05.05.16

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IBM Comes Under Growing Scrutiny for Increasingly Acting Just Like a Patent Troll Amid Layoffs

Posted in IBM, Law, Patents at 8:51 am by Dr. Roy Schestowitz

The ‘Microsoft syndrome’ strikes or spreads to IBM, its cross-licensing buddy

Ginni Rometty

Photo source (modified slightly): The 10 Most Powerful Women in Technology Today

Summary: Deservedly if not belatedly too, more and more pundits come to recognise the rogue element which is IBM, having promoted software patents all around the world, utilised software patents aggressively (to attack/marginalise/tax rivals), lobbied the government to antagonise the Supreme Court’s decision on Alice (using former IBM staff which it had somehow snuck into the USPTO), created bogus solutions to the side effects (such as patent trolls) and so on

“Patent Trolls have already begun to try & discredit the FTC PAE Report & it’s not even been released yet,” Anti-Software Patents wrote earlier this week. All this while the software patents lobby trash-talks SCOTUS (and one particular Associate Justice in particular), PTAB, an Australian report against software patents etc. As we showed here in recent days, IBM played a major role in this lobby. Are they thugs or trolls? Or both maybe?

“Patent Trolls have already begun to try & discredit the FTC PAE Report & it’s not even been released yet”
      –Anonymous
“PTABWatch”, a blog of patent lawyers (Marshall Gerstein & Borun LLP) now evokes David Kappos again (his lobbying is now funded by massive patent aggressors including Apple, IBM, Microsoft etc. but he came from IBM) and to quote the relevant portion: “In a recent speech at a Federal Circuit Judicial Conference, David Kappos, former Under Secretary of Commerce and Director of the United States Patent and Trademark Office, suggested § 101 should be abolished because recent case law in this area has resulted in “a real mess.” Like many practitioners, Mr. Kappos reiterated that courts can ensure basic concepts are not patented while protecting innovation by applying other areas of patent law to make sure patents are novel and non-obvious. Consistent with Mr. Kappos’s criticisms of the developing case law on § 101, Sequenom recently has sought the Supreme Court’s review of the Federal Circuit’s application of § 101 in the Ariosa decision, and many companies and industry organizations have filed amicus briefs supporting Sequenom. What will happen remains to be seen, but there is a growing and significant consensus (among practitioners at least) that something needs to be done at a higher level to clean up this “real mess.” Until such time, this blog will keep a close watch on the developments of decisions relating to §101 in IPRs and how patent eligibility is being viewed at the PTAB and the courts.”

It should be clear that the same forces which lobby for software patents often, unsurprisingly, oppose patent reform. Pieter Hintjens, who has not much time left to live, reminisces: “well, they were just lying. IBM was the one that broke the US patent system to allow software patents.”

“IBM was the one that broke the US patent system to allow software patents.”
      –Pieter Hintjens
“IBM says software patents drive OSS development,” he recalls (from a 2009 article). We never forgot that.

Now that IBM openly attacks companies using software patents John C. Dvorak publishes the article “IBM Is the World’s Biggest Patent Troll” in which he says:

IBM’s real value is with the R&D folks who have helped IBM top the list of companies with the largest number of US patents granted year after year. This has never stopped growing. Last year it was 7,355 patents granted for IBM (followed by 5,072 for Samsung and 4,134 for Canon, with a big drop-off after that to Qualcomm with 2,900 and Google with 2,835).

The patent system is out of control since many of these patents are idiotic software algorithm or blocking patents, designed to keep others away from certain technologies. The point, though, is that IBM has been leading this pack for over two decades and shows no signs of slowing down. That is unless you think 7,355 is slowing down from its 2014 tally of 7,534 patents. In 2013, it secured a mere 6,809.

These numbers are outrageous when you stop to consider that patents were intended to protect small inventors and companies. Now the system is used to dominate that small fry. Good work, USPTO.

Many of IBM’s current patents are about data analytics and so-called cognitive computing, like Watson. It in turn collects “over” a billion dollars a year from licensing, which sounds low to me. I say this because on its licensing page, IBM claims to have 250,000 experts who will work with you to find the right patents for your company.

Those experts likely generate at least $100,000 in business each every year, which I think is conservative. You do the math and that’s $25 billion. This makes sense when the company claims to drop $6 billion into R&D each year. In fact, it would not surprise me if most of its revenues were from licensing, and far more than $25 billion. IBM’s overall revenues are around $82 billion.

With puff pieces like this new one about IBM, no wonder few people care to have noticed what IBM recently turned into (amid layoffs).

“Just last week, the Federal Circuit declined to fix this problem, leaving it up to Congress or the Supreme Court to act.”
      –EFF
Patent trolling is a very serious problem in the US and CAFC, which brought software patents to the US, refuses to stop these trolls [1, 2]. The trolls typically use software patents. Here is an MIP report about it and here is the EFF expressing frustration over it: “As the law stands now, patent owners have almost complete control over which federal district to file a case in. That’s a major problem. It lets patent owners exploit significant differences between courts, an advantage that the alleged infringers in patent suits don’t have. It effectively leads to outcomes being determined not by the merits of a case, but rather by the cost of litigation. Just last week, the Federal Circuit declined to fix this problem, leaving it up to Congress or the Supreme Court to act.”

“Mossoff just can’t help attacking the messenger for trying to stop patent trolls.”Trolls’ apologists aren’t idle either right now. Consider Adam Mossoff, who works for some kind of patent maximalism think tank (“The Center for the Protection of Intellectual Property at Mason Law promotes the scholarly analysis of IP rights and the creative innovation they make possible,” by its own description), so it’s not too shocking that he keeps protecting patent trolls, attacks their critics, and now picks on the EFF. Mossoff just can’t help attacking the messenger for trying to stop patent trolls. This isn’t a new thing from him.

“How to Kill a Patent Troll” is a new article which speaks about what patent trolls are and then promotes the IBM-connected RPX as the solution. It’s not the solution at all. To quote portions from this article:

Anecdotally, NPEs are trolls. But Cohen, Gurun, and Kominers wanted some hard proof. For that, they turned to data from RPX Corporation, which maintains a database on NPE litigation going back to 1977. (RPX also offers its clients a novel and slightly odd solution to patent trolling: It buys patents from NPEs before they start suing others for licensing fees. RPX asserts they are not themselves patent trolls.)

Both the RPX data and other sources make it clear that NPEs are predominantly trolls, mainly because of who NPEs go after: cash-rich tech companies. Cohen, Gurun, and Kominers calculate that the likelihood of getting sued by an NPE is roughly 16 percent among companies with the most cash, roughly double the baseline rate. By comparison, the likelihood of getting sued by a practicing entity—that is, a company that actually worked to create its patents—is less than five percent. NPEs are also more likely to sue firms with small legal teams and those dealing with other lawsuits. In other words, they go after companies with the biggest wallets and the fewest available minutes.

They conveniently neglect to mention that RPX is now a powerhouse of huge ‘patent trolls’ such as IBM. Not good advice at all… this is even more useless than OIN, which was also (co-)created by IBM and was originally led by IBM staff, Jerry Rosenthal.

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