Perhaps times are really tough at IBM. The once-dominant technology company seems to be now largely a technology services company, a massive come-down from the glory days of the 1970s and 1980s when it was the Google, the Microsoft, the Apple of its day.
But one thing, perhaps, hasn’t changed — its extreme litigiousness.
Twitter updated its pre-IPO S-1 documentation this morning, revealing that IBM is suing it over three patents:
We recently received a letter from International Business Machines Corporation, or IBM, alleging that we infringe on at least three U.S. patents held by IBM, and inviting us to negotiate a business resolution of the allegations. The three patents specifically identified by IBM in the letter were U.S. Patent No. 6,957,224: Efficient retrieval of uniform resource locators, U.S. Patent No. 7,072,849: Method for presenting advertising in an interactive service and U.S. Patent No. 7,099,862: Programmatic discovery of common contacts.
You gotta love “invitations” like that.
IBM has a long history of registering and acquiring patents. Its intellectual property licensing site says that the company invests $6 billion in R&D annually and has registered the most U.S. patents for 20 years running, based on the work of 250,000 “technical experts around the world.” I’ve talked to technology executives from the ’80s and ’90s who would speak about IBM coming to their smaller companies about an obvious or minor patent and walking into the meeting with 15 to 20 lawyers — a silent but oh-so-clear statement that they would win any court battle, easily, by virtue of superior resources — and essentially conducting a shakedown.
Clearly, something’s working for the company — IBM brings in over $1 billion annually in patent licensing revenue, reportedly. Just as clearly, Nathan Myrhvold’s Intellectual Ventures, frequently criticized as a patent troll, is an amateur compared to IBM.
Twitter says it believes that it is not guilty of infringement but that there is some danger, nevertheless:
Based upon our preliminary review of these patents, we believe we have meritorious defenses to IBM’s allegations, although there can be no assurance that we will be successful in defending against these allegations or reaching a business resolution that is satisfactory to us.
Realistically, this is a speedbump on the path to IPO. Every company of significance, it seems, gets attacked with increasingly specious patents that cover increasingly broad and general terms. Two of the patents above look very general, and 7,072,849, the advertising patent, could as easily be used to sue Google or Facebook or any ad network.
IBM filed the patent in 1993, and a quick reading shows it to be incredibly obvious and boring — “Ad manager pre-fetches advertising objects by passing advertising object IDs from the advertising queue to object storage facility which then retrieves the object from the interactive system if the object is not available locally” — when it’s not referring to “diskettes” and “floppy disks.”
It does, however, contain these magical words that lawyers love:
While this invention has been described in its preferred form, it will be appreciated that changes may be made in the form, construction, procedure and arrangement of its various elements and steps without departing from its spirit or scope.
The bigger question is, for how long will our legal system allow the patenting of generalities and obvious “inventions” that can then be used as legal ways to (some might say) extort cash from legitimate companies. This costs the U.S economy almost $30 billion a year, according to a Boston University study in 2012.
I’ve contacted both Twitter and IBM for comment and will update this post when they respond.
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