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IBM to offer 40,000 patents to VC's

December 13, 2005

If I were starting a company, I’d like to have a unique concept that I could patent and know that it was both a killer idea and have legal protection…oh yeah, I’d like a bunch of VC money also.

Since I’m not a good engineer, or an engineer at all (my Dad was engineer of the year in Florida, but I didn’t get those genes), the next best way is to have help and get the same benefits.

IBM has announced a plan to offer access to the 40,000 plus patent portfolio to VC’s that they can share with their startups. A pretty sweet deal, money and access to the patent leader. Pick your technology, hardware, software, services and a lot of other stuff. I’ve said before that one of the most under told story’s is the cool stuff that IBM research has. Can you imagine what the value of this portfolio is, not just in terms of money but the invention time must be staggering.

In planning this, we worked with our VC advisory council to see what they would want and how it should be structured. They come out a big winner as now they have something tangible other than just money to offer startups. They either pay a one time 3 year fee for alpha stage companies or for products that are ready, a 1% of revenue relate to an IBM patent (not the entire product). This is relatively the same terms that we offered the largest companies we deal with in these arrangements (yes i mean company’s located in Redmond). The VC’s were quite pleased with the terms as they were a part of structuring from the get go. They viewed it as very fair and were glad to be on equal footing with bigger players.

Most of the analyst comments centered around the tools to search this many patents. Amazing how they see right through everything and pick out vital points. To that, we will provide access to the inventor and the technology, and to the specific comments…we’ll be working on some search tools to help the VC’s.

Startups win as they get the patent protection (ask RIM and NTP about this) and VC money.

IBM wins as it is a reason to partner with us. We offer not only the protection issue, but access to some incredible research. Yefim Natis of Gartner pointed out that this is good for IBM in that patent portfolio is likely under used. Lou Gerstner issued a mandate when he was reshaping IBM that we WILL use research and patents in our products. Now it’s not only IBM products, but it is spreading out to the industry also.

We’ve been rightly criticized for not being far enough down in the SMB stack (in the S part). This may not be the golden egg, but it sure is a step in the right direction. You don’t get much more of an S than in a small startup.

Like all announcements, programs at maturity usually wind up being molded along the way due to various things like industry or technology trends. I’m sure this program will be also, but it’s an interesting start.

More information is found on the VC group link.

Bob Sutor blogs about it also.

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From → ibm, technology, vc

3 Comments
  1. if its a business based on an IBM patent its hardly a unique ideal, is it?

    there is some goodness here, but not enough, as yet.

  2. Not unique, but sometimes hard to do. Working with IBM can be daunting. Be patient, we have to walk b4 we run.

    Hopefully, it spurs the industry to open up also, then SCO travesty’s go away.

  3. On http://qtsaver.blogspot.com/2005/12/ibms-40000-patents.html
    there’s a comment to this thought-provoking post. It has an independent nature and that’s why I didn’t put it here.

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