Wednesday, February 11, 2009


Found in BUSINESSWEEK 17 MAR 1997: BIG BLUE IS OUT TO COLLAR SOFTWARE SCOFFLAWS by Ira Sager, Business Week, 17 March 1997, page 34 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 software companies hoping mad. Note: might as well call this date the formal birth at IBM of trollism 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. Note: a lesson well learned by many trolls to follow in the years to come. All thanks to IBM. So far, no lawsuits have been filed, but software companies aren't waiting. Several of them are launching a pre-emptive strike, hiring Silicon Valley's star litigator, Gary Reback, a partner at Wilson, Sonsini, Goodrich, Rosati. Two years ago, Reback took on Bill Gates. Representing a handful of Silicon Valley companies, he unsuccessfully tried to get the Justice Department to broaden an antitrust investigation of Microsoft. Now, Reback is hurling charges against IBM similar to those he leveled at Microsoft. "IBM shows up the same way someone might might demand protection money.", he says. Officials at the companies confirm that IBM has contacted them, but most refuse to talk publicly. Note: Peter D. - instead of "troll", you should have suggested "goodfellas" Collecting the patent royalties could add millions to IBM's net profits. In 1995 - the last year IBM released figures - the company took in $500 million from royalties on all patents Note: yet it cannot afford to pay for prior art searches for its patent applications software and hardware alike. Insiders say that senior managers Note: this include Kappos? believe that IBM could collect $1 billion a year from its patents. The software makers that have been contacted by IBM aren't yet willing to help Big Blue reach that goal. They maintain that lot of software patents - IBM's included - are too broad and never should have been issued. IBM's pursuit of royalties, they argue, is an abuse of a patent system that is too lax and does not require an applicant to really prove that the software application is unique. Note: of course, while complaining, these companies did nothing to help organize prior art resources and tools to donate to the PTO. IBM contends it's just trying to protect its intellectual property and get a fair return on the $5 billion yearly tab it runs up on research and development. "What Gary Reback is asking us to do is provide an R&D subsidy to our competitors, and we won't do that.", says Marshall Phelps, IBM's attorney in charge of intellectual property and licensing. Note: Phelps moved over to Microsoft, which is now flooding the PTO with its crappy patent applications, while his groomed successor is Kappos. 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 patent attorney Allen Wagner. With all the skirmishing that lies ahead, this dispute is still in Version 1.0.

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