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IBM Launches New Licensing Program With VC Community

IBM Launches New Licensing Program With VC Community

One example of how a startup might use IBM's patents can be found in the company's patent portfolio covering wireless technology. IBM figures its wireless Braille device patents would be valuable to a young startup developing a new handheld device that enables the sight-impaired to access the Internet.

By Jennifer LeClaire
12/13/05 8:07 AM PT

IBM last night announced it is launching a new licensing program with the venture capital community to help startup companies accelerate the development of innovative solutions in the marketplace.

The new IBM Ventures in Collaboration program is designed to give VC firms in IBM's partner network and their portfolio companies the opportunity to access more than 40,000 patents to help ignite innovation.

The program also provides startups with the opportunity to partner with IBM's inventor community to access the technology behind the patents in a Big Blue effort to stimulate new thinking around its existing intellectual property.

"IBM is making it easier for young companies to innovate," said Claudia Fan Munce, IBM vice president and managing director, Venture Capital Group. "This program provides VC-backed companies with an opportunity to access IBM's patent vault to innovate faster and become more successful in the marketplace."

Two Cents From the VCs

IBM said the IBM Ventures in Collaboration program was developed after extensive consultation with the VC community, including members of IBM's own Venture Capital Advisory Council. The company said the end result is a program that offers a simple, affordable licensing agreement.

The program consists of two types of cross licensing agreements: one specifically designed for early stage startups generating less than US$10 million in revenue, the other designed for later stage, venture-backed companies with greater revenues.

IBM said both agreements minimize the need for extended negotiations and accommodate the accelerated growth cycles of the startup. The program is administered through the companies' investing VCs, who have the legal and capital resources to implement it.

"This is a unique program that gives smaller companies access to a treasure chest of intellectual property on affordable terms," said Jo Taylor, the Head of Venture at 3i, an international venture firm. "It is fantastic to see IBM taking such a positive approach by supporting high-growth, venture-backed companies on an international basis."

Ventures in Collaboration in Action

One example of how a startup might use IBM's patents can be found in the company's patent portfolio covering wireless technology. IBM figures its wireless Braille device patents would be valuable to a young startup developing a new handheld device that enables the sight-impaired to access the Internet and to receive important information at their fingertips.

This is the latest in a series of patent-related announcements that IBM has made over the past 16 months including: pledging 500 software patents to the open-source community, granting open IP access to specific standards bodies, and formalizing a non-assertion pledge for the Linux kernel.

Taxation Scheme Brewing?

But Florian Mueller, founder of NoSoftwarePatents.com, and listed on the "top 50 most influential figures in Intellectual Property" by Managing Intellectual Property magazine, told TechNewsWorld that the initiative is effectively a taxation scheme that costs companies 1 percent of their revenues and $25,000 up front.

"The fact that one of the largest corporations in the world can command such business terms, which significantly reduce the return on investment for those who invest in such startups, is no good news at all," Mueller said. "To the contrary, it's another example of the might-makes-right way in which the patent system works."

Mueller said he supports all intellectual property licensing deals that eliminate the need for companies to reinvent the wheel. He said it's only fair that someone who uses a component (such as a software library) from another vendor requires a license. However, he added, the problem with software patents is that even if you read the description of the patent, you're not really closer to a functional solution than if you try to solve the same problem yourself.

"Those patents are granted on the basis of broad and general verbal descriptions, not on code that you can really use," Mueller said. "They monopolize the right to solve a problem, not a real solution. Consequently, what those startups really have to pay for is the fact that IBM first registered tens of thousands of general ideas, and that's why it's a taxation scheme more than anything else."


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