Quantum computing: Rapid innovation and patenting

Insights from a fast-growing field

Quantum computing (QC) is a field poised to transform computation because of the immense promise it holds for turning previously impossible problems into solvable ones, with consequences that could revolutionise whole industries. While not an exhaustive list, QC is expected to tackle problems in realms ranging from cryptography and chemistry to optimisation and machine learning.

With the revolutionary potential of QC, it’s of increasing importance to business leaders to keep appraised of advances in the technology and the potential industry impacts, ideally alongside plans for implementation strategy.

Governments, like business leaders, are also keen to extract the benefits from QC, and have introduced various schemes and incentives to promote its development. In this article, we will discuss the concurrent rapid increase in patent activity related to this emerging field, and the potential implications on quantum computing companies and other invested parties—including views on viable IP strategy.

A global increase in development and investment
 

In the UK, the government recently launched a 10-year programme to invest £2.5bn in the local QC industry, and similar trends can be seen worldwide, including the National Quantum Initiative Act in the USA, the European Quantum Flagship initiative, and Japan’s MEXT - Quantum Leap Flagship Program.

With the rapid emergence of the field of QC, there is a parallel and concurrent increase in patent activity. At an economic level, providing incentives for companies filing patents (such as the tax reliefs offered by Patent Box) can promote local innovation, and encourage companies to invest R&D in these locations, leading to additional benefits such as job creation. Companies pursuing patents in emerging fields can expect valuable protection of intellectual capital, additional avenues to attract investors, and licensing opportunities that can unlock additional revenue streams.

This upswing in patent activity will have an impact on commercialisation strategy development, acquisitions, and investment planning. This, in turn, requires a well thought-out IP strategy to ensure commercial viability in this environment:

• Develop a strategy, and file patents
• Be aware of the existing patent landscape, and your freedom to operate
• Consider licensing, where applicable
• Don’t underestimate other forms of IP

In the following sections we examine this increase in patent activity in detail. The search strategy used to identify QC relevant patents is briefly outlined, before we give a detailed analysis of the results, alongside implications for the future and recommended IP strategy for the field.

Search Methodology

Both the International and Co-operative Patent Classification systems (IPC and CPC respectively) have a dedicated code for “computer systems based on quantum-mechanical phenomena”. Furthermore, patent claim text was found to refer to quantum computing and qubits explicitly; patents were selected that mentioned these keywords within their independent claim text, since this represents the main protected characteristics of a patent rather than ancillary notes that could refer to hypothetical extensions (for example, a patent protecting a very general computing technology with a dependent claim stating that it could be the case that the invention be implemented on a quantum computer instead). Keywords included quantum computing, qubit, quantum annealing, and quantum circuit, among others. These components formed the basis of the patent search conducted, which was also limited to patents with a priority date after the year 2000.

In the following analysis, we refer to a patent ‘family’: this is a group of related patent filings that usually protect the same technology in multiple geographic locations. Companies with many patent families may be regarded as being highly innovative, since it may reflect multiple independent developments rather than one single patentable idea filed in a large number of countries. A family is regarded as ‘granted’ if it contains at least one granted patent, ‘pending’ if it contains at least one application, or otherwise ‘dead’. The search itself surfaced roughly 7,000 patent families, comprising a total of about 16,700 patents, all split across 2,251 different patent owners (‘assignees’).

Patent filing trends

Fast growth

Figure 1 Filing rates for QC patents has increased exponentially since around 2013. Note that data for 2021 onwards should be considered incomplete, because of the delay in publication of applications.

After relatively flat rates from about 2002, filing for QC related patents has been increasing at a roughly exponential rate since 2013. This is characterised by an approximate 50% YoY growth in filings, or a doubling period of about 1.4 years. This kind of rapid growth might be seen in similar fast-moving new technology fields such as AI, and helps underscore how quickly resources are being put into QC patent protection.

Small number of big players

Figure 2 Top 10 assignees (patent owners) by number of live patent families held, with breakdown of legal status of patent families and of filing locations. The 10 assignees listed here hold approximately 30% of the patent families in the data set.

Just under a third of all patent families found were assigned to the top 10 companies, when ranked by the size of their live patent family portfolios. ‘Big Tech’ companies comprise 4 of these top 10, including IBM with a large portfolio of 516 families, as well as Microsoft, Google (Alphabet), and Intel.
IBM and Google overtook D-Wave in 2017 as the former largest patent holder in this space, with advancements in that year such as IBM’s 20-qubit cloud offering and Google’s partnership with VW Group to bring QC technology to the automotive industry.

Further comparison of these top players is shown in Figure 3, with portfolio age along the x-axis vs number of granted families on the y-axis: assignees towards the top right have younger portfolios with more granted families. While IBM leads convincingly in raw quantity of granted families, Ruban, Origin and Baidu (all based in China) have younger portfolios. D-Wave has a more mature portfolio, reflecting their relatively long running involvement in QC as a field.

Figure 3 Granted patent families against the average priority date of granted patents in a company's portfolio. Dot size represents the full size of an assignee's portfolio.

China's rapid growth

Figure 4 Jurisdictional filing rates since 2013.

Referring to the geographical filing rates shown in Figure 4, China has yet to overtake the US as principal location of filing for QC patents in any year with complete data. However, the evidence from the as-yet-incomplete rates from 2021 indicate this will likely be the case once all patents have been published publicly. For the UK’s part, 173 pending and granted families are recorded as filed directly with the UKIPO, along with another 212 granted European Patents in force in the UK. This puts the UK just below Germany in terms of European filing locations, and highlights the gulf between this jurisdiction and other Western IPOs such as Australia (406 live families), Canada (500 live families), and the dominant USA (3058 live families).

The data was further examined to highlight assignees whose first date of filing is within the last 2 years, representing newcomers to QC patent filing. Filings by this group of companies were overwhelmingly in China, with most companies (216 of the 398 found) filing only in this single jurisdiction and nowhere else. The full geographic distribution is shown in Figure 5.

Financially, China seems to be consistently putting large quantities of resources towards QC, with some studies suggesting they are pulling ahead of the US. A group of Chinese companies recently set up a dedicated QC patent alliance, although it’s unclear if this is aimed towards worldwide or local commercialisation.

Figure 5 Geographic locations of patents from companies who have started filing in the last two years; China outweights all other locations combined, but many Chinese companies are only filing in this single location.

Conclusion

With the UK and other governments promising incentives to encourage the developing QC industry, the growth in patent activity in the last 10 years will likely continue for the near future. In a landscape of increasing competition there are a number of risks and opportunities surrounding IP that companies must be aware of and consider:

• Patent to protect your technology, attract investors, and defend yourself
  A robust filing strategy—from capturing new innovations, evaluating them for protection, and the subsequent patenting process—can be an incredibly valuable tool to high tech companies wishing to grow their QC offerings. Patents help protect inventions, allow monetisation, attract investors, and can help form a strong defensive position in a field where filing activity is increasing as rapidly as here.
• Check your freedom to operate
  With increased filing, comes increased risk of litigation. When a company operates in a space with many existing patents, it can be difficult to avoid inadvertently infringing upon someone else's intellectual property. If a company fails to conduct a thorough Freedom to Operate (FTO) analysis and infringes upon an existing patent, it may face severe legal and financial repercussions.
• Look for licensing opportunities
  Patent licensing can be extremely useful, not only for protection and increased ability to operate with third party technology, but also to form partnerships between interested parties, as well as possible financial benefits for the progenitors of the IP. QC patent owners already show some joint ownership between patents, for instance between Universities and industry partners.
• Other types of intellectual property matter too
  Whether it’s trade secrets to protect vital aspects of internal codebases, or registered trade marks to protect a company’s brand, IP rights can be essential tools to grow a start-up and demonstrate to key stakeholders that they are serious about their business. In addition to protecting valuable assets, IP rights can also provide start-ups with a competitive advantage in the market by preventing others from copying or imitating their unique products or services.

Deloitte’s dedicated team of IP experts helps clients to implement end-to-end IP strategies increasing the overall value of their business. Our data-driven innovation and intellectual property strategies enable clients to plan, protect and profit through the strategic management of their IP assets.

For more information please contact Deloitte IP Advisory.

References

https://www2.deloitte.com/us/en/insights/topics/innovation/quantum-computing-business-applications.html Accessed: 27/03/2023
https://www2.deloitte.com/uk/en/insights/industry/technology/technology-media-and-telecom-predictions/2022/future-of-quantum-computing.html Accessed: 27/03/2023
https://www.ft.com/content/900ba4ee-6c60-4406-963a-810771c2ad7c Accessed: 27/03/2023
https://www.forbes.com/sites/gilpress/2023/01/31/new-funding-for-quantum-computing-accelerates-worldwide/?sh=69d62123b35b Accessed: 27/03/2023
https://www.quantum.gov/about/ Accessed: 12/05/2023
https://qt.eu/ Accessed: 12/05/2023
https://www.jst.go.jp/stpp/q-leap/en/index.html Accessed: 12/05/2023
https://techcrunch.com/2017/11/10/ibm-passes-major-milestone-with-20-and-50-qubit-quantum-computers-as-a-service/ Accessed: 28/03/2023
https://techcrunch.com/2017/11/08/volkswagen-and-google-to-bring-quantum-computing-benefits-to-cars/ Accessed: 28/03/2023
https://www.scientificamerican.com/article/china-is-pulling-ahead-in-global-quantum-race-new-studies-suggest/ Accessed: 27/03/2023
https://thequantuminsider.com/2023/03/30/chinese-organizations-form-quantum-computer-patent-alliance/ Accessed 30/03/2023