Jack Ellis

In the latest issue of IAM magazine – available for subscribers to view online from today – Matthew Beers and Maria Lazarova of Ocean Tomo take a deep-dive look at patent abandonments data from both the USPTO and EPO. The full article contains a wealth of interesting data but, for the purposes of this blog we’ll take a sneak peek at the findings relating to IP owners and which of them abandon the most patents at both agencies. Perhaps unsurprisingly, about half of the top 50 companies by abandonment volume are also in the top 50 by number of applications filed. What’s more, of the top 50 companies by abandonment volume over the period examined by Beers’ and Lazarova’s analysis, well over two-thirds appear among the top abandoners at both the USPTO and the EPO.

Japanese companies, renowned for having pursued several decades’ worth of quantitative patent filing in both the United States and Europe, dominate at both offices. Seven of the top 10 rights holders by number of abandoned US patents and half of the top 10 by number of abandoned European patents hail from Japan.

There are no prizes for correctly guessing which company lets the most patent rights lapse in the United States. On average over the past decade, IBM has abandoned close to 2,000 US patents each year – almost twice as many as second-placed Panasonic. Here are the top 10 companies in terms of abandoned US patents over the past 10 years, with annual figures and compound annual growth rate (CAGR) of abandonments:

 

Company Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 CAGR
IBM United States         951      1,272      1,488      2,116      2,994      3,024      1,785         394      2,729      3,064 13.9%
Panasonic Japan         793         769         522         888         732      1,271      1,342      1,061      1,451      1,577 7.9%
Sony Japan         629         890         799         585         522      1,361      1,155      1,181      1,223      1,135 6.8%
Toshiba Japan         436         267         357         413         652      1,230      1,404      1,336      1,558      1,460 14.4%
Hitachi Japan         719         908         796         745         870      1,278      1,078         838         768         867 2.1%
Canon Japan         903         965      1,024         765         507         632         616         672         708      1,316 4.3%
Philips Netherlands         695         837         915         837         487         693         752         556         474         364 -6.9%
Samsung Electronics South Korea           99         100         115         217         418         859         821      1,029      1,094      1,256 32.6%
Fujitsu Japan         284         304         462         463         517         854         907         804         637         608 8.8%
Fujifilm Japan         206         326         174         245         406         759         748         794      1,027      1,077 20.2%

The abandonment rate - ie, the number of abandoned patents as a percentage of all in-force, issued patents - is higher for European than US assets, though abandonment numbers are generally lower with regards the former. Beers and Lazarova suggest that this reflects the considerably higher and more frequent renewal fees in Europe and the resulting strategy of maintaining patents only in those EPO jurisdictions where GDP is higher and enforcement is perceived to be more effective. The top 10 companies in terms of abandoned European patents over the past decade are as follows:

 

Company Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 CAGR
Siemens  Germany          428         421         464         678         779         814         480         437         857         714 5.9%
Panasonic  Japan          198         361         614         913         555         760         495         401         793         483 10.4%
Canon  Japan          588         535         492         545         518         643         500         485         490         395 -4.3%
Philips  Netherlands          429         418         380         596         359         511         452         252         569         234 -6.5%
BASF  Germany          350         308         325         428         342         362         587         428         445         289 -2.1%
Bosch  Germany          200         167         245         206         211         339         438         323         682         417 8.5%
Bayer  Germany          423         204         254         420         382         240         365         259         315         189 -8.6%
Sony  Japan          174         147           54         135         101         617         155         222         521         463 11.5%
Fujifilm  Japan          150         290           27           42         223         312         382         308         479         266 6.6%
Toshiba  Japan         119           76         323         457         388         485         153         129         253           91

-2.9%

The authors note that - in the United States - the trend appears to be that rights holders are increasingly abandoning patents later in the lifetime of the assets – more often than not in the period just before the final and most sizeable maintenance fee is due to be paid, 11-and-a-half years after grant date.

Nevertheless, the fact that so many are being abandoned before their 20-year term is up suggests that plenty of applications are being filed for patents that have negligible strategic value for their would-be owners. As the authors point out: “A first to file mentality continues across the globe, with maintain versus abandon decisions being made later in the life of the asset as technology and commercialisation proof of concepts are measured.”

There is certainly an argument to be made for patenting as voluminously as possible in areas of technological or commercial strength, or with heavy competition. However, to do so means substantial up-front cost and an even greater challenge in convincing the C-suite of the value of filing and maintaining patents in the first place.

An additional problem with this approach is the potential impact it has on the market as a whole. The reality is that the vast majority of patents hold little strategic value; and the chances are that most of those will be abandoned at some point in their lifetime. All of those filings submitted by the companies listed above equate to a whole lot of patent examiners’ time being spent on processing a large number of applications that end up being inconsequential to their holders (and most likely to third parties as well, based on the admittedly idealistic assumption that if they had any value they could, and would, be sold). One can’t help but think that if there really is a significant problem in terms of too many low-quality patents being granted, as many argue, then at least part of cause lies here.