31 May
2016

Huawei and TSMC recognised for portfolio quality; Asian companies still bank on US assets despite slowdown

Much has been said of late about the gradual demise of American dominance of the global patent system. A combination of legislative reform, perceived anti-patentee jurisprudence, and an IP-sceptic environment more generally mean that businesses and investors that rely on patents are increasingly turning their attentions to markets such as Europe, where they feel these assets can retain or even improve their value in the foreseeable future. However, recent research suggests that many of the Asia-Pacific region’s major high-tech players have not received that memo – or, at least, that they are taking its contents with a pinch of salt.

Each year since 2013, IAM and MDB Capital have published the ‘US Patent 1000’ – a list of all the entities that own over 1,000 active, granted US patents. IAM subscribers can view the two-part 2016 report in full here and here.

One appendix to the main ranking is a list of the year’s ‘stand-out portfolios’. This highlights patent owners with portfolios which rank among the top across the three main metrics that MDB uses in its US Patent 1000 analysis: number of granted patents; three-year compound annual growth rate (CAGR) in patent applications; and ‘Tech Score’ (a bibliometric measure of the rate at which other companies are citing each portfolio in their own applications). This implies that, of the 150,000-plus entities that have been assigned at least one US patent, those that feature among the US Patent 1000’s ‘stand-out portfolios’ own the largest, fastest-growing and best-recognised patent portfolios in the world. The ‘stand-out portfolios’ for 2016 are as follows:
 

Patent owner

Country

Granted US patents in force

US patent applications pending

Three-year application CAGR

Tech Score

Alphabet (Google)

United States

20,505

5,229

16%

1.01

Apple

United States

13,236

4,366

19%

1.03

Caterpillar

United States

4,539

1,809

17%

0.8

Ford

United States

8,595

2,828

19%

0.86

Halliburton

United States

4,400

1,636

16%

0.86

Huawei

China

5,036

4,324

26%

0.9

Marvell

United States

6,189

344

17%

0.91

Qualcomm

United States

16,877

7,678

17%

0.97

TSMC

Taiwan

11,399

2,873

22%

0.83

Verizon

United States

4,804

1,313

18%

1.01

Huawei is the first Chinese company to feature among this select group, while Taiwan Semiconductor (TSMC) becomes the second Taiwanese entity to make the list (Foxconn appeared in 2013 and 2014; the only other Asian company to have been listed is Sony, in 2013). The two also boast the largest CAGR in patent applications of all 10 ranked companies.

Of course, patent quality is a subjective measure and people have very different ways of looking at it – the US Patent 1000’s ‘stand-out portfolios’ is just one perspective. Nevertheless, whatever your thoughts on the methodology and its execution, Huawei and TSMC will no doubt be pleased to remember that this ranking led Canada’s Scotiabank to more than double its valuation of BlackBerry’s (then known as Research In Motion) patent portfolio back in 2013. For Huawei, this recognition of quality could prove particularly beneficial, coming at a time when it appears to be adopting a more insistent approach to enforcing its IP rights. (It is worth pointing out that Huawei is also the fourth highest climber on the main 2016 US Patent 1000 list in terms of issued patents, having risen 27 places from its 2015 position and entering the top 100 for the first time.)

Looking at the US Patent 1000 more broadly, there is another trend emerging among Asia-Pacific businesses. Japanese companies have been voluminous filers of US patents for many decades and still dominate the high end of the list, with Canon, Sony, Panasonic, Toshiba and Hitachi all making the top 10. The same can be said of South Korea’s two flagship companies – Samsung Electronics (which has retained the top spot since 2013) and LG Electronics, which this year places 11th. However, this group’s filing activity has either remained flat or slowed over the past few years.

They are now being outpaced by a new generation of Asian applicants - including, significantly, several from China – which are assiduously filing for patents in the United States, even in the midst of an overall slowdown in US patenting activity, and are becoming increasingly engaged in the patent acquisitions marketplace too. While Chinese entities file for, and are issued, massive numbers of patents in their home jurisdiction, their relatively poor showing in terms of US and other foreign assets has always been seen as evidence that they still have a long way to go in terms of a sophisticated, global approach to IP strategy. But this data suggests that the situation is beginning to change.

The US Patent 1000’s top 20 entities by portfolio growth are shown in the table below, ranked by three-year patent application CAGR. Shenzhen-based China Star Optoelectronics Technology (CSOT) – which is owned by TCL and Samsung Display – tops the list by a wide margin. Along with compatriots Huawei and ZTE, it has also been amongst the most prolific filers at the international level through the Patent Cooperation Treaty. It is also worth noting that Taiwan’s HTC makes the list. Often seen as one of the whipping boys of the ‘smartphone wars’ due to an apparent lack of patent coverage and what at times seemed like a rudderless IP strategy, the company is perhaps now upping its game in terms of portfolio building:
 

Rank

Patent owner

Country

Granted US patents in force

US patent applications pending

Three-year application CAGR

Tech Score

1

CSOT

China

1,117

1294

114%

0.92

2

Adobe Systems

United States

2,682

869

52%

1.03

3

Amazon

United States

3,761

727

36%

1.12

4

NVIDIA

United States

2,858

1,066

27%

0.9

5

Huawei

China

5,036

4,324

26%

0.9

5

Hyundai Motor

South Korea

3,643

2,773

26%

0.84

5

ZTE

China

1,652

1,731

26%

0.93

8

Facebook

United States

2,234

1,023

25%

1.02

8

Wistron

Taiwan

1,694

889

25%

0.9

10

Bank of America

United States

1,960

1,266

24%

0.9

11

TSMC

Taiwan

11,399

2,873

22%

0.83

11

LG Chem

South Korea

2,106

1,234

22%

0.79

11

Milton Roy

United States

1,335

671

22%

0.83

14

NetApp

United States

1,881

340

21%

1.07

15

Samsung Electro-Mechanics

South Korea

2,671

3,389

20%

0.83

15

Kohler

United States

1,450

128

20%

0.82

17

Apple

United States

13,236

4,366

19%

1.03

17

Ford

United States

8,595

2,828

19%

0.86

17

Nike

United States

3,977

843

19%

0.94

20

Verizon

United States

4,804

1,313

18%

1.01

20HTCTaiwan1,53663118%0.92
20DisneyUnited States1,31647318%0.95

Jack Ellis

Writer