IBM's patent lawyers have fought most of the landmark cases through the European Patent Office (EPO) and the German courts in order to make software patentable in Europe. Most recently, IBM's chief lawyer,
Fritz Teufel, has pressed a
spellcheck patent all the way to the highest court and obtained a (somewhat sleazy and half-hearted) legalisation of computer program claims. In 1998 IBM obtained
the same from the EPO.
Moreover IBM representatives were active in various organisations and lobbied governments to permit software patents. In Sep 2000 The Gesellschaft für Informatik (GI) published pro swpat press releases that were immediately echoed by the association's vice president, Andrea Grimm, who is an IBM manager. When questioned by some critical members of GI, Ms Grimm stated that IBM is against trivial software patents and that software patents can harmoniously coexist with opensource software.
IBM patent department representatives gave strong statements in favor of software patentability at several meetings at EU and national levels. In private meetings with government officials in 1997/98 they have pressure governments to push the European patent legislation toward official recognition of software patetents and announce that IBM will make its investments in a specific country dependent on that country's government's favorable behavior.
IBM has for many years sponsored the Software Patents Institute, which failed to solve the problem of software prior art while consuming a lot of state and industry money. In 1998, IBM exerted pressure on the Clinton administration to prevent one of the president's advisers from ordering a thourough survey of patent quality and of the effects of the recent expansion of patentability.
see Aborted Whitehouse Study on Software Patents 1998
Around 1990, IBM was not aggressively asserting its software patents but rather using them to gain access to key innovations of competitors, as IBM manager Roger Smith
explained at the time.
Business Week had an article about how IBM uses its patents to press money out of the American software industry. This amount is enough to build many IBM business centers throughout Europe. The question is only, whether Europe should accept the IBM tax or not rather do something on its own to foster the development of software.
BIG BLUE IS OUT TO COLLAR SOFTWARE SCOFFLAWS
Business Week: March 17, 1997
...
Big Blue holds more software patents than any other company in the world. That's great for bragging rights, but it does little for the bottom line. Now, however, IBM sees money in that trove of intellectual property--and its efforts to collect are making other software companies hopping mad. Lawyers for Big Blue are searching for software companies that it says should be paying royalties but aren't. Over the past several months, IBM has been quietly pursuing patent claims against such well-known software companies as Oracle, Computer Associates, Adobe Systems, Autodesk, Intuit, and Informix. IBM is also pressing a software claim against computer maker Sequent Computer Systems Inc.
...
Now, Reback is hurling charges against IBM similar to those he leveled at Microsoft. "IBM shows up the same way someone might demand protection money," he says. Officials at the companies confirm that IBM has contacted them, but most refuse to talk publicly. Collecting the patent royalties could add millions to IBM's net profits. In 1995--the last year IBM released figures--the company took in $650 million from royalties on all patents, software and hardware alike. Insiders say that senior managers believe IBM could collect $1 billion a year from its patents.
When IBM strikes a royalty agreement, it collects 1% to 5% of the retail price of a product using the covered technology. That's a sliding scale depending on the number of patents involved. If IBM can collect royalties from those companies using its approximately 2,500 U.S. software patents, it could reap almost as much from software as the $200 million in royalties it gets from PC makers. Reback says he was told IBM asked one software maker to pay $30 million to $40 million a year.
Indeed, some folks in the computer and software businesses fear that the whole industry could wind up paying a 1% to 5% tax to IBM. "It's hard to be in the computing business--hardware or software--and not infringe on a couple of dozen IBM patents, if not more," says Greg Aharonian, a patent consultant. Meanwhile, other technology companies are following IBM's lead. Says Richard A. McGinn, president of Lucent Technologies Inc.: "We've seen IBM become much more aggressive, and we are, too."
IBM has patented everything from the software to automatically return the cursor to the start of the next line on a computer screen to a state-of-the-art virus-detection program. So far, it has made claims against companies by invoking patents including a spell-check function and techniques for how a database program handles queries and runs on so-called parallel-processing computers.
Software companies aren't eager to settle. Intuit Inc., for one, rejected a patent license deal that IBM offered. Some companies are afraid that paying now will set a precedent, making it harder to say no later. "If we sign up with IBM today, then what happens in three or five years, when the patent agreement expires?" asks Oracle Corp. patent attorney Allen Wagner. With all the skirmishing that lies ahead, this dispute is still in Version 1.0.
IBM 2003-01: 3288 US patents in 2002, 10 bn IP royalties in 10 years- An IBM press release about the patent figures of 2002, which celebrates the continued champion position of IBM in patent numbers among the IT companies, with Canon and HP lagging far behind. The article does not disclose how much of the "10 bn IP royalties in 10 years" is due to patents and how much to copyright and other legal titles.
- WIRED: IBM Patent Revenues in 2000
- Reports license revenue figures but fails to distinguish between patents and copyright:
IBM touted 2,886 patents last year, of which a third -- 962 concepts -- shipped in the form of products. IBM raked in $1.6 billion in intellectual property license fees last year, according to company spokesman Tim Blair.
- Inc.com 01/09: Patent Licensing Strategies
- Advises patent departments on when to embark on an aggressive patent enforcement and royalty-collecting strategy and how to get corporate support behind it. In order to profit from patents it is necessary to transform the company and orient it around a patent strategy unit. Names IBM royalty income figures as a success example. Again the figures relate to "IP" and it is unclear how much of this is based on patents.
- Reback on IBM's predatory patent practises
- The american attorney Gary Reback is known for his role in the procedings against anti-competitive practises by Microsoft. In the 80s, working for Sun Microsystems, he got to know IBM's patent portfolio. 14 IBM lawyers + assistants visited the young firm and asked for 20 million USD without even showing any infringement by Sun. They got what they asked for and proceded to the next victim.
- Forbes 2003/08/07: IBM's Path From Invention To Income
- According to statistics in this article, IBM spent $4.75 billion on research and development, and this article suggests, but does not say clearly, that this is turned into profit mainly by means of patent licensing rather than by application development.
But over the last several years IBM has brought research out of the shadows and in front of customers. Much of the focus has been on software, which accounts for 15% of IBM's revenue and one-third of its profits. Software now contributes almost half of its patents, compared with less than 10% five years ago. With more than 22,000 patents in total, IBM has been granted more patents than any company in the world for the past decade. According to Paul Horn, IBM's senior vice president of research, IBM has generated $1 billion in profit--that's profit, not sales--by licensing intellectual property developed by its researchers.
IBM is one of the few companies in the software area that speak independently and with a certain degree of coherence between the departments about their patent policy.
The speeches by IBM patent law experts such as David Kappos can be astonishing. On 2001-10-20 at a hearing in London, Kappos incurred the wrath of european patent lawyers by criticising the effects of business method patents and trivial patents on the economy and asking the people from the European Commission not to follow the USA but rather to apply stricter standards of "technical contribution" and non-obviousness. When vocal patent lawyers such as Jürgen Betten protested, saying that IBM was profiting most of all from this system and now apparently "once again, as in the 70s" turning its back on their allies, Kappos responded along the lines of:
For us as a company adjusting to whatever system there is is a question of survival. If the mayor hands out guns to everybody in town, you can bet IBM is going to get some of the best guns. That doesn't mean that we are necessarily in favor of a liberal gun policy.
This did not prevent IBM from factually doing everything to push software patentability in Europe. They merely took a more cautious rhetoric, and it seems that they are, unlike GE and some other american companies, not doing this merely because the patent department follows a patent movement agenda, but also because they do not want their server market to be blocked by business method patents, of which IBM does not have so many yet. This is indeed similar to their motivation to oppose software patents in the 1970s.
Perhaps IBM is not quite united on this issue. In its upcoming UK Patent Orifice rally in Brussels, the British patent movement invited Fritz Teufel instead of David Kappos. As a pure lawyer, Teufel is unlikely to change the hardline views which were the keys of his successes in european courts until now.
Although IBM may be earning substantial revenues from its large collection of trivial software patents, it is not sure that unlimited patentability is in the best interest even of IBM. Patent managment generates costs that were not considered in the above calculations. Specialised litigation companies acquire patents in order to go after giants. IBM could perhaps be even more profitable if it didn't dedicate so much of its ressources to this type of warfare. Building the business strategy on patents is increasingly appearing incoherent with IBM's strong support for opensource software and the significant business it has generated therefrom.
In an
interview from 2002/02, a leading developper working for IBM explained some aspects of IBM's patent policy and its conflict with the policy of supporting GNU/Linux.
Dr. Karl-Heinz Strassemeyer basically said:
- IBM does not ship any free software that infringes on patents.[1]
- IBM only submits patches to the Linux kernel after a formal procedure of patent clearance
- IBM does not do distributions because the risk of infringing a patent that way is too high.
- IBM does not deploy Linux in embedded systems of devices which it sells because someone might find that the kernel infringes on a patent and then sue IBM.
As explained above, IBM has become a favorite target of specialised patent litigation companies. IBM attracts such companies more than any small Linux distributor at present.
How are the IBM "IPR licenses" revenues distributed between copyright, software patents, hardware patents and contracts based on some other kind or combination of proerty titles ?- To what degree is IBM's patent lobbying a part of the general actvities of the patent movement to which the people at the IBM patent department belongs (and therefore simply determined by the ideology of that movement), and to what extent is it a well-deliberated corporate policy of IBM?
- Can some common grounds be found that would enable IBM to develop a position of its own that is more rational and more friendly to free software?
- (SmartBusinessMagazine: The Patent King - IBM Corp. : describes how IBM is using its patent portfolio to squeeze money out of companies)
- Bitkom zu Softwarepatenten: Beiträge zur Bundestags-Anhörung 2001-06-21
- Das Referat hielt die Vorsitzende des Arbeitskreises Gewerblicher Rechtschutz, Frau Dr. Katrin Bremer. Anwesend war auch PA Fritz Teufel von IBM, der diesen Arbeitskreis bis vor kurzem geleitet hatte. In ihrem Referat fordert Frau Bremer eine zügige Legalisierung von Softwarepatenten durch Anpassung von Art 52 EPÜ an die Rechtsprechung des Europäischen Patentamtes und meint, die "Opensource-Bewegung" werde es überleben, da sie innovativ sei. In der später eingereichten offenbar von PA Teufel geschriebenen schriftlichen Eingabe heißt es, freie Software sei nicht innovativ und es seien immer die Nachahmer, die das Patentwesen fürchteten.
- IBM
- EICTA
- (Think Magazine 1990 #5: IBM's Roger Smith about the value of patents)
- Think Magazine 1990 #5 contains an article which quotes a spokesman from IBM explaining how IBM can use patents to access key innovations of competitors. "You get value from patents in two ways," says Roger Smith, IBM Assistant General Counsel, intellectual property law. "Through fees, and through licensing negotiations that give IBM access to other patents. The IBM patent portfolio gains us the freedom to do what we need to do through cross-licensing--it gives us access to the inventions of others that are the key to rapid innovation. Access is far more valuable to IBM than the fees it receives from its 9,000 active patents. There's no direct calculation of this value, but it's many times larger than the fee income, perhaps an order of magnitude larger."
- Patenting: An Idea Whose Time has Gone?
- A banker writes that as patent application numbers explode it is becoming increasingly unattractive for small companies to file for patents. They will usually spend a lot of money and in any case have to share their monopoly with large companies who own related patents. Small companies are usually more successful if they instead rely on informal protection shields (product complexity, business secret) and concentrate their energies on quickly moving in the market. Instead of patenting themselves, they should look for a corporate big brother from the start.
- Software Industrie Berlin Brandenburg
- ein Verband wichtiger mittelständischer Softwareunternehmen der Region, bei dem PA Teufel von IBM im September 2003 einen Vortrag hielt. Ein PDF zum Vortrag vom Software-Tag 2003 ist beim SIBB wahrscheinlich auf Anforderung verfügbar.
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