Tonnerre Lombard

The international computer manufacturer IBM has filed an amicus brief to the Bilski case in the USA, a case which is considered decisive for the future direction of software patents in the United States and potentially larger parts of the world.

The message was very clear: IBM stated that software patents are not needed to create or protect innovation. In fact they are hindering it and damaging the overall economy: «You’re creating a new 20-year monopoly for no good reason.»

This position came as a bit of a surprise considering that IBM is part of the Business Software Alliance, an organization who promoted software patents very openly during the Software Patent debate in the European Union. However, IBM lawyers have stated repeatedly on various unofficial occasions since then that the patents have not served the wealth of the company in any way.

Cold Patent War: Productivity considered harmful

The problem IBM is facing with software patents is very easy. The few actors in the world who had a sufficiently large budget to equip their operations with software patents are now standing unable to use them against each other because the patent portfolios are so vast that both companies would suffer serious consequences in any dispute. The reason for this is simple: IBM, just like other large companies, has a large amount of so-called «prior art», which means pre-existing software in this case.

This prior art however offers other patent holders a chance to attack IBM in revenge, because it most likely infringes on a number of patents held by the competitor. In the sum of hundreds or even thousands of patents, this means that they cannot practically be enforced, except as a defensive measure.

The only companies which are not susceptible to this type of dilemma are companies which never actually produced anything at all — so-called «non-producing entities» (NPE), or shorter, patent trolls. These companies solely exist for the purpose of holding and enforcing a software patent. As such, they contribute nothing to the state of the art while causing damage to companies that do.

Summarizing this effect, the patent system has a very negative effect on the economy indeed: it discourages innovation and productivity as a whole while promoting litigation. Thus, it is much less surprising that IBM finally realized that software patents are damaging — even to them.

References

• Amicus Brief by IBM to the Bilski case
• The FFII on software patents

In this blog:

• EU commission takes another shot at software patents
• John Tehranian: No life without IPR infringement

According to an article on Computable.nl, the new 802.11n standard is threatened right after it was released – by patents. This is a rough translation:

Even though pre 802.11n products are already on the market, the coming standard is in danger. While suppliers already offer wireless equipment based on a draft of the 802.11n standard, this next
generation of Wi-Fi technology could eventually fail. The cause? Patents.

The standard that has already been under development for a long time is in danger. The long expected and promising 802.11n could eventually fail to come into existence. This despite the fact that nearly all suppliers of network equipment have already started offering 802.11n products. These Wi-Fi products are based on a first version of the coming standard.

As it turns out now an Australian organisation, the Commonwealth Scientific and Industrial Research Organization (CSIRO) has patents on 802.11n. The patent involved refer to technology for backward compatibility with the present Wi-Fi-standards 802.11g and 802.11a.

CSIRO refuses however to refrain from legal claims. The latter is a normal condition in the development of a standard by the IEEE (Institute of Electrical and Electronics Engineers). The 802.11n working party of the IEEE is now having an emergency meeting.

CSIRO is not willing, despite earlier requests  of the IEEE, to submit a Letter of Assurance in which it  promises not to start legal procedures against parties ratifying the coming standard. Such a declaration is a requisite and for this reason the standards organisation cannot ratify 802.11n now.  Furthermore present suppliers of 802.11n draft equipment would also commit an infringement of the law.

Some experts are expecting a major financial crash in the world due to a breakdown of three main pillars of the world financial system: consumer debts, mortgages, and patents.

According to an article by Pieter Hintjens (President of FFII), a lot of banks have given out moneys for patent portfolios based on the assumption that there is a value associated with these patents. These values however are not based on any facts but on pure marketing: something that could be done with the patent. Experts have never liked this idea, which is also the reason why we don’t have the often-called-for patent insurance yet: because insurance agencies rejected patents as uninsurable.

Nevertheless, banks tended and still tend to give out their money freely to companies and other entities that have nothing else to offer as collateral than a patent portfolio. However, starting from January 1st, 2008, banks have to report their risks imposed by intangibles due to the new Basel II regulations which come into force. At this point, fear coming up is to be expected, and the crisis of the financial market, which is already fueled by the burst of the housing bubble, is going to rise even further.