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Patent reform and IBM's questionable patents

By Lawrence B. Ebert, Esq.

One cannot help but notice the curious squeeze being put on IBM patents in recent days.

On the one hand, there is Jon Dudas talking about IBM's toilet queue patent. Nate Anderson wrote:

[the patent] in many ways is symptomatic of the problems facing his office [the USPTO]. At a talk today [March 27] at the Tech Policy Summit in Hollywood, Dudas shed some light on why companies file such patents in the first place, and what his office hopes to do about it.

IBM, who Dudas only referred to as a "Fortune 10 company," is routinely at or near the top of the heap when it comes to number of US patents obtained in a given year. While companies generally want patents in order to protect intellectual property, that's not the only a reason for seeking patents. Dudas noted that Wall Street loves it when companies file patents, since patent numbers can be used as an easy proxy for innovation and R&D work. The sheer number of patents can also make it easier to strike cross-licensing agreements with other companies, as it makes a given patent portfolio look broader and stronger.

These things don't "promote innovation," as Dudas noted, but they do make increasing economic sense for many businesses. The result has been predictable; a surge in bad applications.

On the other hand, we have Bessen and Meurer and Princeton University Press talking about the "urban legend" of IBM's licensing. In a tiff with Joff Wild, one had the following.

In responding to Joff Wild of IAM, the authors [BM] wrote:

As we discuss in the book, p. 117, our estimates correspond well with IBM's actual performance. In fact, the "over $1 billion a year from licensing its patents" is an "urban legend" promoted by patent boosters; the actual figure is between $100 and $200 million and that is gross of the costs of IBM's several hundred lawyers.

Wild in turn noted:

The $1 billion of licensing revenue as an urban legend ?promoted by patent boosters? claim is an extremely serious one. In effect, what Jim and Michael are saying here is that there are a lot of people who have been economical with the truth about IBM?s licensing activities from the early 1990s onwards.

IPBiz notes one has both Director Dudas and Bessen/Meurer suggesting IBM's patents are not so valuable.

***See also

http://ipbiz.blogspot.com/2008/03/dudas-ibms-toilet-queue-patent-and.html

http://ipbiz.blogspot.com/2008/03/pinocchios-for-intellectual-property.html [One notes that Hillary Clinton changed the
story, but Lemley never did.]

http://ipbiz.blogspot.com/2008/03/more-on-bessen-and-meurer.html

Full post as published by IPBiz on March 27, 2008 (boomark / email).