Congratulations to IBM CEO Sam Palmisano and his team at IBM for doing the exact opposite of what logic would dictate and opening up a small percentage of their massive portfolio of patents today! John Kelly, their Senior VP of Technology & Intellectual Property announced that they would allow free use of 500 of their patents, in a meaningful shift away from from traditional patent enforcement and ownership.

What’s interesting about this move is that IBM has an enormous patent library — they registered almost 3300 patents in 2004 — and that the money they make from licensing their patents is almost pure profit, so much so that they don’t even count patent licensing fees in their standard accounting because it skews the numbers so much. Analysts believe that IBM books as much as $1 billion annually from their patent holdings.

Why have they done this? One clue is…

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