Monday, April 04, 2011

Patents As Both Sword and Shield

Yesterday I suggested,
Although for many years, large companies often seem to ignore each other's intellectual property rights until one or another sues, followed by either a huge settlement and licensing deal or a mutual settlement that allows the companies to use each other's technology without actually testing the viability of the underlying patents.
That reality is not lost on Google.
The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation. Some of these lawsuits have been filed by people or companies that have never actually created anything; others are motivated by a desire to block competing products or profit from the success of a rival’s new technology.
In some cases, a declining company may find its portfolio of patents to be far more lucrative than what remains of its traditional operations. Given the proliferation of patents it's difficult to produce anything without potentially running afoul of somebody else's (often dubious) patent, but sometimes the patents are known and (under current law) defensible and the infringement is deliberate. Apple knew that it had a game changer with the iPhone and likely viewed the inevitable accusations of patent infringement as a cost of business. With the release of the iPhone, every other handset manufacturer made the same business decision.

Google has advocated for patent reform and against patent trolls,1 but its decision to bid for Nortel's patents is, in a sense, an "If you can't beat 'em, join 'em" response to the problem. Yes, Google can leverage its patents to protect open source software, but the success of open source software represents a significant part of Google's long-term business strategy. Although acquiring Nortel's patents potentially gives Google more even footing when it goes head-to-head with companies that accuse it of violating their patents, it will do nothing to stop patent trolls.

It will be interesting to see who, if anybody, attempts to outbid Google.

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1. Google provides a reasonable definition of the patent troll, "people or companies that have never actually created anything" - they generate or acquire patents then seek out violators, with the hope of demanding settlements or royalties from companies that are producing actual value. But it's important to remember that the system is stacked against "the little guy" - an inventor who comes up with an idea and obtains a patent, with the idea of marketing it to companies that can put it into productive use, shouldn't be denied a return on his invention by large companies that steal the idea, knowing that patent litigation is extraordinarily expensive and beyond the reach of most inventors, while dismissing the inventor as a "troll who never produced anything" even as they profit from his ideas.

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