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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Patent Transaction Trends in Cloud Computing

Cloud Computing describes a type of Internet-based computing that provides access to shared computer processing resources. Cloud users store and process data to run diverse sets of software applications on shared computing systems. Cloud computing allows to run performance intensive processes on demand. This avoids up-front infrastructure costs and possibilities to scale up or scale down systems as to user traffic. Pay as you go models enable users to quickly get applications up and running.

The number of applications that run on cloud infrastructures is constantly growing. Market research reports predict worldwide cloud computing spending to drastically scale in the upcoming years.[1] In this regard the number of solution providers has been constantly increasing and the market develops to be more and more competitive.

Companies increasingly compete on innovative technologies that e.g. enable the efficient scaling up of a virtual machine, the quick deployment of data or the rapid recovery of applications. Such innovative technologies are exceedingly patented to allow patent owners to secure future technological areas, to demand royalty payments from other service providers or, equally likely, to ward off claims made against cloud providers by aggressive patent-holders.

We have used IPlytics Platform to perform an extensive keyword[2] search in worldwide filed patents’ titles, abstracts and claims to identify the strongest patent holders in the cloud computing space. In total our search identifies over 26,000 granted cloud computing patent families. 95% of these patent families have been filed in the past four years (2013-2017). Results show that the landscape of cloud computing patent owners is very diverse. Figure 1 illustrates that the three strongest patent holders IBM, Microsoft and Google altogether filed more than 5,000 patent families that have been granted in the past years. Sony, SAP, Samsung and Cannon are the only non-US companies among the top patent owners.


Figure 1: Number of granted cloud computing patent families up until January 2017

Figure 1: Number of granted cloud computing patent families up until January 2017

Not only the filing of new patent families has been increasing, but also the trade of patents has been growing in the recent years. Figure 2 illustrates the number of patent family transfers between 2011 and 2016. Numbers of yearly patent transfers peaked in 2015 with about 790 transferred unique patent families.

Figure 2: Number of reassigned cloud computing patent families as to main industry of the buying entity and as to year of reassignment

Figure 2: Number of reassigned cloud computing patent families as to main industry of the buying entity and as to year of reassignment

To ensure “bare” patent transfers among independent companies we differentiate the applicant and new owner company with regard to the highest parent company. We cleaned out cases, where the former and new owners were subsidiaries of the same parent corporation. Such reassignments are likely to result from fiscal optimization and strategic motives at the corporation group level. We label them as “internal” transfers if they take place between established entities of the same group, and as “acquisition” if they immediately follow the acquisition of the initial patent owning entity by the group.

Figure 2 only takes into account “bare” patent transactions and differentiates the patent transfer deals as to the buyer’s main industry of operation. The main industry refers to the main business service or product marketed by the applicant. The largest buyers in the software industry are SAP, Microsoft, McAfee and Adobe, the largest buyers in the Hardware industry are Intel, HP, Ricoh Company and Lenovo. The largest buyers in the Internet industry are Google, Amazon and Facebook, the largest buyers that are in the licensing and assertion business PAEs (Patent Assertion Entities) are Intellectual Ventures, Rovi Corporation and Dynamic Invention.

While the upsurge of patent acquisitions has consistently been increasing among the Hardware, Software and Internet industries, the share of patent family acquisitions by PAEs especially increased in 2015 and 2016. Figure 3 illustrates monthly patent transfers to PAEs. On average these transfers have been increasing since 2011 by 130%.

Figure 3: Linear trend average of monthly reassigned patents transferred to PAEs

Figure 3: Linear trend average of monthly reassigned patents transferred to PAEs

PAEs often acquire patents in technological areas that will likely become strategically important for future markets. The increasing number of patent acquisitions in general and the acquisitions by PAEs in particular, hint to an increasing strategic use of cloud patents.

The results of the cloud patent analysis show that even cloud technologies, which are rather considered to fundamentally rely on shared environments following public standards are subject to increasing patent filings and patent acquisition activities.

About IPlytics

IPlytics Platform is an IP intelligence tool that augments the analysis of technology landscapes and a company’s competitive position. IPlytics Platform goes beyond patent data by linking and processing over 80 million patents to 60 million scientific articles, 2 million standards/SEPs and 3 million company information on one single platform. The tool helps users to perform analyses in the fields of patent valuation, landscaping, licensing, transfer or litigation. The intuitive graphical user interface allows to easily navigate, analyze and drill down into information, enabling in-depth technology analyses or a long-term monitoring of market segments.

IPlytics GmbH  Zossener Str. 55-58, Staircase D  10961 Berlin, Germany  +49 (0)30 5557 4282  Contact: Dr. Tim Pohlmann

[1] Forbes 2016, “Roundup Of Cloud Computing Forecasts And Market Estimates, 2016”; Gartner 2016, “Gartner Says by 2020 “Cloud Shift” Will Affect More Than $1 Trillion in IT Spending”.

[2] Title_abstract_claims:((“cloud computing”~2) OR (“cloud computer”~2 ) OR (“cloud computers”~2) OR (“cloud server”~2) OR (“cloud servers”~2) AND (granted:(true))

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Professor Blind and IPlytics CEO Tim Pohlmann discuss at the Standards Your Innovation Bridge Conference in Brussels

Professor Blind and IPlytics CEO Tim Pohlmann were invited speakers at the first EU Conference On Standards: Your Innovation Bridge hosted and organized by CEN/CENELEC in Brussels. The goal of the conference was bringing together experts from industry, research and policy organizations to explore and discuss the role of standards and patents in research and innovation. Several speakers presented their experiences in linking the patent and standard world to show how each one is benefiting from the other. Professor Blind Chairman of CEN-CENELEC STAIR, moderated Breakout Session 4 Horizon2020 and discussed how standards and innovation relate in the closing expert panel. The discussions revealed that standards and patents are two different tools with different goals and strengths. Knowing when to use which is key in understanding how to monetise research and development expenditures. In this regard IPlytics CEO Tim Pohlmann held a presentation on the topic: “Understanding the Interplay of Patents & Standards to Leverage Market Potential”.

Standards Your Innovation Bridge Conference Tim Pohlmann, Ged Owens and Laurent Tonnelier

Standards Your Innovation Bridge Conference (l. to r. Tim Pohlmann IPlytics GmbH, Ged Owens EPO and Laurent Tonnelier mobilead)

In the follow-up panel discussion Ged Owens from the European Patent Office and Laurent Tonnelier from mobilead discussed with Tim Pohlmann the future perspectives on the interplay of IPR and standards. Pohlmann’s presentation revealed that patents and standards more and more overlap. In this regard the number of standard essential patents has not only been increasing, but develops to be relevant for sectors beyond information and communication technologies (ICT). In view of the industry 4.0 (Internet of Things), companies are more and more challenged by critical technology investment decisions that concern standards and patents at the same time. In order to make the right technology investment decisions, an innovative company needs to identify which technologies will be relevant in the future, which technologies are protected by intellectual property rights and which standards or specifications are to be adopted. In this regard Laurent Tonnelier stated that “standard setting initiatives are mirrors of how technology will look like in the future. Very often companies participate in standard setting projects that are unrelated from their todays core businesses. This interest in developing a standard reflects a company’s interest in future technologies and related product markets.” Ged Owens further noted that “patenting and standardization are both tools to foster innovation”.

See the video stream of the presentation



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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 members Lutz Welpelo and Heinrich Engelmeyer, 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).

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China’s Farm to the World’s Fork: Why Standards Matter

My latest research paper was cited in a blog post of the World Bank. I repost the text of my co-author John Wilson here:

“Mention China at your next dinner party, and chances are you will be met with references about future superpowers, exchange rates, and the joys of traveling through gleaming new airports. And while the conversation may touch on the dining scene along the Bund or outstanding new restaurants in Shanghai and Beijing, the impact of food standards on global consumers will almost certainly not be the center of discussion.

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8th IEEE Conference on Standardisation and Innovation in Information Technology

Standardisation research is a multi-disciplinary field. Contributing disciplines include, but are by no means limited to, Business Studies, Computer Science, Economics, Information Systems, Management Studies, History, and Social Sciences. While standards and standardisation research is an emerging research area it is of considerable interest and relevance to a large non-academic constituency that includes practitioners from industry, policy makers, users and consumer communities and, last but not least, to those active in or working for, standards setting organisations.

Accordingly, the SIIT conferences aim at bringing together representatives of these communities to foster the exchange of insights and views on all issues surrounding ICT standards and standardisation.

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Quality Infrastructure in a Least Developed Country – The Case of Malawi

Our Post-Doctoral researcher Axel Mangelsdorf from the Chair of Innovation Economics and Federal Institute of Materials Research and Testing spent the last three weeks in Sub-Sahara Africa to analyze the National Quality Infrastructure of Malawi. Here is his report.

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