Click to enlargeStrategic Patent Planning <br>for Software Companies

A Look at Current Patent and Licensing Strategies

Author: Eric Stasik

Number of Pages: 58
Copyright: 2004

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Strategic Patent Planning for Software Companies looks at the current patent and licensing strategies used by successful companies that develop and market software. This book discusses the current status of international patent protection as regards computer-implemented inventions (CII), explains why copyright is inadequate, and describes how patents are being used by Microsoft and the Apache Software Foundation to support a wide range of business objectives.

Over the past decade extensions in the scope of patent protection to include computer-implemented inventions have generated controversy, concern, and a great deal of hyperbole. In Europe the debate over “software patents” has been bitter and rancorous. Presently the directive to harmonize European patent law with EPO practice faces an uncertain future.

In the United States and Japan, however, the debate over software patents has long been over and the influence of software patents in these countries is already being felt. The $521 million which Microsoft was recently ordered to pay to tiny Eolas by a US Federal Court was one of the largest verdicts for patent infringement damages ever. In the United States this is noteworthy so I will repeat it: one of the largest damage amounts for patent infringement ever awarded in the US was the result of a single software patent.

While the validity of the Eolas patent is being challenged at the US Patent and Trademark Office Microsoft remains busy defending itself against 30 or so other patent infringement lawsuits. The problems are not limited to Microsoft. Patent holders such as Acacia Research, with a portfolio of patents on digital streaming have pressed claims against a wide range of web site operators and hosts. InterTrust (now jointly owned by Sony and Philips) with an impressive portfolio of patents on Digital Rights Management (DRM) are in a position to substantially influence future web services. Every week, new patents emerge and new licensing agreements, or lawsuits, are announced. Real politik demands that software companies no longer ignore the threats - or the opportunities - provided by patents, but rather deal with them in a systematic and systemic manner.

The business approach of this book is highlighted by a comprehensive listing of strategic business objectives which patents can be used to support. Patents despite their dusty back-room reputation are uniquely versatile business tools.

Examining the patent strategies employed by others is a good way of learning to understand the needs of your own company and how you too can use patents to gain and maintain competitive advantages. Thus the bulk of this document looks at two opposite ends of the software patent spectrum by examining the patent strategies of Microsoft Corporation and the Apache Software Foundation. Included are discussions and observations regarding Microsoft’s recently announced FAT and Office Schema licensing programs.

There is also a surprising result from the comparison of Microsoft’s XML patent license and the recently updated Apache software license. For small developers, free software may cost them more than they think.

Table of Contents

Executive Summary

The Significance of Patents to the Software Industry

2.1 The Present Status on the Patentability of Computer-Implemented Inventions
2.1.1 Europe and the EPO
2.1.2 Japan
2.1.3 The United States
2.1.4 The World Outside the Tri-lateral Patent Authorities
2.2 Do Software Patents Promote, or Hinder, Innovation?
2.3 Why copyright is inadequate: Computer Programs are not works of art
2.3.1 Copyright Protects Expressions, Not Ideas
2.3.2 The Weakness of Copyright Encourages Lateral Development
2.3.3 The Difference between Patent and Copyright
2.4 A frenzy of patenting
2.5 The effects from software patents are being felt

The Strategic Patenting Objectives of Software Companies

3.1 The Business Needs of Software Companies
3.1.1 Technology Exchange
3.1.2 Near-Term Competitive Protection
3.1.3 Litigation Avoidance
3.1.5 Royalty Income
3.1.6 Out-License Technology to non-Competitors
3.1.7 Acquire Complementary Technology from non-Competitors
3.1.8 Minimize Royalty Payments to non-Competitors
3.1.9 Product Clearance
3.1.10 Promulgate Open Standards
3.1.11 Promote Interoperability
3.1.12 Deter the Development of Alternative Technologies
3.1.13 Strengthened Position in VAR and OEM agreements
3.1.14 Preserving Future Options
3.2 Having the right patents can help to satisfy these needs
3.3 Patenting is horrendously expensive

The Microsoft Response

4.1 A Brief History of Patents at Microsoft
4.2 An Overview of Microsoft’s Technology Licensing Program
4.2.1 FAT File-System Technology and Patent License
4.2.2 FAT File System Patent Portfolio
4.2.3 ClearTypeTM Technology and Patent License
4.2.4 Summary of Microsoft’s Technology Licensing Program
4.2.4 Summary of Microsoft’s Technology Licensing Program
4.3 File Format and Schema Licensing Programs
4.3.1 A Brief Background on XML
4.3.2 XML Schemas
4.3.3 Microsoft’s XML Patent Filing Strategy
4.3.4 Microsoft’s XML Schema Patent Licensing Program
4.3.5 Microsoft’s XML Schema Licensing Program
4.4 Observations of Microsoft’s XML Schema License Strategy

The Apache Response

5.1 Apache License, Version 2.0
5.2 Observations about the Apache License
5.2.1 Comparison to Microsoft’s license for the Office Schemas
5.2.2 Who is exploiting whom?
5.3 The Myth of the Software Patent Thicket

About the Author

Eric Stasik is director of, an expert consulting firm providing patent engineering, product development, and licensing services. Mr. Stasik helps small and medium sized businesses, individuals, and research organizations to create strong new patent positions and maximize the leverage available from their existing portfolios.

Formerly director of patents and licensing for telecommunications giant LM Ericsson, he has over a decade of experience in dealing with complex patent issues. As manager of IPR activities for the GSM division of Ericsson Radio Systems, he was instrumental in developing a patent portfolio which has generated in excess of €100 million in royalty income. Mr. Stasik has a Master's Degree in Electrical Engineering from the Georgia Institute of Technology in Atlanta, Georgia, USA and has been a registered US patent agent since 1994.

Strategic Patent Planning for Software Companies BK7781332$14.99

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