Microsoft beats IBM in value for patents

Bangalore: Though, IBM may rule the patent world by having the highest number of U.S. patents, when it comes to value for money it still lags behind Microsoft, which ranked third in the number of patents filed last year. According to a study conducted for Bloomberg BusinessWeek by Ocean Tomo, an intellectual property consulting firm, IBM's collection of U.S. patents over the past five years ranks only eighth in value with Microsoft leading the list. 

This year, IBM topped the charts for the 17th consecutive year by raking in 4,914 patents, reports BusinessWeek. "The arms race approach doesn't pay off," says Mark Chandler, General Counsel of Cisco Systems. "It doesn't do you a lot of good just to have a lot of patents," he adds.

In all, Microsoft's portfolio was assessed at 3.3 times that of IBM's. "This is something that IBM people won't accept, but it's accurate nonetheless," says Steve Lee, President of Ocean Tomo's patent-rating division. He says IBM's portfolio includes a large number of service-related patents, which do not command as high a price as the video-game and software patents that heavily weigh in Microsoft's portfolio.

IBM maintains one of the last university-like laboratories in U.S. and based on outlays through the first three quarters of 2009, the company spent $5.8 billion on research and development last year, or six percent of its total revenue. Besides protecting its products and services from imitators, IBM's patents produce considerable income for the technology giant.

Fees from licensing and custom-developing intellectual property for other companies through Sept. 30 were on track to top $1.1 billion in 2009. "Their patent department is a profit center," says Bruce Lehman, former Head of the U.S. Patent and Trademark Office and now Chairman of the International Intellectual Property Institute, a Washington think tank.