Roku Grows Patent Portfolio Through Innovation

Last month, Roku Inc. debuted on the NASDAQ, with its shares skyrocketing 67% from its IPO price at $14 per share. Over the last few weeks, Roku’s stock has continued its ascent, most recently closing at just shy of $40 per share. The company operates a television streaming platform, and allows users to personalize content, and also monetizes its service through ad-supported channels. With the streaming video space becoming increasingly competitive from dominant players such as as Netflix, Apple TV, Google Chromecast, and Amazon’s Prime Video and its Fire TV Stick, Roku faces stiff competition in terms of user acquisition. Envision IP analyzed Roku’s US patent portfolio to understand the extent of its intellectual property focus, as well as how the company is innovating its platform to differentiate itself from the competition.

According to Roku’s S-1, dated Sept. 1, 2017:

“As of June 30, 2017, we owned 33 issued United States patents (8 of which are design patents) that are scheduled to expire between 2031 and 2035, with respect to utility patents, and between 2021 and 2032, with respect to design patents. We continue to file patent applications and as of June 30, 2017, we had 56 U.S. patent applications and 24 international patent applications (21 of which are Patent Cooperation Treaty (PCT) applications) pending.” (Page 102)

Based on our research conducted on November 24, 2017, Roku currently owns 44 issued US patents, and 39 published, pending US patent applications. The difference between the 39 published applications that we identified and the 56 figure listed in the S-1 may be due to the fact many of the patent applications have not been published yet.

The issued patents consist of 33 utility patents, and 11 design patents, with the earliest priority years for the utility patents dating back to 2011. Two design patents, USD546337S1 and USD558781S1, have priority dates of 2003 and 2005, respectively. This is interesting, given that Roku’s first video receiver box, the Roku DVP, was not commercially available until 2008. The patent data indicates that the company may have been developing its platform for years prior to its first product launch, possibly in stealth mode. Below are excerpts from these two design patents showing Roku’s first user interface and box designs.

Given that Roku aims to offer personalized content and user experiences, we were surprised that only a handful of its patents discuss social networking or the use of social data in order to customize a user’s experience. Social-based personalization seems to be the cornerstone of much of today’s pervasive applications and systems. We analyzed Roku’s issued patents and published patent applications, and identified only two references mentioning the use of social networking or social technology. Roku’s patents focus primarily on customization based on prior user history and demographic information, as well as user supplied preferences.

The portfolio covers various aspects of Roku’s streaming platform, from its set-top device and hand-held controller hardware, to software related to on-screen guides, multimedia searching, sharing multimedia and content, closed captioning, and customization features such as content prioritization and user interface layouts.

Another interesting note is that Roku’s US patent portfolio appears to be entirely organic, and the company has not acquired any third-party patents. This is in stark contrast to companies such as Twitter, Facebook, and Snap, which had amassed large patent portfolios primarily via acquisitions around the time of their respective IPOs. The bulk of these acquisitions were made from IBM. We reported in September that Hulu acquired over 50 patents from IBM recently related to audio and video streaming, DVR technology, and video coding. In addition, Rovi acquired a patent from IBM recently as well related to on-demand streaming. We would not be surprised if Roku seeks to acquire third-party patents, possibly from companies such as IBM, Hewlett-Packard, Panasonic, NEC, Sony, and others which have large patent portfolios related to video and audio transmission, multimedia streaming, and cloud storage.

That being said, Roku recently inked a multi-year patent agreement with TiVo, where Roku obtained a license to thousands of Rovi and TiVo patents. While the specific terms of the deal have not been disclosed, in the event that Roku has been granted defensive assertion rights, it may not need to rely heavily on third-party patent acquisitions to bolster its defensive patent portfolio. To that point, we did not identify any instances where Roku has asserted any of its patents, either offensively or defensively (via a counter-suit in response to being sued by a third-party), as of the date of this research.

We expect Roku to continue its trend of aggressively filing patent applications for its in-house platform development. Given its influx of cash post-IPO, the company may focus on strategic patent and technology acquisitions to increase its product and feature offerings, versus large scale bulk patent portfolio purchases in light of its current license with TiVo.

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