The IBM suit against Amazon – a non-event?

Many analysts were surprised by the suit. Recently, IBM sought to project the image of a company open to sharing of Intellectual Property and a champion of Open Source. It is not an IP gladiator and litigator. On the other hand, the company is very proud of its patent portfolio, the biggest in the world, and it seeks to leverage it through an active licensing program. And stakes in the Amazon suits are not negligible and could reach, according to IBM spokesman, “several hundred million dollars.”

The most interesting aspect of the suit is the market reaction. As far as Amazon investors are concerned, it was a complete non-event. Their primary concern that week were the quarterly results and next year prospects of the company. As those were in line with expectations, Amazon’s stock rose all week, with a major upside jump occurring on the day after the suit was announced, Wednesday 25. This market reaction is in marked contrast to semi-conductor, drug or biotechnology companies, where a mere hint of a possible IP suit can send the stock price diving. Market appears to believe that at this point, the core strategic asset of Amazon is not its IP, as sophisticated as it can be, but customer base and the operational mastery of its supply chain.