BOSTON — IBM Corp. says it has dreamed up a new method for profiting from its vast storehouse of patents. And by the way, the company wants to patent the idea.
Beyond the circularity of the concept, IBM's application is notable because the company — the world's top patent holder — has been campaigning to improve the quality of patent filings and reduce so-called "business method" patents.
"I think this is absolutely a business method patent," said Barbara Fiacco, a patent attorney with Foley Hoag LLP.
The new patent application was initially filed in April 2006, was updated last April and published by the U.S. Patent and Trademark Office last Thursday. It covers what IBM calls "a system and methods for extracting value from a portfolio of assets, for example a patent portfolio."
Specifically, IBM — which collects more than $1 billion in patent royalties every year — describes a new process for licensing patents. Instead of smaller companies licensing technologies from patent holders like IBM in a plodding, one-by-one manner, IBM envisions a more dynamic system with "floating privileges," in which patents could be licensed quickly, as needed.
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The application says this floating privilege, once purchased, could be activated by a patent-infringement lawsuit. In other words, companies would buy the right to use a patent portfolio like IBM's as a legal shield for themselves — "just like purchasing a fire insurance policy," IBM's application contends.
Alex Chartove, a patent attorney with Morrison & Foerster LLP, said IBM's proposal appears to be aimed at hindering "patent trolls" — a term often applied to small firms that buy up patents and aggressively wield them in lawsuits against other companies.
The problem for IBM, though, could be the greater scrutiny it and others have brought to business-method patents in recent years. In a 2005 "friend of the court" brief to the U.S. Supreme Court, IBM argued that patent law's scope should be "fairly narrow, and limited to technology," Fiacco said. In fact, IBM's brief acknowledged that some of its own patents "might not satisfy this standard."
One influential decision came last month, when the U.S. Court of Appeals for the Federal Circuit ruled against lawyer Stephen Comiskey's bid to patent a system for conducting arbitration. The implication appears to be that it is unacceptable to patent a basic idea that doesn't by itself transform something, without a technology that harnesses it.
Chartove said IBM's proposed patent for patent portfolios might fall into that category.
"It's not clear to me that there's a significant technological tie-in to the IBM application, at least in its present form," he said.
Because of IBM's vocal stance on patents, the company took some ribbing on tech blogs recently when an application surfaced in which IBM sought to patent a method for outsourcing labor. Robert Sutor, an IBM executive for intellectual-property standards, responded on his blog that the application would be withdrawn because it was not in line with the patent-reform drive.
This time, however, IBM wants to see the patent-portfolio application through. IBM spokesman Steven Malkiewicz said that while the application does describe a business method, "this is all only possible with technology."
LOCAL ANGLE
Patenting technology is a big deal at IBM Corp.'s storage-systems development center in Tucson.
The center, which employs 1,750 people in the University of Arizona Science and Technology Park at 9000 S. Rita Road, is one of Big Blue's major worldwide development centers for high-end computer storage systems used mainly by large businesses.
Earlier this year, IBM reported that scientists at the local center beat their own record for the number of U.S. patents they received in a single year, with 135 patents in 2006.
The Tucson staff previously won 100 patents in 2005, 95 in 2004 and 60 in 2003, mainly for innovations in storage systems, hardware and software.