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Industry group might buy Commerce One patents
By Stephen Lawson

A move is afoot to form an industry consortium to buy about 40 patents that are among the assets of bankrupt Commerce One Inc.

The CommerceNet industry group met on Monday with representatives of major technology vendors to discuss forming a foundation to buy the patents, which cover Web services technology, according to Lee Van Pelt, an attorney at Van Pelt & Yi LLP, in Cupertino, California, who attended the meeting. That purchase could prevent speculators from acquiring the patents and launching expensive lawsuits to enforce them, he said.

Software patents have become a hot topic in IT, an industry rife with patent lawsuits. The government of the European Union is currently embroiled in debate over a proposal to codify software patents there.

The Commerce One patents cover methods for companies to communicate with each other and provide certain types of information when carrying out machine-to-machine transactions over the Internet, Van Pelt said. Patents from the Santa Clara, California, company, which was a pioneer of electronic marketplaces, could cover technologies widely used by other companies, said Zapthink LLC analyst Ronald Schmelzer.

A speculator might capitalize on the broad use of the technology by taking those vendors to court for infringement, possibly consuming more time and litigation costs than the patents are worth, according to Van Pelt. He estimates the patents, most of which are still pending, will fetch between US$1 million and $10 million.

"Probably the least efficient way for these patents to be used by the industry would be for a speculator to buy them and aggressively enforce them against the industry," Van Pelt said. "A lot of the companies who have expressed interest in this are not necessarily companies that would be targets."

The concept of a public foundation buying "orphaned" patents and essentially retiring them is one that Van Pelt and other attorneys have been advocating for a while, he said. A key challenge is raising the money to buy patents. No vendor has pledged money to support a buy-out of the Commerce One patents, and CommerceNet has not yet committed itself to take action, according to Van Pelt. Time is tight: The auction hearing is scheduled to take place Dec. 6, he said.

CommerceNet, based in Mountain View, California, could not be reached for comment on Wednesday

Posted November 25, 2004 12:37 AM | TrackBack (1)