International Business Machines Corp. (IBM) Patents Will Pay Dividends In 2-5 Years, Says Chris Carani

International Business Machines Corp. (NYSE:IBM) has just been granted the most number of patents of any technology company by the United States Patent and Trademark Office (USPTO) and that’s likely to benefit the company in the next two to five years, Chris Carani said in a discussion on Bloomberg.

International Business Machines Corp. (NYSE:IBM) was granted 7,500 patents last year by the USPTO, largely a numbers game when talking about this many patents, the McAndrews Held & Malloy Partner said. That is a very large trove of patents even though the USPTO also granted a record number of patents last year, he contextualized.

“The growth in the patents that they are securing does serve their three main business models with respect to outgoing licensing, reducing litigation cost and providing them design freedom. […] Largely, they’re betting across a lot of different technologies. A lot of growth opportunities with respect to cloud computing and cyber security and also cognitive computing. The thought here is that’s going to pay dividends in the next two to five years,” Carani said.

Carani did acknowledge that for three straight years, International Business Machines Corp. (NYSE:IBM) has had negative sales growth. Nonetheless, he said that the company’s three business models are served by having a large amount of patents. The technology veteran and now business process giant is light-years ahead of the second place finisher in the number of patents granted, Carani noted.

International Business Machines Corp. (NYSE:IBM) produces $1 billion revenue annually from licenses but they also spend $6 billion on research and development every year.

The discussion also yielded the point that the company needs to monetize effectively on the patents they have rather than just focusing on pumping patent after patent just for the sake of being granted patents.

Prem Watsa’s Fairfax Financial Holdings held about 1.07 million International Business Machines Corp. (NYSE:IBM) shares by the end of September.