IBM Suit Vs Informix Meant To Sway Other Software
Firms
By SCOTT EDEN and MARCELO PRINCE
NEW YORK -- In another bid to persuade software companies to recognize what it believes are its
intellectual property rights, International Business Machines Corp. (IBM) sued database software
maker Informix Corp. (IFMX), alleging patent infringement.
According to IBM general counsel Lawrence Ricciardi, the suit caps a series of negotiations lasting
"more than a year" and meant to persuade Informix, Menlo Park, Calif., to pay licensing fees for
database technologies patented by IBM. When Informix finally refused to ink an agreement, IBM sued,
Ricciardi said.
The 10-page suit against Informix, filed Feb. 3 in U.S. District Court in Delaware, seeks compensatory
damages and the enforcement of six IBM patents, granted as early as 1981, covering database
"compression" technology.
Informix general counsel Gary Lloyd said his company had been in "sporadic" discussions with IBM
over the past 2 1/2 years. The talks between the two firms centered on "technical aspects" of IBM's
claims, he said.
"We couldn't understand what their patent was for, what the alledged infringement centered around,"
Lloyd said. "We never got to, at any point, talking about any resolution." Asked if IBM's suit was
intended to force Informix to pay a licensing fee, Lloyd responded "I don't know, we didn't get that far."
Lloyd said some of the products mentioned in the suit have been on the market for "a number of years"
and the company continues to sell them. Since IBM hasn't sought a temporary injunction, Informix can
continue to sell its software until the case is resolved, he added.
As for the legal wrangling, Lloyd said Informix would file its court response within the next 30 days,
hinting that the main recourse would be a countersuit.
"We've decided to send the signal to Informix or other software makers (that might refuse to pay IBM
license fees) that the party is over," Ricciardi said. He declined to say if other suits were in the works,
or to name potential targets of that litigation, but added, "we have been in discussions with a number of
companies."
IBM, which holds a library of 3,000 patents for software technologies alone, has in the past forced
licensing pacts with other software makers. In 1998, IBM struck a deal with Adobe Systems Inc.
(ADBE) ending a patent dispute over that firm's use of technology for a slew of functions, including
graphics and document publishing.
Many of the target companies, which also compete with the Armonk, N.Y., computer giant, maintain
that IBM's patents are too broad and place undue restrictions on software developers.
Joseph Payne, a software analyst at Hoak Breedlove Wesneski, said IBM's suit is "not just a nuisance
event. This is probably as pejorative against the industry as the Justice Department suit against
Microsoft (in terms of) stifling creativity across the industry."
For nearly 40 years, Payne said, "IBM has invested a fortune" in research and development,
"developing one of everything, many times never to fruition. I'm sure they can reach into their bag of
tricks and find something against everything."
Said James Pickrel, analyst with Chase H&Q, "these kinds of suits are becoming pretty common. A lot
of tech companies have stepped up their patent activities as pre-emptive strikes against competitors."
IBM, like other big tech firms, is likely claiming broad coverage of a patent to "force across a licensing
deal on a vendor," Pickrel said. Qualcomm Inc. (QCOM), for instance, has largely succeeded in
claiming a patent covering a widely used cellular phone technology.
News of the lawsuit was enough to send Informix shares down sharply in heavy trading Tuesday. The
stock recently moved at 14 3/4, down 1 3/4, or 10.6%, on volume of 14.6 million shares, more than
double the daily average.
Shares of Ardent Software Corp. (ARDT), which Informix agreed to acquire Dec. 1 in a stock swap
initially worth $880 million, were down in sympathy. The stock traded recently at 51, down 5 7/8, or
10.3%. Volume was 369,700 shares, compared with average daily turnover of 562,125.
IBM stock, meanwhile, was up 3 1/2, or 3.1%, at 117 1/2, on volume of 4 million shares. Average daily
volume is 8.4 million.
-Scott Eden; Dow Jones Newswires; 201-938-5253
-Marcelo Prince; Dow Jones Newswires; 201-938-5244
Briefing Book for: ADBE | ARDT | IBM | IFMX | MSFT |
