The rise of the Metaverse has seen mainstream interest in extended reality (XR) technologies surge. This gives a key opportunity to innovative organisations looking to create the technologies that will move XR onto the next stage in its evolution. However, seasoned observers realise that there is much more to XR than the Metaverse and indeed one of the big attractions of XR technologies is that they can be applied to a wide range of potential applications. Indeed, XR technology has the potential to enhance any application that involves human-machine interaction and already we are seeing it applied in areas as diverse as automotive driver interfaces, field repairs, medical procedures and therapy, games, production line control, fashion, advertising and energy production and distribution, amongst many others.
The granting of Patents for new technology involves a bargain in which innovators are permitted a degree of control over their inventions by being granted certain rights in those inventions for a limited period in return for disclosing working details of the innovation to the world and other parties being allowed to work the invention after the limited time protection period has expired. Patent filing data is also widely available and as such is a good metric for analysing trends in innovation, particularly skewed to commercial innovation as Patents are essentially a commercial tool.
In this report we use Patent filing data for published Patent applications filed at the European Patent Office (EPO) and PCT (Patent Cooperation Treaty) Patent Publications that have a more global reach. Our analysis covers Patent publications from the start of 2016 to the end of 2021. The relevant patent authorities classify the technology area of the Patent application using classification codes and we’ve used these technology classifications made by the relevant patent authorities to identify publications having classifications relevant to XR technologies.
It seems that the Metaverse has fuelled a mainstream boom in interest in XR technologies, but is this interest reflected in the numbers of XR Patent applications being published? Our research shows that PCT publications for XR technologies increased by 19% between 2016 and 2020, against an 18% overall growth in PCT applications over the same period. In contrast, EP publications for XR technologies increased by 43% over the same period, against an overall increase of 13%.
For PCT publications in XR technology, which are dominated by US entities, strong growth in filings between 2016 and 2018 was followed by a period of much slower growth between 2018 and 2020. Interestingly, 2021 appears to have seen a significant reduction in PCT publications relating to XR tech. One possibility is the effect of global pandemic restrictions impacting research and collaboration activity and the economic uncertainty impacting decisions to file Patent applications. Patent applications are usually published around 18 months after a patent application for the inventions has been first filed. As such, many patent applications filed in early 2020, when many countries instigated lockdowns, would publish during 2021. Another possibility is the sudden upturn in demand for remote collaboration technologies could perhaps result in a shift of resource from product research to product delivery. It will be interesting to see if the figures rebound in subsequent years as lockdowns are lifted throughout the world or whether the figures are indeed indicative of a sharp drop off in XR Patent activity.
The figures for publications of XR technology applications are much more robust at the European Patent Office (EPO), with a continuously strong growth of XR publications year on year between 2016 and 2020, resulting in a 43% growth in EP publications for XR technologies over this period against a 13% increase in overall EP filings over the same period. Like the PCT figures, the number of XR patent applications being published in 2021 dropped compared with 2020, but the figures for EP applications show a much gentler drop off of around 3% in publications compared to 2020. There could be many reasons for this difference. For example, although US entities are the largest filers of XR patent applications at the EPO, they are less dominant than for PCT Figures where US entities make up a far larger proportion of applicants. This could be a sign that whatever caused the PCT drop off in publications in 2021 could be more skewed towards the US. Another possibility is that applicants could have been more focussed in their patent filing strategies, favouring direct entry applications in jurisdictions of interest rather than the PCT route. However, similarly to the PCT figures, we will have to wait and see the trends for subsequent years to see if the figures pick up their previous growth.
The Origin of XR, Publications by Country of Origin of the Applicant
Where is the next wave of industrial XR innovation coming from? Patent applicants have to provide an address which can be harvested to get the country of origin of applications. This is an imperfect measure as the applicant may be based in one country but the inventors may be based in a different country. However, the figures can be used to give at least an indication of where the commercial XR interest lies.
The PCT publication data is overwhelmingly dominated by US applicants, with there being over 55 times as many XR related PCT applications published between 2016 and 2021 having US applicants as those of the next highest country of origin (Japan). The Cayman Island’s entry in third place is most likely a comment on modern commercial practices than any indicator of a literal hotbed of XR innovation. However, special mentions must go to Israel and Sweden for pipping Germany to the next two places on the PCT filing table, with Canada, France, Switzerland, the UK and Finland following behind.
The EP publication data shows a much more diverse picture of origin. US entities are clearly still by some way the largest filers of XR applications at the EPO, but the margin is much less than for PCT publications. Japanese applicants still feature in second place in the EP filing tables, followed by China, Germany and South Korea rounding out the top five. A number of European and Scandinavian countries unsurprisingly follow, with France, the Netherlands, the UK, Sweden, Switzerland and Finland showing good filing figures, just ahead of Israel, Canada and Taiwan.
The Drivers of Commercial XR Innovation – Big, Medium or Small Organisations?
“Commercial innovation” is a broad classification and covers a wide range of entities from well-resourced tech giants that include some of the world’s biggest companies though to small, nimble innovators able to take risks and explore cutting edge technologies. To try to get insights on what types of companies are innovating, we’ve looked at publications originating from:
the top 10 applicants (the “mega-filers”, who all filed at least several hundred and often thousands of XR patent applications over the period analysed);
the “middle order” who have between 6 and 18 publications over the period from 2016 to 2021, averaging between 1 and 3 applications a year over this period; and
the “smaller filers” who have 5 publications of XR patent applications or less over the 2016 to 2021 period, i.e. averaging less than one application a year.
Many would expect the top 10 “mega-filers” to dominate the filings, and our PCT publication data does indeed show that the top 10 applicants have the largest number of publications of PCT patent applications for XR technology, with over two and a half times as many publications from 2016 to 2021 than the 318 applicants who make up our “middle order” company group. However, perhaps surprisingly, the cohort of 4953 applicants forming our “smaller filers” group are collectively responsible for almost as many publications of PCT patent applications for XR technology over the 2016 to 2021 period as the top 10 “mega-filers”, with a 1:1.1 ratio of collective publications to the top 10 group, and a 2.3:1 ratio to the collective number of publications to applicants in our middle order group. Thus, whilst the entities in our “smaller filers” category may be individually responsible for only a small number of innovations that are the subject of patent applications, collectively this category contributes almost as many patent applied for innovations as the top 10 “mega-filer” filer group.
Similar trends can be seen in the EP publication data, with both the top 10 “mega-filer” and the 7329 “smaller filer” entities collectively filing broadly similar numbers of applications.
Hot Tech – What XR Technologies are Attracting the Most Applications?
Patent Offices classify the Patent applications they receive by area of technology of the innovation described in the application, in part so a Patent Examiner with appropriate experience can examine the application. Analysis of these patent classifications affords us the opportunity to look at the technical areas for which patent applications relating to XR technologies are being filed.
For the PCT publications, the three most common classifications of area of technology are (1) optical systems and apparatus (including head mounted displays/headsets, holographic display technology and other display technology); (2) input / output arrangements (including eye/gaze tracking, haptic feedback devices, and the like); and (3) image analysis (including segmentation of images, feature or object recognition, and so on). Whilst optical systems such as HMDs, HUDs and input/output devices are unsurprising, it is interesting to see filings in “image analysis” being more prevalent than areas such as “3D modelling” and “3D image rendering”. This could be due to image analysis being a less developed area or perhaps it is seeing a particularly high rate of innovation due to advances in machine learning in this area, but additional research will be needed to more fully understand why there is such a large number of filings in this technical area. This is also, potentially, an indicator of heightened innovation in the field of AR, augmenting image data captured from the ambient environment typically in real-time, relative to the field of VR which relies upon 3D modelling and rendering techniques with innovation long predating the mass adoption of HMDs, noting that consumer-grade VR HMDs are gradually embodying AR techniques themselves.
The EP filing data shows broadly similar trends, with publications in the technical areas of image analysis, optical system and apparatus and input/output arrangements being the technical areas for which most EP patent publications relate.
What Industries are Embracing XR – Publications by Industry Classification
XR technology can significantly improve human-machine interactions and as such can potentially provide benefits across a wide range of applications. In this section, we look at the standard industrial classification (SIC) codes of the top 50 PCT and EP applicants of XR related Patent applications to see what industrial sectors are filing in this area and to look at the breakdown between technology innovators looking to find an application for their products (“technology push down”) and those who have products that they are looking to enhance with XR technologies (“application push up”).
The data for publications of PCT patent applications relating to XR technology (which is heavily dominated by US entities) shows that the most common industrial classification is for semiconductor manufacturers, who appear to be mainly “technology push down” applicants, filing applications for a wide range of technologies including ambient awareness systems, light-based image adjustment and graphics processing, amongst many others. However, the next largest cohort of industrial sectors are more varied and include sectors that might be expected to be more “application push up” entities such as those providing business services, producing motion pictures and manufacturing surgical equipment to complement the entities that might be expected to be “technology push down” entities such as those classified as operating in computer programming, computer manufacture, non-computer electronic manufacture and home entertainment system manufacturers. Indeed, the range of applicants in sectors that are likely to be “application push up” include oil & gas production and services, communication services, publishers, aircraft manufacturers, retail, advertising, and others.
The EP publications show a similar breakdown but with software providers being the top industry area for top 50 applicants, and application based sectors including business services, vehicle parts manufacturers, motion picture producers, medical equipment, domestic appliance manufacturers, publishers, advertisers and others all making the list of top 50 EP filers.
The growth in publications of XR related patent filings has been strong in recent years, but tempered by a downturn in the publication of both EP and PCT publications in 2021. Whilst this could well be lockdown related, only time will tell if this is a temporary blip or the sign of a more general slowdown.
The publication data shows that patent filings in the XR field are, like many others, dominated by US entities with Japanese entities being the second largest filers. However, it is worth mentioning relatively strong filing figures by applicants from Israel, Sweden, Finland, Switzerland and Canada.
The breakdown of the publication data between the top 10 “mega filers”, “medium filers” who average between 1 and 3 filings a year and “small filers” who average less than one patent publication a year is particularly noteworthy, in that the number of publications collectively filed by the “small filer” cohort is broadly similar to the number filed by the top-10 “mega-filers”. By this metric although the entities in the “smaller filer” cohort are individually responsible for only a small number of patent filings, their collective contribution of innovations that are protected by XR patent filings is similar to the top 10 tech giants in our “mega-filer” category. In our view, the contribution to patentable innovations collectively made by this “smaller filer” category shows that significant contributions to overall XR innovation landscape represented by patent applications are not limited to the so called tech giants and are equally coming from the ecosystem of small entities that are active in this area.
Our data shows that the top areas of technology that are the subject of patent filings are (1) optical systems and apparatus (including head mounted displays/headsets, holographic display technology and other display technology); (2) input / output arrangements (including eye/gaze tracking, and haptic feedback devices); and (3) image analysis (including segmentation of images, and feature or object recognition). The focus on innovations in headsets and displays is perhaps not surprising. However, the other two categories seem to address interesting challenges in XR technologies, namely how to get input to allow the user to interact with objects and other users in the XR realm rather than just simply watch.
Our analysis of Standard Industry Classification (SIC) codes of the top 50 applicants shows that interest in XR technologies is diverse with applicants from a wide range of industries, including semiconductors, electronics and software developers on one hand to entities providing business services, producing motion pictures, manufacturing surgical equipment, manufacturing vehicles and vehicle parts, publishers, and advertisers on the other.
The XR related patent filing figures are a useful metric of commercial innovation in this exciting area and give insights into what entities are commercially innovating XR technologies and what they are innovating in. It will be useful to repeat this analysis in coming years to see if the drop of in publications in 2021 is a lockdown related anomaly and whether the trends change as the metaverse approaches the mainstream.
Graham was born and educated in Scotland and obtained an honours degree in physics from the University of Glasgow, followed by a doctorate from the University of St Andrews. Before entering the Patent Attorney profession, Graham worked for several years in industry on the development of new technologies in the semiconductor and energy technology fields, and is a named inventor on a number of patents.
Graham advises clients in a variety of IP related issues, specialising in patent and design matters, over a wide range of fields including electronics, electrical, artificial intelligence and algorithms, software, video games, oil and gas, defence and renewables. His clients range from some of the world’s leading multinational corporations and universities to fast growing SMEs and spin-outs. Much of Graham’s work lies in the interface between fields of technology, such as the application of artificial intelligence, modelling and algorithms to oil and gas technologies.