Ideas Are Assets

2006-10-22

IBM loves patents. We’ve held the record for thirteen years for the most U.S. patents granted each year. IBM’s margin over the competition is also good (2941 in 2005, compared to 1828 for our nearest competitor, Canon). IBMers are actively encouraged to develop patents (which is probably why we do so well in the patent charts), and IBM is a large company with a lot of resources and a disproportionately large R&D; spend - perhaps no-one should be too surprised.

But in the chart position / size stakes, Nathan Mhyrvold’s company, Intellectual Ventures, is impressive. Their only products are patents - in much the same way, says Mhyrvold, as Coke’s product is a brand (trademark), and Microsoft’s is software (copyright). In other words, they are just focusing on another aspect of IP. A recent In Business episode looked at Intellectual Ventures, and they hold the record at 25th place for most U.S. patents granted in a year, despite being a minnow in a world of IBM and Canon. It’s an unfair comparision with IBM really, as IBM produces much more than just copyrighted product (a substantial portion of IBM’s business is services, not software), but IV has a fascinating business model, and one that’s still comparatively rare.

Update 2006-10-23: It’s unlikely to calm the debate I’ve been seeing on this topic any, but as Richard points out, IBM has just filed suit against Amazon for patent violation.

Update 2006-10-25: Greg at IBM Eye has more details on the suit.

Update 2006-10-29: John Simonds from IBM Analyst Relations (We allow these guys to blog? Wow!) has a personal perspective on the IBM-vs-Amazon case.

Update 2006-10-30: For some comment in defence of Amazon, see this article from PC Magazine.

Comments

Andrew: Nice blogsite. When did you start the blog under this title Ideas Are Assets? I inquire because there is a patent lawyer in California that is trying to get a US Federal Trademark on that phrase. She filed on April 3, 2006, so if your blog started before that you might be OK. Regards, J. Dulin

— Jim Dulin 2008-03-01 17:33

I understand your points on the concept of burying good ideas. However, IBM and other big companies don't have the market cornered on innovation. As a point of fact, most large companies acquire technology, rather than develop it in-house.

— ~rick 2006-10-23 01:11

Yeah, I have a problem with patents too... I am not sure whether they are right or not, but one thing is for certain - they are all companies have to protect their ideas with. The other side is that companies that just have patents and no actual application of them in the market are causing real pain to the IT world. Imagine if AOL actually had that patent on web links that they claimed they had (I think it was AOL, though it could have been someone else), and could actually force everyone with a website to pay $10 per link. Or the similar case with <a href="http://en.wikipedia.org/wiki/Eolas" rel="nofollow">Microsoft and Eolas</a> Thankfully all the big companies are not abusing their patents. It is a shame they don't release them to the public like IBM has done for a large number of its patents. If this area is interesting to you, i recommend <a href="http://www.paulgraham.com/softwarepatents.html" rel="nofollow">Paul Graham's post on the subject</a>

— Anton Piatek 2006-10-22 15:28

Actually, maybe the title - 'Ideas are Assets' - sounds like I'm a bit surer of myself than I am. I'll try to make my um-ing and ah-ing more obvious next time :)

— andrewferrier 2006-10-22 14:35

Yes I can :) Better to be passionate than lukewarm, I always think. Apart from describing them as 'impressive' and 'fascinating', I wasn't actually advocating what IV is doing - mainly because I'm still holding back on that. I have to admit I've always been in two minds about patents: whilst on one hand they can encourage innovation by providing an artifical monopoly, they can obviously also hinder it in some cases. The whole 'software patents' argument has always seemed to me to just be a distraction from a more fundamental discussion. In the end, I think this comes down to a moral statement about whether you believe that ideas are property or not. As a libertarian, I have minority views on property, but ideas have always been a difficult one for me, because they are so emphemeral and the are they/aren't they question seems so abitrary. What I will say is that I have considerably less respect for companies that simply trade patents (NTP?) than those who develop them in the first place. This is primarily because the former are just tedious and boring. IV fall into the second camp according to Mhyrvold. This could actually be a good thing - shoving a bunch of clever people together in one building and seeing what they come up with. That costs of course, so if they sell those ideas, I don't have too much of a problem with that I think. I'm still not clear what my opinion is, though.

— andrewferrier 2006-10-22 14:27

I think that producing patents with no intention to use them to protect your innovation in *real* products is morally wrong and should be legislated *against*. NB I don't think that IBM does this, but companies like the one you highlighted and e.g. NTP (bought patents as other product based companies went under then sued RIM et al on push email) are opportunistic money-grabbers who stifle innovation in the long term and may prevent truly original products being brought to market [ultimately the only place where they can benefit consumers]. Patents were originally designed to be a mechanism to allow inventors to profit from their personal innovation in the short term without fear that established players could copy them immediately and get rich off the back of their innovation. They were not intended to be and should not be allowed to further become commodities to be bought and sold by companies with no intention of developing the underlying IP, used to leach money out of others who genuinely try to provide a useful service into the pockets of a few executives and (mainly) lawyers. *phew*, can you tell I feel rather passionately about this?

— dps 2006-10-22 13:51