As previously reported, aircraft manufacturer McDonnell Douglas received the patent for a software technique called "windowing" used to correct computer code for year 2000 glitches. The company then handed the patent over to the technique's inventor, Bruce Dickens.
Today, Dickens, now president of his own firm called Dickens2000, announced that he will license the patent for an up-front fee and royalty payments. After the date change, licensing fees will increase substantially for firms unwilling to agree to his initial offer.
The attempt to collect fees and royalties from companies that had previously used the now-patented technology could deal a financial blow to thousands of companies. Analysts say that roughly 90 percent of Fortune 500 firms have used some form of windowing to fix their computer systems.
Dickens's small firm may lack the financial clout to fight lengthy patent infringement cases, but analysts expect some companies to pay the fee simply to avoid legal battles. Yet the fees may hit small companies the hardest, and analysts say these firms are expected to challenge the patent in court.
Bill Cray, a lawyer representing Dickens from the California-based law firm Levin and Hawes, said letters went out to U.S.-based firms today in an attempt to procure lump-sum payments for previous use of the technology. Giga Information Group expects Dickens will seek payments ranging from $50,000 to $100,000 from firms that have used the Y2K fix.
Challenging in court
Legal experts said that the challenge for firms that want to fight Dickens's patent will be proving that the patent should be revoked.
"Any patent is presumed valid. The defendant would have the burden of showing that the patent is invalid or that they didn't infringe upon the patent," Jeffrey Neuburger, a patent law attorney at New York-based Brown, Raysman, Millstein, Felder & Steiner, said.
Another way to beat a patent in court is by showing that the idea existed before, what lawyers define as "prior art."
Gartner Group analyst Dale Vecchio, who has been following the issue, said there appears to be plenty of instances where windowing has been mentioned or even used by companies.
"We believe there is overwhelming prior art," Vecchio said. "We have discovered prior art with IBM, who referred to the technique in pamphlets as far back as 1991."
The windowing patent was issued in 1998.
"Someone has to take this on in court. My fear is once companies pay the fees it will strengthen the Dickens patent. Someone has to fight it so it can be revoked," Vecchio said.
Analysts have also questioned whether the U.S. Patent and Trademark Office is equipped to evaluate complex technology patents.
Many are criticizing the office for issuing the windowing patent and are concerned that the patent claim could hamper companies in the final stages of renovating their computer systems for the year 2000.
The new patent represents how "the Patent Office doesn't understand the complexities of the technology industry," Kazim Isfahani, an analyst with Giga Information Group, said.
The Patent Office said it does not comment on specific patents and that a patent is valid once it is issued.
Although the Patent Office has been criticized in the past for having too many engineers and chemists and not enough software experts on staff, as more technologically complex issues come up, the office is adapting to them, Neuburger said.
"Now they can do a better job going forward," he said.
Despite the growing controversy, Dickens is moving ahead with his plans to get companies to agree to his licensing scheme.
McDonnell Douglas, now part of The Boeing Company, handed the patent over to Dickens. Neither McDonnell Douglas nor Boeing are associated with the licensing of Dickens's patent, Cray said.
The Y2K problem, also known as the millennium bug, is rooted in the way dates are recorded in computer code. Previously, systems programmers used two digits to represent years to conserve PC memory. With this format, however, the year 2000 is indistinguishable from 1900, or 2001 from 1901.