Cloud Computing Patent Litigation on the Rise

A recent study reveals that US patent litigation on cloud technologies has been increasing by 700% over the past 4 years (figure 1). This drastic surge of litigation was mainly driven by so called PAEs “patent assertion entities”. PAEs purchase patents, e.g. from a bankrupt firm, and then sue other companies by claiming that one of their products or technologies infringes on the purchased patent (figure 2).

US Patent Litigation Over Time

Figure1: Number of cloud computing patent litigation cases in the US over time

Cloud computing is a space where complex technologies often overlap. Therefore, it becomes challenging for cloud-based companies to make sure that their solutions are not unconsciously infringing patented inventions. Just recently a techcrunch article revealed that Snap Inc. acquired a cloud-based geo filter patent from Mobli for a record amount of 7.7 million US dollars. Mobil was a Snap competitor that closed business years ago. However, Snap acquired the patent to ensure that the patent will not fall into the hands of an aggressive PAE (patent assertion entity) or competitors. When looking at the recent litigation numbers the fear of being sued for infringing cloud patents seems eligible.

US PAE Patent Litigation Over Time

Figure 2: Number of cloud patent litigation cases in the US as to main business model of the plaintiff

Cloud technologies are often believed to fundamentally rely on shared environments following public standards. The presented numbers however show that cloud technologies are increasingly subject to patent litigation. This may in fact block the open use and the commercialization of future cloud-based solutions. Cloud computing technologies are complex systems with millions of applications that are incorporated in various products or services. Broadly written patent claims may thus touch an unforeseeable range of cloud-based solutions creating unpredictable legal risks for every business that is based on cloud technologies.

The presented results are an extract of an ongoing study around patent activities in the space of cloud computing. The analysis conducted by IPlytics intends to shed light on the potential legal risks for cloud technology users.

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IAM magazine publishes study on Standard Essential Patents

IAM magazine standard essential patents

IAM magazine standard essential patents

The current January issue 75 of the IAM magazine has published an article on the landscape of standard essential patents. The study reveals the latest trends of patent files around standards using the IPlytics Platform tool.

Future technologies such as Internet of Things, smart cars, smart home and smart energy will increasingly rely on patented technology standards such as LTE, Wifi, NFC, RFID and Bluetooth. The number of patents that claim an invention on these standards is consequently constantly increasing. So called Standard Essential Patents (SEPs) can be extremely lucrative in terms of royalty income, but also in terms of being strong bargaining chips in cross-licensing negotiations. Accordingly, also the number of SEP litigation cases as well as the number of SEP transfer deals has been become more frequent. In recent years, standard essential patents are increasingly the subject of lively debate among market observers, but are they worth all the fuss?

standard essential patent trend

standard essential patent trend

Indeed, the IAM article provides evidence that declared SEPs are cited more often, are subject to larger patent families, are transferred more often and are litigated more frequently. While companies such as Qualcomm, Nokia and InterDigital still hold the largest SEP portfolios, emerging Asian companies such as Huawei, ZTE or Datang Mobile are catching up quickly. The analysis further confirms that declared SEP portfolios are by large still active and valid. Most of the declared SEPs either cite the relevant standards projects as prior art or are cited by other declared SEPs. Both measures indicate that declared SEPs have a close technical relationship with the respective standardized technology.

standard essential patent licensing

standard essential patent licensing

The study makes use of data from the IPlytics Platform tool, connecting information on:

  • 80 million world-wide patents documents
  • 2 million world-wide standards documents
  • 300,000 declared standard essential patents (licensing statement, FRAND commitment, reciprocity statement, etc.)
  • 450,000 patents referencing standard as prior art
  • 15,000 patents that are subject to a patent pools
  • 42,000 patents that are subject to US litigation

The article concludes with proving an action plan on how to deal with the interrelation of patents and standards. IPlytics CEO Tim Pohlmann states:

“The interplay between patents and standards is higher on the agenda than ever before. Senior managers and directors at patent-owning businesses which are active in fields where standards matter, or will matter in the future, should bear some key considerations in mind”:

  • The number of declared SEPs is constantly increasing. IP directors should consider royalty costs for products that comply with technology standards.
  • Not only has the number of declared SEPs been increasing, but so too have the number and diversity of rights holders. This is reflected in the increasing geographical variety of rights holders, as well as the increasing variety of business models. IP directors should conduct foresight screenings on the existence of relevant SEPs to identify possible licensing costs or legal problems at an early stage. The risk potential for the launch of new technologies or products can thus be quantified and valued during the early stages.
  • While litigation around declared SEPs is rising, the market for declared SEPs has evolved in recent years. Senior managers should bear in mind that buying SEPs may be a way to enter new markets. SEPs may be good bargaining chips in licensing negotiations, which could avoid costly court disputes.
  • The results of the analysis suggest that companies should pursue a common strategy for patenting and standardization in order to ensure that they are aware of the existence of SEPs and are exploiting patented inventions in technology fields where standards matter.
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IPlytics wins ICT innovation prize 2013

Dr. Tim Pohlmann is currently busy trying to transfer the subject of his doctoral thesis into the business model of his startup IPlytics. The idea is to develop a market intelligence tool that analyzes market developments, technology trends and patenting on a single, unified platform called OpenPSP. The awarding of IPlytics for this year’s ICT-innovation prize shows that this business idea has a lot of potential. Tim Pohlmann together with his team received the award today at the International Consumer Electronics Fair (IFA) in Berlin. With the ” ICT Innovation Prize” the BMWi awards the best business plans out of more than 300 applications. The Federal Ministry of Economics and Technology (BMWi) supports startups that have innovative ideas for information and communications technologies (ICT).

 IPlytics small(von links: IPlytics team and Stefan Schnorr (BMWi)

Berlin Startup IPlytics increases transparency in the patent thicket!

In recent years, numerous patent disputes have caused damages and menace to many industries. Only this year Apple had to temporarily stop the selling of its iPhones and iPads in Germany over the patent dispute with Motorola. Just a few month ago, the Samsung Galaxy Tab was banned to be commercialized in the whole European market on the basis of patent infringement.

When companies fight for patent infringement quite often hundreds of million Dollars are at stake. However, not all companies have the means to fight in court. Many innovative firms thus state that there is a need for transparency in the dense thicket of patents to prevent patent disputes beforehand.

The Berlin-based startup IPlytics has taken on the task to shed light on the patent thicket. Several years of research at Professor Knut Blind’s Chair of Innovation Economics have brought up new methods for measuring and understanding patent activities in the ICT sector. IPlytics’ market analysis combines economic methods with IT-driven algorithms to process new information on R&D activity, technology trends and market developments. The main product and service of Iplytics is the online platform OpenPSP (Open Platform Patents and standards ). OpenPSP is an online platform that collects and connects current data on patents, products and technology standards with the help of web robots. OpenPSP makes use of data sources that are often freely available in the Internet, but distributed all over the web and difficult to access. With the help of data processing technologies OpenPSP provides its users structured up-to-date information on one single unified platform. The data linking is based on new methods of economic correlation, regression and indicator analysis and combines them with text mining algorithms. OpenPSP is thus the first solution that is able to connect patent data with technical standards, as well as with market-specific information.

In recent years, especially Germany has developed to be an arena of patent litigation. The German patent system is seen as patent holder friendly with a high likelihood of patent enforcement. However, the innovative SME sector feels threatened by the increasing number of patent litigation. Quite frequently, so called patent trolls buy up German patent portfolios to sue for patent infringement in entire industries. Nevertheless, the infringement of patents in the IT industry is in many cases unintentional. The scope of patents is often very wide and patent infringement is difficult to detect in the dense thicket of patent claims. Though, once a company has established its product on the market it is often too late to late to row back. Companies should therefore conduct precautionary measures in advance.

Intelligent patent software solutions save lengthy searches and help innovative companies to hedge early. IPlytics provides a new service to support a company’s innovation and technology management. OpenPSP increases transparency on market developments and on the existence of patents, standards and technologies. Foresight screenings of patenting and standard setting help companies to identify possible licensing cost or legal problems in early periods. The risk potential for the launch of new technologies or products can thus be quantified and valued in early stages.

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