Global CIO: Software Patents And The CIOGlobal CIO: Software Patents And The CIO

If CIOs and other senior business technology executives don't have a software patent strategy, they need to develop one now, as two recent patent developments put them at the center of efforts to increase their companies' market capitalization.

The first centers on recent studies that measure a correlation between good corporate patent strategy and the performance of the company stock price. These studies, including one titled "The Intellectual Property Marketplace," in the February 2007 issue of The Licensing Journal, look at large publicly traded companies, in software and other tech-sensitive fields, as well as small venture capital-funded technology companies. While efforts have been underway for some time to measure the enterprise value of and competitively benchmark patent strategies, only recently have some of them proved effective. And it turns out that the ROIs on patent strategies can be surprisingly large.

The second development is that, as of 2008, the majority of all new patent applications are in the area of software, computer systems, and business methods, and that volume continues to grow. These patents can enable the owner to stop competitors from copying the patented improvements (i.e., the patent owner can use the patent monopoly to obtain market share and competitive advantage) and to obtain cash for damages, triple damages, and attorney fees.

There are several places where CIOs can be involved in the case-by-case exploitation of patent strategies, both offensive and defensive. They include:

Later columns will delve into specific patent studies and strategies in more detail.

Stephen Glazier, a partner in the Washington, D.C., law firm K&L Gates LLP, specializes in patents, corporate transactions, and disputes. Write to Stephen at [email protected].