“The quest for securing patents in the routing and switching industry might resemble navigating through a stormy sea….Yet, every skilled sailor knows, within the tumult, there lie paths towards calm waters and unclaimed territories.”
Imagine setting sail on a vast ocean, marked by established sea routes governed by mighty, seasoned mariners. These old sea dogs, with their extensive map collections (akin to patents), dominate the waters, leaving little room for new explorers. This is the situation young companies often find themselves in when chartering into territories monopolized by a few dominant players.
The networking industry, ruled by giants like Cisco, Huawei, Juniper, Nokia, and Ericsson, mirrors this vast ocean. The waters are thick with “patent thickets” – tangled masses of patent claims, making it hard for fresh-faced voyagers to navigate without infringing on existing patents.
Moreover, the sea is marked by “standardization” lighthouses, which while guiding ships towards interoperability and quality, impose limitations on the course of innovation. These beacons can also increase the cost of compliance, posing as formidable reefs blocking the path of emerging vessels.
However, as any good mariner knows, every sea, no matter how tough, has its navigable routes. Through strategic navigation, protection of unique innovations, and smart sailing, the daunting sea of patents and standardizations can become a vibrant domain of opportunities for startups and established enterprises alike.
For instance – Centripetal Networks was awarded $1.9 billion in an infringement lawsuit against Cisco.
The Waters are Thick with Reefs
Routing and switching are not unique among crowded and dynamic technical fields. But they present an unusual combination of challenges that make IP protection difficult.
Some challenges networking companies face include the following:
Rapidly Evolving Technology
Networking and telecommunications companies are always pursuing technologies that make data switching and routing faster, broader, and more accurate. This field is also the subject of academic research.
As a result, the state of the art evolves rapidly, making it difficult for innovators to grasp the scope and content of the prior art. This uncertainty interferes with a switching and routing company’s ability to:
- Identify potential research avenues
- Evaluate the patentability of its inventions
- Assess its infringement risk
Without this information, the company cannot project the value of its products and services.
Patent Thickets
Landmark patents often reside with dominant companies in every industry, and the routing and switching domain is no exception, with intricate thickets of interrelated patents for specific tech innovations.
Upon examining the landscape of active patent families within routing and switching technology, it’s clear that Cisco and Huawei are at the forefront, collectively owning 487 out of 904 active patent families – a significant majority of over 50%. This underscores the competitive nature of this domain, as tech companies tirelessly innovate to keep pace with the industry’s constantly evolving demands.
This patent maze often leads to exclusive technological territories for patent holders, allowing them to establish overlapping patent thickets whenever gaps surface.
Worldwide Patent Coverage
Networking companies need IP protection throughout the world. But the filing strategy of the two biggest routing and switching companies shows marked variations.
While Cisco’s patent efforts are predominantly concentrated in the United States, garnering them a leading position, their geographic focus appears to wane in Europe and China. In these regions, Huawei firmly holds the reins, demonstrating a broader geographical emphasis in its patent filing strategy.
Source – IETF Report
These jurisdictional variations can make it difficult for competitors to plan their international patent portfolio strategy. However, here is an interesting take by IPWatchdog Founder and CEO Gene Quinn on this geographical dominance – “Huawei Patents are Not the Enemy.”
The Navigable Routes
The challenges described previously may seem daunting. But with each of these challenges comes an opportunity. If a company can find a way through the patent thickets to protect its inventions, it can establish barriers to entry, differentiate its products, and gain market leadership.
Some opportunities that come in the routing and switching market include:
Technology Standardization
Navigating industry standards in switching and routing presents both hurdles and opportunities. Significant influencers sometimes drive proprietary standards, potentially limiting creative freedom. However, this isn’t a one-way street.
Smaller entities can seize the opportunity to accelerate their technologies’ adoption by actively engaging in standards organizations like IETF (Internet Engineering Task Force).
Although getting their technology standardized might require offering royalty-free licenses, it helps safeguard their IP without litigation expenses. More importantly, it can catapult them to an industry leadership position, turning challenges into opportunities.
Licensing, Collaboration, and Acquisition
All startups and small firms in the switching and routing realm are sailing in the same waters. Once they secure IP assets, they may find other companies in the same domain willing to license, collaborate, and merge their IP.
On occasion, they might even become acquisition targets for larger entities.
For instance, in 2023 alone, Cisco made a few strategic acquisitions focusing on network performance, cybersecurity, and cloud security:
- Accedian: A network performance monitoring leader enhancing agility, efficiency, and scale in service provider transport and 5G networks.
- Armorblox: A pioneer in Large Language Models (LLMs) and natural language understanding for cybersecurity, revolutionizing security control points.
- Valtix: A cloud network security company simplifying security across multi-cloud environments, harmonizing policy and enforcement.
Huawei has also been notably active in its growth strategy, making nine acquisitions and 18 investments at an expenditure of over $227 million. Their investments are strategically diversified, spanning sectors such as photonics, cybersecurity, and IoT infrastructure, among others.
Hence, obtaining patents isn’t just a strategic move—it can dramatically elevate the course, from startup to potential exit, for these routing and switching companies.
Steering Towards Opportunities Amidst the Storm
The quest for securing patents in the routing and switching industry might resemble navigating through a stormy sea. The rapid technological waves, dense patent thickets, and changing international currents present formidable challenges.
Yet, every skilled sailor knows, within the tumult, there lie paths towards calm waters and unclaimed territories. Similarly, SMBs can find their unique routes amidst the tempest. They can engage in the standardization of lighthouse construction, offering royalty-free licenses to allow broader adoption of their technology, and charting new courses in the process. They might also draw inspiration from successful voyages that found their way into the harbors of industry giants, making rewarding exits.
As the wise Dalai Lama suggests, every challenge represents an opportunity to demonstrate and develop our navigation prowess. In the end, it’s not just about reaching the destination, but also about the journey and the sailor we become. Sail on!
