Alibaba Surpasses IBM in Blockchain Patent Filings
President Xi Jinping wants China to dominate the world in blockchain, a technology for storing data in a permanent and verifiable way, by setting aggressive 5-year plans. Today, “China is leading the global blockchain patent race,” according to a report from Forkast. The report cites a staggering 10,000 Chinese blockchain patents filed in 2019, of which 543 are from Alibaba. Are these numbers indicative of real innovation? How do these patents fare outside of China? We took a closer look at the blockchain-related patent filings.
Patent numbers from Chinese sources
The data source for the Forkast report is Innojoy, a patent search engine from DAWEI Computer Software Development Co., Ltd., a Chinese software company whose Chairperson Pan Xiaomei was nominated the “National Patent Information Leader” in 2013.
According to the Innojoy data, the staggering 10,000 number is not coming from startups, but large firms such as Huawei, DJI, and Tencent. The Forkast report includes a break-down of the patent filing number by geographic origin, showing a correlation between patent filing numbers and the local governments’ support for the development of blockchain in these cities.
The report shows the number of blockchain patents from outside of China and lists representative companies by foreign countries. Interestingly, Alibaba Group is technically considered a company from a foreign country (not from China). Indeed, the state of incorporation of Alibaba Group Holding Limited is in the Cayman Islands.
The surge in quantity of patent filings, fueled by the Chinese government incentives, is not indicative of a proportional rise in innovation. Most of these patents are of lower quality or utterly “worthless,” according to a Bloomberg article indicating that 91% of the Chinese patents are abandoned within five years. In other words, the patent owners didn’t think these patents were worth paying modest maintenance fees to keep them alive for more than five years.
International numbers don’t lie
To correct for the Chinese patent number bias, we looked at the blockchain patent filings received by four prominent patent offices:
- the US Patents and Trademarks Office (USPTO),
- the European Patent Office (EPO),
- the World Intellectual Property Organization (WIPO), and
- the Japan Patent Office (JPO).
We compiled charts representing the total number of inventions for which at least one patent was filed at the USPTO, EPO, WIPO, or JPO. If more than one patent was filed for the same invention (e.g., in the US and in Europe), this counts as one invention only. The years shown are the “priority year,” which means the year when a patent was first filed at any patent office for a given invention. The data was generated using Innography, a patent search engine from CPA Global Ltd., a global company headquartered in Jersey (Europe). We used a keyword-based search methodology limited to titles, abstracts, and claims containing at least one word or expression among “blockchain”, “distributed ledger”, or “decentralized ledger”.
The first chart below represents the total number of blockchain innovations per year. The last year of data is 2018. It shows only 64% of the year’s innovation that year, as patents are published within 18 months. As publicly available patent data as of this writing goes until mid-August 2018, the 2018 data point is adjusted to an estimated 2,700 to account for a full year. In 2018, blockchain innovations grew by 75% from 1,545 to 2,700.
The next graph shows the top patent owners of blockchain innovations. Alibaba leads the pack with 6% of the 1,769 blockchain innovations, followed closely by IBM at 5%.
Another Chinese company, Ping An Technology also made it to the top five in 2018. The company’s website boasts its 6,000 patent filings on its front page. Innography data says 9,128 (all technologies, active patent count). They may want to update their website.
The last graph below shows Alibaba and IBM’s blockchain innovations from 2016 to 2018. Alibaba did surpass IBM. Indeed. This spectacular growth happened in only three years, from 2016 to 2018. The gap is probably going to be wider as we will see more patent data released for 2018, 2019 and 2020.
Conclusion: yes, Alibaba surpassed IBM
The numbers of Chinese-originated blockchain patent filings are inflated by many low-quality patents. That said, even after the correction of the Chinese patent bias, there is still an observable surge of Chinese-originated blockchain innovations. One company stands out: Alibaba is today the worldwide leader in blockchain innovations, both in China and outside of China. And given the pace at which Alibaba won this race, they will likely widen the gap in the coming years.
