Congratulations to IBM CEO Sam Palmisano and his team at IBM for doing the exact opposite of what conventional logic dictates by opening up a small percentage of their massive portfolio of patents! John Kelly, their Senior VP of Technology & Intellectual Property announced that they would allow open source developers to freely use 500 of their patented software solutions. This is a meaningful and positive shift away from from the traditional and highly constraining world of patent enforcement and ownership.

Lest this feed rumors of IBM‘s imminent financial demise, it’s worth pointing out that IBM has an enormous patent library — they registered over 3,000 patents in 2004 alone — and the money they make from licensing their patents is almost pure profit, so much so that they don’t even count patent licensing fees in their standard accounting because it skews the numbers too much. Industry analysts suggest that IBM books as much as $1 billion annually from their patent licenses.
Why has IBM done this? One clue is what CEO Palmisano has been talking about in the business community for the last few years. He believes — and I agree — that there’s a significant need for more open technology standards and collaboration as a way to create more economic growth and job creation.

I can’t but compare this bold move by IBM to SCO‘s CEO Darl McBride who myopically continues to run his company into the ground trying to collect on what he claims are patent and copyright violations by the Open Source community surrounding Linux. Darl, give it up and sit at Palmisano’s knee for a few months to learn how a real CEO works and what it means to be a visionary business leader.
The newly open patent library includes patents in fourteen categories, including image processing, storage, data handling, Internet communications and electronic commerce. IBM says “These patents are for technologies that are deeply embedded in many industry uses, and will be available to anyone working on open source projects.”
However this works out, my kudos and congratulations to Palmisano and the entire team at IBM for helping move us out of the intellectual property hoarding 20th Century and into the exciting new 21st Century where it’s about what you do with intellectual property that’s important, not the property itself.