It has been called the biggest tech IPO since Snap was listed on the New York Stock Exchange in March of 2017. On March 23, Dropbox saw its stock open at $29 a share on the company’s first day of trading on the Nasdaq, with the company’s initial market capitalization reaching more than $12 billion.
As had been widely reported earlier in the year, Dropbox filed with the U.S. Securities and Exchange Commission (SEC) on February 23 in preparation for its IPO.
The cloud storage provider, which operates on a “freemium” model, has more than 500 million registered users and 11 million paying users. In 2017, Dropbox brought in US$1.1 billion in revenue, although the company has yet to turn a profit.
As might be expected, Dropbox has a growing patent portfolio. Its SEC filing states that the company has “over 600 issued patents and more than 600 pending patent applications in the United States and abroad.”
In the wake of Dropbox’s IPO, we decided to briefly review the company’s patent portfolio.
Composition of Dropbox’s US Patent Portfolio
In this overview of the composition of Dropbox’s US patent portfolio, we can see that a notable amount comes from patent acquisitions from two main companies: Sony and IBM. Further research reveals that the Sony patents were acquired in a 2014 deal and the patents from IBM in 2016.
In addition to patents, Dropbox has also acquired 24 companies since its founding in 2007.
US Patents Owned by Dropbox-Acquired Companies
It is interesting to note that some of the companies that Dropbox acquired, such as Loom, are still designated as the current assignee for some patents, as shown in the chart above.
Dropbox Patent Portfolio–Proportion of Pledged Patents
It is also worth noting that a substantial amount of Dropbox’s patent portfolio has been pledged.
Dropbox Patent Portfolio–Pledgor
As seen in this chart, the main pledgor of the patents in Dropbox’s patent portfolio has been Dropbox itself.
Dropbox Patent Portfolio–Pledgee
And the overwhelming main pledgee of Dropbox’s patents has been JPMorgan Chase Bank, followed, in smaller numbers, by other financial institutions.
Dropbox Patent Portfolio–Patent Pledge Activity
Although there was an increase in Dropbox’s patent-pledging activities in 2014, the largest amount of patent pledging took place in 2016, just a few years before the company’s IPO in 2018.
Composition of Dropbox’s Global Patent Portfolio (Inferred by US Patent Family Members)
Dropbox’s global patent portfolio includes 1,553 patents and applications of 542 patent families, with US patents and applications making up 49 percent of the portfolio, and patents and applications from Europe, Japan, WIPO, and Australia making up another 35 percent*.
*as of March 22, 2018
Dropbox’s Global Patent Portfolio By Patent Office
*on the basis of patent family Source: Patentcloud
In addition to the patents filed by Dropbox itself, the patents and applications acquired from Sony and IBM* also comprise a major part of Dropbox’s global patent portfolio, with more than 350 patents and applications from Sony alone.
Main Technology Categories of Dropbox’s Patent Portfolio
Top Applicants of Dropbox’s Information Retrieval-Related (IPC: G06F 17 group) Patent Portfolio
Top Applicants of Dropbox’s Data Network Communication-Related (IPC: H04L 29 group) Patent Portfolio
In the Data Network Communication-Related category (IPC: H04L 29 group), Dropbox itself once again holds the most patents, with patents acquired from IBM and Sony, among others, again playing a smaller role.
Interestingly, there are more patents in Dropbox’s patent portfolio for data transmission control (IPC H04L 29/02) and switching (IPC H04L 12/54) than patents for information retrieval (G06F 17/3), human-computer interface (G06F 03/01), and multi-computer system (G06F 15/16).
Technology Categories of Patent Portfolio Acquired from Sony
Patents Acquired from IBM and Pledged
At the same time, the three charts below show that most of the patents that Dropbox acquired, particularly from IBM, ended up being pledged to JPMorgan Chase Bank. As well, this pledging took place not long after the patents were acquired, as shown below.
This suggests, perhaps, that these patents were acquired more for reasons related to pledging (and raising money) than for their technical relationship to Dropbox’s core business.
1.Patents Acquired by Dropbox That Have Been Pledged
2. IBM Patents Acquired by Dropbox by Year
Using Patent Search Premium’s exclusive Patent Quality and Value Rankings*, it is possible to compare the US patents filed by Dropbox with the US patents that Dropbox acquired from Sony and IBM.
The first table, which looks at Patent Quality, shows that the US patents Dropbox acquired from Sony have lower Quality Rankings, in general.
The second table, which looks at Patent Value, shows that the US patents Dropbox acquired from Sony also have lower Value Rankings. It should also be noted the US patents acquired from IBM also tended to have lower Value Rankings. These low Quality and Value Rankings, coupled with the information above highlighting that many of these patents acquired from Sony were unrelated to Dropbox’s core business, raise questions about why they were acquired.
What is clear, however, is that as Dropbox moves forward following its IPO this March, the company’s patent portfolio remains worthy of further study, especially from the point of view of prospective investors. As seen above, by taking a closer look at Dropbox’s patents, it is possible to uncover information that can lead to useful insights about Dropbox and its business practices, as well as its possible future development.
*Both the Patent Quality and Value Rankings compare US patents and applications on the basis of an inferred tendency at the time of each patent’s issuance or each application’s publication. The inferred tendency is calculated by a machine learning model based on patent data and patent claims with the following training data:
- Patent Quality Rankings are trained to reflect the tendency of having prior art that may challenge the validity of a patent. The training data includes (but is not limited to) the invalidity of patents in post-grant proceedings.
- Patent Value Rankings are trained to reflect the tendency of enforcement or monetization activities, including patent litigations, transactions, licensing, and assertions. The training data includes (but is not limited to) US litigation patents and the US assignment database.
*The charts in this post were created on or before March 22, 2018, using Patentcloud’s Patent Search Premium. To learn how these advanced features can benefit you, please contact us for more details.
by Ted Pigott