The role of software patents in sustaining IT-enabled competitive advantage: a call for research

Journal of Strategic Information Systems 11 (2002) 59±82

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The role of software patents in sustaining IT-enabled competitive advantage: a call for research Kathleen Mykytyn a,*, Peter P. Mykytyn Jr. b,1, Bijoy Bordoloi c,2, Vicki McKinney d,3, Kakoli Bandyopadhyay e,4 a 102 N. Gordon Lane, Apt. A Carbondale, IL 62901, USA Department of Management, Southern Illinois University, Carbondale, IL 62901, USA c Department of Computer Management and Information Systems, Southern Illinois University, Edwardsville, IL 62026-1106, USA d Department of Information Systems, University of Arkansas, Fayetteville, AR 72701, USA e Department of Information Systems and Analysis, Lamar University, Beaumont, TX 77710, USA b

Received 29 January 2001; accepted 2 October 2001

Abstract A number of information technology (IT) researchers have examined IT and sustained competitive advantage. However, the relationship between software patents and IT sustained advantage is often unclear and incomplete. This paper reviews some of that research, pointing out various research contributions while indicating some of the problematic issues in dealing with competitive advantage and software patents. In addition, we highlight a number of software-based patents that have been awarded to organizations in diverse industries, including some that provide researchers and executives with insight into how organizations are protecting unique business methods with software patents. We also pose some intriguing research questions, including determining why ®rms do in fact patent software, and investigating the potential differences in doing business globally involving countries that either take steps to protect software assets with patents versus those that do not. Based on the information presented, we anticipate that IT researchers would be more open to

* Corresponding author. Tel.: 11-618-549-1946. E-mail addresses: [email protected] (K. Mykytyn), [email protected] (P.P. Mykytyn Jr.), bbordol@ siue.edu (B. Bordoloi), [email protected] (V. McKinney), [email protected] (K. Bandyopadhyay). 1 Tel.: 11-618-453-7885. 2 Tel.: 11-618-650-3947. 3 Tel.: 11-501-575-7740. 4 Tel.: 11-409-880-8635. 0963-8687/02/$ - see front matter q 2002 Elsevier Science B.V. All rights reserved. PII: S 0963-868 7(01)00057-9

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investigating the relationship between software patents and sustaining IT-based competitive advantage. q 2002 Elsevier Science B.V. All rights reserved. Keywords: Sustained competitive advantage; Legal issues and information systems; Computer software patents

1. Introduction Software and business methods made possible by IT are even used as bargaining chips. Chase Manhattan Corp., which holds patents on an imaging system for checks and a highway toll-collection system, uses those and other IT assets as negotiating leverage, particularly in joint ventures, says Mark Kesslen, VP and assistant general counsel at Chase. ªWe have certain lines of business that operate as high-tech businesses, and in those, we view intellectual property as a type of currency,º says Kesslen. ªIt's a competitive advantage.º (Hibbard, 1999). Think of your company's most important business process or innovation. Then imagine not being able to use it because your competitor's lawyer ®gured out a way to patent it. (Bresnahan, 2000). Your competitors are using software patents to gain a business advantage, shouldn't you? (Cantzler, 2000). There is little doubt that organizations are using information technology (IT) to obtain competitive advantages over their rivals. Many that have successfully developed and implemented strategic systems have been cited in IT literature. Noteworthy applications include: American Airlines' SABRE system (Martin et al., 1994), American Hospital Supply's ASAP system (Mata et al., 1995), Merrill Lynch's Cash Management Accounts System (CMA) (Martin et al., 1994; Turban et al., 1996), integrated management and reporting systems developed by Mrs Fields, Inc. and Otisline developed by Otis Elevator, Inc. (Senn, 1992). These success stories notwithstanding, attention has been directed toward how IT can help organizations attain a sustainable advantage. Those who have either raised questions about sustainability or have suggested ways to achieve it include Clemons (1986), Feeny (1988), Feeny and Ives (1990), Barney (1991), Kettinger et al., (1994), and Mata et al. (1995). There is, however, a factor that has not been completely addressed by some IT researchers, a factor that has been utilized by businesses worldwide, including thousands in the US. It is one that could help an organization achieve sustainable competitive advantage through IT. That factor concerns the many perspectives dealing with software patents. Indeed, a number of research issues that have a direct relationship to IT and competitive advantageЮrst-mover advantages, adoption and diffusion of technology, reverse engineering, imitating IT implemented by competitors, and erecting barriers to entryÐcan be affected by a ®rm's approach to protecting software by patents. We suggest that speci®c research involving this means of protecting software assets should be conducted so as to

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better understand the relationship between software patents and sustained competitive advantage. In this article, our objective is to raise the awareness of the role of software patents in the IT research environment involving strategic information systems or IT-enabled competitive advantage. 5 We do so, ®rst, by presenting a brief overview of the nature of patents, especially as they apply to software. Next, we identify a number of software patents that have been awarded with suggestions on how these patents could provide a sustainable competitive advantage. Several of the models and frameworks dealing with the sustainability of competitive advantage through IT are examined. We brie¯y point out if and how these researchers address patents. In conclusion, suggestions are offered on how IT researchers could examine more completely the relationship between software patents and sustained advantage. 2. Patents Section 2.1 provides general information about patents as they apply in the US. Section 2.2 discusses patent protection as it relates to computer software. 2.1. General patent information 6 In general, a process, machine, article of manufacture, or composition of matter as well as improvements thereto may be protected by patents, subject to meeting the requirements of novelty, non-obviousness, and utility. That is, the invention must be new and not exist as prior art; it must not be an obvious variation of an existing invention; and the invention must be useful (Maier and Mattson, 1999). Patent laws in the US provide ®nancial incentives to inventors or their assignees by granting them exclusive rights to the invention for a number of years (Siller and Retsky, 1993). These rights include the right to exclude others from making, using, selling, offering to sell, or importing the invention and the right to license others to make, use, or sell the invention for a period of 20 years from the time a patent application is ®led (Voet, 1995). In essence, patents grant their owners a legitimate monopoly. Even though patents grant a monopoly for a period of time, the patent holder would ®nd no value in spending the time and money to obtain a patent if there was no way to protect the rights granted if someone infringes it. Essentially, infringement is de®ned as activities by anyone who makes, uses, sells, offers to sell, or imports a patented invention that is exactly or substantially the same as the invention even though there may be no knowledge of the existence of a patent on the product or process (Koffsky, 1995). When a patented invention is exactly duplicated, infringement is fairly easy to prove. What may not be clear, however, is how an invention infringes if it is substantially the same. The Doctrine 5

Our research is focused on IT applications that are either developed by an organization or for an organization, such as by a consultant, for use by the ®rm in its business. It is not intended to deal with off-the-shelf software that is developed for resale. 6 Often, the term `invention' is used to designate that which has been patented. Additionally, due to space limitations, this discussion regarding the general aspects of patents is limited. Readers interested in a more indepth presentation are referred to Cantzler (2000) and Thomas (1999).

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of Equivalents, which is founded on the theory that ª¼if two devices do the same work in substantially the same way and accomplish substantially the same result, they are the same, even though they differ in name, form or shapeº (Graver, 1950, p. 605), offers an additional measure of protection to the patent holder. 7 On October 1, 1982, the United States Court of Appeals for the Federal Circuit (CAFC) was established. This court, which replaced the United States Court of Customs and Patent Appeals for appeals of patent applications rejected by the United States Patent and Trademark Of®ce (USPTO) and also replaced US Courts of Appeals for appeals from district court decisions in patent infringement cases, substantially changed judicial review encompassing patent litigation. Any appeals of district court decisions involving patent lawsuits, outside challenges to the validity of a patent, and appeals from the Board of Appeals of the Patent Of®ce now go directly to the CAFC (Miller and Davis, 1990). Bender and Barkume (1992) state that since the creation of the CAFC, there has been a noticeable increase in decisions af®rming patent validity. In fact, infringement suits favoring the patent holder have increased substantially, compensatory damages awards have been higher, and enhanced damages, i.e. up to a factor of 3 for willful infringement, have increased in number. 2.2. Patents and computer software Until 1981, patent protection for software was almost non-existent. Then, in the landmark Diamond v. Diehr (1981), case, the US Supreme Court held that some software could be patented. In this instance, the Court ruled that a computerized process for curing rubber was patentable even though the process involved an algorithm, which by itself was unpatentable. The distinction here was that the algorithm was applied to a process, as opposed to attempting to patent the algorithm in the abstract (Cantzler, 2000). Writing about this decision, Nimtz (1981) noted that this case resolved a 12 year-old legal controversy over the patentability of computer programs. For greater emphasis, Nimtz indicated that since the patent system protects inventions, the protective advantages of the patent system were now clearly available to the software industry. In 1982, Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) received a patent on its CMA, a system designed to improve securities brokerage/cash management activities involving an investor's brokerage account, money market or comparable funds, and credit/debit media and/or checking accounts. In 1983, Paine, Webber, Jackson and Smith (Paine±Webber) challenged the validity of the CMA patent. The case was signi®cant in that it was the ®rst reported case where litigants in the private sector disputed the validity of a patent on a software invention, and it was also the ®rst reported decision 7

In a seminal modern case, the Doctrine of Equivalents was applied by the US Supreme Court in 1950 (Graver, 1950) and further invoked more recently in 1993 (Valmont, 1993) and in 1997 (Warner±Jenkinson, 1997). In essence, it stipulates that one may not practice a fraud on a patent through imitation, and may not make unimportant and insubstantial changes and substitutions in a patent, which, though adding nothing, would be enough to take the copied matter outside the reach of the law. Brie¯y, one cannot circumvent a patent just by substituting equivalent ingredients. Although the Doctrine of Equivalents is still a viable doctrine in patent law, recent cases have narrowed its scope, thus making it somewhat more dif®cult to prove non-literal infringement (Warner±Jenkinson, 1997; Festo, 2000).

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concerning the validity of a software patent by a US district court (Meyer, 1984). The court upheld the validity of the patent, concluding that the patent claims ª¼allegedly teach a method of operation on a computer to effectuate a business activityº (Paine et al., 1983, p. 1369). Merrill Lynch's patent on its CMA system is especially important because the system has been referenced often in MIS textbooks dealing with strategic applications of IT and in IT-related scholarly research published in the 1980s and 90s pertaining to competitive advantage. The importance attributed to the CMA patent by Merrill Lynch is also emphasized by the fact that Merrill Lynch took active measures to protect its investment. In 1983, Merrill Lynch won a $1 million settlement from Dean Witter after charging that Dean Witter had infringed the CMA patent (Merrill Lynch, 1983). Smedinghoff (1988) reported that patent laws are some of the most overlooked forms of protection for computer software. Bulkeley (1989), while writing in The Wall Street Journal, drew attention to the growing movement to protect software by patents, pointing out that there are both proponents and detractors for this means of protecting software. Emphasizing the importance of software patents and the ®ling of patent infringement lawsuits, McAllister (1989) reported that Refac Technology Development Corp. had ®led more than 2000 infringement lawsuits in the preceding ®ve years, and in 1989 the company took actions against Lotus, Ashton±Tate, Borland International, Informix, Microsoft, and Computer Associates. During the period 1988±1995, software-related patents grew dramatically. Song (1994) states that not only are ®rms in the computer business, such as IBM, NEC, Texas Instruments, etc. aggressively obtaining patents, but ®rms in other industries that develop inhouse software have also obtained software patents; companies include Merrill Lynch, SABRE, 3M Company, Dow Chemical, Pitney Bowes, Inc., and Mirage Resorts Incorporated. The USPTO's patent Class 364, Electrical Computers and Data Processing Systems, encompassed six main divisions, including sub-classes 400±408 which were devoted to such activities as: business practice and management, sub-class 401; accounting, sub-class 406; reservations, sub-class 407; and ®nance, e.g. securities and commodities, sub-class 408. Another software-related classÐPatent Class 395, Information Processing System OrganizationÐwas created from ®ve former sub-classes that were included in Class 364 and went into effect in 1991. Kunin (1994) notes that the patent applications in the Patent Class 395 rose from 3829 applications in ®scal year 1988 with 1774 patents issued, to 7552 applications in 1992 with 2830 patents issued. The perception that IT application software cannot be patented may be based on seven elements that Bender and Barkume (1992) label as so-called `Conventional Wisdom' (p. 280) that they state are out of step with reality. The seven elements are: (1) software inventions will not be issued patents because they are inappropriate subject matter for patent protection; (2) the requirements set forth in patent law are so stringent that most computer programs would be precluded from consideration; (3) even if a software patent is issued, the time involved in the patent process would be so lengthy that the software patent would be useless because the commercial life of the software would have passed; (4) even if a software patent is issued, it would have little value because the courts exhibit hostility towards patents and are averse to enforcing them; (5) it is too costly to obtain a patent; (6) courts will not issue preliminary injunctive relief to patent holders when infringement

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Fig. 1. Class 705: Data Processing: Financial, Business Practice, Management, or Cost/Price Determination (source: United States Patent and Trademark Of®ce, http://www.uspto.gov. Last accessed September 6, 2001).

occurs; (7) since a patent is a public document, the program source code must be disclosed and anyone, including competitors, can get a copy of it from the Patent Of®ce for only $3.00. Bender and Barkume (1992, p. 280) state that ªOn the spectrum of reliability, each of these bits of `Conventional Wisdom' falls somewhere between misleading and ¯at wrong.º Most recently, the USPTO has created several patent classi®cations that relate to data processing activities. These classes include applications dealing with navigation systems (class 701), arti®cial intelligence (class 706), and database and ®le management systems (class 707). In fact, during the period 1996±early September 2001, the number of patents awarded in just those three classes exceeds 16,000 (USPTO, 2001). Another class that is most relevant today is class 705ÐData Processing: Financial, Business Practice, Management, or Cost/Price Determination. This class includes applications of software-based business methods, many involving e-commerce and business applications. Examples include patents by Electronic Data Systems (1999), Priceline.com (2000), Merrill Lynch et al. (2000), Visa International (1999), Citicorp Development Center (2000), MasterCard International (1997), International Business Machines (2000), Nortel Networks (2001), Disney Enterprises (2001), and Amazon.com (2000); these software patents, which are outlined in Appendix A, involve aspects of doing business, areas where patents for the most part have not been utilized before (Glazer and Kahn, 1995). In general, the growth in the number of patents involving business methods has been and continues to be phenomenal. Fig. 1 depicts the number of patents issued since 1981 in patent class 705. In the current context of business application patents, related e-commerce activities, and from the perspectives of competitive advantage, three recent patents leading to court decisions are worthy of discussion. The ®rst case, State Street Bank and Trust Co. v. Signature Financial Group, Inc. (State Street, 1998), involved a program developed by Signature to calculate changes in the allocation of assets of mutual funds. ªThe program, known by the proprietary name `Hub and Spoke,' facilitates a structure whereby mutual fundsÐthe `Spokes'Ðpool their assets in an investment portfolioÐthe `Hub'Ðorganized as a partnership for tax purposesº (Cantzler, 2000, p. 450). Unable to negotiate with Signature for a license to use the patented system, State Street sued Signature, claiming

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that the patent was invalid. The US District Court of Massachusetts agreed with State Street, ®nding that the patent covered a business method, which that Court said would render the patent invalid because a business method was not a patentable subject matter (Wiese, 2000). The case ultimately reached the CAFC, which agreed with its earlier decision in In re Alappat (1994) that the use of mathematical algorithms is patentable if they produce a useful and practical application. More important, the CAFC reversed the district court's decision that business methods are not patentable subject matter. The aftermath of the State Street decision has seen a ¯ood of business method patent applications, which is likely to continue. Businesses that had heretofore not considered patenting software are faced with the reality of either acquiring patents or watching their competitors do so (Cantzler, 2000). A second case also dealt with the patentability issue of business methods. In AT&T Corp. v. Excel Communications, Inc. (AT&T, 1999), AT&T sued Excel for infringing on ten method claims in its patent entitled `Call Message Recording for Telephone Systems.' Basically, the application dealt with the generation of an electronic record for long distance telephone calls that permits differential billing by a long distance carrier, depending on whether the called party has the same long distance carrier as the calling party. The US district court held the patent invalid, determining that the patent's claims fell within the mathematical algorithm exception. AT&T appealed to the CAFC, which, supporting AT&T's position, reiterated that a business method employing a mathematical algorithm is patentable as long as it produces a result that is tangible and useful. The State Street and AT&T cases are important because 3-member panels of the 12member CAFC decided both cases. The AT&T decision showed that the State Street case was not just a ¯uke decision from one 3-member panel. A third case involves two well-known organizations engaged in e-commerceÐ Amazon.com and Barnesandnoble.com (Amazon.com, 2001). In September 1999 Amazon.com received a patent on what has been colloquially referred to as its `1-click ordering system'. Basically, the patented business application is designed to obtain customer information, e.g. name, address, credit card information, related to an order placed with Amazon.com. The application requires that the customer enter this information and `1-click' the order button. Additionally, the customer need not enter this information again on future orders in that the application stores it on an Amazon.com server; any future order merely requires the customer to identify the item or items wanted, followed by the `1click' of the order button. Subsequent to the issuance of the patent, Amazon.com ®led suit against Barnesandnoble.com, alleging that Barnes' `Express Lane' ordering feature infringed on Amazon's patented application. In December 1999, Amazon.com won a preliminary injunction against Barnesandnoble.com, essentially prohibiting Barnesandnoble.com from employing its `Express Lane' feature in its ordering system. In February 2001, the CAFC overturned the injunction because of doubt about the patent's novelty or non-obviousness. However, the question of the patent's validity is still undecided in that the action is scheduled for a full trial in September 2001 (Linn, 2001). These business method patents are important from the perspective of competitive advantage. Many organizations invest considerable time and money in developing IT applications to optimize their business practices with the hope that they will be provided with a competitive advantage over their rivals. When the development of unique IT

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software is undertaken and subsequently gives an organization a competitive edge it has sought, then there is certainly an element of value associated with the process and software, and the incentive to protect the ®rm's investment rises. Meyer (1992) cites four incentives that could motivate software-developers to attempt to obtain patent protection. They are: (1) to reduce the competition for products that embody their inventions; (2) to use a patent primarily as a tool for any additional licensing revenue a patented invention can provide; (3) to develop a defensive portfolio of patents to use in negotiations with competitors, potential business partners, or other patent holders, i.e. `bully power' (p. 738); and (4) to legitimize their technology to their clients and/or investors. The value of a patent, with respect to these four incentives and IT, depends on the protection it offers and how effectively it can be enforced. Meyer's points clearly indicate the importance of patent protection and a possible sustainable competitive advantage. For instance, Porter (1980) indicates that building barriers can impede the competition faced by an organization. Also, if an organization can change the basis for competition within an industry, it can achieve a competitive edge. These perspectives are clearly ingrained in Meyer's (1992) ®rst point that deals with reducing competition, and three organizationsÐPitney Bowes, Citibank, and EDSÐare representative of them. During the period January 1996±September 4, 2001, Pitney Bowes, long a leader in postage metering equipment, has been assigned 168 patents in class 705, and Citibank has been assigned 40 patents. EDS' patent portfolio involves a number of software-related classes, and its total number consists of 153 patents assigned during that same period (USPTO, 2001). Pitney Bowes has expanded well beyond postage equipment, establishing an Advanced Concepts & Technology (AC&T) group that is responsible for developing new concepts and technologies, including departments devoted to e-commerce, the Internet, and software technologies. Citibank's patents involve applications in e-commerce, commercial loan analysis, online credit review and approval, and relationship management based on a customer's relationship with Citibank. The changing landscape for ®nancial institutions that are now involved with insurance, investments, as well as traditional banking services and Citibank's diverse patent portfolio may force Citibank's competitors to investigate their business models and practices. Likewise, with its focus on class 705 business method patents, EDS may force other outsourcing vendors to rethink how they can differentiate themselves from EDS, perhaps providing EDS with time and ®scal advantages while other vendors consider their options. Another of Meyer's (1992) incentives to patent is to obtain licensing revenue. From the perspective of sustained competitive advantage, the issue is what a patent holder can and will do with those additional revenues in order to try to secure this advantage. As an example, these revenues can enhance further R&D work in software development, work that can lead to enhancements to existing applications or toward new development. In turn, these new or enhanced applications may qualify for patent protection. In effect, since this development has progressed as a result of obtaining licensing revenues, the ®rm has actually achieved this position by having its competitors, i.e. the licensees, pay for it. Furthermore, Meyer (1992) points out that ®rms that have extensive patent portfolios ®nd themselves in stronger positions in their relationships with competitors, potential business partners, and other patent holders. Such ®rms often engage in cross-licensing, i.e. two ®rms license each other's patents, but Meyer (1992) indicates that ®rms with larger and

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stronger patent portfolios can achieve greater advantages in these types of licensing arrangements. The importance of software patents has been emphasized in a report to the US Secretary of Commerce (The Advisory, 1992). Furthermore, the nature of software patents, their application to the business arena, and the nearly 20-year history surrounding them should by itself be suf®cient to raise questions leading to substantive IT research. Unfortunately, the opposite has been true. There has been little attention by IT researchers to this means of protection and possible competitive advantage. Some aspects of this are discussed next. 3. Software patents and competitive advantage Researchers such as Clemons (1986), Clemons and Row (1991), Kettinger et al. (1994), and Mata et al. (1995) have made important theoretical and empirical contributions and have suggested that IT has a possible role to play in creating sustained competitive advantage. Indeed, there is little opposition regarding the necessity of committing resources and other factors necessary to sustain an IT-based advantage. Furthermore, the failure to act decisively can produce unintended negative consequences for an organization. For instance, one need only look at such well-cited examples as ATM machines and package tracking systems to realize what once was an IT-based strategic advantage is now an industry standard, essentially a strategic necessity for anyone in that industry, or one that is able to enter it. Unfortunately, the scholarly research dealing with the sustainability of competitive advantage is not de®nitive. Jarvenpaa and Ives (1990) suggest that both empirically and theoretically based research dealing with IT sustainability is `underdeveloped'. Although a number of frameworks and models to sustaining IT competitive advantage have been proposed and examined (several are discussed below), for the most part software patents are not addressed or the discussion is lacking in appropriate information. We review some of these frameworks from the perspective of software patents; due to space limitations, the review is purposely brief. 3.1. Clemons (1986) Clemons cited several examples of competitive advantage provided by IT. Among them are Merrill Lynch's CMA and reservation systems employed by two major airlines. He also noted that a clear distinction should be made between internally and externally focused applications as far as sustaining competitive advantage is concerned. Internal applications generally occur within an organization in order to achieve cost advantages or improvements in product or service quality, whereas the latter are used primarily to interact with customers, clients, or vendors for the purpose of adding value. In each case, to be successful the innovation must provide real bene®t to the ®rm, and there must be time for the ®rm to nurture that bene®t. Speci®cally dealing with external applications, there must also be a real bene®t to the customer. Clemons does indicate that patents and other forms of statutory protection may provide effective barriers for internally focused applications, but he does not provide suggestions on how to do so. Any relationship between patents and externally focused applications is not addressed. It is interesting that Merrill

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Lynch's CMA system, a system that was de®nitely external in nature, was patented in 1982, and it was the subject of considerable notoriety in business publications in the mid 1980s. 3.2. Clemons and Row (1991) Research by Clemons and Row examined sustainability of competitive advantage from the perspective of IT innovation and differences among competitors in the role that strategic resources play. Arguing that IT equipment and services are quite widespread today with most applications easily copied, they propose that a sustainable competitive advantage can be obtained when IT is used to leverage differences that may occur in such resources. Speci®cally, strategic resources may include plant and equipment, customer relationships, know-how, or brand recognition. They go on to say that if IT exploits unique resources of a ®rm, so as to keep competitors from bene®ting from imitating, the innovating ®rm will enjoy an advantage. Their resource-based theory is important from the perspective that it is well grounded in economic theory. However, they dismiss patent protection as a means to achieve any IT advantage, stating that patent protection for information systems is almost non-existent. This position, therefore, does not consider that patented software would not be readily available to other competitors, and that such protection could be used as a means to exploit unique IT resources. 3.3. Kettinger et al. (1994) Kettinger et al. developed a `model of sustainability' based primarily on environmental and ®rm-speci®c factors and strategies that could lead to sustainable competitive advantage. They based their research on longitudinal changes in certain performance measures of 30 strategic systems that have received considerable attention in the literature; these included reservations systems by American Airlines, Inc. and United Airlines, Inc.; credit card processing systems by Chase Manhattan Bank and Chemical Bank of New York; and order entry systems by Baxter International, Bergen Brunswig Corp., and McKesson Corp. Many of these `success stories' began in the early 1970s, and none were launched after 1983. Their research revealed that not all of these systems could be classi®ed as `sustained winners'. This conclusion was based on an analysis of relative pro®tability (i.e. a ®rm's pro®tability relative to the ®rm's industry) and relative market share covering three periods: stage 1: the ®ve-year period prior to the launch date of the particular system; stage 2: the period from system launch to ®ve years from the system launch; and stage 3: the period of ®ve years to ten years from system launch. After analyzing a considerable amount of longitudinal data involving these well known organizations and their systems, Kettinger et al. call into question the approaches that some ®rms have taken regarding adoption of IT: the so called fascination with `technological wizardry' and being a ®rst-mover. A well-established technological base and signi®cant availability of capital are needed, they say, if ®rms are to compete based on technology. A variety of ®rm resources, along with those of the competition, must also be weighed. They do refer to patents as an example of an inhibitor to a competitor's ability to initiate a preemptive strategy. But they note that it is dif®cult to protect innovative applications through patents and other uses of proprietary technology, based on unsupported

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statements by Clemons and Knez (1988). Further, Kettinger et al.'s position does not consider the thousands of software patents awarded by the USPTO during the 1980s and early 1990s. 3.4. Mata et al. (1995) Mata et al. (1995) developed a model based on the Resource-Based View (RBV) of a ®rm (Barney, 1991) that posits that resources and capabilities possessed by competing ®rms may differ, and that these differences may be long lasting. Speci®cally, this means if a ®rm possesses a resource that is heterogeneous, i.e. it is not possessed by other ®rms, and is immobile, i.e. the other ®rms will encounter cost disadvantages to develop, acquire, and use that resource, then a sustained competitive advantage may be possible for the ®rm that possesses the heterogeneous, immobile resource. In the context of their model, Mata et al. examine four other attributes of IT that have been reported in the IT literature as being possible sources of sustained competitive advantage: access to capital, proprietary technology, technical IT skills, and managerial IT skills. After reviewing each of these attributes, they conclude that managerial IT skills are a sole source of sustained competitive advantage. Their enhancement to the resource-based theory is important in that it does apply a well-regarded theory to IT sustainability. However, their position with regard to proprietary technology, e.g. patented software, similar to some of the previous research cited above, does not consider the software patents that had been awarded for more than ten years prior to their research. In addition, some of the support for their position regarding patents is dated, published in 1981 and prior to the US Supreme Court decision in the Diamond v. Diehr case that laid the groundwork for software patents. 3.5. Summary We have reviewed several frameworks and models to sustainability of competitive advantage through IT. It is evident that the approaches, issues, and views of researchers are many and varied. However, from our perspective and from the perspective of organizations in the business community, the relationship between IT sustainability and protection of software assets using patents is not treated appropriately. This less than appropriate focus is exacerbated by the fact that there is a preponderance of evidence that businesses and other organizations have pursued this avenue of protection for software assets for many years; furthermore, that attention is growing dramatically as organizations investigate the relationships between e-commerce and business method patents. What we believe is necessary is a reinvestigation of these frameworks and models by IT researchers, an investigation that includes software patents as a means to achieve a sustained advantage with IT. If the appropriate attention is focused on software patenting, IT researchers have the opportunity to add to many of the models and frameworks existing. In essence, this direction is similar to that taken in the latter 1980s and early 1990s when researchers examined and added to many of the GDSS frameworks that had been proposed. In addition, researchers could enhance theoretical perspectives dealing with `®rst-mover' advantages and disadvantages. Do software patents provide an additional advantage to ®rms that are traditionally ®rst-movers? Can these patents provide the basis for ®rms that may have been followers to become ®rst-movers?

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In Section 4, we propose a number of research questions to examine the relationship between software patents and sustained competitive advantage. 4. Research agenda In Section 3, we reviewed brie¯y three frameworks and models to sustainability of competitive advantage through IT. The directions and theoretical perspectives vary, but it is clear that the relationship between IT sustainability and protection of software-related inventions using patents is, for the most part, not discussed, or it is not based on appropriate information available at the time of the research. It is important to note that we are not implying that the previous research addressing sustainability is ¯awed or not valuable. Instead, we are suggesting that we believe researchers have failed to recognize a mechanism that at least deserves to be investigated; a mechanism that we believe may play an important role in IT sustainability. A number of opportunities are available to IT researchers to delve into the software patent domain. For the most part, the frameworks and models presented above, which include the research by Kettinger et al. (1994) and Mata et al. (1995), can in many cases provide the appropriate theoretical foundations needed. Toward this goal, we pose some questions below that researchers should investigate so as to provide further insight to this important area. 4.1. Do ®rms that patent software achieve an enhanced ®nancial gain? There is ample evidence that the number of organizations patenting software applications has been on the rise for many years; some evidence of that was presented earlier in this paper. Two illustrative ®rms include larger organizations such as Electronic Data Systems (EDS), which has patented in excess of 30 software applications involving business-oriented areas such as ®nance, travel management, knowledge management, and reservation systems just since 1996. A smaller organization, Maxagrid International located in Addison, TX is a privately held consulting company involved with the broadcast industry and has received three software patents involving inventory management relevant to that industry. Whether the organization is a large, multi-billion dollar company or a considerably smaller ®rm, the real-world question remains: what type of ®nancial gain does the company realize from its patent investment? As a systems integrator, consultant, and outsourcing vendor, EDS has various options available to achieve ®nancial gain as a result of its software patents. These can include licensing revenue received from consulting clients who would be using patented applications developed through the consulting relationship. EDS could also utilize the patented applications with other clients whereby little or no additional software development work would be required; in this instance, EDS would be leveraging its initial investment in developing and patenting the application. The result could be a perpetuation of the direct ®nancial gain. Firms could also achieve ®nancial gains indirectly. For example, if ®rm `A' patents an application, what is the impact on ®rm `B', its competition? In the case of Amazon.com versus Barnesandnoble.com, Amazon.com charged Barnesandnoble.com with infringing

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on its `1-click' ordering system. Was Amazon.com able to achieve enhanced revenue as a result of its actions against Barnesandnoble.com? Was Barnesandnoble.com impeded in its ability to compete effectively with Amazon.com because of the infringement actions, and was Amazon.com able to achieve additional revenues as a result? Kettinger et al.'s (1994) Model of Sustainability provides for a number of opportunities to investigate the relationship between software patents and ®nancial gain. Part of the Model includes the ®rm's organizational base, which is part of the Model's foundation factors. It is de®ned as a source of competitive asymmetry (Feeny and Ives, 1990). Keen (1991) indicates too that organizational base can be viewed as the ®t between a ®rm's capability to act on, and its competence to exploit, IT opportunities. Viewing a patented software application as an IT opportunity through the ability to generate cash ¯ow, e.g. licensing revenue, for the purpose of reinvestment, Kettinger et al. suggest that this capability may be very important for a ®rm as it deals with strategic responses from its competition. Another foundation factor from Kettinger et al.'s Model is technological resources, which includes IT in use and under development. As suggested by Clemons and Weber (1990), Kettinger et al. indicate that the packaging and selling of sophisticated applications and IT services that are developed internally create an opportunity for additional value from an IT investment. Again, licensing revenue would ®t within the framework of `selling' IT applications. Kettinger et al. also suggest that the extent of a ®rm's innovative technological resources may also be important in determining ®rm pro®tability. One measure of this is a ®rm's R&D expenditures. Correspondingly, a ®rm that chooses to develop and patent software may in effect be investing in its future pro®tability and may look upon those expenditures as a form of R&D. Kettinger et al. also identify a number of action strategies as part of its Model of Sustainability. One such strategy is pre-empting, i.e. being the ®rst-mover. Factors to be considered in examining pre-empting include barriers to entry and technological leadership. Software patents can provide barriers to entry, thereby affecting other ®rms' posturing, business strategies, and corresponding actions. In addition, a ®rm that engages in software patenting may be viewed as a technological leader, thereby providing for enhanced ®nancial opportunities. Finally, research that includes software patents as a variable of interest related to pre-empting could also dispel suggestions, e.g. Aaker and Day (1986), that being a ®rst-mover may not produce advantages as automatically as suggested. This could be achieved by showing that software patents can minimize technological uncertainties by affecting a ®rm's competition and by producing additional revenue through licensing. 4.2. Can ®rms that patent software enhance their competitive position by developing a portfolio of software-based patents? Organizations that prove to be competitively successful may undertake a number of approaches to achieve that success. One such approach may be a collection, i.e. a portfolio, of patented software applications that encompass the depth and/or the breadth of courses of action a company chooses to take in order to achieve a competitive edge. In theory, the more an organization can do to make it more dif®cult for its competition to respond to its

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actions, the more successful it may be. Some organizations that have undertaken this course of action include Electronic Data Systems (EDS), MasterCard International, and Merrill Lynch. In just one patent classi®cation, class 705, EDS has been assigned more than 30 patents. Recall that patent class 705 deals with data processing activities involving ®nance, management, cost/price determination, and business methods. 8 A brief examination of the titles of the patents reveals the extent to which EDS conducts its business and, thus, deals with its competition. Software patents have been assigned to automated travel planning activities, scheduling of project orders in a manufacturing facility, project management, knowledge management, and employee relocation. These areas of business could serve EDS internally, e.g. knowledge management and employee relocation, or could serve to enhance its position in the outsourcing/IT consulting industry. MasterCard International's focus is obviously different from that of EDS, but the result might be similar. In the same patent class, MasterCard has been assigned 10 patents, most dealing with electronic funds transfer and electronic transaction requests. Likewise, Merrill Lynch has been assigned 22 patents in class 705. Examples of them include cash management accounting, bene®ts processing, and check fraud protection. Whereas EDS' approach encompasses more of a breadth perspective in that its software patents embrace a wide range of applications, that taken by MasterCard and Merrill Lynch would seem to be based more on depth in that the application focus is quite narrow. Yet despite the different tactics, these organizations are very successful. For example, EDS is ranked #1 and Merrill Lynch #2 within the industries in which they compete. Researchers seeking to investigate this phenomenon as it may relate to sustained competitive advantage can look to work by Porter (1980, 1985) and Feeny and Ives (1990) for theoretical support. Recall that Porter's competitive forces and strategies model includes a differentiation strategy that could provide an organization that develops a portfolio of software patents with uniqueness within its industry. For example, a travelrelated ®rm engaged in e-commerce could develop applications dealing with reservations and customer relationship management. These actions can not only create a unique posture for a ®rm, they can seek to erect entry barriers to others or cause existing competition to extend itself as it tries to deal with the patented application portfolio. Porter's value chain (1985) also provides a rich grounding to investigate this question. For example, the support activities within the value chain include the ®rm's infrastructure, human resource management, technology development, and procurement. Porter suggests that general management, accounting, and ®nance are part of infrastructure. Recruiting and training are part of human resource management. R&D and product and process improvement are included in technology development, and purchasing of materials, supplies, etc. are embodied within the procurement activity. A ®rm that could be linked to the value chain and that did develop two patents is Mrs Field's Cookies. One application includes a staff scheduling system to schedule staff and management personnel at remote locations. The system also includes a data base for 8 EDS has been assigned a total of 153 patents, including more than 30 in class 705 during the period 1996± September 4, 2001. It is quite probable that many of the patents not in class 705 may also contribute to its methods of doing business and in supporting its clients.

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storing and retrieving information characterizing: central of®ce policy; applicable labor requirements; tasks that need to be performed; skill levels required to perform tasks; resources that may con®ne or facilitate the scheduling of a task at a given time; relationships between tasks that will alter the placement or movement of a task on a schedule; employees with associated skill levels and priorities and availability; the employee's starttime and stop time, the percentage of an employee's time that it takes to work on a particular task, and the positive or negative slide in relation to the task's completion time by an employee. Upon request to create a schedule for a given day for a remote location, the system and method selects all the tasks to be performed on that day, and using historical data about that location, the tasks, the skill required to complete the tasks, the available resources, employee availability, and central of®ce policy, creates an optimized display of the required schedules. Porter's primary activities in the value chain e.g. inbound logistics and operations, also provide research opportunities to investigate this question. Feeny and Ives (1990) developed a framework for determining sustainability that could also provide a basis for dealing with this research question. One of the components of the framework is project life cycle analysis, which examines the issue of how long before a competitor can respond, i.e., duplicate the application or applications in the case of a portfolio of them. A second component of the framework is competitor analysis, which asks the question of just which competitor(s) can respond; Feeny and Ives also label this factor as competitive asymmetry. In the case of how long before a competitor can respond, the matter may become moot if a ®rm has one or more patented applications. A competitor is precluded from copying something that is patented, and if it does, it runs the risk of being sued for patent infringement. If a ®rm has but one patent, its competition may be hindered in responding, or it may have to invest additional resources to do so. However, a portfolio of patented applications may cause the competition to withdraw completely based on the assumption that there are too many barriers to overcome. With regard to competitive asymmetry, one source of it is information resources, which in part examines the uniqueness of the application(s). Patented applications can serve to rede®ne the impact and effect of a ®rm's applications inventory. In either case, including a patent portfolio in Feeny and Ives' framework could serve to provide answers to how successful a ®rm is that embarks on the strategy of patenting software. Researchers may also choose to examine Feeny and Ives' model itself, with an eye toward determining whether parts of it are still valid, given the nature of patents. For example, as was stated above, ®rms cannot legally duplicate an application that is patented. If they cannot duplicate, for example, then is generic lead time even a factor any longer? Should the model contain something like a decision/selection point that asks whether software patents are a factor? If the answer is yes, then researchers have the opportunity to add new dimensions to the model. Lastly, recent research in strategic management by Ahuja (2000a,b) provides additional rationale for IT researchers' investigation of patents themselves. In that research Ahuja examined patent data from the USPTO and treated patent applications and granted patents as a dependent variable (Ahuja, 2000a); in the other study, Ahuja (2000b) used the number of patents obtained by a ®rm as an indicator of a ®rm's accumulated technical capital. This

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latter perspective might be investigated within the overall framework of the RBV of the ®rm (Barney, 1991). 4.3. What actions do ®rms that do not patent take to contend with competitors that do patent? Although EDS, Merrill Lynch, and Priceline.com are different types of organizations in vastly different industries, they all share one thing in common. Each has developed a portfolio of software-related patents, and each continues to do so. The patent portfolios for EDS and Merrill Lynch were reported previously. Priceline.com has six patents, all of which are in class 705. Recall that class 705 is concerned with business methods. According to Fortune Magazine's Fortune 500 listing (see www.Fortune.com), EDS is ranked 106, and it is ranked ®rst in the Computer and Data Services category. At the same time, many companies that compete against EDS have chosen not to undertake the development of software applications leading to patents, not in class 705 nor any other class. Lawson Software, an organization that has developed an alliance with Deloitte and Touche; Everest Group; Software Solution Providers; Mindstream Software, Inc.; and Software Completions, Inc. compete in IT outsourcing along with EDS. None of them have any patents. Likewise, such well-known organizations as Goldman Sachs, Lehman Brothers, Bear Sterns, and Charles Schwab are leaders in the securities industry. None have any patents, yet each competes against Merrill Lynch. In the e-commerce-based travel industry, Priceline.com has been assigned 6 patents, all in class 705. Orbitz.com, Expedia.com, and Cheaptickets.com have none. Feeny and Ives' (1990) framework to determine sustainability delves deeply into the concepts surrounding being a ®rst-mover versus a follower. In fact, one of the principal components of their framework deals with the lead time a ®rst or prime mover has until the follower can take action. This framework could provide the theoretical grounding to investigate the differences between ®rms that patent and those that do not. For instance, do non-patenting ®rms try to lead as a ®rst-mover, developing applications before others but yet taking little or no protective action, such as trying to protect the developments with software patents? If so, why? There is ample evidence, much of it presented in this paper, that organizations in different industries engage in protecting software assets with patents. For some reason, perhaps, non-patenting ®rms may feel it is better to be ®rst without having to become involved with the particulars and peculiarities of securing patents. If such a strategy is followed, how quickly must non-patenting ®rms develop applications in order to remain ahead? From a different ®rst-mover/follower perspective, perhaps non-patenting ®rms choose to remain as followers. In these instances, they may feel that they can better serve customers and their own success in so doing. In such cases, these organizations may feel it is to their bene®t to commit resources in other areas or in other ways, feeling that these approaches may provide a competitive edge. Related to this is the issue of licensing by non-patenting ®rms. Perhaps these organizations' strategies are to invest in other areas and to license applications or purchase off-the-shelf software as needed. Research delving into the patenting/non-patenting perspective may also be guided by a framework provided by Lieberman and Montgomery (1988). They suggest that ®rst-mover

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advantages arise from within an organization, ®rst as a result of some inequality or irregularity among competing ®rms that allows one ®rm to achieve a head start. Lieberman and Montgomery (1988) suggest that such an opportunity may arise as a result of the ®rm's uniqueness or foresight, or even luck. A number of mechanisms may enable the ®rm to further exploit its position, leading to greater or more durable pro®ts. Using the framework as a guide could advance IT research regarding ®rst-mover/follower issues by including software patents, either as part of the ®rm's unique resources or as one of the mechanisms referred to so as to enhance its position further. Lieberman and Montgomery (1988) discuss patents brie¯y in the context of the economics literature, but they dismiss them as viable, stating that they appear relevant only in a few industries. They do not address patenting of software at all. Using their framework and including software patents as a variable, IT researchers might provide new ®rst-mover/follower insights regarding the relationship between patenting and non-patenting ®rms. 4.4. What are the implications globally to both patenting and not patenting? Biddinger (2001) has emphasized that globalization involving businesses has led to an increase in the awareness and importance of intellectual property rights, with a particular emphasis involving patents. One perspective to investigating the effects of patenting software in the world arena is to consider how the organization chooses to structure itself in this type of competition. For instance, Boudreau and Loch (1998) discuss four strategies that organizations can follow in order to compete globally. These strategies are global, multinational, international, and transnational. A global strategy is based on an organization whose headquarters is located in one country with its operations being performed in one or more countries. A multinational strategy is based on an organization that has national or regional operations that are relatively autonomous and decentralized. Organizations following an international strategy compete on a worldwide basis against similar organizations. Finally, a transnational strategy dictates that an organizational activity is performed in a location where it can best be accomplished. Boudreau and Loch (1998) provide some speci®c differences involving these strategies. Using this framework as a basis would allow IT researchers to investigate more completely the role that software patents might play in developing and implementing each of these strategies. Can an organization that chooses to follow a global strategy achieve greater ef®ciencies because it has patented applications, thereby necessitating its competition to increase its costs due to the lack of related software applications? Likewise, the ability to transfer knowledge between countries is critical if an organization follows an international strategy. A patented application that provides for this transfer could severely impact organizations that do not have this capability or that have to expend additional ®nancial resources in order to obtain it. Lee and Mans®eld (1996) provide a different perspective to investigating the relationship between patenting and success. They found that US ®rms were most reluctant to invest in countries that afforded little or no protection to intellectual property. How do ®rms that want to open new markets determine the extent of their operations in developing countries? What measures should a ®rm undertake to motivate governments to enact and then enforce patent laws?

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US ®rms competing outside the US must also confront efforts that non-US ®rms have taken to secure US patents. A review of the USPTO's patent database (USPTO, 2001) found the following regarding non-US ®rms that have been assigned US patents in class 705, dealing with business applications: Japan, 808; France, 104; Germany, 83; Canada, 53; England, 33; Sweden, 20; South Korea, 18; Taiwan, 12; and Finland, 5. It would be important for researchers to include this perspective as a variable when investigating IT and competitiveness. 4.5. What role does protection of software by means of patenting play? Previously, we indicated that a company could be forced to discontinue the use of its most important business process or innovation because another company was able to patent it (Bresnahan, 2000). Should this occur, the value to the ®rm that did not patent the application would be lost and the competitive position of that ®rm severely threatened. Further adding to this scenario is the American Inventors Protection Act of 1999. This act provides protection against patent infringement for any ®rm that has practiced a business method for at least a year prior to the ®ling for a patent. If a ®rm has practiced the method for less than a year, that ®rm could be guilty of patent infringement if another ®rm has been issued a patent on its application. These issues present major implications to organizations and their competitive status. Should they pursue an aggressive `patent ®rst' policy, thereby attempting to safeguard their important business methods or processes? The RBV of the ®rm is one theory that can provide the support to ask this question. Homogeneity, or heterogeneity as the case might be, is a key component of the theory. Patents provide the exclusive rights to their owner that would make their IT heterogeneous. Thus, competitive advantage could be sustained. 4.6. Summary We have discussed a number of research questions regarding the relationship between software patents and competitive advantage. In so doing, we have also referred to a number of existing theories and frameworks upon which to base this research. These include frameworks/models by Mata et al. (1995), Feeny and Ives (1990), and Kettinger et al. (1994). Researchers have the opportunity to extend these models/frameworks by including software patents as a factor or variable for the purpose of both assessing the value of patents and for advancing these frameworks/models. 5. Conclusion Software patents are almost non-existent! (Clemons and Row, 1991). IT researchers do not address software patents and externally focused applications! (Clemons, 1986). Legal barriers to protect IT can be invented around at modest cost! (Sethi and King, 1994). IT capabilities can be copied easily! (Clemons and Weber, 1990). It is dif®cult to protect innovative applications through patents! (Kettinger et al., 1994). Patents provide little protection against imitation! (Mata et al., 1995). These are the results of much IT research dealing with software and patents.

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As stated in Section 1 to this viewpoint, something is amiss. Clearly businesses have been patenting software applications for a considerable length of time. There is evidence that those holding such patents take action to protect their investment, e.g. Amazon.com and Signature Financial Group, which could impact the competition faced by the ®rms doing the patenting. Yet, IT researchers have not adequately examined the relationship between software patents and a ®rm's sustainable competitive advantage. Recent research by Jarvenpaa and Tiller (1999) calls into question how ®rms engaged in e-commerce can hope to survive if they ignore political, social, and regulatory matters that go hand in hand with management and technology strategies. One of the policy issues they address is the legal environment. Certainly, the legal issues they raise are important and deserve greater attention. So too, we believe, are the issues surrounding IT, competitive advantage, and software-based patents. Our purpose in writing this viewpoint is to raise awareness of this means to protect a ®rm's software assets and to suggest that research needs to be conducted to see if such means of protection can lead to a ®rm's sustainable competitive advantage. Clearly, there is suf®cient evidence to conduct such research. Acknowledgements The authors wish to thank Arlen W. Langvardt, JD, Chair of the Business Law Department at Indiana University, Bloomington; Len Jessup, Philip L. Kays distinguished Professor in MIS, Washington State University; and the anonymous reviewers for their invaluable knowledge and expertise in the preparation of this paper. Appendix A. Selected patented IT software Listed below are brief descriptions of patents that have been assigned to the organizations listed. Each patented application described below is from patent class 705, Data Processing: Financial, Business Practice, Management, or Cost/Price Determination. In essence, these patents pertain to various methods of doing business. Numbers of patents indicated for each organization are the total number of patents the organization has, followed by the total number of patents for class 705. The numbers were current as of September 4, 2001. Electronic Data Systems (EDS) (153 patents, 33 in class 705). In July 1999, EDS was assigned patent number 5,924,072, Knowledge Management System and Method. The knowledge management system receives submitted knowledge items, maintains and provides access to knowledge items, updates knowledge items as appropriate, prompts for and receives feedback relating to knowledge items, monitors various activity concerning knowledge items, and generates a variety of incentives to encourage desirable activities associated with knowledge items. Priceline.com Incorporated (Priceline.com) (six patents, six patents in class 705). In October 2000, Priceline.com was assigned patent number 6,134,534, Conditional Purchase Offer Management System for Cruises. This patent is similar to Priceline.com's well-known system designed for customers to initiate conditional purchase offers for airline reservations except that it is designed for the cruise industry.

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Merrill Lynch, Pierce, Fenner and Smith (Merrill Lynch) (29 patents, 22 patents in class 705). On August 22, 2000, Merrill Lynch was assigned patent number 6,108,641, Integrated Nested Account Financial System With Medical savings Subaccount. Merrill Lynch received patents in the early 1980s dealing primarily with cash management accounting. The current patent continues Merrill Lynch's development of patented cash management systems and variations. In this case, Merrill Lynch incorporates a Medical Savings Account (MSA) as one of many subaccounts associated with a person's master account. Visa International (Visa) (45 patents, 19 patents in class 705). On October 5, 1999 Visa was assigned patent number 5,963,925, Electronic Statement Presentment System. This patent pertains to an electronic statement presentment system that replaces the preparation and mailing of paper statements and invoices from a biller with electronic delivery. Citicorp Development Center, Inc. (Citicorp) (20 patents, seven patents in class 705). On June 6, 2000 Citicorp was assigned patent number 6,073,119, Method and System for Banking Institution Interactive Center. This patent relates generally to a banking facility layout and a method and system for networked customer and other user interaction with a variety of functions, including network access, email capability, options to view information on banking capabilities, access to home banking, and other electronic user functions. MasterCard International Incorporated (Mastercard), 11 patents, 10 patents in class 705. On December 30, 1997 Mastercard was assigned patent number 5,704,046, System and Method for Conducting Cashless Transactions. This system is designed for a user to interact with a sales or transaction terminal to conduct cashless transactions. Especially designed for purchases of items or transactions of relatively small monetary value, the terminal processes data that includes a balance stored on the card and updates the stored data at the end of the transaction. The system is also capable of increasing the balance available on the card if the purchase price exceeds the existing balance on the card. International Business Machines Corporation (IBM), 27,724 patents, 303 patents in class 705. On December 5, 2000 IBM was assigned patent number 6,157,915, Method and Apparatus for Collaboratively Managing Supply Chains. This patent is for a system that delivers information and decision support tools to present a collaborative dynamic decision making capability to a community of persons with a supply chain process. Such capability is made possible through the integration of a business process, the organization of the persons, and relevant business applications. Nortel Networks Limited (Nortel), 817 patents, 11 patents in class 705. On January 9, 2001 Nortel was assigned patent number 6,173,282, Electronic Sealed Envelope. This patent relates to a system where restricted data is stored on a smart card. The smart card may store a record of users who are authorized to access certain groups of the restricted data. When a registered user accesses the restricted data with his/her password, the smart card irretrievably modi®es a codeword in the restricted data. The owner of the smart card can then determine if the restricted data has been accessed by checking for modi®ed codewords. Disney Enterprises, Inc. (Disney), 21 patents, 2 patents in class 705. On January 9, 2001 Disney was assigned patent number 6,173,209, Method and System for Managing Attraction Admission. This patent relates to a system whereby a customer wanting to access a particular attraction, e.g. one of Disney's roller coasters, can avoid standing in line for the attraction by obtaining a pass for that attraction that is valid at a later point in time. Thus,

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Kathleen Mykytyn is a consultant and researcher in Management Information Systems. She received her Master of Science in Information Systems from the University of Texas at Arlington. She has taught information systems-related courses at several universities. For more than 10 years, she has conducted research in the area of information systems and the law, with current emphasis involving intellectual property. She is currently focusing on the relationship between intellectual property and MIS curriculum issues in colleges and universities. Her research has been published in MIS Quarterly, Information and Management, Journal of Management Information Systems, Management Decision, and Knowledge, Technology, and Policy.

Peter P. Mykytyn Jr. is a Professor of Management Information Systems in the Department of Management at Southern Illinois University, Carbondale. He received his PhD degree in Computer Information Systems from Arizona State University. Prior to joining the faculty at Southern Illinois University, he was a member of the faculty at the University of Texas at Arlington for 16 years. He has also been a visiting professor at Agder University College in Kristiansand, Norway. His current research interests concern the relationship between information systems and the law. He has examined the nature of liability related to defective information systems, and most recently he has emphasized the role of intellectual property, speci®cally computer software patents, in providing an organization with sustained competitive advantage. His research has been published in Information Systems Research, MIS Quarterly, Journal of Management Information Systems, Information and Management, and Information Resources Management Journal. Dr Mykytyn also serves as an Associate Editor for the Journal of End User Computing.

Bijoy Bordoloi is a Professor of Computer Management and Information Systems at Southern Illinois University-Edwardsville. He received his PhD in MIS from Indiana University, Bloomington. His current research interests include data modeling and logical database design, human±computer interactions, and economic and legal aspects of information technology management. His publications have appeared in several journals including MIS Quarterly, Journal of Management Information Systems, Information and Management, DATA BASE, and Journal of Database Management.

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Vicki McKinney is an Assistant Professor of Information Systems at the Sam Walton College of Business, University of Arkansas. Her current research focuses on communication and trust in virtual teams and retention issues. Her work has appeared in Knowledge, Technology and Policy and Nursing Research. She holds a PhD from the University of Texas at Arlington.

Kakoli Bandyopadhyay is an Assistant Professor of management information systems at Lamar University, Beaumont, Texas. Her research interests include healthcare information systems, disaster recovery planning, e-commerce and information technology risk management. She has published several referred papers on these and related issues in conference proceedings and journals. She is a recipient of the Decision Sciences Institute's Best Interdisciplinary Paper Award in 2001.