IBM Looks to ITC to Settle Its Asus Patent Beef

IBM (NYSE: IBM) asked the U.S. International Trade Commission (ITC) to investigate an alleged patent infringement it says is being committed by Taiwan-based Asus.

IBM took out the complaint against Asus and its North American subsidiary, Asus Computer International, after "repeated attempts to reach a licensing agreement between the companies," it said.

"IBM's position has been -- and remains -- that Asus either must license or stop using IBM's patented technology," Big Blue commented.

Accusations and Denials

Asus is importing and selling a host of infringing products, including notebook and desktop PCs, as well as servers, IBM claims. Patents involved cover power supplies, cooling and computer clusters.

Asus conducted an internal investigation, the Taiwanese firm said, and found no evidence that it was using IBM technology. "Based on an evaluation report by the lawyers and experts, there's no patent infringement by the company."

IBM has one of the world's largest portfolios of protected intellectual property -- it regularly ranks as one of the top patent recipients in the U.S. and globally each year -- and is has shown a willingness to license its technology broadly and at times to turn its advances over to the open source community.

Three at Issue

IBM is asking the ITC to issue an exclusion order that would prohibit Asus from importing any more of the allegedly infringing products until it removes the patented technology from them or reaches a licensing agreement with the Armonk, N.Y.-based company, it said.

The claim covers three patents: No. 5,008,829, which covers personal computer power supply and was granted to IBM in 1991; No. 5,249,741, which is for automatic fan speed control, issued in 2002; and No. 5,371,852, a "method and apparatus for making a cluster of computers appear as a single host on a network," which was also granted by the U.S. Patent and Trademark Office in 2002.

"IBM annually invests billions of dollars in research and development, and has extensive patents and other intellectual property in areas, including personal computing, servers, networking, semiconductors and other computer components," the company said.

It's not clear how many Asus machines are imported into the U.S. annually. However, the company ranks as the world's largest contract manufacturer of motherboards and is a top producer of other PC components. The company, which is investing to grow its presence in mainland China, is a major player in emerging markets, where its Eee brand of PCs are a popular low-cost choice. Asus has brought the machine to the U.S. in recent months -- Amazon (Nasdaq: AMZN) sells a notebook version with a 7-inch screen for under US$400.

Asus North America said in November that it had sold 1,300 of its notebooks to the Fresno, Calif., school district. Since IBM is no longer in the personal computer market directly -- having sold its PC lineup, including the popular ThinkPad, to Lenovo -- however, it's likely the complaints focus on machines being sold to enterprises.

Multiple Tactics

"Companies that once had their geographical niches are now becoming global players, and that's creating new conflicts," said Gartner (NYSE: IT) analyst Charles Smulders.

Not only is Asus becoming a more significant low-cost supplier of technology in the U.S., but IBM has designs on the other firm's turf in China, where Asus is among the fastest-growing tech vendors, Smulders told the E-Commerce Times.

Asus had 2006 revenues of $17 billion and ranked as the top original design manufacturer of motherboards, according to iSuppli. It more recently began producing its own line of computers and is said to be weighing moves into other hardware sectors, such as mobile handsets.

IBM has a varied track record when it comes to its intellectual property. Nearly three years ago, the company said it would open up 500 of its patents to free use by open source developers, a move meant to help make it a major force in the quest to provide open source support and services to enterprises. It has also set up a licensing program meant to allow venture capitalists to gain access to technology their startups can benefit from.

Still, it has prosecuted its patents at times. In May, IBM reached an agreement with Amazon to settle claims that the e-tailer had infringed on five of its patents relating to e-commerce.

A Civil Suit?

The ITC's role is to help protect U.S. companies' intellectual property against infringement by foreign rivals. The agency most recently sided with Broadcom (Nasdaq: BRCM) in a dispute against rival handset technology maker Qualcomm (Nasdaq: QCOM).

Technology companies often turn to the ITC first because the agency acts relatively quickly, said Bruce Wieder, an intellectual property attorney with Dow, Lohnes & Albertson.

They also favor the agency because it has the power to bar products from being imported, something that even outright wins from other courts can't necessarily guarantee.

"A civil suit may still be in the offing," Wieder told the E-Commerce Times.

The ITC complaint came amid a flurry of other news from IBM. The company reached a deal to acquire the data storage firm Arsenal Digital Solutions for an undisclosed sum. It also laid out plans to invest heavily to create a greater presence in Africa and said a new chip design it was perfecting had the capacity to bring supercomputing type power to notebook machines.