Alibaba Leads Blockchain Patent Race in 2020
A new report from the China Patent Protection Association designates that Chinese multinational Alibaba leads the world in patents awarded for blockchain-related technology. According to the 2020 Blockchain Global Patent Authorisation Report, there are 3924 awarded patents for blockchain technology to date. US firms account for the lion’s share of awarded patents, at 39%, Korea has 21%, while China comes in at 19%.
Alibaba leads the field of individual firms with the most patents, with 212 awarded blockchain patents, while IBM has 136. South Korea’s Coinplug comes in third for patents awarded with 107 in total. China’s other web giant, Tencent, has 42. 2020 is set to smash records for the number of blockchain patents awarded on an annual basis. In 2019 there were 1799 patents awarded, while as of May 14, 2020, there were 1257 confirmed by patent offices across the globe.
The report also records how many patents from large firms have been awarded in jurisdictions other than their own. One hundred twenty-six of Alibaba’s 212 China-awarded patents have also been verified in the US, while 80 of IBM’s US-granted patents have been confirmed in China. Overall, 59% of all blockchain patents awarded in China also have a parallel award in an overseas jurisdiction.
The blockchain patent arms race
During the past few years, there has been a sort of ‘arms race’ as firms in China and the US file for patents to claim their blockchain-related technology. Nevertheless, blockchain patent filings have a particularly high failure rate. In the inaugural China Blockchain Report, Forkast Insights remarked that over 10,000 blockchain-related patents had been filed with the China National Intellectual Property Administration as of late 2019, but only a fraction was awarded.
Part of the reason for the tremendous number of blockchain patents filed (and patents filed in general from China, the world’s largest filer) is that it subsidizes the application process. This incentive structure eliminates the financial burden, particularly for startups. However, it also produces a high noise-to-signal ratio. This is why non-resident companies are awarded 68% of patents filed, versus 26% for residents—have a greater success rate for patent applications over any industry.
Another instance of this noise-to-signal ratio is the 35,000 ‘blockchain’ companies registered in China. But many, according to Forkast, are solely shells connecting the world “blockchain” to their name as a form of SEO for investor interest. Of these 35,000 firms, only 730 have a government-required blockchain service number indicating that less than 2% of blockchain companies in the nation are doing what their name implies.