Patents and Innovation

"In 1914, no money was spent on Engineering, Development or Patent work. Last year we spent over $500,000 on this important phase of our operations. ... In other words, we spent more money in 1928 in Engineering, Development and Patent work than our entire earnings amounted to in 1914. ... Mr. Watson has always been an ardent advocate and a firm believer in 'ploughing' money back into the business to protect and insure its future. ... What such a policy has meant is exemplified in the fact ... that 90% of the products which we are today selling ... were developed since the Engineering Department was brought into existence by Mr. Watson. Where would IBM be today if no provision had been made for research, experimental and development work?"

The patenting practices of today's old-line computer firms—such as IBM, Unisys and NCR—were established in the last quarter of the 19th century. Patents were as crucial to starting a technology-based business as finance and manufacture. When the business was established, patents protected R&D investments against appropriation by free-riders and enabled innovations to be traded with competitors. ... Patenting was an instrumental part of the innovation process, rewarding innovators for their investments while promoting competition.

“At the very least, IBM's performance dramatizes the business need for a strategic—not tactical—approach to technology licensing. They have learned how to use licensing as a strong positioning factor in global markets.”

"IBM Research has played a critical role in the development and application of new technologies that have revolutionised information technology and science. Its continued innovation from some of the sharpest, creative minds has had an indelible impact on the global IT industry."

"The real excitement is seeing the work in the customer’s hand and making a difference,” Selinger said, adding that a patent brings a ‘warm feeling of satisfaction’ from inventing something ‘that was unique and innovative.’"