The Patent, Used as a Sword: An Outtake From the 1980s
By STEVE LOHR
I.B.M. At the dawn of the PC era, I.B.M feared that Apple would move on its lucrative mainframe business.For Apple, the pioneering innovator in smartphones, patents are a means to an end. Its goal is not money — at least not so much in the short-term sense of extracting licensing revenues. Instead, Apple is trying to use its patent portfolio as a weapon for competitive advantage. If Apple can force rivals to redesign their products, Apple can slow down Samsung and others.
Apple’s “sacred stuff,” as one former company executive put it, is its technology that controls the user experience of the iPhone and iPad, the look-and-feel features.
More than a quarter of a century ago, Apple found itself in a patent negotiation with the most powerful technology company of its day, I.B.M., shortly after Steve Jobs had been forced out.
By the mid-1980s, the I.B.M. PC, introduced in 1981, had been mimicked by clone makers, led by Compaq. I.B.M. was making the rounds collecting intellectual-property rent from the other companies in the personal computer business, starting with Apple, the unclone. The computer giant wanted money, yet it had a strategic agenda as well.
An I.B.M. team showed up at Apple’s headquarters in Cupertino, Calif., armed with a big pile of documents, patents it claimed Apple might be infringing. Apple had its own stack of patents, but far smaller than I.B.M.’s pile. So Apple owed I.B.M. some money, if far less than the clone makers would pay in their cross-licensing deals with I.B.M.
But I.B.M. had one other demand. In the contract between the two companies, I.B.M. insisted that Apple pledge it would not make a computer larger than a standard government desk.
“It was one of their hot buttons — I.B.M. was concerned that Apple would compete with them in mainframes,” recalled Irving Rappaport, former associate general counsel for intellectual property at Apple. “We just laughed.”
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