Midwest IT Survival

Are Corporate IT Patents the on the Rise?

Many times in the course of a corporate IT project, new and innovative technical solutions to challenging problems are developed. Many of these solutions are related to the hoops one has to jump through to get company specific legacy systems and legacy decisions to integrate with new technical products or capabilities. Thus, are these solutions truly innovative? No, most are not if they are viewed in the context of “from outside the company”. “Inside the company”, they could be a miracle of cross-team, cross-department partnering and vendor product limitation mash-ups. “Outside the company” observers would be wondering why such a convoluted approach was needed for a seemingly simple interoperability challenge. Yet, every once in a while, a technical approach to solve a problem that isn’t truly unique to that company occurs.

Geez, IT is so mature these days one has to wonder why there aren’t fifteen vendors clamoring to demonstrate how they can solve these problems with their products. The vendor landscape either hasn’t recognized that their customer base has a problem they can sell a solution for or the problem is created by vendor solutions that provide a core capability but don’t go the last ten feet to cross the finish-line of a fully mature feature set. With all this being said, the question that seems to be coming up more and more is:

Is that innovative corporate IT technical solution worth getting patented?

My first thought that always comes to my mind in these discussions is:

Why is it worth it to patent something corporate IT-ish when the business’s core competency isn’t delivering IT products and services?

It is easy to understand why, say, Apple, Google and other tech companies are rushing to patent new and innovative techniques such as in the mobile device functionality space. The monetary compensation surrounding having to pay a competitor licensing fees means you win, revenue-wise, when your competitor sells a large number of devices. Imagine if you were the patent holder of something used in the Apple iPad 2. If you licensed that invention to Apple for a mere one cent per device, in the fourth quarter of 2011 alone, you would net $154,000.

Thus, it seems that corporate IT does not get to generate direct revenue through patenting solutions. So why do so? The strategy here appears to be one of investing in a solid defense as opposed to an aggressive offense. That defense appears to be at least two fold.

Vendor Leverage Reduction

Vendor products are so pervasive in corporate IT it is next to impossible to avoid the sometimes painful contract negotiations. I’ve written quite a bit about the corporate IT management/vendor relationship in the past in a series starting here. If a vendor becomes aware you are using your own approach to a solution they have patented, the company can lose significant leverage in the contract negotiations as the raw legal sparing can trump the best sales/customer relationship. These negotiations can turn even worse if the company is trying to switch to a competing vendor.

Non-IT Company Product Battles with Competitors\

More similar to the classic tech company patent wars such as between Apple and Google/Motorola, non-IT based companies have similar legal battles over non-technology product patent infringements. In addition to holding the non-IT patent, having an additional IT-centric patent that complements the original product patent infringement helps strengthen the case of that patent holder. Thus, not a clear cut win for the patent holder, but clearly a legal strategy to make the claimant have to invest in an even larger, more expensive and time consuming case.

So, can everyone expect a rush to apply for patents for innovative corporate IT solutions in non-IT centric companies? I wouldn’t say rush, but as technology become an ever more important and strategic component of traditionally non-IT centric companies, look for a steady increase in patent applications as part of a holistic business strategy to be in a strong position to go head to head with a competitor in a patent infringement suit.