IBM expands patent troll fight with its massive IP portfolio

After claiming more than a quarter century of patent leadership, IBM has expanded its fight against patent assertion entities, also known as patent trolls, by joining the LOT Network. As a founding member of the Open Invention Network in 2005, IBM has been in the patent troll fight for nearly 15 years.

The LOT Network (short for License on Transfer) is a nonprofit community of more than 600 companies that have banded together to protect themselves against patent trolls and their lawsuits. The group says companies lose up to $80 billion per year on patent troll litigation. Patent trolls are organizations that hoard patents and bring lawsuits against companies they accuse of infringing on those patents.

IBM joins the LOT Network after its $34 billion acquisition of Red Hat, which was a founding member of the organization.

"It made sense to align IBM's and Red Hat's view on how to manage our patent portfolio," said Jason McGee, vice president and CTO of IBM Cloud Platform. "We want to make sure that patents are used for their traditional purposes, and that innovation proceeds and open source developers can work without the threat of a patent litigation."

To that end, IBM contributed more than 80,000 patents and patent applications to the LOT Network to shield those patents from patent assertion entities, or PAEs.

Charles King

IBM joining the LOT Network is significant for a couple of reasons, said Charles King, principal analyst at Pund-IT in Hayward, Calif. First and foremost, with 27 years of patent leadership, IBM brings a load of patent experience and a sizable portfolio of intellectual property (IP) to the LOT Network, he said.

"IBM's decision to join should also silence critics who decried how the company's acquisition of Red Hat would erode and eventually end Red Hat's long-standing leadership in open source and shared IP," King said. "Instead, the opposite appears to have occurred, with IBM taking heed of its new business unit's dedication to open innovation and patent stewardship."

IBM's decision to join should also silence critics who decried how the company's acquisition of Red Hat would erode and eventually end Red Hat's long-standing leadership in open source and shared IP.

The LOT Network operates as a subscription service that charges members for the IP protection they provide. LOT's subscription rates are based on company revenue. Membership is free for companies making less than $25 million annually. Companies with annual revenues between $25 million and $50 million pay $5,000 annually to LOT. Companies with revenues between $50 million and $100 million pay $10,000 annually to LOT. Companies with revenues between $100 million and $1 billion pay $15,000. And LOT caps its annual subscription rates at $20,000 for companies with revenues greater than $1 billion.

Meanwhile, the Open Invention Network (OIN) has three levels of participation: members, associate members and licensees. Participation in OIN is free, the organization said.

"One of the most powerful characteristics of the OIN community and its cross-license agreement is that the board members sign the exact same licensing agreement as the other 3,100 business participants," said Keith Bergelt, CEO of OIN. "The cross license is royalty-free, meaning it costs nothing to join the OIN community. All an organization or business must agree to do is promise not to sue other community participants based on the Linux System Definition."

IFI Claims Patent Services confirms that 2019 marked the 27th consecutive year in which IBM has been the leader in the patent industry, earning 9,262 U.S. patents last year. The patents reach across key technology areas such as AI, blockchain, cloud computing, quantum computing and security, McGee said.

IBM achieved more than 1,800 AI patents, including a patent for a method for teaching AI systems how to understand implications behind certain text or phrases of speech by analyzing other related content. IBM also gained patents for improving the security of blockchain networks.

In addition, IBM inventors were awarded more than 2,500 patents in cloud technology and grew the number of patents the company has in the nascent quantum computing field.

"We're talking about new patent issues each year, not the size of our patent portfolio, because we're focused on innovation," McGee said. "There are lots of ways to gain and use patents, we got the most for 27 years and I think that's a reflection of real innovation that's happening."

Since 1920, IBM has received more than 140,000 U.S. patents, he noted. In 2019, more than 8,500 IBM inventors, spanning 45 different U.S. states and 54 countries contributed to the patents awarded to IBM, McGee added.

In other patent-related news, Apple and Microsoft this week joined 35 companies who petitioned the European Union to strengthen its policy on patent trolls. The coalition of companies sent a letter to EU Commissioner for technology and industrial policy Thierry Breton seeking to make it harder for patent trolls to function in the EU.