EDITORIAL NOTE: On December 7, 2015, Julia Elvidge will moderate a panel at the 2015 IP Dealmakers Forum titled “How IP Drives Corporate Reinvention, M&A and Investments.” This is the first of two articles she has written for us on the Internet of Things.
Technology is in a constant state of evolution, and the Internet of Things (IoT) is no exception. The top five emerging markets for the IoT – medical, fitness wearables, industrial, automotive, and smart homes – are driven by patented IP, much of which is being applied in IoT inventions. It is vital for both IoT developers and companies that hold extensive patent portfolios to have a clearer understanding of the patent landscape as the IoT becomes pervasive in our lives on a global scale.
The patents for the five technology areas of the IoT – Things, networking, computing and storage, services and analytics – differ in content and maturity. The bottom line is that the technologies at the beginning of this system, Things, and at the end of this system, analytics, are the newest. The technologies in between, networking, computing and storage, and services, are established, but will evolve and scale for IoT. It is in these “in between” areas that we see the most dominance of mature companies.
At Chipworks, we focused on the Fitness and Wearables market segment to gain a more detailed analysis of the patents and the players working on IoT Things. Gartner lists six companies that share the majority of the revenue in this market: Samsung, Nike, Garmin, FitBit, Sony, and Google. To create patent analysis models, the technologies of the products made by these companies were considered, characterized, and refined by applying a set of about 100 keyword phrases to the patent portfolios.
Next, these refined keywords were applied to all U.S. patents, to determine what other companies may have applicable patents.
Wearables Company Patent Portfolios
The companies examined in the initial patent study fall into a several groups regarding their position in the market and licensing positions. There are new companies that are just starting to build their portfolios, some of which are successful in the wearables market like FitBit and Garmin. Some companies, like Nike, are successful in other markets as well and have diversified into the wearables market. Established companies in the medical, gaming and other markets, have been creating products similar to wearables for some time.
Using Chipworks Patent Analytics solution powered by KMX, we visualized the patent diversity for groups of patents. In resulting plots, each dot represented a patent. A group of patents sharing similar keywords created a peak in the landscape. Each peak indicated the top three keywords found in patent cluster. Patent clusters that are significantly different were further apart, and separated by white space.
Chipworks has developed models that separated patents into four areas based on the type of analysis required to prove the claim, either process (yellow), package (green), circuit (blue), or system (red). Process refers to structure and materials, physical properties of the materials, and mechanical aspects. Package includes mechanical assemblies interfacing the physical and electrical domain. Circuit refers to electronic schematics of PCB, packages, or semiconductor die, and range from transistors to common circuits like amplifiers, PLLs, converters, and digital logic. Systems includes the operation of products, where several separated blocks are combined to deliver a feature or function, either at the electrical, data, or software levels.
Further analysis was used to identify which patents were useful towards a goal, such as licensing technology applicable to the wearables market.
We looked first at FitBit, a new wearables company with a modest portfolio applicable mostly to the wearables market. Their portfolio includes 81 U.S. applications, 69 recent granted patents, and 8 design patents. The structure of the portfolio appears to be centered on notifications, with four branches related to the monitoring fitness and activity, geo-location, heart rate, and biometrics in a portable fashion.
About 58% of the portfolio was found to be similar to our six models for wearables. This is a high percentage, suggesting that this is the primary market for FitBit. Most FitBit patents are systems related; perhaps only few are strongly circuit in nature. This implies that FitBit is an integrator, combining its own building blocks or those from other companies to create a higher value end product. FitBit may be in a good position for licensing negotiations, as their portfolio of recent systems patents may patent high-level value features of the recent innovations marketed in this wave of wearable products.
Medtronic, a successful medical company that has been making human body monitors for some time, also may be responsible for inventing many of the features in consumer wearables. Its portfolio contains 4,870 U.S. applications, 12,827 patents, and 281 design patents. It appears to have three main areas in the patent landscape: surgery and body, chemical, and electrical/data.
About 655 of Medtronic patents, some early patents as well as recent innovations, were similar to one or more of the six wearables models. This suggests focused solutions have been developed and patented by Medtronic that are similar to wearable products. Considering the volume of patents and Medtronic’s product history, it appears they have a strong position to leverage their portfolio regarding the revenue of wearables, and that their patents may be more fundamental patents than those of companies now selling products in the wearables market.
Finally, Microsoft’s portfolio consists of 8,696 applications, 25,677 patents, and 3,692 design patents, most of which are software patents. About 300 patents are circuit related, most likely related to their Xbox gaming system, which includes Kinect and handheld peripherals that comparable to the IoT’s Things.
About 962 Microsoft patents were similar to the six wearables models in the initial study. These patents are widely distributed meaning they may cover a broad range of technologies in wearables products. A patent landscape found that of only the 962 patents found to be potentially applicable to wearables Microsoft has patents for sensors and sensor systems, sensor systems and processing, communication, wireless, and power. Considering that Microsoft has a very wide range of other technologies innovations patented, they would have the best position leveraging the wearables market among all companies considered in this study.
IoT will continue to evolve and as a result, the IoT patent landscape will evolve as well. In addition to driving revenues – the health and fitness wearables market alone is projected to reach $25B US in 2015 – the patent licensing landscape for these markets is on the verge of explosive growth, especially since many of the patents used in IoT technology and Things are nearly 20 years old. Many companies new to the IoT market may have strong and expansive portfolio positions for assertion. Even so, understanding the market players, their experience, and their patents in similar products, is vital in creating a product and IP strategy that can deliver a high return in the IoT market.
has been a vital part of building Chipworks into a globally recognized leader in patent and competitive technical intelligence for the world’s largest semiconductor and electronics companies. Her extensive knowledge of technology products and strategic issues involving intellectual property has enabled her to provide invaluable insight and guidance to Chipworks’ customers. A widely respected expert she has been recognized as one of the world’s most foremost IP strategists by Intellectual Property Magazine (IAM).
Julia brings to her role as President a highly regarded participative management style – and a focus on understanding customers and their needs. She has been instrumental in creating an environment that encourages employee input and open communication in any business climate. This open culture is a defining characteristic of Chipworks and one that has fueled continuous innovation while enabling the company to consistently attract the smartest engineering talent in the world.
Julia joined Chipworks when it was still in its infancy in 1994 and held increasingly senior management positions before being named President in 2003. Her extensive industry experience and business leadership have helped Chipworks earn the respect and trust of IP groups and their legal counsel around the globe. Her strategic insights and recommendations have been instrumental in Chipworks’ ability to help clients earn hundreds of millions of dollars in patent licenses – often saving as much in royalty payments.