Why 5G Patent ‘Value’ Is More Important Than The ‘Number’ Of Patents

By Patrick Moorhead - March 14, 2020

Metrics are very important in society and business as they save time for everyone involved to get to certain levels of cognition and determine which widget or company is better at something. Whether it’s “miles per gallon,” automobile “0-60”, appliance energy rating labels, number or quality of patents or performance benchmarks, they all serve to limit the time necessary to understand one variable or sets of variables that impact the performance of the car, appliance, company R&D or smartphone. I will note that metrics or benchmarks are never perfect; in fact, they’re always imperfect.

Falling into the patent counting trap

Patent counting, or the sheer number of patents, has been brought to the surface by some pundits as “the” one and only metric to determine a company’s contribution to technology and society, kind of a metric for innovation. Having a lot of patents is impressive, no doubt, but when you drill into what can constitute a patent, you’ll realize that it could be more about the resources that a company dedicates to the process of filing patents than it does the value and impact of those patents. An earlier report from IPlytics, shows that Huawei has “the most 5G patents”. The issue, I believe, is that readers may leave with the impression that Huawei is leading the 5G race by bringing the most patent value and impact.

The patent process is an interesting one. While I won’t dive into the machinations, it is important that there are distinctions between patents. As an inventor, I can get patented just the same for inventing the rocket as I do for improving on the bolt mechanism for the rocket assembly. The value for these 2 patents is clearly not the same.

Better 5G patent ranking systems exist

You’re probably asking, “Pat, if you don’t think 5G patent counting is the best metric, what is”? For patents, I prefer a more sophisticated measurement, one tries to demonstrate the value of a patent.

For example, the IEEE Spectrum created a “Patent Power Index,” which took into account growth, impact, generality, and originality of communication patents. You can find the IEEE Spectrum methodology here. As you can see, the rankings are quite different from pure number counting methodologies. Qualcomm is #1 by a wide margin and Huawei Technologies plummets to #9.

Patent Power for Communications category 

To rule out any potential cognitive bias, I researched to see if any other rankings reflected this. And there were. According to IPWatchdog, in a recent webcast (slides here), while many companies cluster in their patent portfolio size or number of patents, Qualcomm leads the pack in value and impact. Note how close the number of patents are between Qualcomm, Huawei, Intel (now Apple), and Samsung are, but when it comes to value, Qualcomm is considerably higher than the next competitor.  

Patent Asset Index 

Wrapping up

At a minimum, I hope I have made my case that the number of patents companies claim doesn’t necessarily reflect the value or impact of these patents. This is important for more than intellectual honesty and fact-checking pundits. Some companies, unfortunately, are trying to demonstrate their contribution to the 5G standard based on the number of patents, not the value or impact of those patents, and that’s a mistake. This is especially true when the standards organization ETSI does not have a review process to control patents declared as standard-essential, making it easy for some companies to game the system with over declaration. 

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.