Joff Wild

The potentially catastrophic effects of the Alice v CLS Supreme Court decision on the patent holdings of the US’s biggest technology companies are laid bare by the IAM blog today. Research undertaken by IP data company ktMINE on behalf of the blog reveals that tens of thousands of assets owned by the likes of IBM, Microsoft, Apple, Oracle, Google and Cisco could be threatened by the judgment, which was handed down in June and has since led to a series of software patent rights being overturned by lower courts. Should this trend continue, then our research reveals that it may have a significant impact on companies that employ huge numbers of Americans and spend billions of dollars on R&D.

In light of the Alice decision and the warnings that this could effectively end many types of software patent protection in the US, we thought it would be interesting to look at the patent portfolios of the US’s biggest technology players, as well as some of their counterparts from overseas and several large NPEs, to see what percentage of their holdings might be affected. We got in touch with ktMINE CEO David Jarczyk and asked if his firm could help; David said they could and put his team of number crunchers to work. The results they came up with were stunning, and for many of the businesses looked at potentially very frightening indeed. For example, according to ktMINE 49% of all IBM’s US patent holdings could be affected by the Alice decision, as could 58% of Google’s, 55% of Microsoft’s and a whopping 76% of Oracle’s. In descending order, the impact list reads as follows:

  1. Oracle – 76% of patent portfolio potentially affected by Alice v CLS

  2. Google - 58%

  3. Microsoft – 55%

  4. IBM – 49%

  5. Cisco Systems – 38%

  6. Apple – 34%

  7. Hewlett-Packard – 31%

  8. Rockstar – 31%

  9. Intel – 29%

  10. Round Rock Research – 26%

  11. Alcatel-Lucent – 25%

  12. Intellectual Ventures – 24%

  13. Honeywell International – 18%

  14. Nokia – 16%

  15. Texas Instruments – 16%

  16. Ericsson – 15%

  17. Qualcomm – 15%

  18. Micron Technology – 14%

  19. Xerox – 12%

  20. Panasonic – 10%

  21. InterDigital – 9%

  22. Samsung – 9%

  23. GE – 8%

  24. Philips – 7%

  25. AT&T – 6%

You can see the full results of ktMINE’s work here.

Of course, it is important to remember that ktMINE’s findings are indicative only and that no individual patents were looked at during the research process; while being potentially affected by Alice does not automatically imply either invalidity or unenforceability. That said, the figures are stark – my back of the envelope calculations are that among just the 25 entities that we asked ktMINE to look at over 120,000 patents may be under threat. That’s a very big number and will be much bigger still if the holdings of all US patent owners are included.  

Reporting of the Alice case has mainly been based on the impact it may have on NPEs and it is clear from the figures we publish today that the likes of IV, Rockstar and Round Rock should be concerned – but the decision goes way beyond that. We are talking here about major US corporations facing up to the possible loss of vitally important strategic assets; and, as an article published on IP Watchdog yesterday discussed, this may have knock-on disclosure and value write-off implications. It would be an unwise publicly-traded tech company in the US that is not currently doing a full audit of its patent portfolio to assess where it stands in this post-Alice world.

What our research also emphasises is the need for further clarity from the courts – and perhaps Congress – on software patent protection in the US. Right now, everyone is operating in something of a fog. But given what is stake that is not a sustainable position. Should courts continue to take a hard line against software patent rights, I’d expect many of the tech big guns to get pretty vocal about this. Some – such as Google and Cisco – may not be too exercised by recent developments, whatever it may mean to the portfolios they own; but I doubt the likes of IBM, Microsoft, Apple and Oracle will be as relaxed - their business models are very different. Given the resources that such businesses can throw at a problem, what this may end with sooner rather than later is some scaling back of the most negative consequences of Alice for software patent owners. Who knows, perhaps even the Supreme Court may take an early opportunity to do something about the havoc and confusion that it has unleashed. What we know now is that the stakes are very high indeed.