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Microsoft's patent tumble: A kinder, gentler IP politics? No

The stealth war against Chairman IBM

The fact that IBM filed more patents in 2015 than anybody is about as usual as Alexander Lukashenko sweeping to a fresh presidential term in Belarus.

For a 23rd year, our glorious leader IBM has been ranked number one in the top 50 US patent assignees, with 7,355 grants. Samsung Electronics came second with 5,072 with Canon KK third with 4,134, according to an analysis of US Patent and Trademark Office data.

Patents are part of the job at IBM – the company expects its technology and process-engineering staff to create patentable ideas. You don't become an IBM distinguished engineer without having first filed patents.

What's more interesting, however, is that Satya Nadella's Microsoft has tumbled so far down the top 50. Microsoft ranked number 10 with 1,956 patents last year, down from number five the year before with 2,829.

What makes that fall more remarkable is that Microsoft was number three in 2009 – growing 43 per cent over the year before to hit 2,903.

It was Bill Gates who in 2003 put Microsoft on a deliberate policy of racking up patent filings to make more money for his firm. In 2004, a year after he'd initiated the program, Gates told Wall Street analysts he was stepping up the pace to boost licensing of Microsoft ideas to others.

"We are at an early state of that, but it's something that we are pretty excited [about]," Gates was reported to have said. Gates had been responding to IBM, a firm that – back in the early 2000s – Microsoft wanted to be more like. He saw what IBM was doing with patents and liked it so much he decided to emulate them.

Horacio Gutiérrez, Microsoft's corporate vice president, said while he was chief intellectual property officer that he reckoned Microsoft's patents were not a profit center but, rather: "A currency that you use to trade to another company." It's Gutiérrez's quote that appeared on press releases in 2010 announcing that Microsoft had agreed to some patent cross-licensing deal with a Linux/Android device maker.

Even IBM admitted that the value of patents comes not from the creation of technology but, rather, from the leverage they provide against somebody else.

So, does the fact that Microsoft is sliding down the numbers demonstrate the death not just of Gates' policy for industrial-scale patent production, but also a corporate softening under Nadella? A kinder, gentler Microsoft?

No.

Despite the dwindling filings, Microsoft has continued to press enforcement, switching its initial attention 10 years ago from makers of Linux to manufacturers of devices running Google's Chrome or Android – Star Micronics the latest in November.

It would seem what Microsoft is enforcing is an increasingly dated portfolio rather than an ever-expanding body of work. If things continue, the implication is that the legal team's scope for operation will become increasingly limited – as will Microsoft's ability to cash in.

But there is a good reason for the drop at Microsoft, according to IFI Claims Patent Services, who crunched the USPTO data. "Rather than keeping all corporate patents under a single registration, some companies are choosing to spread their portfolios across multiple entities," Larry Cady, IFI senior analyst, said in a statement.

"This is why we are seeing such dramatic movement this year with Microsoft and Panasonic, which all started assigning some patents to newly formed holding companies," he said.

Panasonic was number 18, down from 10.

What Microsoft is doing is changing to more covert means to file its creations. In future, if you encounter a Microsoft patent, there's a good chance you won't know it's registered to Microsoft. Also, there's a good chance somebody other than Microsoft's legal team will be doing the chasing.

Whether or not Microsoft switched to stealthier means, what is true is the fact that IBM is no longer the benchmark Gates once took it to be. As in other areas of computing, it's the new entrants – in the fields of mobile and cloud – that are beginning to out-gun Microsoft, at least according to these numbers. Qualcomm was up three places to number four, Google up three places to number five – sitting in that slot held by Microsoft 12 months ago. Amazon, according to IFI Patent Services, made "impressive gains." Amazon Technologies landed at 26 – up from 50 last year.

Time will tell whether these firms follow Microsoft in asserting their claims. It'll also tell whether they begin to employ stealth registration, too. ®

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