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IBM and Amazon in Patent conflict, Goliath vs. Goliath

October 24, 2006

IBM has entered into litigation with Amazon over violation of Patents.  Here are the facts:

1. Some legal cases are complicated — but this one is very simple.  It’s about IBM not being compensated for the use of its R&D. IBM spends about $6 billion on R&D each year, and we’ve had more U.S. patents than any other company in the world for each of the past 13 years.  Last year IBM was granted nearly 3,000 patents for its inventions and innovations.

2. IBM has tried more than a dozen times since 2002 to get Amazon.com to pay for using these patents.  Amazon.com has refused every time.

3.  IBM has been a leader in sharing intellectual property in ways that foster collaborative innovation.   But a key tenet of IBM’s IP policy is “mutual respect for intellectual property rights.”  Other companies license and use these very same patents, and IBM is entitled to protect its inventions.

4. We would have preferred to deal with this without litigation… it’s not what we do.   In fact, many companies have licensed these high-quality patents from IBM, as well as other patents, in “field of use” patent licenses.  Those companies value the quality and innovation of these inventions.   To not enforce our patent rights would be a discredit to those who  have fairly and lawfully taken these licenses.

5. We did what we had to do to protect IBM’s interests. (yes it’s rhetorical, but facts are facts)
My personal view is that in drawn out cases, the only winners are the lawyers who bill.  This will be complicated as IP law is a specialty that few are experts in.  It appears from the early facts that IBM has a good case, as it also has had with SCO.

I’ve been a part of 2 separate IP cross licensing issues that started as patent infringements, once with a software company in Redmond and once with Cisco.  What started out not on the right foot ended up as a positive for both companies so I know that IBM tries very hard to work these out if both parties will cooperate.  This leads me to think that Amazon is not trying very hard, except to not cooperate.

These usually drag out over years and are not fun nor pretty nor are they a PR dream.  I wouldn’t keep any hopes up for a fast resolution.  I do know that having worked with the IP lawyers at IBM, they are some of the most competent and well versed groups you will find, so don’t look for any unturned stones on this one.

I’m sure there will be plenty of updates to follow, but if I had to pick sides, I’d like to be on the IBM version of this one.  I’m sure that Amazon has a big team of lawyers also, but ultimately it has to be settled, in front of a judge, or by working together.  There are too many instances of IBM trying to work these out…Amazon, are you listening?

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