Going Ape for Apps: Samsung is Gaga for U.S. Patents

No company has more Active U.S. patents than Samsung or files more applications.

In fact, outside of IBM, Samsung leads all filers in U.S. patent applications by better than two to one.

According to “The US Patent 100” published by Patent Vest and MDB Capital in IAM, Samsung is the biggest current U.S. patent holder with 45,012 issued and more than 25,457 applications on file. Highly active patentees like Canon, Panasonic, Sony, Toshiba and Microsoft are not even close, with around 10,000-11,000 applications each.

What does Samsung know that others don’t? It’s hard to say. Perhaps they hope that at least some of their patents will read on their competitors’ products and will discourage them from filing infringement suits. This will do little to slow down NPEs, unless, of course, the NPE is a proxy for an operating company. Like Apple and Microsoft before them, outspending the competition on filing and/or litigation defense is a viable strategy for some players.

Might Samsung also believe, similar to the Japanese in the 1980s and 1990s, that it will be difficult to get a fair shake in U.S. courts (see Apple v. Samsung)? Relying on large numbers of patents, quality aside, to increase their likelihood of having some of them read on a potential adversary might discourage a law suit, or may provide bargaining leverage. It has worked for IBM.

Size vs. Quality

Patent portfolio size was of questionable help in Samsung’s much reported dispute with Apple, where it had been directed to pay Apple $1 billion in damages until the award was reduced two weeks ago by Judge Koh to $450 million. But no check has been written yet, and without an injunction, Apple’s victory is little more than a series of admittedly valuable headlines for it and a write-off for Samsung. Despite Apple’s tough talk, Samsung may find a silver lining by including some of its many patents in a licensing package that Apple would find acceptable. (Some companies see patent litigation as a very expensive form or licensing. It works better for some than others.)

The US Patent 100, similar to data provided in the past by CHI Research, now 1790 Analytics, monitoring patent filing and citation trends, suggests that analysis of the largest, fastest growing and most recognized (cited) portfolios can predict prowess. Certainly, size counts when it comes to patents (both in terms of portfolio breadth and claims), but it counts more to some than others.

IBM, now number two in U.S. patent grants (38,394) and applications (19,138), still has more grants over the past twenty years. Patent Vest suggests that divestitures to Google and Facebook, totally over 3,000, have brought down the number of IBM’s patents in-force. They do not mention IBM’s lapse rate, which I understand is among the highest. (Lapse can mean prudent management or it can mean that IBM didn’t care much about securing the patents in the first place, or does not think they will be very useful to anyone. It also may mean that once their goal of not allowing anyone to own a particular patent is achieved, there is little value in maintaining it.)

So, who has the better patent portfolio? I’m not sure that size, maintenance or citation frequency is very  indicative of quality or success. Those with the biggest portfolios often don’t have the best or most valuable patents. But size does count in court where discovery is costly, and time is money. Whose to say which patents at a given time have value to a particular business.

Who’s Gaming Whom?

It’s ironic that owning ten’s of thousands of questionable patents, those primarily intended to protect market share and slow competitors, is typically more meaningful to a businesses than a handful of well-crafted, timely rights that actually read on successful products.

Deployment of increasingly larger portfolios, like Samsung’s, makes it unclear as to who is really gaming the patent system, and who has the most useful inventions and best quality patents.

China, BTW, is now ahead of the Japan and second only to America in U.S. patent applications. Permitting innovation to become little more than a numbers game is likely to affect its future and the economy’s health.

Mark Cuban ought to think about that. His gutless tirade against “stupid” patents was documented in TechCrunch and dissected in IP Watchdog, and followed by a long stream of angry comments. When it comes to innovation rights, Mark is in no position to determine what is stupid.

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