The number of software patents is a topic of debate in the tech industry. Despite cases such as Alice that made software patenting more challenging, innovative companies are still bagging lots of software patents.  Software inventors have been granted tens of thousands of patents covering various programming processes, machine instructions, user interface, and more.  

You as the founder of a software or a SaaS company should become educated in how to build your patent estate. 

In this article, we’ll discuss the number of active software patents and why you should not wait to build your patent estate.

Top Patent Owners in 2020

If you’re wondering, “How many software patents are there?”, you’ve come to the right place. The patent office publishes a list of top corporate recipients of patent grant. The number of software patents has grown considerably in recent years, with the top 15 assignees seeing a 23% increase in granted patents in 2020 and 2019 respectively.

According to the USPTO, the top patent owners with issued patents in 2020 include:

While there is no exact statistics on how many software patents are, it is a good bet that the vast majority of these patents involve software. With the exception of TSMC, all listed companies are involved with software in some form. 

Google was ranked No. 15 with 1848 patents. Due to the ubiquitous nature of software virtually all of the new patents embed some form of software therein.

For example, Meta has a total of 17753 patents globally. These patents belong to 6970 unique patent families. Out of 17753 patents, 15054 patents are active. As expected, the five prominent American technology companies—Meta (formerly Facebook), Apple, Amazon, Netflix, and Alphabet (GOOG), or the “FAANG” group, are in the top 20 spots of patentees. In contrast, startups receive a small chunk of granted patents, with many not applying for patents at all.

Independent Developers Should Do More to Protect Software Innovations

Many software developers feel that software patents are a stumbling block to innovation. They stifle innovation, reduce customer choice, and favor the most wealthy corporations and that software patents hurt independent developers by limiting their ability to compete in the market. That’s the wrong approach.

There is a reason why the FAANGs are the top 20 patent recipients, the patent system works for them.  Witness the case of hapless software developers Phhhoto against Meta and Unlockd against Google.  Both companies alleged the big companies cloned their software or invested in their direct competitor, and both had to resort to unfair competition laws because they neglected to build their patent portfolio. 

In the end, both companies went out of business and the only thing left was to sue the big companies on antitrust or unfair competition reasons.  This is not the best way to exit the business.

Microsoft has more than 40,000 active software patents

A recent Microsoft patent announcement published a searchable list of its patent holdings. Microsoft has more than 40,000 active software patents. Microsoft promised to release this information by April of this year. Despite the delay, Microsoft has now made good on its promise.

The company intends to eliminate the practice of shielding the identity of the owner of a patent by publishing the list on its website. Its patent portfolio now contains more than 60,000 patents and 40,000 pending patent applications, making it one of the largest inventors in the world.

Microsoft’s research and development teams have a history of creating groundbreaking products. The company invests $11 billion per year in R&D. Many of its innovations make headlines, including the ability to measure biometric data such as heart rate and blood pressure of employees.

Despite the difficulty of patented technologies, Microsoft has been making headlines with new inventions regularly. In fact, its innovations are regularly in the news, causing the company to seek patent protection for their technology.

The use of patents by companies to protect their intellectual property is increasing. Many companies now realize the value of patents and are rushing to patent their software. Software patents protect the value of a company, particularly when it comes to new markets.

While a company’s physical assets may make up the majority of its value, its software-based innovations could be copied by competitors. Patents protect the company’s value, as they are often its most transferable asset.

Independent developers suffer most from software patents

According to an IT Brief article reporting on a BanklessTimes presentation, IBM leads machine learning research with 5400 patents.

Between 2017 and 2021, 5400 machine learning patents were registered by the company. This beat Microsoft and Google, with Microsoft taking second with 2108 applications, and Google third with 1342. Capital One was fifth with 921 applications, while Samsung Electronics had 937.

To put that in perspective, since 1920, IBM has received more than 150,000 U.S. patents and played a crucial role in innovations ranging from magnetic storage to laser eye surgery. 

Machine learning tools have seen a surge in popularity recently. Both a growing trust in machine learning tools and a decrease in costs are the reasons. Many companies now use ML to quickly analyse large amounts of data and make accurate predictions.

Machine learning is complex and requires a lot more development to make it work. Patent applications are one indicator of the progress companies are making in this area, according to the BanklessTimes presentation.

IBM’s investment in artificial intelligence is being increased against this backdrop. According to IBM, its inventors are working on new technology that will help businesses scale their AI usage. IBM claims that fluid intelligence is the next stage in AI. According to IBM, current machine learning technology is limited. Therefore, it is difficult to train models for new needs.

IBM is focusing its efforts on promoting change through automation and natural language processing (NLP), as well as building trust in AI. It is also continuing to incorporate new capabilities from its R&D arm into its products.

In addition to AI, IBM appears to be focusing on hybrid cloud deployments at the edge and on data security.  In 2020, IBM received more than 3,000 patents related to cloud and hybrid cloud technologies. One of the crucial decisions CIOs face today is determining which data will be processed on premises and which will be processed in the cloud. 

In 2020, IBM inventors received more than 1,400 security-related patents to solve  enterprise level protection of data, particularly in highly-regulated industries.

Is software patentable?

The patentability of software depends on several factors, including the way that it is written and claimed. Providing sufficient explanations of engineering solutions or technical challenges solved and how the invention improves computer performance will increase the odds of obtaining a software patent.

Properly claiming the invention is also crucial. Patent claims should not attempt to cover every possible method of relieving a particular pain point that preempts the field, but should instead be narrowly focused on a specific method of doing so. In order to protect a new software invention from invalidity, developers should consult with a patent attorney before beginning the process.

Patent eligibility is dependent on whether the software improves technology. Specifically, it must improve data processing and manufacturing processes. Thus, if a particular software program simply automates a process that is common in the business world, it is not patentable.

However, software that reduces the amount of computing resources necessary to perform a task may be patented. The question of whether software is patented is an important one because it may have multiple applications in the future.

Software patenting requires the inventor to describe in-depth methods by which a person skilled in the art can implement the invention. The description should provide a detailed flow chart that illustrates the logic of the software.

The flow chart must be clear enough to allow a person skilled in the art to write the code necessary to implement the invention. This is as important as defining the underlying concept. It is critical to make the specification as detailed as possible.

Moreover, to reduce developer’s concerns about overclaiming, the USPTO has begun to check and ensure that all claims are properly supported by the specification with a proper written description and enablement support within the application per 35 U.S.C. 112(a).

 Other changes contemplated by the USPTO include:

  1. Require applicants to identify or explain the corresponding support in a written description of each claim or claim limitation upon initial presentation of the claim(s) and/or any subsequent amendments to the claim(s). This includes requiring that a written description be given for claims with negative limitations.
  2. applicants must explain or identify the support for each claim or limitation in the written description for every prior-filed request for which the benefit from an earlier filing date is sought under , e.g. 35 U.S.C. 119, 120 or 121?
  3. Require applicants to identify or explain the corresponding support for each claim or limitation in the written description for every prior-filed request for the benefit of an earlier filing deadline, under e.g. 35 U.S.C. 119, 120 or 121 or 365 (including the requirement to provide such support when a claim or benefit is presented, as well as upon the filing a petition for delayed benefits or priority claims and upon the filing a request for corrections to add a claim or benefit)
  4. Make it clear that claims need to find support and antecedent base in the written description. This is done by replacing “or” in 37 CFR.75(d)(1) by “and”.
  5. Require applicants to submit detailed analysis supporting genus and Markush claims. Applicants must also identify any claim limitation that is part of a genus and explain or identify the support in the written description.

These inquiries will enable the public (such as other software developers) to be able to understand clearly what the patent is about and be able to respect the patent while still be able to practice their craft.  Founders and entrepreneurs can then focus on increasing company valuations with valid patents. It’s a win-win.

Is it worth applying for a software patent?

Most companies, including startups, tend to be ‘IP-centric’ – meaning that they prioritize technological innovations over anything else.  However, when it comes to  There’s a lot of controversy about software patents, which are often viewed as preventing innovation and discouragers of creativity.

However, software companies still file patent applications, despite the decision in Alice Corporation versus CLS Bank International, which was widely considered a landmark legal decision.

While software patents can be very valuable, they do require time, knowledge, and monetary resources to complete. The benefits of a software patent are many, but the costs are often outweighed by the risks involved. For example, many companies waste time pursuing a software patent when the potential revenue is negligible. But if your software generates substantial income, then a patent is a great investment.

The value of a software patent goes beyond generating short-term revenue for a startup, as a patent effectively excludes competing products for up to 20 years. In addition to this, software patents have many other advantages for a startup, including industry recognition of innovation and brand recognition. 

In sum, the answer is quite simple.  Follow the leaders, in this case the FAANG companies and you will do well.