IBM breaks patent record in 25th straight year as No. 1, Samsung in 2nd place

IBM's logo seen at the SIBOS banking and financial conference in Toronto, Canada, on Oct 19, 2017.
IBM's logo seen at the SIBOS banking and financial conference in Toronto, Canada, on Oct 19, 2017.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - International Business Machines (IBM) was once again awarded the largest number of US patents in 2017, as the company pushes into blockchain and artificial intelligence (AI) technologies.

IBM received 9,043 patents in 2017, breaking the record it set in 2016, the company said on Tuesday (Jan 9). A lot of the research that IBM conducts may not translate to immediate business gains, and it could take years before patents turn into a product that pays off. The company also invests in exploratory research unrelated to business lines and goals.

Despite winning the most patents for the 25th straight year, IBM is struggling to turn itself around. Slowing sales in older business lines have hurt total revenue, while growth in newer areas - including cloud, AI and cyber-security software - has not yet closed the gap. Though IBM expects to show growth in the last quarter of 2017, analysts said much of that boost will come from a new mainframe computer. The company consistently spends about 6 per cent of its annual sales on research and development.

Samsung Electronics was second place, with 5,837 patents, according to data compiled by IFI Claims Patent Services, a unit of Fairview Research. Canon, Intel and LG Electronics round out the top five.  The number of patents granted in the US has doubled in the past decade, IFI Claims said. There were 320,003 patents granted last year, up 5.2 per cent from the previous year.

Cloud-related software and services have been the cornerstone to IBM's bid to modernise its offerings. IBM has stepped up its push to sell big companies software using artificial intelligence and blockchain technologies. These products are by and large cloud-based - meaning that they are found on servers not owned by clients and are delivered over the Internet. Getting more customers for these products is critical to Big Blue's efforts to compete against other cloud providers like Amazon.com and Microsoft.

Blockchain in particular has become key to IBM's growth strategy. The digital ledger technology, used by cryptocurrencies like bitcoin, allows different parties to record transactions accurately and securely. By definition, multiple companies need to be using the same network, which means getting one client to sign on easily leads to multiple sales.

Interest in using blockchain technology has even spurred companies that have been resistant to move to the cloud, according to Jerry Cuomo, vice-president of technology for IBM Blockchain. Last year, IBM patented a method to bundle transactions together, cutting the cost and time needed for them to go through. Big Blue is among the top recipients of the patent classification for financial technology, which would include blockchain and cryptocurrency, IFI Claims senior analyst Larry Cady said in an interview.

More than 1,400 of IBM's patents in 2017 were related to AI. Some of those patents include a system that analyses speech patterns and learns to match them and a machine learning program for self-driving cars that figures out when to switch control from software to human and vice versa. Since 2012, Big Blue has led in the number of AI patents received with more than 5,600, beating out runner-up Alphabet's Google by more than 1,000.

Autonomous vehicles, 3D printing, machine learning, aerial drones and food have been among the fastest growing areas in patents granted over the past five years. Facebook had a 35 per cent jump in the number of patents it receives, mainly in the area of machine learning, Cady said. Toyota Motor, Ford Motor and Denso Corp were among the top recipients for patents on autonomous vehicles and 3D printing, which is transforming the manufacturing industry.

While they remained among the top recipients, Japanese electronics companies - including No. 3 Canon - Toshiba and Fujitsu received fewer patents than in 2016.

By contrast, Chinese companies experienced a big jump. China's BOE Technology Group, best known for computer and TV displays, increased by more than 60 per cent to put it at No. 21 on the list. Another LCD manufacturer, Shenzhen China Star Optoelectronics Technology Co, increased the number of patents it received by a third as Chinese companies seek to transition from contract manufacturers to developers of their own products.

"Japan is still much, much larger than China, but China is growing at an impressive rate," Cady said.