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January 21, 2009

Up and Coming

There is a continuing shift in U.S. patent grants towards Asian companies. While IBM stayed on top in 2008, at 4186 grants, #2 was Samsung (Korea, 3515), and #3 Canon (Japan, 2114). Of the top twenty patentees in 2008, 13 were foreign-based companies, all but one Asian. Behind the numbers lie motivations.

U.S. companies commonly give its employee inventors a nominal thank-you gratuity, but nothing obliges them to do so. By contrast, Japanese companies by law (Article 35) must compensate their inventors. The law is non-specific, other than stating the payment should be reasonable.

Canon gives its patenting engineers a bonus at submission, registration and approval of patent applications. Payment is based upon contribution to the company. Canon has been in the top three annual patentees in the U.S. since the early 1990s.

Toshiba compensates patenting employees based on sales contribution and licensing fees. Sony also has a multiply-faceted reward system.

While the Japanese system may seem to emphasize quantity over quality, compensation is oriented towards revenue contribution, with bonuses based on value to the company.

Naturally, corporate Japan has howled at the patent bonus requirement, wanting Americanesque discretion. And not every employee is satisfied. Shuji Nakamura, who invented the blue laser diode while employed at Nichia, sued for bigger slice of the pie. The Japanese courts adjudicate such disputes.

At core, gaining a competitive edge is always the driving force for patenting. Korean companies have come up in the ranks in patenting in the past decade apace with growing respect for the quality of their products. Canon credits its aggressive patenting in the 1960s for breaking Xerox's lock on the copier market, and challenging for market share against more established brands, such as German Leica.

With the high courts in the U.S. over the past few years disparaging patents with its rulings, particularly targeted at software and business methods, which are a significant aspect of this nation's competitive edge, this country risks strangling the goose that lays its golden eggs. The patent numbers in the next few years may well be a canary in the coalmine of world competitiveness for U.S. companies.

Rank Company (Country) Patents
1 IBM (US) 4186
2 Samsung Electronics (Korea) 3515
3 Canon (Japan) 2114
4 Microsoft (US) 2030
5 Intel (US) 1776
6 Matsushita Electric (Japan) 1745
7 Toshiba (Japan) 1609
8 Fujitsu (Japan) 1494
9 Sony (Japan) 1485
10 HP (US) 1424
11 Hitachi (Japan) 1313
12 Micron Technology (US) 1250
13 Seiko Epson (Japan) 1229
14 General Electric (US) 912
15 Fujifilm (Japan) 869
16 Ricoh (Japan) 857
17 Infineon Technologies (Germany) 814
18 LG Electronics Inc (Korea) 805
19 Texas Instruments (US) 757
20 Honda Motor (Japan) 747
21 Siemens (Germany) 724
22 Hon Hai Precision (Taiwan) 719
23 Denso Corp (Japan) 708
24 Cisco (US) 704
25 Broadcom (US) 643
26 Honeywell (US) 619
27 Nokia (Finland) 608
Silverbrook Research (Australia) 608
29 Sharp (Japan) 603
30 NEC (Japan) 547
31 Broadcom CorpXerox (US) 529
32 LG Philips LCD (Korea) 524
33 Renesas Technology (Japan) 513
34 Sun Microsystems (US) 509
35 Koninklijke Philips Electronics (Netherlands) 497

Table Source: IFI

Posted by Patent Hawk at January 21, 2009 7:20 PM | Patents In Business


strangled, Patent Hawk, past tense.

Posted by: New Light at January 22, 2009 4:00 AM

Ah, I was wondering why nobody buys American cars any more. Something to do with the US courts disparaging patents, is it? Hawk, we need to look at what are the causes and what are the effects, right? Besides, tracking patent grants is not a very good indicator of what business decisions are being made right now. Then again, the public in Japan and Korea has an avid interest in the patent holdings of its national champions. How many members of the great American public knows what a patent is? But you're right, and maybe the employee inventor law has an effect. Japan copied it from Germany and the UK did not. A lot of German engineers have their name on a company patent. How many patent attorneys there are in Germany, and how many in the UK. I think the ratio is about 3:1.

Posted by: MaxDrei at January 22, 2009 7:16 AM

"Canon credits its aggressive patenting in the 1960s for breaking Xerox's lock on the copier market, and challenging for market share against more established brands, such as German Leica."

I think you just quoted the "Business Case Analysis" in Chapter One of the Coalition for Patent Fairness strategy book.

Posted by: Anon E. Mouse at January 22, 2009 12:20 PM