(Bloomberg) — International Business Machines Corp. dropped from the top spot for US patents in 2022, the first time in decades Big Blue hasn’t claimed the most in a year, signaling a strategy shift at the longtime intellectual property leader.
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IBM’s patent count declined 44% to 4,743 patents in 2022, falling to No. 2 behind Samsung Electronics Co.’s 8,513, according to Harrity LLP’s Patent 300 list. Technologies such as semiconductors and hardware memory saw the largest drop in IBM patents, though the reduction was across all major types.
The decline reflects a strategy shift begun in 2020 to focus the IP portfolio on IBM’s core businesses and free engineers from the time-consuming patent process, said Dario Gil, head of IBM Research, in an interview. “We decided to no longer pursue numeric patent leadership, but remain an intellectual property powerhouse and continue to have one of the strongest portfolios in the world in our priority technologies.”
The Armonk, New York-based company has long prided itself on patent leadership — it said it had the highest number of patents for the last 29 years. IP licensing and development has also been lucrative: IBM has generated more than $27 billion in IP income since 1996, according to filings. In recent years, however, that money has slowed down as some companies have resisted licensing fees.
For more: IBM’s Patent Income Slips as Companies Resist ‘Godfather’ Deals
But IBM isn’t done monetizing its intellectual property, Gil said. “On the priority areas — hybrid cloud, AI, semiconductors, cybersecurity, quantum — we will continue to patent and defend that aggressively.”
The shift mirrors IBM’s broader transformation away from hardware and legacy infrastructure toward cloud services and software. Under Chief Executive Officer Arvind Krishna, the company has made more than 25 acquisitions since April 2020, including artificial-intelligent software powerhouse Red Hat. IBM in November 2021 spun off a large portion of its infrastructure services business into a company called Kyndryl Holdings Inc. The spinoff, however, wasn’t a reason for the patent decline in 2022, Gil said.
IBM has been a relative haven in the tech market meltdown, rallying 5.4% in 2022 compared with a 33% dip in the Nasdaq 100 index. In the most recent earnings report, the company beat sales estimates and affirmed its cash flow forecast.
Samsung has long been the runner-up before last year, being issued more than 8,000 new patents a year since 2017, according to Harrity’s list. It was often awarded patents on visual display systems and voice communication.
Chinese technology firms like TikTok parent ByteDance Ltd. and internet firm Baidu Inc. saw some of the steepest increases in patent issuance on the list. For example, ByteDance has applied for a patent on a method of adding special effects to human bodies on video, commonly used in TikTok filters. Tencent Holdings Ltd. and Alibaba Group Holding Ltd. also saw large increases.
“Patent filings in china have been exploding for years,” Harrity analytics chief Rocky Berndsen said. “So as more of these companies do business in the US we would expect the numbers to increase here as well.”
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