1970 to 1979: Computers and Software Begin Creating Wealth - The Technical and Social History of Software Engineering - page 165

A patent application had been filed on the ENIAC computer in 1947 but not
issued by the patent office until 1964. The ENIAC had been built by J. Presper
Eckert and John W. Mauchly, but the patent had been acquired by Sperry-Rand.
Because the patent covered the essential design and features of digital com-
puters, other companies such as IBM were required to pay royalties for all digital
computers that had the same or similar features as those covered by the patent.
Some of the companies facing royalty charges included Burroughs, Control Data,
General Electric, Honeywell, National Cash Register, Philco Ford, and RCA.
(IBM did not face charges because it had a patent-sharing arrangement with
Sperry-Rand.)
The federal judge for the case was Earl R. Larson and his decision was issued
on October 19, 1973. The gist of the decision, which was itself a very large docu-
ment, essentially found that the ENIAC patent was unenforceable and invalid for
a wide variety of reasons.
One aspect of the decision was and still is controversial. The judge stated in
passing that the inventors of the digital computer were not Eckert and Mauchly,
but rather John V. Atanasoff, whose ABC computer was discussed in Chapter 3 .
As it happened, Mauchly had visited Atanasoff and had seen the ABC com-
puter and also written a letter about it. The ABC and ENIAC computers were dif-
ferent in many respects, so the judge's opinion remains controversial even today.
In any case, the decision that invalidated the ENIAC patent opened a path for
dozens of companies to start building digital computers without paying royalties
to Sperry-Rand. The implications of this decision are significant to the growth of
the computer and software industries.
It is quite possible that if royalties had remained in force, small companies such
as Apple, Altair, Atari, Commodore, Data General, Prime, Sun, Tandem, Tandy,
and Wang would never have been started because the royalties demanded from
each company ranged from $20 million to $250 million.
If the lawsuit had gone the other way and the ENIAC patent had been con-
firmed, the computer and software industries today would probably be quite dif-
ferent than they have become. Large companies would dominate, and probably the
diversity of hardware and software offerings would be much smaller.