IBM patent row: ensure protection at the agreement stage

You do not expect to get sued when you buy IBM software, but that is exactly what happened to one US customer.

You do not expect to get sued when you buy IBM software, but that is exactly what happened to one US customer.

The story reported last week in Computer Weekly should ring alarm bells for IT managers. Internet retailer Harry and David received a writ for using IBM software after another software supplier claimed the IBM software infringed its patents. The retailer settled and has now filed a £3m countersuit against IBM for failing to protecting it.

IT directors have enough on their plate without having to deal with legal surprises. So how can you protect your IT department from similar ligitation?

UK IT supplier group Intellect said IT managers should check that their contracts include terms and conditions covering warranty, indemnity and damages. A licence agreement should set out the amount of protection a user has from a supplier against patent infringement claims from other companies.

"If the supplier is aware of any current or potential claims against its software, it is usual for the supplier to disclose them, and for the licence to refer to a disclosure letter," said Jenny Carlton, programme manager at Intellect.

Where a patent is in dispute or there is an ongoing case, Carlton said that customers should look for specific terms that say something like, "We have a claim from third-party X dated Y that we have infringed their intellectual property rights, but we deny this."

This way, a user can clarify what protection they will get if the software supplier loses the case.

Even if something comes up that is not mentioned in the disclosure letter, it should be covered by the warranty. However, IT managers should be aware that a warranty is usually time limited by between 12 and 24 months, said Carlton.

Forrester analyst John Rymer said that IT managers should check that when conditions change, for example, when an IT department upgrades to a new version of software, that the terms of the agreement stay the same or offer greater protection. They must also clarify how protection works, for example, who they contact, the amount of protection they are entitiled to and whether there are any exceptions to protection.

IT managers worried that they are at risk from third-party suits after purchasing software should work with the supplier to audit software. They should check the components that are in dispute from ongoing or established patent and copyright claims.

This will give businesses an understanding of the risks they face from patent suits and can help influence decisions to uninstall components that are in dispute or place in workarounds, said Gartner analyst Gene Alvarez.

"IT managers will also have to determine if they will still be at risk for owning the product even thought they may not have used the functionality, too," he said.

Alvarez said that IT departments may be liable to make back payments to companies whose patents they have inadvertently infringed for the length of time they have used software. But that prevention at the customer agreement stage would inevitably save time and money.

"Should IBM lose the case, it could be possible that existing customers will have to pay just as Harry and David did to bring themselves into compliance," he said.

This was last published in March 2008

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