Who is leading the 5G patent race? July 2019 update – part two

Part one of this article (see here) gave an overview of the leaders in the 5G patent race. In part two IPlytics takes a deep dive into further indicators of companies’ growing interest in developing 5G technology.

The IPlytics Platform makes use of statistical patent valuation indicators to analyse the strengths, weaknesses and positioning of patent portfolios. In close cooperation with the Technical University of Berlin, Mines Paris Tech and Northwestern Chicago, IPlytics uses scientifically validated methods to calculate relevant patent valuation indicators. In order to compare different patent portfolios, the statistical indicators are normalised by averages of patent control groups at the same patent office, International Patent Classification (IPC) or Cooperative Patent Classification (CPC) class and publication year. A patent from 2010 that was filed in the United States with the IPC/CPC H04W that receives six foreword citations is compared to the average forward citation counts of all US/2010/H04W patents. If the forward citation count is six and the average is three then the statistical indicator is two – a value twice as high as average.

The technical relevance (TR) indicator is calculated by counting the number of prior art citations that a patent receives (forward citations). Citations are counted as citing families. Self-citations as well as subsidiary citations are not counted. Finally, counts are normalised by year, country of jurisdiction and main IPC/CPC.

The market coverage (MC) indicator is calculated by counting the number of countries in which the patent has been filed (jurisdiction) and weighted by the country’s gross domestic product. Finally, counts are normalised by year, jurisdiction and main IPC/CPC.

Figure 1 illustrates the patent portfolio valuation of declared 5G patent families as to the market coverage and technical relevance indicators. The y-axis describes the share of declared 5G families as to all-declared 5G families, the x-axis shows the average normalised number of forward citations (technical relevance) and the size of the bubble demonstrates the patent family size (market coverage). The companies LG, Samsung and Nokia have the highest TR values while the Chinese Academy of Telecommunications and Technology (CATT), OPPO and ZTE have rather low technical relevance (TR) values. A high TR value reflects the high technical relevance of a patent portfolio, since subsequent patents had to cite the patent portfolio as prior art. As the counts are normalized by year the portfolio age does not bias the results. Patent citations are reviewed and verified by objective and qualified patent examiners. A high TR value thus identifies leading technologies of a particular market segment. On the other hand, low TR values reflect the low technical relevance of a patent portfolio, since subsequent patents did not cite the portfolio as prior art. A low TR value reflects that a patent either protects a niche technology or a technology that is not relevant to other market participants.

Intel, Qualcomm and Huawei have the highest MC values. A high MC value reflects a global internationalisation strategy and wide market protection. Further, a high MC value reflects a high perceived patent value for the applicant. Patent application and patent maintenance fees create considerable costs at each patent office. The more countries in which patents have been filed, the higher the perceived international market potential for the patented invention. A low MC reflects a local internationalisation strategy and a narrow legal market protection. The fewer countries in which a patent has been filed, the lower the perceived international market potential for the patented invention. Here CATT and OPPO yet peruse a rather local strategy.

The interconnectivity of different systems and the communication across multiple devices relies on a common specification of the 5G standards. Standards development of complex technologies such as 5G therefore often integrates many patented solutions. Beyond the patent data analysis, it is also worth taking a look at the companies that are actively involved in 5G standards development. The 5G standard is specified in international meetings where companies present and submit technical contributions.

Using the IPlytics Platform’s database and analytics, Table 1 shows all those companies that declared 5G SEPs to then analyse if they have also submitted technical contributions to 5G (companies that have not yet submitted 5G-relevant SEP declarations were excluded). Huawei is responsible for most 5G contributions, followed by Ericsson, Nokia, Qualcomm and Samsung.

Standards contributions are in many cases not submitted by one, but a group of companies. The first company is mainly responsible for the contribution; it then teams up with other companies to submit the input. In Table 1, the contributions in the first column are counted for all companies that have been in a group that submitted the standards contribution. The second column in comparison only counts contributions for the first contributing company. Although the counts are reduced, the general order of companies remains the same.

A different way of counting contributions made by multiple companies is to calculate the share of the contribution. For example, if there are four companies submitting a contribution together, each company will receive a pro rata value of 0.25. The third column represents the counts of proportionate standard contributions, (ie, how many contributions the company contributed proportionately). After applying this weighting, Ericsson has submitted more pro rata standard contributions than Huawei for 5G, since Ericsson has apparently made many standard contributions alone or in smaller groups, while Huawei has submitted standard contributions together with many other companies (often also subsidiaries such as Hisilicon).

Table 1: Top companies submitting technical contributions for 5G standards (IPlytics Platform, July 2019)

The 3rd Generation Partnership Project (3GPP) (ie, the consortium that develops the 5G standard) is divided into several sub-groups that each work on different technical matters. Not all of these groups are working on technologies that are relevant to mobile phones or Internet of Things (IoT) devices. For example, the work in the RAN3 group specifies the interfaces between infrastructure equipment only. RAN1, RAN2, RAN4, SA2, SA3, SA4, and CT1, on the other hand, define specifications relevant to mobile phones or other IoT devices only. The fourth column of Table 1 thus includes contributions submitted in these groups only. Again the group filtering changes the 5G contributions counts for each company.

Standards contributions must be accepted and approved by the 3GPP in order to be included in the final 5G specification. The fifth column counts standards contributions approved by 3GPP members only. Overall, about 10% of all contributions have been approved for 5G. Most of the approved contributions have been submitted by Huawei, closely followed by Ericsson and Nokia. Samsung overtakes ZTE for approved contributions compared to the overall numbers.

Another measure used to estimate involvement and investment in 5G standards development is the attendance of engineers at the standards-setting meetings where 5G standards are developed. Attending these meetings reflects a company’s investment, as it shows that it has highly skilled technical engineers who commit their time to prepare, travel and discuss the latest 5G technologies.

Figure 2 illustrates the number of employees per company that attend the 5G standards-setting meetings. Each attendant is counted for each meeting. Huawei has sent the most employees to 5G-related meetings and thus spends a lot of resources to attend the worldwide 3GPP RAN meetings, followed by Ericsson, Samsung, Nokia and Qualcomm. However, a few companies that are not among the top patent declaring or standards contributing companies have attended many meetings (eg, NTT Docomo, Fraunhofer and Orange).

Outlook

The licensing of 5G SEPs looks set to become a major issue not only for the handset industry, but for any manufacturing sector where connectivity will matter. Senior patent managers and patent directors should bear the following in mind with regard to 5G patents:

• Future technologies that enable connectivity will increasingly rely on patented technology standards such 5G.
• The number of 5G SEPs is constantly rising – patent directors should consider royalty costs and appropriate security payments in advance.
• Patent directors should not only consider information retrieved from patent data, but also monitor and consider standardisation data such as technical contributions and meeting attendance to understand the landscape of 5G patent holders.
• Senior patent managers should bear in mind the dynamic market of SEPs, where patent assertion entities often acquire patent portfolios to assert extensive royalty payments.
• Manufacturers should pursue a common strategy for patenting and standardisation to ensure that they are fully engaged in developing future connectivity technologies.