In 2022, IBM dropped out of first place in terms of the number of patents registered in the United States. It was the first time in decades that Big Blue was not at the top of the list, indicating a strategic shift by the company.
The number of IBM patents fell by 44 percent to 4,743 in 2022, falling to second place behind Samsung, which registered 8,513 patents, according to Harrity LLP’s Patent 300 list. Technologies such as semiconductors and hardware memories saw the largest declines in IBM patents, although the decline extended across all major types.
The decline reflects a strategic shift begun in 2020 to focus IBM’s intellectual property portfolio on its core businesses and free engineers from time-consuming patent processes. We have decided to no longer strive for numerical patent leadership, but to remain an intellectual property powerhouse and we continue to maintain one of the world’s strongest portfolios in our core technologiesDario Gil, head of IBM Research, told Bloomberg.
IBM has long prided itself on its patent leadership and has held the most patents for the past 29 years. Licensing and development of intellectual property rights is lucrative. Since 1996, IBM has generated more than $27 billion in intellectual property revenue, according to filings. However, this cash flow has slowed in recent years as some companies have resisted licensing fees.
However, according to Gil, IBM is not done monetizing its intellectual property. “In priority areas – hybrid cloud, AI, semiconductors, cybersecurity, quantum – we continue to patent and aggressively defend patents,” said the head of IBM Research.
The shift reflects IBM’s broader transformation from hardware and traditional infrastructure to cloud services and software. Under CEO Arvind Krishna, the company has made more than 25 acquisitions since April 2020, including the AI-powered software asset Red Hat. In November 2021, IBM spun off most of its infrastructure services business from Kyndryl Holdings Inc. However, according to Gil, the spin-off was not the reason for the patent decline in 2022.
IBM was a relative safe haven in the tech market crash, rising 5.4 percent in 2022, compared to a 33 percent drop in the Nasdaq 100 index. In its latest earnings report, the company beat sales estimates and boosted its cash flow forecast.
Samsung had been in second place for a long time before last year, with more than 8,000 new patents issued annually since 2017, according to Harrity’s list. He has frequently received patents for visual display systems and audio communication.
Chinese tech companies such as TikTok parent ByteDance and Internet company Baidu have seen some of the sharpest increases in patent issuance on the list. For example, ByteDance has filed a patent for a method to add special effects to videos of human bodies, often used in TikTok filters. Tencent Holdings and Alibaba Group also saw large increases.
“Patent filings in China have been exploding for years. As more of these companies do business in the US, we expect the numbers to grow here as well,” said Rocky Berndsen, head of research at Harrity.