Microsoft Corporation (MSFT) Catches a Wave, and the First Shot in the Software Patent Wars

The reversal of a Supreme Court decision against software patents began a monumental shift in the relationship between software companies and their software just at the moment that consumer computing was about to explode in popularity. By this point, Swift-Answer was essentially obsolete (the computers it was written for were largely obsolete, too), but the floodgates had been opened, and there would be no stopping the software patent flood, nor the later flood of that most reviled of enterprise, the patent troll. The USPTO issued approximately 40,000 software patents two decades after Asija’s patent, and many of these patents now represent extremely lucrative sources of revenue for their filers. Unfortunately for innovators, much of that lucrative potential is tapped in the courtroom — more than 5,000 software-patent infringement lawsuits are now filed in American courts each year.

Today, International Business Machines Corp. (NYSE:IBM) and Microsoft Corporation (NASDAQ:MSFT) have the two largest software-heavy patent hoards in the United States. IBM was granted 6,500 patents, and Microsoft 2,600, in 2012. Interestingly, many of the top U.S. patent-holding companies aren’t U.S. companies — only three of the top 10 companies by 2012 patent grants (General Electric Company (NYSE:GE) is the third) are based in the United States, and the rest are all Asian consumer-electronics companies. However, all four of the Dow Jones Industrial Average‘s computing-focused companies rank among the top patent holders (if slightly further down on the list). In addition to IBM and Microsoft, Hewlett-Packard Company (NYSE:HPQ) and Intel Corporation (NASDAQ:INTC) are also beneficiaries of software patents, despite their hardware focus. The former company gained 1,400 patents in 2012, and the latter gained 1,300. These computing companies are patent heavyweights compared with the pharmaceutical industry — the largest patent trove granted in that industry would barely equal half that earned by HP or Intel.

The article Microsoft Catches a Wave, and the First Shot in the Software Patent Wars originally appeared on Fool.com.

Fool contributor Alex Planes owns shares of Intel. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more insight into markets, history, and technology.The Motley Fool recommends Intel. The Motley Fool owns shares of General Electric, Intel, IBM, and Microsoft.

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