Insight from IoT Intellectual Property Trends

by: Myriam Davidson

Whether it is light bulbs controlled remotely, refrigerators that track their contents, wearable devices that monitor behaviour, or cars that call the owner when their alarm activates, IoT is infiltrating all aspects of modern life. Tens or even hundreds of billions of IoT devices will be connected over the next few years. Yet it is still early days. Understanding IoT intellectual property trends can provide insight into the future.

When people discuss IP in IoT, they usually mean “Internet Protocol”. However IP also means “Intellectual Property”, which arguably will have a larger influence on the evolution and structure of the industry. What does this sort of IP mean for IoT innovators? To find out, Stratford Managers conducted an in-depth analysis of the IoT patent landscape. Here are a few highlights:

Area of High Growth

It’s no surprise that there is high growth in patents filed for IoT. The fields relating to IoT are quite dense ranging in the tens to hundreds of thousands of publications. Much of this has happened in the IoT “gold rush” over the last 10 years.

Fitness Applications Proliferate

The fitness devices facet of IoT is by far the most crowded in terms of filings for applications (400K publications). This points to fitness devices as an application in which companies see value and market opportunity. For newcomers however, it is an increasingly crowded and competitive market in which it may be difficult to find new areas not already covered by existing filings.

China Leads in Filings

Across the board the trend is for a larger filing rate in China, with some exceptional areas in which the USA demonstrates equal or slightly higher filing rates. Clearly IoT is a global innovation market and heavy competition will come from China in most areas.

Value of New Patents is Tailing Off

Given the fast pace of application filings in the past 10 years, it is not surprising that about one third of the nearly 300K filings analyzed are ranked in lower value categories. This implies that the ROI on R&D may be declining and that the more valuable broad, foundational innovations have already been applied for. Is it also a sign that the competitive dynamic of the industry is now shifting from innovation to commercializing and marketing?

Diverse Players

Not only are large multinationals (like IBM and Citrix) big players in the IoT field, but the patent landscape also includes many Asian companies and universities. Again, competition, and opportunities to partner, may appear from unexpected quarters.

Non-Practicing Entities Lie in Wait

Particularly noteworthy is the strong presence of Non-Practicing Entities (NPEs) in this field, including Intellectual Ventures and Headwater Partners, both with aggressive litigation histories. As the industry grows and becomes increasingly lucrative for some players, the NPEs will undoubtedly strike. Now is the time to ensure rock-solid patent protection and to be aware of the risks presented by NPEs.

Opportunities for Acquiring IP

Interestingly, a large number of publications are not assigned to companies. This may indicate that work is being performed in “stealth mode” or that patents are owned by very small companies or sole inventors. Unassigned patents often present opportunities to acquire IP at reasonable cost.

4 Good Reasons to Care

Why should you care about the IoT intellectual property landscape? Here are just 4 good reasons to pay attention:

  1. Solid IP protection assists in increasing company value and makes your company more attractive to investors. Large companies looking to broaden their offerings often look at patent databases to identify small targets to acquire.
  2. Patents prevent competitors from copying innovative features. They also provide their owners with the right to exclude unauthorized competitors from using the inventions for specific applications and geographic markets. Together, this can slow down the competition’s product development and market expansion plans.
  3. Patents enable a company to differentiate itself from its competitors. By branding innovations and promoting their patent status, marketers highlight that these unique characteristics are not available anywhere else.
  4. The sale and licensing of patents can provide additional revenue streams independent of product sales.

In-Depth Perspective on IoT Intellectual Property

In what directions is the IoT industry evolving? What are your competitors, suppliers or customers really up to? Are non-practicing entities accumulating portfolios in your field and waiting to pounce? An understanding of IoT intellectual property trends yields unique insights and early warning that provide competitive advantage.

If you want to learn more about the state of intellectual property in the IoT market (and you really should), then download our free in-depth report.

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