IBM's Crafty Intellectual Property Strategy

Posted by: Michael Arndt on December 08, 2008

IBM came up during a discussion at the Salzburg Global Seminar, a five-day conference in Austria on new models in intellectual property. IBM is known, of course, for innovation. That may be best reflected in the number of patents it nabs: The company has ranked first in the world for the last 15 years, with more than 3,100 last year alone. But IBM, according to one of the seminar’s co-chairmen, is just as creative in the inventions it gives away. The generosity may make IBM look like a good guy championing the open source movement. Good PR or altruism is beside the point, however.

IBM files for patents on its core discoveries, like all tech biggies. But rather than seeking patents on peripheral breakthroughs, the company makes them public by publishing them with patent authorities, said Johnson Kong, executive vice-president of IP.com, a New York-based intellectual property advisory.

While that may seem against IBM's self-interest--you can't license technology you don't own--it's actually not, Kong added. Once an invention has been made public, it becomes "prior art," a legal term that basically means it's not new and therefore in longer worthy of a patent. That stops IBM's competitors from patenting related advances and poaching on IBM's innovation. Like IBM, they can't license what they don't own. Kong called strategy this a "picket fence" defense.

He used an this analogy: Say IBM is the first to invent the chair. While its researchers came up with this new device, they also created the first chair head-rest, arm-rests, padding, and wheels. IBM secures a patent on the chair, but publishes its discoveries of the chair's features, turning them into "prior art." Thus, no one else can patent an add-on, while IBM profits from its core invention.

But why not patent everything and gain the rights to royalties from product extras? It's not worth it, Kong told me. Securing even a simple patent costs at least $5,000. Publishing an invention could be done for free. What's more, if anyone wants a padded office chair with arm-rests and a head-rest, he'll have to pay IBM for it. Sneaky, huh? And smart.

Here's part of my interview with Kong in Salzburg:

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What comes next? The BusinessWeek Innovation and Design team of Michael Arndt and Helen Walters chronicle new tools for creativity and collaboration, innovation case studies in both the corporate and social sectors, and the new ideas that have the power to change the way things have always been done.

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