryptography emerged only in the 1970s, when Martin E. Hellman, a professor at Stanford, together with his students patented the approach of generating a shared key for senders and recipients across insecure channels. This became known as the Diffie-Hellman patent.

• It may be assumed that both interest in and demand for encryption have been steadily growing, judging by the steady linear growth of encryption-related patents over the past 15 years.

There are many different ways in which information can be stored and transmitted, as technologies increase the options available to public sector, commercial and domestic users. The chart below takes a look at the way patents are split between these avenues.

Active encryption patent families by application area

• Encrypted communication remains the dominant application area, as well as that which enjoys the steadiest growth;
• The popularity of disk encryption increased in the early years of this century, but patenting activity has flattened out in recent years, presumably as disks have themselves become less popular;
• Patenting in the area of cloud encryption picked up fairly late, in 2009, but has been steadily increasing ever since. This predictably reflects the increased popularity of cloud computing in general.  

So who are the leading lights in the encryption/decryption field? 
The 20 biggest encryption players

• In the chart above, the size of each box represents the number of encryption-related patents owned by the company named within it, in relation to the whole technology field in 2017.  The colour of each box represents the positive/negative change in the proportion of patents the company held between 2007-2017 (Green = Growing; Red = Reducing: see the key at the top of the chart);
• The 20 biggest players in terms of encryption or cryptography patents are almost exclusively tech giants and household names, suggesting that there may not be many, or any, eminences grises lurking behind the scenes;
• Sony, Toshiba, Panasonic and Canon –- companies with more of an emphasis on disk-related activities -- are clearly losing their share of granted patents to companies like Google and Intel, which have demonstrated a far greater commitment to a data/cloud computing focus.
• All the “losers” in terms of share are Japanese companies, which makes one wonder whether Japanese cryptography is in decline.  

Which countries hold the greatest number of encryption and decryption patents, with the potential for exercise of political clout which control of a technology can establish? The chart below is instructive.

Encryption technology by country
• The United States is the clear leader here, with more patents than the next two countries combined (China and Japan);
• There are at least two countries that are known to possess a substantial degree of expertise in encryption and decryption, but do not feature in this chart at all: Russia and Israel. 
• If the member states of the European Union are aggregated, European encryption technology would be of the same order of magnitude as that of the United States.

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