Pure Storage Goes on Defensive through IBM Patent Deals

Flash storage vendor Pure Storage recently signed a deal with IBM (IBM) to acquire 100 of the vendor’s storage and related technology patents. The two companies also signed a patent cross-license agreement but declined to disclose financial terms for either transaction.

While the patent deal is newsworthy it’s not out of the ordinary, by any means. On the surface, the Pure/IBM patent agreement is fairly run-of-the-mill, not unlike many similar deals that are regular occurrences in the IT industry. But there’s much more to this story.

Pure’s purchase of IBM’s storage patents are part of broader strategy to fend off entrenched rivals’ opportunistic lawsuits, wrote Scott Dietzen, Pure chief executive, in a blog post. In fact, adding the 100 IBM storage patents is part of Pure’s recent doubling of its patent portfolio, a move Dietzen said is a pre-emptive, albeit defensive, strike against what he called “a prototypical response to the existential threat posed by technology sea changes [when] legacy vendors to resort to litigation.”

In other words, he’s arming Pure with storage patents others might buy to use against him. Indeed, the majority of Pure’s newly bought patents aren’t licensed by big storage vendors—the spectre of patent litigation is why Dietzen is shoring up Pure’s flanks.

And, he’s going farther, not naming names but taking legacy storage vendors to task for turning to litigation to stave off market competition.

“An entrenched incumbent, whose customers are stuck on a hamster wheel, deciding between a technology refresh or facing a spike in maintenance fees, has little incentive to innovate in ways that could disrupt their existing business,” Dietzen wrote. “Only when pushed by innovative competition do they wake up that a day of reckoning is at hand. The next step is often, then, to sue the upstart vendor in the hopes of slowing their momentum to buy time to catch up, all the while milking the installed base with promises of innovation tomorrow if they buy more legacy today.”

In explaining why Pure turned to patent portfolio-stuffing to fortify itself rather than relying on its own organic IP, Dietzen wrote, “Organic IP focused on the future is essential but still sometimes insufficient to defend innovators from entrenched incumbents. … We’re convinced that by also owning inorganic IP that reads on existing legacy storage, we put ourselves in a stronger position to defend ourselves, thereby protecting the long-term interests of Pure’s customers, partners and shareholders.”

Dietzen vowed that Pure won’t use its expanded patent portfolio against its rivals but only to defend itself against “competitors who choose litigation over marketplace competition. Our goal is to keep the battle out of the courtroom and in customer data centers where it belongs,” he wrote.

Do you believe him?

Patent trolling

Two recent developments may serve to snuff out some of the patent trolling that IT companies argue stifles innovation and investment. A new study conducted by Catherine Tucker, an MIT marketing professor, discovered that in the last five years, VC investment in IT might have amounted to some $22 billion more had not serial litigators—companies filing 20 or more patent lawsuits—muddied the landscape.

And, a new U.S. Supreme Court decision narrowed the definition of an invention to exclude generic computer implementation. In other words, an abstract software idea that runs on a computer doesn’t qualify as a patent.