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The Patent System on Tilt: IBM Seeks to Change the Game
Posted On October 16, 2006
When the nation's most prolific patent company says that it is going to change the way in which it does business, folks tend to listen, particularly when so much of this nation's commerce is tied up in commercialized intellectual property. IBM wants to change the way the patent system works, holding itself out as an exemplar of openness. What does IBM's announcement really mean for an American patent system widely considered to be in mass disarray? It depends on whom you ask. IBM (, though, is convinced that its initiative will help improve a patent system thought to be on the brink of collapse.

According to Ari Fishkind, spokesperson for IBM Technology and Intellectual Property, these are the core tenets of IBM's new initiative: 1) Patent applicants should be responsible for the quality and clarity of their applications, 2) patent applications should be available for public examination, 3) patent ownership should be transparent and easily discernable, and 4) pure business methods patents without technical merit should not be patentable.

The new policy initiative stemmed from a 2-month-long wiki-based conversation called IBM's Global Innovation Outlook, which included some 50 experts collaborating with IBM staff on the proper functioning of the intellectual property marketplace. The effort is synthesized into the collaboratively written document "Building a New IP Marketplace:

A Global Innovation Outlook 2.0 Report," which is published at Hard copies are available from

To support and implement this new initiative, IBM has announced a number of specific actions:

  • Contributing the expertise of its technical experts in reviewing published patent applications and providing pertinent prior art to the USPTO as part of the USPTO Community Patent Review pilot, a peer review model process
  • Opening more than 100 of its business method patents (representing around 50 percent of IBM's total business method patents) to the public for open use, while reducing future business method filings to only those with substantial technical content
  • Promptly and publicly recording the assignment of all patents and published patent applications it owns

"The patent policy we announced is a broad framework for everything related to how we handle intellectual property. The common denominator is that in many cases, we will exceed what the law requires," said Fishkind. "Some aspects of our policy are the notions of transparency and quality. Allowing the USPTO [U.S. Patent and Trademark Office] to publish all of our patents, and allowing other community members to provide detailed feedback about our patents, will exemplify our drive for transparency and quality in the industry."

Big Blue's Clout

How much impact will IBM's initiative make in the patent field? "They're the perennial leader for patents procured, so it's significant when a firm of that size does something like this," said Lisa Dolak, a patent attorney and senior associate dean at Syracuse University's College of Law. According to PTO figures, IBM has been the top nongovernmental patenting organization in the country for 13 consecutive years ( IBM was awarded 2,971 utility patents in 2005; the second-ranked patent holder last year was Japanese company Canon Kabushiki Kaisha with 1,848 patents, more than 35 percent fewer than IBM.

Dolak noted that IBM's initiative is consistent with the Community Patent Review project (, an enterprise Big Blue is sponsoring with New York Law School, Microsoft Corp., and General Electric Co. "Community Patent Review aims to improve the quality of issued patents by giving the patent examiner access to better information by means of an open network for community peer review of patent applications," according to a white paper posted at the project's Web site ( "The Community Patent Review pilot project focuses on integrating an open peer review process with the USPTO, creating and amalgamating a vetted database of prior art references that, over time, produces better patent grants, and developing a deliberation methodology and technology to allow community rating, ranking and processing of the data collected and feedback from patent examiners." Commenting on the project, Dolak pointed out that "aspects respond to specific concerns about patent quality and the need for patent reform."

A pilot for community patent review is scheduled to begin at the PTO sometime in 2007, according to Brigid Quinn, deputy director of the PTO's public affairs office. "The pilot program will allow peer review of 200 specific patent applications. A number of organizations, including IBM, have agreed to participate in the project. In return for their participation, the USPTO will take up review of these applications much earlier in the process than they would normally be examined, which is a boon for filers."

Critical Issues

The problems with the American patent system have been brewing for years, but this year the complaints and calls for reform have become overwhelming. Two of the biggest complaints about the system involve the role of patent holding companies and the propriety of business method patents. Some patent holding companies have been derided as "patent trolls," a derogatory term used to describe a patent owner who enforces patent rights against accused infringers, but does not create products or provide services based on these patents. Many patent-holding companies are much smaller than the traditional patent powerhouses that make the PTO's "Preliminary listing of Top Ten Patenting Organizations" (, such as IBM.

According to Dolak, preemptive protection from patent holding companies is one reason why a company such as IBM would agree to publish its patents in a transparent manner. "Ironically, big users of the patent system recently have found themselves defendants in litigation by individuals or patent holding companies, and they're spending significant resources defending against patent infringement claims," she said. "In a way, the tables have been turned: some of the big patent procuring companies which are used to doing the suing now are being sued by unknown individuals and small holding companies." If patent applications are made transparent, however, then there is a lower level of uncertainty about what technologies are protected, thereby reducing the risk of an unforeseen patent infringement lawsuit.

The problems with business method patents, on the other hand, have become a widespread issue affecting all patent holders, regardless of size. The business method patent has become the intellectual property protection vehicle of choice in the digital age, especially for fledgling Internet companies. Many have accused the business method patents of protecting the intangible, suppressing innovation (particularly on the Internet), and clogging the PTO pipeline. The volume of business method patent applications has exploded more than tenfold from 584 in 1996 to 6,226 in 2005, according to PTO data ( In 2005, the issuance rate for business method patents rose sharply to 16.1 percent—its first year of double digit rate increase—from an issuance rate of 4.45 percent in 2004. This explosion in business method patent filings stresses an already overburdened system. A recent Washington Technology article ("Infotech and the law: Patent system faces extreme makeover," Christine McCarthy, noted that the PTO's processing backlog has grown to more than 700,000 applications, up from an estimated 250,000 applications a few years ago. In response, the PTO has issued a call to hire as many as 5,000 new patent examiners over the next 5 years.

"Hiring large numbers of examiners is one component designed to address the backlog," said Quinn. "The agency has a five-year plan (2007-2012) designed to further address the backlog. These include initiatives that the agency has already proposed, but not yet adopted [including] limiting the number of times that an applicant can request an examiner to again review a rejected application; and asking that the applicant identify no more than 10 claims that best describe the claimed invention. Only these representative claims will be initially examined by the PTO; the rest will be reviewed once the representative claims are found patentable. Today, more than 30 percent of all applications are request[s] for rework, plus 80% of all applications are rejected after the initial review, requiring that examiners spend valuable time reviewing claims that don't meet the requirements of the law."

Fishkind hopes that IBM can use the bully pulpit afforded it by virtue of its status as America's most prolific corporate patenting organization and affect change in this area as well. "Business method patents can be subject to abuse. That is why IBM is now pledging to reduce the amount of patents it seeks for ‘pure' business methods, and will focus only on those with deep technical underpinnings," he said. "While IBM's business method patents meet current patent requirements, the company is trying to encourage others to shrink this patent category, which are susceptible to abuse by those seeking to patent ‘obvious' processes."

K. Matthew Dames, J.D., M.S.L.I.S., is the executive editor of CopyCense (, an online publication that reports on the law, business, and technology of digital content as well as the code that creates and governs that content.

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