The Patent King
IBM is king of the hill when it comes to sheer number of patents. And it makes no bones about vigorously enforcing those patents.
In 2000, for the eighth year in a row, IBM was granted more patentsâ€"about 2,800â€"than any other company in the world. In total, IBM holds about 19,000 U.S. patents and 34,000 worldwide. Sitting atop that pile of intellectual capital is Jerry Rosenthal, IBM vice president of licensing and intellectual property, who boasts that IBM's licensing of patents and technologies generated more than $1.5 billion in profits in 2000.
"You can bet that there's one guy at IBM with a swagger, and that's Jerry Rosenthal," observes Conrad Langenhagen, an executive at online patent exchange Yet2.com.
"IBM uses a stick approach to extract value from their patents," Langenhagen explains. "They go to other companies and say, 'You're infringing on this patent and that patent and that patent.' " Rosenthal makes no bones about IBM being vigorous in enforcing its intellectual property rights. "Protect your intellectual property, be sure you are protecting it," is his No. 1 rule.
Licensing technology pays off in other ways too. Through cross-licensing deals, IBM's patents buy it the rights to use other companies' innovations, Rosenthal says. Making sure other high-tech companies use IBM's technology helps establish it as a standard while advancing the state of the art generally, he says. And licensing gives IBM's developers the impetus to invent the next big thing.
"By licensing the stuff out, it keeps our developers on their toes, constantly having to move ahead to get that technology to the next level because they know we're licensing out the previous levels," Rosenthal says.
And the company has turned its own patent-tracking database into a commercially searchable database on the Web, Delphion.
Meanwhile, IBM uses more of what it invents than many companies. Of the patents it was issued in 2000, more than one-third were already incorporated into IBM products. "We think that's a pretty significant number," Rosenthal says.
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