Software and business methods over half of Google, Microsoft US patents

Software and method patents may appear to have fallen out of favor because of recent court decisions and legislation. However, recent trends indicate that they comprise surprisingly high portions of four US companies’ recent grants.

Better than half of the patents issued to Google and Microsoft by the United States Patent and Trademark Office (USPTO) in 2014 were methods-related patents, and more than one-third to IBM and one-quarter to Apple. This is according to data collected and analyzed by Envision IP, a law firm specializing in patent research.

Alice v. CLS Bank decided in June by the United States Supreme Court made the bar for affirming software patents considerably higher than in the past. Software inventions now have to show that they are not directed to mere abstract ideas or that they are not simply existing solutions that have been expressed with a computer.

The Patent Trial and Appeal Board (PTAB), which was established as a result of the American Invents Act, also made proving validity more challenging, especially for methods patents. Reviews to date have invalidated nearly 78% of claims in cases instituted by the PTAB, with almost a quarter of all AIA petitions filed in fiscal year 2015 directed towards methods claims.

Despite the new case law and recent legislation some active patent filers continue to pursue and receive patents in significant numbers in USPTO classifications 700-708, 715, 717, 726 and 902, which are typically associated with software and methods. (See pie chart below)

pie-chart

 

The Numbers Tell a Story

Companies intent on obtaining method patents include Google, for the first time in 2014 in the top ten of US patent recipients, in eighth place just behind Toshiba and Qualcomm. Of the 2,599 US patents granted last year to Google, 1,522, or 59% were in the methods classes. Microsoft, with 2,847 patents received, had 1,575, or 55%, that fall under the heading of methods.

Perennial US patent recipient leader IBM secured 7,540 patents, and received the most methods-related patents with 2,916, 39% of its total grants for last year. Not to be outdone was Apple, with 2,037 patents, 538 or 26%, which are associated with software and methods. Samsung, LG, Qualcomm, Panasonic, Canon and Toshiba, all top-ten US patent recipients for 2014, secured less than 10% in methods.

Methods patents were up slightly for IBM, Microsoft and Apple from 2013 and 2012. However, Google received 69% more methods patents in 2013 than it did in 2012 (1,225 vs. 723) and 24% more in 2014 than the previous year (1,522 vs. 1,225).

Our analysis indicates that many of the foreign multinational technology companies that top the list of US patent recipients are focused on receiving hardware and non-software related patents.  For example, less than one-tenth of the patents issued last year to Samsung Electronics, Canon, Toshiba, Panasonic, and LG Electronics were in the methods and software-related classes that we analyzed. This is not necessarily surprising, as these Korean and Japanese technology icons have for decades been known for their diversified consumer electronics products, notably televisions, cameras, and media players.

Microsoft, Apple, Google, and Sony tend to sell products that are software or methods-dependent and are connected to smart devices powered by cloud technologies. We would expect these companies to have a higher percentage of recently issued patents in software and methods-related classes.

The data also suggest that some large filers may believe that their software and methods-related patents are better than others that have been previously granted and can be defended, if necessary. Another possibility is that recent methods recipients believe there is little likelihood that their patents will ever be tested in court or at the PTAB.

issued-utility

percentage-2014

The Author

Maulin Shah & Bruce Berman

Maulin Shah & Bruce Berman  

Maulin Shah, Esq., is Managing Attorney of Envision IP, a specialty law firm focused on patent research and invalidity studies. He holds dual BSc degrees in Electrical and Biomedical Engineering from Duke University, and practiced patent law at Snell & Wilmer LLP before starting Envision IP.

Bruce Berman heads Brody Berman Associates, a strategic communications firm that helps to differentiate IP rights and holders. He is responsible for five books, including From Ideas to Assets and The Intangible Investor.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 9 Comments comments.

  1. Paul Morinville January 21, 2015 7:35 am

    We/ve been Googled. If they sue some company for infringement and they lose a few patents to the PTAB, they can throw a few more in. Eventually, one will stick and that’s all they need. However, if they are sued by a small company they only need to kill one or two patents in the a PTAB death squad to end the threat and kill the small competitor.

    It’s asymmetric warfare – just not the way Google would have us believe. It’s easy to see how big money can Google us in DC.

  2. Anon January 21, 2015 8:56 am

    Asymmetric warfare is nothing new.

    Keep in mind that the birth of the so-called “Troll” was in response to the threat of Patent Armageddon – the exact same type of asymmetric warfare.

  3. Paul Morinville January 21, 2015 9:05 am

    Yes. That is the story. However the asymmetry argument widely asserted is that litigation is too expensive for the poor infringer, so they settle when they don’t infringe.

    When a new idea is born and patented, asymmetry is created. The intent of a patent is to create the asymmetry in favor of the inventor in order to encourage more inventors to disclose instead of secreting.

    Unfortunately, the asymmetry is now reversed. We’ve been Googled by big money in DC. I’ll never file another patent.

  4. Anon January 21, 2015 9:46 am

    Paul,

    You may be sadly reinforced with another aspect of the Teva decision: the unintended consequence of ratcheting up the expense of litigation due in part to the perceived benefit of extrinsic (as opposed to intrinsic) facts put on the court (not PTO) record.

    I suspect that there will be more impetus to “hold your best ammunition” for the courts, as well as more intense battles at the court level for experts and the facts they bring post grant – no wait, scratch that – post file wrapper closure in order to preserve the difference between extrinsic and intrinsic facts.

    The take-away though, oddly, may be the opposite of “never file another patent” to “file a whopping boatload so that a war of attrition can be won.”

    Unfortunately, this tactic favors the opposite of those for whom the US system was established – remember, that award winning historical article first shared at the PatentDocs blog? The article emphasized how the US system was built to not favor the big and entrenched, was built to favor the free transfer of patents – as property, so as to enable the small, even single inventor to change the game against even the largest corporations.

    Alas, in the line of “Sport of Kings,” then, those that can afford the bigger boat and can afford the tit-for-tat war, will win the patent battles. In the end, the value and power of the individual patent will be lessened – and that is the end game for those entities who have most to lose in regards to disruptive innovation (the established big corps).

  5. Paul Morinville January 21, 2015 11:16 am

    That article on PatentDocs sounds interesting. That’s message I’ve been bringing door-to-door in DC. A patent must be an investment grade asset for the system to work. If it isn’t (as is the case today) inventors cant get funding to build companies that compete with entrenched interests nor can they get money to fight a patent battle if the entrenched interest steals it. No investment, no point in filing patents. How can I find it?

    We need more people to speak up in DC. We need inventors to go personally.

  6. Anon January 21, 2015 11:51 am

    Paul,

    Here is the link that mentions the Forbes article: http://www.patentdocs.org/2013/09/the-war-on-patent-trolls-congress-prepares-for-battle.html

  7. Anon January 21, 2015 12:06 pm

    From the Forbes article:

    According to Bowdoin College historian Zorina Khan—whose book “The Democratization of Invention: Patents and Copyrights in American Economic Development, 1790-1920” earned the Alice Hanson Jones prize in 2005 for outstanding work in economic history—the Founders also knew that these high fees and “working” requirements restricted innovation activity to a tiny handful of wealthy individuals with the factories (or the capital to build them) needed to produce products. These high fees and working requirements also skewed invention towards existing capital-intensive industries, rather than the disruptive new ones that often spark economic advances.

    http://www.forbes.com/sites/forbesleadershipforum/2013/09/17/thank-the-founding-fathers-for-the-open-market-in-patents/

  8. Paul Morinville January 21, 2015 12:21 pm

    Thanks Anon. Strangely, that is one of the first books I read about the patent system. I’ve read it twice now and use many of her examples. She’s got other important papers out there. I haven’t found anyone else who digs as deeply and puts it together so well. The book is heavy in references, so you can go deeper into a particular event or subject. Gene should do an article on her.