What is the Value of Red Hat’s Patents?

Open Source software and patents aren’t exactly the best of friends. That fact has not stopped enterprise Linux leader Red Hat (NYSE:RHT) from assembling one of the strongest patent portfolios in the IT business.

According to a recent study from The Patent Board, Red Hat’s patent portfolio is now ranked 50th in the Information Technology category. The top patent holder in the IT category is IBM. Red Hat’s position at number 50 is a 16 spot jump since November of 2010. Red Hat now holds 137 granted U.S. patents as part of its intellectual property portfolio.

“Open source is Red Hat’s mission, and our patent program is done for the purpose of protecting and defending Red Hat and open source,” Rob Tiller, assistant general counsel and vice president, IP at Red Hat told InternetNews.com. “The patents relate to a variety of technologies.”

Tiller did not however specifically call out any of Red Hat’s granted patents. He noted that the strength of Red Hat’s patent portfolio was based on an entirely independent analysis by the Patent Board. The Patent Board is an independent group that issues the Patent Scorecard which ranks the relative quality and strength of patent holdings.

While the Patent Board has ranked Red Hat’s patent portfolio highly, there is not a direct relationship to financial value.

“The value of our portfolio relates to defending Red Hat and open source against baseless patent lawsuits,” Tiller said. “We have not sought third party valuations of the patents.”

From a financial perspective, Red Hat has just wrapped up its most successful year ever, closing out its fiscal 2011 with nearly $1 billion in revenue.

As an open source company, Red Hat participates in a community development model where multiple companies and individuals often contribute. Tiller noted that Red Hat’s patents relate to inventions made by Red Hat employees, not inventions by others.

So what is Red Hat’s overall strategy when it comes to patenting technologies it is working on?

“We evaluate inventions with a view to the possibility of building our defensive patent portfolio,” Tiller said.

To date, that defensive patent approach is one that has worked for Red Hat.

“Our patent portfolio has served as an important deterrent against patent aggression by competitors,” Tiller said.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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