Doubling portfolio size while maintaining quality
Alphabet Inc, headquartered in Mountain View, California, was created through a corporate restructuring of Google in 2015, when it became the parent company of Google and several of its former subsidiaries. With sales of $117.9 billion and a profit of more than $16 billion, the tech giant currently ranks 17th among the world’s largest companies according to Forbes Global 2000. We investigate the status quo of Alphabet’s patent landscape using our industry proven patent evaluation metric, the Patent Asset Index and the LexisNexis® PatentSight® business intelligence platform.
Alphabet’s portfolio has grown significantly since 2000, however, is this shadowed by a corresponding fall in Competitive Impact. This is not uncommon for growing portfolios, as companies initially start by filing patents for only their most significant innovations. Then to maintain this level of quality each subsequent patent would need to be of an equal of higher quality than previous, which is less likely. Our Competitive Impact metric considers both the technology relevance and market coverage of a portfolio, capturing both the strength of the technology and the scope of protection. Competitive Impact is stated relative to other patents in the field, where a value of 1 represents the global average. The Patent Asset Index, on the other hand, is a measure of the strength of a portfolio and is the sum of the Competitive Impact of all the patent families held within a portfolio. For Alphabet we found that whilst there is an overall drop in Competitive Impact, between 2007 and 2017, the company managed to double its portfolio size whilst maintaining quality – a difficult thing to do.
The time evolution of the Alphabet Patent Portfolio with respect to Quality and Size
Alphabet has made a number of acquisitions that have bolstered its patent holdings. Nevertheless, the company’s portfolio is still primarily composed of organic patents. Motorola is one most of the most significant purchases the tech giant has made. Although the operating business was later sold to Lenovo, Alphabet interestingly chose to remain in possession of many of the IP rights it received as a result of the original transaction. Alphabet originally paid around $12.5B for Motorola, and then sold the operating business for around $3B to Lenovo. After taking into account cash held by Motorola and other sales Alphabet is reported to have effectively paid around $4B for the intangible assets it retained. Not a small price to pay, but given the support this gave to the suits with Oracle and Samsung, it is likely seen as a big win within the company.
The Quality vs. Quantity representation of the individual Patent Portfolios of Alphabet and its past acquisitions
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About the author: William Mansfield
William is the Head of Consulting and Customer Success for LexisNexis PatentSight. Responsible for overseeing the negotiation, creation, and delivery of PatentSight’s global consulting work along with managing the Customer Success team.