IBM Keeps Top Patent Spot for 19th Year as Asian Rivals Gain

By Sarah Frier - Jan 11, 2012 9:31 PM GMT+0700

International Business Machines Corp. (IBM) won a record number of U.S. patents in 2011, its 19th straight year on top, as some Asian competitors advanced in the rankings at the expense of Microsoft Corp. (MSFT) and Intel Corp. (INTC)

IBM, the world’s biggest computer-services provider, gained 6,180 patents last year, researcher IFI Claims Patent Services said in a statement. Samsung Electronics Co. (005930) was second, its growth outpacing IBM, and Canon Inc. replaced Microsoft as third. Panasonic Corp. (6752) moved up to No. 4 and Toshiba Corp. (6502) advanced to fifth spot.

A patent portfolio spanning from computer memory to online shopping provides Armonk, New York-based IBM with licensing revenue and protection against intellectual-property infringement lawsuits. That means IBM is spending less time in courts than competitors, Manny Schecter, IBM’s chief patent counsel, said in an interview before the numbers were released.

“Everyone knows that if they attempt to bring their patent portfolio against us that they will be met with an equal and opposite force -- and it will be formidable,” Schecter said.

IBM also uses its patents to affect trends in technology: If it wishes to promote certain standards, it may tell other companies it won’t sue anyone innovating in that area even if its patents are infringed. So far, the strategy has attracted clients for consulting on intellectual property management and requests to testify before Congress, Schecter said.

Asian Surge

Still, IBM’s reign may be threatened in coming years by Asian rivals, IFI said. Samsung’s 8 percent growth in patents outpaced IBM’s 5 percent, and in the number of patent applications Samsung has eclipsed IBM for two years, the researcher said. Patent applications are an indication of future patent grants, IFI said.

“Global companies, and especially Asian ones, are collecting U.S. patents at a dizzying pace, and now Asian firms hold eight of the top 10 slots in the 2011 ranking,” Mike Baycroft, IFI chief executive officer, in the statement. “This isn’t to say that U.S. companies have lost their verve for patent production, as their patent portfolios are also growing. It seems that Asian companies have apparently made it a higher priority.”

Samsung, based in Suwon, South Korea, gained 4,894 patents last year, while Canon won 2,821. Microsoft dropped to sixth place in the rankings, while Intel fell to 16th from eighth.

In all, the U.S. issued a record 224,505 patents in 2011, up 2 percent from 2010, Madison, Connecticut-based IFI said.

Perforating Machine

Patents are part of IBM Chief Executive Officer Virginia “Ginni” Rometty’s strategy as the company seeks to expand in areas such as emerging markets, cloud computing and analytics. Rometty, the first woman at the helm in IBM’s 100-year history, took over from Sam Palmisano Jan. 1 and tries to meet a goal of adding $20 billion in new revenue between 2010 and 2015. Analysts on average estimate IBM will report $107.2 billion in sales for 2011.

The company invests about $6 billion in research and development each year, and makes about $1 billion in licensing revenue, said Chris Andrews, a spokesman. IBM has a 250-person team managing its patents, and it provides training for more than 8,000 inventors. They record about 20,000 breakthroughs annually, and only some are submitted for patents.

IBM fell 0.3 percent to $180.86 at 9:30 a.m. New York time. The stock reached a record in 2011 and advanced 25 percent for the year.

IBM won its first patent for a perforating machine on July 25, 1911. Since then, the company’s inventors have received more than 70,000 patents, 34,000 of which are active, Andrews said. The company patented DRAM cells, which became the standard for computer memory, in 1968. There are also non-computer inventions, like a laser technique that went on to become the foundation for LASIK eye surgery.

* The Top 10 U.S. Patent Winners of 2011: 1) IBM 6,180 2) Samsung 4,894 3) Canon Inc. (7751) 2,821 4) Panasonic Corp. 2,559 5) Toshiba Corp. 2,483 6) Microsoft Corp. 2,311 7) Sony Corp. (6758) 2,286 8) Seiko Epson Corp. 1,533 9) Hon Hai Precision 1,514 10) Hitachi Ltd. (6501) 1,465 *

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net