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IBM Takes Major Step Against Patent Trolls

IBM is a patent generating powerhouse. A record number of patents, 9,262, was awarded to the company in 2019. This number is the most patents ever awarded to a US company and IBM has led in the patent race in the US for 27 consecutive years. In patents, IBM is nearly a force of nature. […]

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Rob Enderle

Jan 17, 2020

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IBM is a patent generating powerhouse. A record number of patents, 9,262, was awarded to the company in 2019. This number is the most patents ever awarded to a US company and IBM has led in the patent race in the US for 27 consecutive years. In patents, IBM is nearly a force of nature.

IBM this week announced a major move to help the industry defend against Patent Trolls and the company is pledging a substantial amount of its intellectual property to that defense this week.

Since Patent Trolls are a significant drag on the industry, let’s talk about getting rid of them this week.

IBM’s Patent Arsenal

IBM has a massive patent arsenal, not only in having a total of 140,000 patents going back to 1920 but in the diversity, depth, and power of those patents.

For instance in Artificial Intelligence they have 1,800 patents, in Blockchain (an ever more critical secure transaction technology) they have patents in making it more secure. They have 2,500 patents in cloud technology with many in hybrid cloud platforms, and they have many patents in homomorphic encryption, a technology that allows users to access encrypted data without decrypting it.

With 8,500 inventors across 45 different countries, IBM is a power to be reckoned with, and their legal teams are some of the most experienced in the segment.

Historically IBM has sold a lot of the patents they don’t intend to use to the secondary market, and some of the firms that have eventually acquired them may have been Patent Trolls. IBM is moving aggressively to correct this by joining with the LOT Network.

Patent Trolls (PAEs)

One of the biggest problems for any technology company, including IBM, are PAEs (Patent Assertion Entities, which are informally known as Patent Trolls). These are companies that buy patents in bulk cheaply, wait around until some company invents a compelling infringing technology, and then they use the patents to extort money from them.

These companies provide no real value, and they make money by using the Patent system in a way that should be illegal but, sadly, isn’t.

LOT Network

Red Hat, recognizing this critical problem, co-founded the LOT Network, as the leading provider of open source software solutions to the enterprise.

The LOT Network has over two million patent assets, and these assets form a defense for companies under attack by Patent Trolls. Currently, the LOT network has over 600 companies in it, all working to mitigate patent abuse. The network notes that many dollars bleed to needless patent troll litigation. This massive drain on funds that likely would have otherwise gone to making the related firms better able to do Research and Development is a massive drain on the world’s productivity. And is directly opposed to the purpose of the Patent system, which is supposed to encourage innovation, not create huge financial penalties against it.

And this problem isn’t static either. According to LOT, Patent Troll lawsuits have increased 500% in the past ten years, a rate of increase that isn’t sustainable and could have a major adverse economic impact on the nation and world over time. I should add that the average cost on a single Patent Troll lawsuit is around $3 million dollars, which can often significantly exceed the funding of a startup.

With the acquisition of Red Hat, IBM coincidentally became a member of LOT, but just announced they are formalizing and significantly strengthening this relationship.

Wrapping Up: IBM + LOT

This week’s announcement that IBM is joining LOT is a powerful step toward mitigating the damage that POEs (Patent Trolls) do to the industry. By contributing 80,000 patents, they are significantly increasing LOT’s resources. And by changing their Patent Sales process to avoid selling to POEs, they are now, more aggressively, contributing to the solution.

Other technology firms that aren’t already part of the LOT Network should consider joining as well. For only by working on this problem as an industry can the plague of the POE/Patent Troll finally be eliminated, allowing the market to go back to focusing on innovation rather than litigation defense.

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Rob Enderle

As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.