Where Innovation Happens

[Pawan Fangaria]

Here is another parameter which says USA is the sole leader in global science and technology innovation.
According to World Intellectual Property Organization (WIPO), in 2013-14, the US witnessed 61,492 patents, followed by Japan at 42,459 and then China, Germany and South Korea occupying 3rd, 4th and 5th positions.

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Some time ago, I had written a blog on world innovations based on the R&D expenses the semiconductor companies make, and there it was clear that the companies in US spent the most on R&D led by Intel. An interesting observation from WIPO report is that the patent filing in computer technology ranks first at 17,653 patents, followed by digital communications and electronic machinery. Now, tell me which of these areas do not involve semiconductors? Computers, digital communication and electronics, all are highly dependent on semiconductors.

So, clearly, semiconductor is leading the world innovation and US is leading the semiconductor innovation.

 

[Staf_Verhaegen]

Here is another parameter which says USA is the sole leader in global science and technology innovation.
According to World Intellectual Property Organization (WIPO), in 2013-14, the US witnessed 61,492 patents, followed by Japan at 42,459 and then China, Germany and South Korea occupying 3rd, 4th and 5th positions.

So you make the assumption there is a correlation between innovation and number of patents? I would think it is more an indication of how much grip the legals have on the engineers

 

[Pawan Fangaria]

So you make the assumption there is a correlation between innovation and number of patents? I would think it is more an indication of how much grip the legals have on the engineers

Sir, it's true that the number of patents do not matter, however there are certain patents which actually drive new innovations and developments. I consider it as 'one' important parameter of innovation. Of course it's not everything about innovation. However, having filed a few patents myself, I can certainly say that it's a worthwhile effort which puts innovative thinking in your mind. Number of patents is just a measure, there needs to be some parameter!

 

[Daniel Payne]

In general the hardware-oriented companies have used patents more successfully as a defensive measure against competitors keen to clone their technology. On the EDA side we have seen recent patent battles between Synopsys and Mentor over hardware emulation.

I agree with Staf that only the companies with lots of cash can afford to file and then defend their patents in court.

 

[Pawan Fangaria]

Daniel, I agree to that observation that cash is needed to file a patent and defend it in court on any kind of infringement. So, definitely cash rich companies have an advantage in filing patents, however ultimately the quality of patent will rule any way. Having said that, a smaller company, if it has a good quality patent, it must file it, because returns it's going to have can be much more than expense in filing a patent. So, that's coming down to a business decision.

If you look at it from a technical angle, other than business, a patent definitely reflects some amount of innovation, the weight-age may vary depending on the area, type, business potential etc.

 

[Daniel Payne]

Here in Portland I know of Keith Lofstrom, holder of 9 patents. One of his patents is widely violated, and it's for creating a unique digital ID on each IC. He simply doesn't have the financial resources to fight this in court against the many companies using his un-licensed ideas.

 

[Sumita Sarma]

So, its mostly the 'fabless' firms who have the highest patenting propensity or it is also the manufacturers?

Also, for my academic research, I am looking for (1) number of fabless firms / country as of 2013 or 2014, (2) fabless chip market sales from 1980-2014. I shall be grateful if you can provide me the data or alternately point me to an authentic data source (free one). Thanks

 

[Pawan Fangaria]

Here in Portland I know of Keith Lofstrom, holder of 9 patents. One of his patents is widely violated, and it's for creating a unique digital ID on each IC. He simply doesn't have the financial resources to fight this in court against the many companies using his un-licensed ideas.

That's a problem with capitalistic society and is pathetic, but that should not conclude in the sense that patenting is bad. Imagine, this violation would have been with all patents? It would have been a kiosk. Staf is right that it's a boon for legals to make money, but that's true in other legal tangles as well.

Personally, I guess there should be some way out for poor individual inventors to protect their patents, probably it could be through legalized social bodies?

 

[Pawan Fangaria]

So, its mostly the 'fabless' firms who have the highest patenting propensity or it is also the manufacturers?

Also, for my academic research, I am looking for (1) number of fabless firms / country as of 2013 or 2014, (2) fabless chip market sales from 1980-2014. I shall be grateful if you can provide me the data or alternately point me to an authentic data source (free one). Thanks

Sumita, I do not have the granularity with me but according to GSA estimates, the last I know were total 1284 semiconductor companies, out of which 1011 were fabless. It's a fair assumption that patents by fabless companies will be much more than the manufactures. The manufacturing cycle itself is much lengthier compared to fabless and then the fabless companies outnumber the manufacturers. By the way, if we include patents by IDMs, then that will include design patents as well. In 2014, IBM was at the top at 7534 patents, followed by Samsung at 4952 and Canon at 4055.

 

[Sumita Sarma]

Thanks for the information Pawan. Just a quick question: are these 1011 fabless firms based out of the US?

 

[Pawan Fangaria]

Thanks for the information Pawan. Just a quick question: are these 1011 fabless firms based out of the US?

You are most welcome Sumita! The companies are overall global.

 

[Staf_Verhaegen]

If you look at it from a technical angle, other than business, a patent definitely reflects some amount of innovation, the weight-age may vary depending on the area, type, business potential etc.

Agreed, if the patent officer does his job right a patent has to be innovative or should not be granted. I am the co-author of a few patent myself and I don't have the feeling the needed paperwork has contributed much to the idea. The first time I was eager to become 'an inventor' the last times I was arguing to the legal people my idea was not innovative enough so I could avoid doing the boring paperwork
What I don't think you can say is that regions with higher number of patent applications has higher innovation rate; it just says that there the company culture is more patent oriented. Even in the US minds seem to be changing; to quote Elon Musk: "Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers."

 

[Staf_Verhaegen]

Here in Portland I know of Keith Lofstrom, holder of 9 patents. One of his patents is widely violated, and it's for creating a unique digital ID on each IC. He simply doesn't have the financial resources to fight this in court against the many companies using his un-licensed ideas.

In theory I agree with principle of patents; people with big ideas should have the right to get proper compensation. Unfortunately current system seems to be more a vehicle for the big guys to stiffle the innovation done at startups than a vehicle for startups to protect themselves from the big guys.

 

[Pawan Fangaria]

Agreed, if the patent officer does his job right a patent has to be innovative or should not be granted. I am the co-author of a few patent myself and I don't have the feeling the needed paperwork has contributed much to the idea. The first time I was eager to become 'an inventor' the last times I was arguing to the legal people my idea was not innovative enough so I could avoid doing the boring paperwork
What I don't think you can say is that regions with higher number of patent applications has higher innovation rate; it just says that there the company culture is more patent oriented. Even in the US minds seem to be changing; to quote Elon Musk: "Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers."

Thanks Staf! I agree with you, such kind of misuse by the legal out of greed for money takes away all the fun and real sanctity of the patent. It's a pity! However, I would consider such instances as a small percentage out of the large chunk of patents. Why I say this is that when I look into the details of major innovations in the world, they are all initiated and supported by patents. In fact there may be some patents which have not been included yet in the products due to fund crunch (or infringed by other fund rich companies or organizations as Daniel said). But great products are always supported by great patented ideas. That's where I draw the inference of the regions. And then there is second parameter of R&D investment which I talked in my blog. It's not because of US being rich country, it's more to do with the culture of that country. As that report was clearly showing percentage of sales invested into R&D, US was leading there. Let me take an isolated example of my own country; in India there are business owners who are among world's top 100 rich people, but if I see R&D investment in their companies or in general in India, that is minuscule. It's to do with the culture.

True, innovations can happen from anywhere, and without patent, and not necessarily from US or Japan or China. But those will be isolated instances. There is a thing called creation of innovative environment. Filing patents (in true sense) creates that kind of environment. Investing into R&D activities creates that kind of environment. There can be more innovations emerging from that kind of environment.

 

[Sumita Sarma]

What is the best way to measure the 'innovativeness' of a high tech firm (say, in the semiconductor industry)? From the discussions it is clear that raw count of patents (of a firm) or patenting propensity of a firms are not the best indicators, right? SO, can R&D/Sales (R&D intensity or technological commitment) a decent indicator of a firm's innovative nature?
If all three are noisy, then what is a decent indicator and what are the causes of such innovativeness in a company?

Thanks in advance for your response.

 

[Pawan Fangaria]

Sumita, innovativeness of a particular company can be debatable. It cannot be decided by one parameter as patent filed by the company. Innovativeness becomes a subjective matter which can be objectified by a number of parameters and it can vary in perception by different people. I consider patents and R&D expense to be important parameters for innovations, but those cannot be the sole parameters. There can be other less important parameters too which do not contribute directly to innovations but supports into it. There comes business (may be in terms of sales), collaboration with universities, patent licensing etc.

Imagine a company only selling and not doing any R&D, it can be just like a "distributor". Then imagine a company just filing patents and not developing any product, it can be termed like a "university" or "research institution". Again, imagine a company doing R&D, developing products also, but not setting; can it sustain? So, there R&D / Sales ratio is a good measure. So, after all it all combines together and forms a healthy company. If a company is able to make products out of 90% of its patented ideas, and then able to sell making healthy business out of it to generate funds and propel further innovation, I would consider that to be an innovative company.

An example - in 2014 IBM filed 7534 patents and Qualcomm filed 2590 patents. But if you see, Qualcomm business is much stronger. I do not have the details, but I can perceive that Qualcomm is better utilizing its patents in revenue generation. Again, business depends on particular areas as well, so you have to consider that also. So, innovativeness cannot be a linear scale for companies, but yes companies can be graded into tier1, tier2, like that based on certain parameters, as I discussed above. More can be added.

 

[Staf_Verhaegen]

Thanks Staf! I agree with you, such kind of misuse by the legal out of greed for money takes away all the fun and real sanctity of the patent. It's a pity! However, I would consider such instances as a small percentage out of the large chunk of patents. Why I say this is that when I look into the details of major innovations in the world, they are all initiated and supported by patents. In fact there may be some patents which have not been included yet in the products due to fund crunch (or infringed by other fund rich companies or organizations as Daniel said). But great products are always supported by great patented ideas. That's where I draw the inference of the regions. And then there is second parameter of R&D investment which I talked in my blog. It's not because of US being rich country, it's more to do with the culture of that country. As that report was clearly showing percentage of sales invested into R&D, US was leading there. Let me take an isolated example of my own country; in India there are business owners who are among world's top 100 rich people, but if I see R&D investment in their companies or in general in India, that is minuscule. It's to do with the culture.

In software there are clear examples of innovative things without patents: python, VP8, xiph.org. For hardware it seems to be impossible to release one without having the have a bunch of defensive patents; you need them to countersue if somebody sues you. Again an indication to me of the wrong way the current patent system works.

 

[Pawan Fangaria]

Staf, that's a great observation. Software is actually a different breed of animal. A great credit of open innovation in software goes to several open source projects in that space. Today, we are also seeing open source initiatives by several companies in IoT space. Open Source is a great way to unleash the innovations with contribution from everyone. However, even there, on top of what is open, people put their proprietary stuff.

Coming to protection by using patent, wherever there is something to be claimed by an individual or company (where there is no contribution of others), what could be any other way of protection? I guess filing patent on individual stuff / property is fair enough.

 

[Arthur Hanson]

I feel the vast majority of patents should not be granted for they violate the rule that patents should not be obvious to professionals in the field. Most patents are built to erect a wall around knowledge that is the obvious progression of the field and has already been thought of by several in the field or would have shortly. Only patents that reach this threshold should be granted. This would increase the value of patents granted, since far fewer would be granted, the basic law of supply and demand. It would also speed up technology by preventing frivolous patents from slowing down progress. Dan, a unique ID for a semi is just akin to a serial number that has been used for hundreds of years over an extremely broad range of products, it's just in digital form. I would love to have a patent on serial numbers, like I would like to copyright the word "the". I feel that's an ideal example of abuse of the patent system. I also feel for a patent to stay in force, a prototype or proof of concept should be built in a reasonable time frame, otherwise a patent is just a tool to block progress.

Having far fewer patents would also speed progress by not blocking the learning process with pay walls and allow for much faster progress.
I feel something that could be done to stop the patent abuse of obvious knowledge is to have a repository of public knowledge that anybody could make a contribution to, blocking any patent or copyright of said work. This would save everyone time and many, while speeding progress to the benefit of all.

 

[Pawan Fangaria]

Restricting patents only to few is first of all not logical, but if done, it will bring higher monopoly in the system. Wider ambit of patents is fine, but it must be holistic and should not be misused for legal trade.

In today's world, open source initiative is a process that can unleash larger innovation potential. We have seen several open source initiatives in software already and there are new ones opening up in hardware as well.