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IBM seeks to patent its idea for patents

IBM Corp. says it has dreamed up a new method for profiting from its vast storehouse of patents. And by the way, the company wants to patent the idea.

Beyond the circularity of the concept, IBM's application is notable because the company - the world's top patent holder - has been campaigning to improve the quality of patent filings and reduce so-called business method patents.

"I think this is absolutely a business method patent," said Barbara Fiacco, a patent attorney with Foley Hoag LLP.

The new patent application covers what IBM calls "a system and methods for extracting value from a portfolio of assets, for example a patent portfolio."

Specifically, IBM - which collects more than $1 billion in patent royalties every year - describes a new process for licensing patents. Instead of smaller companies licensing technologies from patent holders like IBM in a plodding, one-by-one manner, IBM envisions a more dynamic system with "floating privileges," in which patents could be licensed quickly, as needed.

The application says this floating privilege, once purchased, could be activated by a patent-infringement lawsuit. In other words, companies would buy the right to use a patent portfolio like IBM's as a legal shield for themselves - "just like purchasing a fire insurance policy," IBM's application contends.

Alex Chartove, a patent lawyer with Morrison & Foerster LLP, said IBM's proposal appears to be aimed at hindering "patent trolls" - a term often applied to small firms that buy up patents and aggressively wield them in lawsuits against other companies.

The problem for IBM, though, could be the greater scrutiny it and others have brought to business-method patents in recent years.

In a 2005 "friend of the court" brief to the Supreme Court, IBM argued that patent law's scope should be "fairly narrow, and limited to technology," Fiacco said. In fact, IBM's brief acknowledged that some of its own patents "might not satisfy this standard."

One influential decision came last month, when the US Court of Appeals for the Federal Circuit ruled against lawyer Stephen Comiskey's bid to patent a system for conducting arbitration.

The implication appears to be that it is unacceptable to patent a basic idea that doesn't by itself transform something, without a technology that harnesses it.

Chartove said IBM's proposed patent for patent portfolios might fall into that category.

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