Perpetual Innovation

Category: innovation

  • The Patent KING: IBM for 28 years

    The Patent KING: IBM for 28 years

    IBM is again the leader in patents issued. That’s 28 years and running.  IBM had 9,130 patents issued in 2020, compared to the next highest, Samsung with 6,416.  There’s about 15 electronic and manufacturing companies with 2,000 to 3,000 patents issued. Note that all the top 10 are electronics and/or chip makers.  Forbes has a nice article by Roberts about the top 20 patent recipients of 2020. 

    Apple, the largest company by market cap ($2.1T), is 8th with 2,792 patents. Apple is starting to get serious about batteries and autos.

    Amazon and Google are the only two in the top 20 that are not electronics and/or manufacturing. Amazon (2,244 patents) comes up at 11th. Google at 17th had 1,817 patents issued. The automakers of Toyota and Ford are 14th and 15th.

    A couple years ago, Samsung kinda dethroned the King as discussed in our 2017 blog post: The End of a Patent Dynasty, IBM has Been Dethroned. Samsung, including all of its related companies, with lots and lots of design patents, outpaced IBM in 2016. For 2020, Samsung Display company had 1,902 patents, so Samsung, as a consortium of companies, again rivals IBM in total patents.

    GE, even though it is a shell of it’s former mega company, is still in the top 18, with 1,760 patents.  GE continues to divest of various business unites including financials to focus on a few core business like turbines, renewables, transportation and healthcare. 

    A Bloomberg article by Brody Ford on March 12 2021 discusses IBM as more of a Godfather of Patents than a King. With more that 38,000 active patents and a spectacular war chest of patent licenses, or cross licenses, IBM is a force to be reckoned with. Ford discussed Chewy fighting back, kind of the dog nipping at the heels of the King (or the Godfather). IBM is way down from the times when it was customary to produce $1B a year from licensing royalties. Patent revenues peaked at $1.7B in 2000 and then again in 2016 at $1.6B. The patent landscape has changed. One thing that Ford alluded to, but didn’t fully address, is that IBM has significantly changed the way they approach patent commercialization. If they can’t directly use patents, they seem to be doing a much better job of figuring out ways to commercialize. If they sell the patent, that, I believe, would not show up in their patent revenues which reflects royalty streams. 

    In the meanwhile, IBM is on a multi-decade move to upgrade the company to more relevant businesses and business models. Mainframes are only needed for businesses in “as a service” models (SaaS). 

    IBM is a leader in Quantum computing and in blockchain. IBM is actually my way to play the blockchain mega trend and avoid the mania associated with various bits and bytes of cyber coins. 

  • Cool Motor that Runs on Air

    A lot like a perpetual motor: no fool’n.
    As a kid, college really, I was intrigued about the idea of a “perpetual” motor. A motor that ran forever. My idea seemed like it should work, but I had a hard time getting someone to explain why it wouldn’t. My idea was based on the flywheel of the single engine Briggs & Stratton where a magnet on the flywheel creates the spark for the ignition on each rotation. My idea was to have magnets that attract the flywheel and a reverse magnet to repel the flywheel once it got past. But I had the problem that the flywheel would get attracted and stuck. So I found something called paramegnetic materials, materials that repel both positive and negative magnetic forces. All I needed, then is to have a thin sheet of paramagnetic material pass between the attracting magnets to let the flywheel move on to the repelling magnet. Perfect, a perpetual motor.
    I finally got to talk with a Physics professor at USF who explained my small, but subtle issue with the perpetuity of my motor. When you use a magnet, you loose a magnet. It took energy to magnetize a magnet, so the process of using it will deplete it!
    For decades, there have been articles about perpetual motors… But generally they have gone the way of “cold fusion”.
    Here is a very cool article/technology on a motor that runs on air. Liquefied Nitrogen, actually. Very cool. Literally, about -210 C (or -340 F). So, if the internal combustion motor works on the temperature differential before the ignition of fuel and after ignition, the liquid nitrogen concept works in the same way: from really really cold, to cold. Not nearly the same as the 1,000 times differential from gasoline, but still an effective motor. Effective only once you overcome the problem of things freezing up in the process.
    So here’s the great Wired article by Nicola Twilley about the inventor Peter Dearman: A One-Time Poultry Farmer Invents the Future of
    Refrigeration: Mechanical cooling revolutionized the global food supply—and
    accelerated global warming. Peter Dearman’s liquid air engine could change all
    that.
    The thing that Dearman had to overcome is to bring the temp of the super cold nitrogen up enough that it didn’t freeze up the works. (Kind of a reverse of the radiator idea to cool the motor down.)
    So the motor works, not especially efficient, but it works.
    However, your favorite internal combustion engine is very inefficient. Your car is only about 15% efficient. Diesel turbine motors for electricity are generally about 40% efficient, at best… Unless… Unless you need the excess heat. So if you can use the heat, like hot water on a campus environment, then the combined heat and power (CHP) can be very efficient, maybe up to about 70%.
    Imagine if you could use the cool from a liquid nitrogen engine? Say, hypothetically, for refrigerated storage or reefer. (No, not a Jimmy Buffet kind of Reefer!:-) A refrigerated reefer truck.
    And, wa la. You have a really great method of efficiently transporting and simultaneously cooling perishable products.
    The cryogenic reefer truck seems to be really gaining traction (sorry about the pun) within several food chains.
    Very cool!
    Dearman says the nitrogen solution will result in a 40% improvement over diesel in terms of greenhouse gases. If is the nitrogen is liquefied (chilled) by renewable energy the improvement compared to diesel moves up to 95%.
    Even Cooler!
    It also helps to overcome the need for Freon or the replacements for Freon. (Fluorocarbons are a wicked greenhouse gas that blow holes in the ozone layer.)
    With 78% of the Earth’s atmosphere, nitrogen (N) is readily abundant.
    Dearman has several patents related to cryogenics and cryogenic motors.
    Interestingly, it would appear that the same Peter (T?) Dearman is also the inventor of respirators and ventilators back in 1990!

  • Inequality in Efficient Infringement

    Inequality Finds a Place in Intellectual Property (IP) where Efficient Infringement Runs Wild
    Well established. Well understood. Great wealth creates great inequality. Wealth creates its own space, and maintains exclusivity by keeping others out.
    Here, a different view is taken of the inequality condition.  It is a perspective based on corporate wealth – aka corporate greed – masquerading as producing shareowner value.  It is almost axiomatic that when a company scores a major – no, “outstanding” – market success it is compelled to keep the great successes going.  A few outstanding successes include:  Apple’s iPhone, Google’s search engine and ad, Microsoft’s Windows, Ford’s F150, IBM’s Watson, and Coke Cola Company’s Coke.  Companies with successes like these are faced with a profound dilemma: what is the follow-on major winner that produces profits and increased shareowner value?
    CEOs of high tech companies, of consumer product companies, of logistics companies, of pharmaceutical companies, of medical device and drug companies have for the last several decades looked to their Intellectual Property assets as a source of answers to the follow-on question.  Research and Development (R&D) leading to new inventions and products is frequently the best source of value-added enhancement to an established offering, and consequently, to the opportunity to create a new market.  This is, however, the cost causing method as R&D is a heavy burden in most companies and while success can be magnificent, failure is also a possibility.
    A patent system can be strong or it can be weak.  Unfortunately, the US has gone from strong to weak over the past fifteen years.  In a strong system, there is a “presumption of validity” wherein the patent holder’s rights are protected against infringement: infringers are punished and patents are not subject to constant attack in the courts or the Patent Office (USPTO).  In a strong system, investors are far more likely to invest in a product when it has patent protection.  Most new jobs are created by young companies and the majority need funding – especially if they are disruptive and fast-growing.
    A strong patent system is what you should think of as the “play by the rules” method or process of gaining new corporate revenues and market success.  It is conducted on a level playing field.
    In contrast, a weak system is basically the opposite.  The courts tend to rule against the patent holder, established competitors ignore the innovator’s patent and engage in what is termed “efficient infringement” utilizing long, drawn out court processes the innovator cannot afford.  Large and well-established high-tech companies have led the strong-to-weak downward slide by lobbying congress and funding campaigns which resulted in the American Invents Act (AIA) of 2011.  “Google spent $18M on lobbyists the year the AIA was passed…Google wanted a weak patent system because it already dominated the search and internet advertising in 2012…with a 67% market share.  Today, (2018), with a weaker patent system firmly in place and no fear of any innovating competition protected by patents, Google’s market share has increased to almost 80%.”  (Shore, M., 2018, Mar 21, How Google and Big Tech Killed the U.S. Patent System, IPwatchdog.com)
    “Efficient infringement occurs when a company deliberately chooses to infringe a patent because it is cheaper to fight off a legal challenge from an inventor than it is to license the patent.  This practice is especially harmful to small inventors and innovators and it undermines our broader innovation economy.”  (Save the American Inventor, 2019, May 21, www.SaveTheInventor.com)
    In selected circles, this is stated as “efficient infringement is a ‘fiduciary responsibility’ when the costs are less than those in R&D plus product development.”  Huh!  What? Really? Is this saying that Effective Infringement is legal?  It is Stealing!  It is the startup in a garage inventor versus a mega high-tech corporation with very deep pockets taking and using the invention.  The term “infringing” originally applied to a situation where a company accidentally or inadvertently used the same technology (techniques, methods, algorithm, signaling, coding) as the patent what the patent owner claimed (and may have been granted rights to in an issued patent).  In such cases, when the patent owner discovered the infringement, he went to court and got an injunction against the infringer – as cease and desist order.  In most instances, the outcome of follow-on negotiations was that the infringer paid some settlement for past infringement, took a license to the patent, and paid royalties for future sales (usually until the patent expired).
    A strong patent system sounds rather quaint in view of today’s infringement-as-a-corporate-strategy where the infringer drags the patent owner through the courts for years until the inventor and his funding are exhausted.  Here is yet another example of wealth inequality where those with money disadvantage those without.  “Try to assert a patent covering the technology being copied and the Gang of Five will simply petition the Patent Trial and Appeal Board (PTAB) dragging the patent through inter partes and deveining it of any useful subject matter if the proceedings are instituted.”  (Brachmann, S., 2017, March 17, How tech’s ruling class stifles innovation with efficient infringement, IPWatchdog.com). Gang of Five refers to Google (Alphabet), Apple, Facebook, Microsoft and Amazon.
    Meanwhile, back in Washington, DC, Senator Thom Tillis (R-NC), Chair of the Senate’s Subcommittee on IP, said the Committee would not be able to complete its work on legislation addressing patent eligibility.  “[A]bsent stakeholder consensus, I don’t see a path forward for producing a bill – much less steering it to passage – in this Congress.”  There is no mention of considering strengthening injunctions or treating efficient infringement as the crime it is.  (Borella, M., Feb. 4, 2020, The Zombie Apocalypse of Patent Eligibility Reform and a Possible Escape Route, www.patentdocs.org)
    High tech gets to run free without restraint for at least another year.  Hey look, it’s a fiduciary responsibility.

  • FinTech unicorns are taking out some BIG bank Donkeys

    Here’s a great InfoGraphic about the FinTech market and the unicorns ($2B startups) that are hanging out, and disrupting, in the Financial space.
    Natania K brought it up on LinkedIn:

    Our Global Startup Heat Map showcases 4 top asset management solutions, ready to impact the energy industry: http://bit.ly/2L2FlfE

    I love this “Innovation Map” and the unicorns are proof positive that the addressable market of some of the slices of new Fin Services are addressable and viable (now or soon). So the trillion dollar question is: what does the brick and mortar (BnM) have in store. BnM are looking in the rear-view mirror, and they have low visibility of the future. The reason that they have low visibility, is because — after a couple hundred years of doing business in the office — it is hard to change the stripes on a donkey.

    But the changes they are a come’n, and the storefronts will be a closing.
    FinTech unicorns are going to be taking out some BIG bank Donkeys that are hanging out on every major business corner.
    What do you think, what FinTech services are most disruptive?

  • Unexpected Consequence of US Tax Reform: International Patent Pinball

    IP intensive US corporations have gained a tangible, potentially very profitable benefit from the tax reform signed into law in December 2017.  A new provision reduces taxes on “foreign derived intangible income,” i.e., Intellectual Property (IP) — primarily patents.  However, in yet another “all that glitters…,” this new benefit doesn’t arrive without its requirements for a
    new level of analysis and decision-making.

    In  a comprehensive January 24, 2018 Wall Street Journal article by Sam Scheckner, Tax Change Aims to Lure Intellectual Property Back to the U.S. – WSJ, the tax rates was dropped to 13.125% until 2025 which corporations view as a major improvement over the prior rate of up to 35%. As the author states, this is a serious attempt to bring back assets from countries such as Ireland that had a much lower tax than the US for years.  Corporations, such as Google and Facebook, while not commenting for the article, have in place elaborate asset transfer schemes- see “Double Irish” across multiple countries to gain the optimum tax rate.  

    The US action to reduce the asset rate has not gone unnoticed by these other countries.  Several are revising their tax rate in response to and to outflank the US change.  This has driven US corporations with overseas operations to reengage in asset number crunching — aka patent pinball — to

    land on the country with the optimum package. The patent number crunching could involve licensing versus barrier patent protected product revenues versus sales versus tech transfer partnerships depending on the terms and conditions in a given country.  And as countries change their tax laws in
    what amounts to revenue one-up-manship, patent pinball is certain to become an ongoing game.

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