Alibaba is the leader in the blockchain patent competition

A new report from the Chinese Patent Protection Association shows that China’s multinational trade network Alibaba is leading the world in patenting for blockchain technology.

According to the ‘Global Blockchain Patents 2020 Report’, there are 3,924 blockchain technology patents issued to date. US companies account for the lion’s share of awarded patents – 39%, Korea – 21% and China – 19%.

Alibaba leads in the individual companies with the most patents with a total of 212 blockchain patents, while IBM has 136. South Korea’s Coinplug is in third place with a total of 107 patents granted. The other Chinese web giant Tencent has 42.

(Blockchain patents by country. The United States has 39% of total blockchain patents, South Korea 21%, China 19%, Japan 6% and Taiwan 4%. Source: Patent Protection Association of China)

2020 is a record year for blockchain patents

2020 is about to break the record for the number of blockchain patents granted on an annual basis. In 2019, 1,799 patents were issued, while on May 14, 2020, 1,257 were confirmed by patent offices around the world.

(There were 1,799 blockchain patents issued in 2019 and 1,257 as of May 14, 2020. Source: China Patent Protection Association)

The report also notes how many patents from large companies have been granted in jurisdictions other than their own. 126 of the 212 Alibaba patents obtained from China have also been confirmed in the United States, while 80 of IBM’s patents granted by the United States have been confirmed in China. Overall, 59% of all blockchain patents issued in China also have a parallel award in a foreign jurisdiction.

The blockchain patent competition

In the last few years, there has been a sort of ” race ” as companies in China and the United States have applied for patents to claim their blockchain technology. However, blockchain patent applications have a certain high refusal rate.

The introductory report on the blockchain space in China Forkast notes that at the end of 2019, more than 10,000 blockchain patents were filed with the Chinese National Intellectual Property Administration, but only a handful of them were actually awarded.

Part of the reason for the staggering number of blockchain patents filed (and patents usually filed by China, the world’s largest representative) is that the government subsidizes the application process.

This incentive structure removes the financial burden, especially for startups, but also creates a high noise-to-signal ratio, and therefore non-resident companies – which have been granted 68% of patents filed against 26% for residents – are more successful in applying for patent in any industry.

Another example of this noise-to-signal ratio is the 35,000 blockchain companies registered in China. But many, according to Forkast, are just ‘hollow companies’, adding the word ‘blockchain’ to their name as a form of SEO for investor interest.

Of those 35,000 companies, only 730 have a government-required blockchain service number, meaning that less than 2% of the country’s blockchain companies do what is implied on their behalf.