Shopify awarded two merchant patents as company continues to ramp up IP activity

Shopify Tobias Lütke

In recent weeks, Shopify was awarded two merchant patents by the United States Patent and Trademark Office (USPTO).

The patent approvals come as part of a broader shift in the e-commerce company’s intellectual property strategy, which saw Shopify begin to prioritize protecting its intellectual assets in 2019 as it ramped up competition with Amazon.

“Only in the last few years has Shopify begun to patent their innovation.”

The recently-approved patents, which were both filed by Shopify to the USPTO in 2019, pertain to recommending merchant discussion groups based on merchant categories and platform settings.

Michael Perry, currently the CEO of San Francisco-based Maple, who is listed as an inventor on the approved patents, confirmed to BetaKit the two patents were approved but declined to provide additional commentary on the approvals.

Perry filed the patents while working at Shopify. The approvals represent two of four patents filed by Shopify, since December 2018, with Perry listed as an inventor.

Though currently the CEO of Maple, a software startup targeted toward parents, Perry formerly served as director of product and marketing technology at Shopify from 2017 to 2019. Perry also served as director of Kit at Shopify, which was acquired by Shopify in 2016. Kit is an e-commerce plugin for Shopify that allows merchants to manage marketing and communication activities.

BetaKit has reached out to Shopify regarding the two patent approvals and whether the company has received any additional patent approvals recently. Shopify had not responded by time of publication.

In recent years, Shopify has worked to strengthen its intellectual property (IP) activity. According to Espacenet, a patent search database, Shopify currently has 45 patents that are either approved or are still pending. These range from email address verification to processing package deliveries.

But only three years ago, Shopify held no issued patents, according to its annual report for that year. Shopify’s 2020 annual information form noted the company held a “small number of issued patents.”

That form was published a few months after Shopify acquired 6 River Systems for $450 million USD. According to The Logic, 6 River Systems, which has developed warehouse fulfillment solutions, held four patents with the USPTO at the time of the acquisition.

The deal was a signal of Shopify’s intention to aggressively expand into fulfillment, a strategy it first introduced at its Shopify Unite conference in 2019. This move created an unexpected threat to e-commerce behemoth Amazon, which operates more than 175 fulfilment centres around the world.

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The acquisition of 6 River Systems also granted Shopify those four patents, with the company since ramping up its IP filings. Since patents are usually filed to ensure other businesses can maintain a competitive advantage, stock analyst Ross MacMillan has noted it made sense for Shopify to increase IP activity.

“Only in the last few years has Shopify begun to patent their innovation,” Natalie Raffoul, a Canadian IP lawyer, told BetaKit. “Hopefully, they can catch up, but they will probably need to increase their patenting rate 10-fold.”

Raffoul noted that Shopify’s 45 patents and applications pale in comparison to the over 11,000 global patent assets owned by Amazon.

IP generation has been a sticking point for many tech companies in Canada, not just tech darling Shopify. Provinces such as Ontario have been looking to promote and ramp up patent activity, particularly over the last year.

A February expert panel report highlighted the importance of IP as well as Ontario’s lag in commercializing it. One notable finding was that while 59 percent of Ontario’s small to medium-sized enterprises (SMEs) are at least slightly aware of patents, only two percent of SMEs hold at least one.

Notable members of that expert panel include Raffoul and Jim Balsillie, chair of the Council of Canadian Innovators and co-founder of BlackBerry. The latter, in particular, has long touted the importance of IP for the growth of the Canadian tech ecosystem

In July, the Ontario government created an action plan and team focused on generating IP in the province. That plan involves the provincial government working with post-secondary and research organizations in Ontario to revise the mandates of provincial commercialization entities such as startup and innovation hubs.

Isabelle Kirkwood

Isabelle Kirkwood

Isabelle is a Vancouver-based writer with 5+ years of experience in communications and journalism and a lifelong passion for telling stories. For over two years, she has reported on all sides of the Canadian startup ecosystem, from landmark venture deals to public policy, telling the stories of the founders putting Canadian tech on the map.

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