The Internet of Things (IoT) is the next logical step towards a connected world. As it becomes more pervasive on a global scale, it is beginning to find applications across all industries – from healthcare to retail, smart homes, automobiles and industrial automation.

Companies operating in the telecommunications and other technology domains are frontrunners in bringing new opportunities in IoT. While IoT can be considered as the next stage of evolution of the telecoms industry, it is still too early to predict the onset of a fight for market share and associated patent wars. However, initial trends suggest that traditional companies entering the IoT environment are taking IP protection seriously from the start. In our chapter in the IAM Yearbook 2017 (“Innovation and survival: lessons from the smartphone wars”), we discussed traditional companies that had large market shares but weak IP holdings, which made them vulnerable to patent litigation. However, the IoT landscape finds traditional players building on their IP assets and developing products in tandem. This cautious yet prudent approach has triggered rapid innovation in IoT, with patents driving much of the investments.

US patent landscape

The IoT landscape can broadly be classified under three categories:

  • hardware and infrastructure;
  • devices; and
  • markets.

A detailed classification is presented in Figure 1. The patent landscape corresponding to this classification revealed almost 48,000 assets (issued and pending).

Figure 1. IoT technology taxonomy and leading IP asset owners across Level 1 categories

Samsung, Intel and Qualcomm have taken an early lead to build a strong patent portfolio across the landscape. Apple is nowhere close to these entities; it has always been a pioneer in usability and building products that are consumer friendly, rather than a true innovator of fundamental technology. Trends similar to those in the smartphone era are now emerging. While Ericsson, Nokia and Blackberry built fundamental technology that enabled a smartphone, Apple (and Google) figured out ways to please the consumer. This subsequently led to each of these pioneer companies engaging in a patent war with Apple and Google. Figure 1 indicates a similar trend in IoT. However, it will be interesting to see how pioneer companies focus on building products that consumers love. Or will Apple repeat what happened in the smartphone industry in the IoT space?

The winners in this space will ultimately be decided by those that own innovation that matters, and IoT standards. In particular, owners of fundamental intellectual property are focusing on four key areas:

• hardware and infrastructure;

• network and data security;

• predictive analytics; and

• IoT standards.

Hardware and infrastructure

Hardware and infrastructure components for IoT comprise data centre and network technologies. However, developers of connected hardware often face a roadblock at the conceptual phase, owing to the daunting task of scaling up all IoT components. Service providers in the IoT ecosystem depend heavily on wireless technologies for core networking needs. Connectivity management and application-enabled platforms will bolster significant infrastructure development.

For now, network protocols are driving innovation in hardware and infrastructure. Most existing protocols were designed for the Internet where large machines interacted with each other via large bandwidths, consuming high power. On the contrary, the IoT environment comprises multiple small devices (eg, mobile phones) that can interact with large machines such as home appliances via lower bandwidths – some even via unlicensed wide area networks – and on extremely low power. LG Electronics (1,515 IP assets), Qualcomm (1,505), Ericsson (1,327), Samsung (1,029) and Intel (897) have taken the lead to develop technologies for network protocols. With increasing focus on developing hardware and infrastructure, the top 10 IoT patents involved in litigation notably belong to this category and primarily relate to network protocols.

Microsoft, Intel, Qualcomm and Samsung are leading the patent race in hardware and infrastructure. About 94% of Apple’s IoT portfolio comprises IP assets in this technology. Ericsson has a strong focus on developing cloud infrastructure, filing a significant number of IP assets in infrastructure protocol technologies.

Microsoft

Microsoft has devised solutions in the form of its IoT and Artificial Intelligence (IoT/AI) Insider Labs. This provides IoT device manufacturers with established hardware designs and machinery to create a comprehensive IoT product package. Microsoft also integrates hardware components with its cloud services, thus establishing a platform for possible IoT standardisation. Interestingly, a large share of its IoT portfolio focuses on hardware and infrastructure.

Intel

With 1,282 IP assets, Intel is poised to lead chip manufacturing for IoT. Its wide range of processors already support a multitude of performance aspects, paving the way for its leadership.

Intel has also been active in vehicle telematics – specifically self-driving cars – filing over 500 related IP assets. Its recent acquisition of IoT automobile companies Arynga and Yogitech supports its claim to spend over $250 million in R&D for autonomous vehicles.

Qualcomm

Qualcomm’s early entry into IoT application processors has garnered it a significant market presence. It owns 2,016 hardware IP assets and is emerging as a strong player in embedded technologies essential for IoT connectivity. Qualcomm has already developed a range of system on modules and single-board computers, with a comprehensive software ecosystem. The Snapdragon processor versions of 820, 600, 410 and Krait are combined with connectivity modules to support a multitude of applications, including medical imaging, robotics, computers, 360-degree cameras and digital TVs. This is enhanced by Qualcomm’s DragonBoard 410c, which provides an evaluation platform for embedded customers.

This trend is likely to amplify the demand for a refined set of IoT protocols for network technologies to cover a range of applications. Such an evolution will transform business methods for the digital amalgamation of technology and traditional companies.

Table 1. Top 10 IoT patents involved in litigation in the United States

Patent number

Original assignee

Number of cases

Technology

US 7822816

MacroSolve Inc

67

Hardware and infrastructure data centre

US 5999927

Xerox Corporation

50

Hardware and infrastructure data centre

US 6714559

Broadcom Corporation

39

Hardware and infrastructure data switching networks

US 7916747

Broadcom Corporation

38

Hardware and infrastructure data switching networks

US 5940771

Norand Corporation

36

Hardware and infrastructure transceivers

US 7386002

Broadcom Corporation

34

Hardware and infrastructure protocols

US 7535921

Broadcom Corporation

34

Hardware and infrastructure protocols

US 7536167

Broadcom Corporation

34

Hardware and infrastructure transceivers

US 7548553

Broadcom Corporation

34

Hardware and infrastructure protocols

US 7873343

Broadcom Corporation

34

Hardware and infrastructure data switching networks

Apple

IoT toes the line of smartphones with dependence on devices and applications to manage all connected things. Every other thing that is processed behind the scenes ultimately powers the user to manage products and services remotely. Apple proves this best. The iPhone was the first IoT device that could gather large-scale data on user interests, aiding companies such as Uber and Foursquare to assess user patterns to customise services. The Apple Watch, with its plethora of biomedical sensors, is providing healthcare companies such as Airstrip a fillip to enhance telemedicine.

Unlike Microsoft’s more open IoT development platform, Apple continues to maintain firm ownership of the hardware and software of its products. It is reported to have expressed its intention to sever ties with graphics provider Imagination Technologies. The company might leverage its in-house teams for this and power management chip making, projecting a possibility of increased patenting focusing on hardware and infrastructure for its IoT environment.

Apple has been quietly building a patent portfolio, but it pales in comparison to those of Microsoft, Intel and Qualcomm.

Ericsson

Ericsson has joined the league of Amazon, Google, Microsoft and Adobe to enhance software as a service. About 38% (1,554 IP assets) of its hardware and infrastructure portfolio focuses on network infrastructure technologies. These IP assets emphasise developing fully automated data centres, moving away from traditional siloed architectures. Its product line of Hyperscale Datacenter System 8000, BSP 8000 and Datacenter Automation Platform mark the beginning of Ericsson’s innovation interests in cloud infrastructure for IoT.

Samsung and LG Electronics are pioneering the smart home segment. However, their initial approach to the consumer market shows signs of another Microsoft-Apple scenario. Samsung is leaning towards developing feature-rich products (similar to Microsoft) on its proprietary hub of SmartThings that can be controlled from a television. On the contrary, LG Electronics is toeing Apple’s style of developing its SmartThinQ one level at a time over the open source AllJoyn platform for greater interoperability of devices. It is too early to comment on who will emerge as a leader; yet LG Electronics’ smart home interface that can be managed from a smartphone makes it consumer friendly.

Over the past two years, Samsung has increased its focus on developing a comprehensive IoT ecosystem. It is replicating its smartphone business strategy and investing significantly to develop data centre technologies under the banner of Samsung SSDs, with capacities starting at 1.9 terabytes and high energy efficiency. Samsung has a significant portfolio of 1,035 IP assets relating to data centres. It also owns the largest portfolio in device security, with 71 IP assets, and a significant network security portfolio with 144 IP assets.

Unlike its late entry into the telecoms space, LG Electronics has taken an early lead in IoT. It has a significant portfolio of 1,599 IP assets relating to network infrastructure and 1,515 in network protocols to support its IoT platforms for HomeChat and SmartThinQ.

Network and data security

Breach of data privacy and its misuse are a bone of contention for IoT security. Samsung and Apple have created security models that protect their proprietary IoT environments. Samsung owns the largest portfolio in smart devices, homes and cities, with 1,715 IP assets, and a healthy security portfolio. Its foray into the autonomous vehicles space poses a challenge to several players, such as Uber and Google. With an IoT product market already in place, Samsung seeks to strengthen device security via its Artik platform.

A growing demand for a common security code for IoT devices operating across platforms has found Device Authority emerging as a significant patentee. Baimos Technologies and Covinsit are also redefining device security. Baimos has a strong R&D focus on network security and resource management, and Covinsit caters to the automobile and healthcare industries. Gemalto is pioneering memory utilisation features and security in smart cards, such as mobile SIMs. These companies are building strong intellectual property around their security systems to secure themselves against a smartphone wars-like situation.

As IoT begins to grow, network security demands active innovation. Protecting data during transfers poses a greater challenge due to competing technologies involved in an IoT environment. Qualcomm’s Edge offers security using hardware firewalls that isolate security functions from the operating system of an IoT device. Microsoft, Intel, Cisco, Bayshore, Darktrace and Senrio are other major players that provide robust network security at each level – from device to transmission and data storage.

IoT demands the ability to move data across platforms easily. Application programming interface (API) security plays a critical role in securing data and processing analytics from multiple sources. We identified 2,711 IP assets relating to API security in the United States. Qualcomm, Samsung, Intel, Nokia and Ericsson lead the race, owning 68% of the IP assets held by the top 10 portfolio owners.

Figure 2. Leading IP asset owners in IoT security in the United States

Table 2. Significant R&D by smaller players in analytics for IoT

Assignee

Number of IP assets

Core R&D area

Bristol-Myers Squibb

175

Predictive modelling of biological processes

Seven Networks

100

Pattern detection, primarily for traffic management

Conformis Inc

88

Pattern detection and prediction for healthcare

State University System of Florida

58

Predictive modelling

University of California

50

Prediction using statistical analysis software

Predictive analytics to optimise IoT strategies

Predictive data analysis forms the nexus between internet computing and traditional electronics. Imagine a matrix of smartphones, smart homes, smart vehicles and smart retail, powered with pre-emptive thinking capabilities. A mix of every segment finally culminates into a chip that can predict the best advertising pitch – from understanding a user’s desire to travel a particular route to guessing the perfect moment for big-budget entertainment.

Data analysis is a hardware-intensive process that uses high processing power to mine insights and model complex data. Accelerated hardware such as solid-state drives and graphics processing units improve data extraction and enable complex analytics. Distributed server architecture is also gaining popularity to reduce load on a single server. A host of smaller players focus on pure analytics innovation in specific domains such as predictive analysis, data mining, data streaming and forecasting.

As we inch closer to the IoT era, enterprise providers, data centres and communication management service providers must boost their capabilities. Cloud computing will take a giant leap with every industry requiring software, platform or infrastructure as a service model. Half of the top 20 IoT patent owners provide core IoT cloud infrastructure and solutions. Their next logical step is to develop interoperability solutions for easy access across networks.

Machine learning as a service provides key infrastructure for data pre-processing and evaluation. These analytics are bridged with internal IT infrastructure via representational state transfer APIs such as Amazon Machine Learning, Microsoft Azure and Google Prediction. In 2016 only IBM and Microsoft shipped machine learning cloud offerings. However, the first half of 2017 has witnessed Amazon, Google, IBM and Salesforce either shipping machine learning cloud offerings or announcing shipment plans during the year. There is a $1 trillion market capitalisation focused in predictive analytics for IoT and new players – including Baidu, HP, Intel and NVIDIA – are intensifying competition.

The biopharmaceutical industry is taking to IoT in a big way for enhanced innovation. Bristol-Myers Squibb has collaborated with Amazon Web Services to run its compute-intensive clinical trial simulations and analytical methodologies over a secure cloud. Merck KGaA also has developed software to automate experiments. Alltrope Foundation is furthering this connectivity of lab equipment. Its aim to develop a universal standard to manage data for biopharma experiments could accelerate an Internet of Expansive Life Science Things.

Seven Networks is emerging as a leader in monitoring and managing device-level data by providing real-time historical and predictive metrics of a consumer’s usage across devices. It has focused its R&D efforts to strengthen its intelligent web that connects mobile platforms, device manufacturers, cloud services and infrastructure providers. Its portfolio strength finds it as a plaintiff in eight of the 10 litigations it is involved in. These patents primarily refer to its power management methodologies, network information security techniques and data transfer protocols.

Table 3. Leading plaintiffs and defendants in IoT-related patent litigation in the United States

Top 10 plaintiffs

Number of cases

Number of patents involved

Top 10 defendants

Number of cases

Number of patents involved

MacroSolve Inc

66

1

American Vehicular Sciences

35

13

Genaville

50

1

Samsung

33

45

American Vehicular Sciences

46

21

Amazon

30

7

lnnovatio IP Ventures

30

8

Hyundai

29

25

Brandywine Communications Technologies

30

1

David Folsom

24

24

Global Equity Management (SA) Pty Ltd

25

1

Vadata Inc

23

1

James P. FreenylBryan E. FreenylCharles C Freeny, Ill

18

3

Toyota

22

18

Infinity Computer Products, Inc

14

1

Apple

21

7

Rambus Inc

14

33

LG Electronics

20

10

Cellular Communications Equipment

13

1

AT&T

19

19

Figure 3. Percentage of IP assets across major IoT protocols and corresponding leading IP asset owners

IoT standards: the fight for establishment

Developing intellectual property that is strategically aligned to standards creates a vital environment for innovation and technology deployment. The formation of the Open Connectivity Foundation (OFC) after a tumultuous start has set the pace for standardising IoT. The face-off between Qualcomm-backed AllSeen and Intel-pioneered Open Interconnect Consortium toned down after the two consortia realised that a fragmentation of standards could negatively affect IoT development. While OFC is believed to be a possible future method to establish IoT standards, the industry is still nascent with several other consortia drawing standards. Intel-IBM-Cisco-Intel-AT&T-backed Industrial Internet Consortium is looking to establish IoT standards for industries, the International Telecommunication Union is emerging as a standard-setting body for smart cities, IEEE is building its repository through its IEEE project P2413 and Apple has its proprietary HomeKit.

The IoT patent landscape is on the verge of explosive growth. The average lifespan of granted IoT patents in the United States is 12 years, with several players boasting high-value IP assets. As IoT converts into large-scale commercial reality, patent licensing and litigation will increase. It is too early to say how the top companies will ultimately fare in this space. However, considering the patenting trends, it is clear that Samsung, Intel, LG Electronics and Qualcomm will either be market leaders or lead patent monetisation in IoT.

This article first appeared in IAM. For further information please visit www.IAM-media.com.

iRunway, Inc

1114 Lost Creek Blvd

Suite 400

Austin TX 78746

United States

Tel +1 512 284 8200

Web www.i-runway.com

Animesh Kumar

Chief solutioning officer

animesh@i-runway.com

Animesh Kumar is the chief solutioning officer of iRunway. He oversees all revenue and client operations for the firm and is responsible for driving the organisation’s strategic customer relationships. He is responsible for the strategy, design and growth of iRunway’s solution landscape across multiple technology domains. He works in close collaboration with chief IP counsel of leading corporations and partners in law firms to design customised IP monetisation programmes and help organisations to achieve better outcomes. His interactions with leadership teams across organisations and service orientation have helped iRunway to achieve ‘strategic IP partner’ status with customers.

Nikhil Sreedharan

Consultant

nikhil.sreedharan@i-runway.com

Nikhil Sreedharan is a technology consultant at iRunway and supports clients in their IP monetisation efforts. He has worked extensively with major law firms, in-house corporate counsel and university research centres. His innovative approach to IP litigation and portfolio management has successfully helped attorneys and clients to find crucial infringement evidence in high-profile technology litigation and licensing programmes. He pursues finding evidence of use through product testing, source code analysis and reverse engineering. His expertise extends to device and protocol testing spanning many domains, including computer networks, telecoms and semiconductors.