Despite Tough Economic Times for R&D, Patent Awards Up 31% over 2009

By:  John R. Harris

The U.S. Patent and Trademark Office (USPTO) issued 219,614 utility patents in 2010.  This represents a 31% increase over 2009.   So, in spite of tough economic times for many companies, patents continue to be filed and granted in record numbers.

This information was released on January 10, 2010, by IFI Claims®, a division of Fairview Research, LLC.

The IFI Claims® news release lists the top fifty patent assignees, which is reflective of the U.S. patenting activity of major technology companies.  The top ten patent acquirers are as follows:

IBM has now held the top position for 18 consecutive years, and enjoyed a 20% increase in patent awards.  Samsung holds the no. 2 position, while another Korean company (LG) holds the no. 9 position.  Japanese companies held four positions in the top ten, while American companies only held four positions.

As a whole, American-headquartered companies recaptured the lead on the total number of assigned patents after losing ground to foreign (non-U.S. headquartered) companies for the past two years.  U.S. assignees overall obtained 50.3% of all utility patents in the survey.  The list appears heavily dominated by electronics, information technology (IT), and electrical/industrial companies.

Several companies experienced significant upticks in their patent grants for 2010.  Not surprisingly, given its recent innovative product successes, Apple gained 94% more patents in 2010 than in 2009.    Qualcomm, another U.S. company, gained 84% more patents.  NEC gained 74% more patents than in the prior year.  All three of these companies are known to be active in mobile devices and telecommunications.

The reasons for the significant upturn in patent grants are not entirely clear.  The USPTO has been harshly criticized for issuing patents without sufficient quality controls, as well as for its large backlog and long average patent pendency.  However, the USPTO under present director David Kappos (formerly of IBM) has undertaken recent efforts to improve turnaround times, increase efficiency, and reduce pendency, which may be key factors in the increased grant numbers.

Many of those familiar with the patent system think there is a fundamental tension between high patent quality and fast turnaround times.  High quality patents take more time and resources to examine and search so as to ensure quality and validity.  Increased numbers of patent grants could suggest lowered standards of review.  But how can one really know?

Meaningful information as to patent quality is virtually nonexistent for several reasons.   First, there is no agreed-upon metric for patent quality.  Second, there is no real accountability of the USPTO for issuing increased (or decreased) numbers of patents, or for issuing higher (or lower) quality patents.  Third, there is no required public reporting of patent litigation settlements or licensing – the only public information comes at the conclusion of a patent trial and damages award, which can take many years to conclude.

The USPTO responds slowly, if at all, to public criticism, similar to other large government bureaucracies.  It is also constrained to a large extent by ill-considered legislation passed by Congress, often as a result of heavy lobbying by stakeholders – such as large patent-holding companies.  Patent reform is not the country’s highest legislative priority, and is highly political.  Efforts at patent reform during the past several years have been controversial due to significant differences of opinion between different stakeholders with very different and often conflicting interests – large information technology (IT) companies (which interestingly dominate the list of patent-holding companies), large pharmaceutical companies,  small and emerging companies, and individual inventors.

This much is clear, however:  despite economic conditions, major patent-holding companies are increasing their patent filings and are apparently enjoying increased patent awards.  The implications of increased numbers of patents will be felt in the upcoming years in terms of increased patent litigation, increased licensing activity, and more “horse trading” between companies who have managed to acquire patent chits to trade.

This information is presented for educational purposes and is not intended to constitute legal advice. Opinions expressed are those of the author and not of Morris, Manning & Martin, LLP; see disclaimer at http://www.www.mmmtechlaw.com/privacy-policy-and-disclaimer/. Contact John Harris for more information at jharris@mmmlaw.com.