MENLO PARK, CALIF. - Google made big news here earlier this month with its $1.65 billion swallowing of YouTube. The acquisition evoked an earlier epoch when the Dow flirted with 12,000 and startup companies (like Google itself) could float or sell themselves for astronomical sums.
But while this new-old-school purchase made big headlines, another development in the tech world has been traveling under the radar even as it portends potentially significant changes in the way that technology companies deploy their intellectual property.
In late September, IBM - arguably the oldest tech startup still around - took a major foray into the related fields of open-source software and patent reform by announcing that it would make its patent applications available for public scrutiny.
This marked only the latest wrinkle in Big Blue's increasing willingness to "liberate" its patent policies. Back in January 2005, the Armonk, NY-based company dedicated over 500 of its patents in the software field to the public.
While these composed a miniscule fraction of the 10,000 software patents in the company's portfolio, the move nonetheless signaled Big Blue's growing affinity for the (free) Linux platform and for an operating system-style showdown with Microsoft; by making some of its computing IP freely available to software developers, IBM hoped to encourage others to produce killer programs capable of running on Linux and challenging Windows.
The maneuver earned predictable plaudits from open-source types secretly hungry for the kind of recognition that only a major company can bestow.
And bestow IBM most certainly has. Its latest gambit appears to be even more ambitious than its previous surrendering of patents. According to the company's press release, IBM will relinquish another 100 patents in the controversial "business methods" field, an area encompassing Amazon.com's (in)famous "one-click" patent. The company announced its official view that "pure business methods [inventions] without technical merit should not be patentable."
Big Blue also plans to make its applications available for all to review within 18 months of filing them. Any programmer or academic out there who believes that certain similar products or patents predate IBM's claimed inventions will be encouraged to contact the company and share this "prior art."
The company also promises to provide its own "technical experts" who will "spend thousands of hours annually" sifting through other companies' patent applications in an effort to determine whether prior art exists.
The guiding principle behind the policy is that "patent quality is a responsibility of the applicant," according to the company's senior vice president for technology and IP. The new approach was apparently midwived by a two-month-long online wiki forum in which a "worldwide community of 50 experts in the fields of law, academia, economics, government, technology and others...collaborated with IBMers to...establish a blueprint for meaningful change."
On the whole, this new policy is a reflection of the company's belief that "widespread adoption of a more formal code of conduct around patents could ease the burden on legal and government administrative systems." It's an attempt to ensure that the patents that do end up issuing are clear, well-founded, and unimpeachable, a highly laudable goal.
Of course, some have interpreted these moves as yet more evidence that something's rotten in Armonk. IBM has gradually extricated itself from what was once its core business: making computers. In 2005, it stopped selling PCs, instead licensing its popular ThinkPad notebook line to Lenovo, a Chinese company that now manufactures all IBM-branded computers.
Ostensibly, these divestments were aimed at enabling the company to focus on its core competence: developing software. Yet now, the world's leading intellectual property company - IBM's portfolio reportedly exceeds 25,000 in the U.S. and 40,000 worldwide; it received 3,248 issued patents in 2004 alone - appears to be dismantling its own empire, prompting some analysts to wonder: what gives?
I think there are two equally plausible explanations: a cynical one and an altruistic one.
First, let's indulge the cynics, including one patent law expert that I interviewed. For one thing, it's not yet clear exactly which of its patents IBM considers to be illegitimate business method inventions that are unworthy of exclusive protection and which, instead, it intends to continue relying on.
It could also be argued that by presenting its applications to the public (and generally not sooner than 18 months after they're filed), IBM is merely outsourcing its own patent review efforts to the community of programmers. Why pay an internal team of lawyers and technicians when slashdotters galore will gladly review your patents for you?
And cynics might also see a sinister motive in Big Blue's announcement that it will now be monitoring PTO filings for dodgy patent applications filed by others. Is the company actually committed to ensuring the objective validity of all software patents or is it just trolling (perhaps "goating" would be more appropriate) for shaky patents that might inhibit its business?
But on the other hand, from an altruistic perspective, in implementing its new policy, IBM could be exploiting the company's first-mover position to foster positive changes across the industry. As the Hummer of the computing IP world, guzzling Patent Office resources like they're going out of style, Big Blue has opted for fuel efficiency, shrinking itself from the H2 to the H3. In so doing, IBM also appears to hope that its competitors will follow suit, thereby conserving the finite supply of PTO time and money. Even if the policy is to the company's immediate detriment, it's betting that it will influence the system enough to restore balance.
Thus, the company seems to be adopting the approach of Harvard College, which recently announced that it would no longer accept "early" applicants. While at first blush, the decision would appear to disadvantage Harvard relative to its competitors for elite students (such as Stanford and that school in New Haven) which will now get first crack at top high schoolers, the nation's oldest university felt confident enough in its position that it could sacrifice its own well-being for (what it saw as) the good of the system (Harvard officials believe that the early admission process burdens students who require financial aid, since by considering only a single school, they cannot compare aid packages from multiple colleges).
Interestingly, Princeton and other schools have followed Harvard's lead in abolishing early admission while all admissions directors across the country have had to engage in the debate.
So too, IBM seems to expect that that which will benefit the industry will also bolster its bottom line.
In a sense, then, the two explanations for IBM's actions dovetail: the company is undoubtedly trying to improve its competitive position while also attempting to improve the system for all players. Big Blue is quite possibly trying to do well by doing good.
Whether or not the plan will work remains to be seen. But this could prove to be one of 2006's most important developments in the tech and IP worlds, the Google grab notwithstanding.
Michael M. Rosen, TCS Daily's Intellectual Property columnist, is an attorney in San Diego.