Sunday, August 07, 2011

Patents -- The New A-Bomb -- Deployed to Crush, Not Foster, Tech Innovation

How many times have you heard someone -- perhaps a venture capitalist -- say that intellectual property (IP) is not a real barrier to entry? Well, that certainly may be true if a patent holder is simply an innovator who naively takes pride in his or her work and assumes the world will respect the exclusivity of that work without the need to tie up the courts. After all, patents are to foster innovation and reward innovators, right?

Well, gone are those days my friends ... long gone ...

Patents -- the very purpose of which was to foster innovation -- are now used to absolutely crush innovation. Somehow, somewhere, the IP world became twisted and patents became THE new weapon of choice deployed by technology companies to destroy their competitors ... not by innovation ... but by sheer brute force. And, in the wake of such destruction billows up a mushroom cloud of waste and IP aggression instead of constructive creativity.

I witnessed this first-hand when I was President & COO of Musicmatch several years ago and we were sued by because a well-known company, from whom we licensed technology, didn't like the fact that we chose to develop our own solution -- independently and from scratch -- when they offered us a deal we COULD refuse (because, quite frankly, their final terms were wholly unreasonable). This firm, which essentially held a monopoly position for the particular kind of service at the time, didn't like our answer so they tried to force the answer they wanted -- they sued us for patent infringement. Of course we didn't infringe, but we had to prove that in court -- which we ultimately did, but only after millions and millions of dollars and years of litigation (where not only were we completely vindicated, but we also established serious questions about the legitimacy of their own IP). Just think of the waste! Musicmatch wasn't THAT big! Those millions upon millions could have been spent instead to create jobs and foster innovation that benefited our customers. Instead, those millions were paid to lawyers ... and for what? The "bad guys" in this scenario got nothing out of it in the end! We kept using our own independently created alternative solution, and they ended up being bruised and battered.

The stories go on and on ... patent trolls are hiding everywhere. Tech companies beware. At a certain point -- if you cross the threshold of deep pocket "interest" to patent trolls -- you WILL be sued. Not a question of if, but rather when. Legitimacy is not the goal here. Pure vacuuming of cash.

And, this brings us back to today. THE tech titans -- Apple, Google, Microsoft -- all kings of innovation in the minds of many of us. But, like the company in the classic Dr. Seuss tale "The Lorax," each of these companies seeks to get biggerer because biggerer it must -- that is all it knows. That itself is not the real problem. Rather, many believe that each of these companies will stop at nothing to achieve that goal. So, when all else fails in their knock-down drag-out battles, what's next? Yes, that's right -- the patent. The patent started with such humble beginnings, but certainly it ain't humble no more. Apple and Microsoft -- odd bedfellows to be sure -- just recently acquired the Nortel patent portfolio because of what many believe is their mutual disdain of Google. Conventional wisdom says that this was done to blast back the ongoing march of Android. Patents are Apple's new "A-bomb" if you will -- especially in an out-dated enabling IP law world that cannot keep up with technology. It's one thing to innovate and establish bona-fide patents. It's quite another thing to simply buy patents to stockpile weapons.

What's next? More and more patents ... hence the clamor for the acquisition of new massive patent portfolios. This is, plain and simple, an arms race -- those companies with the most cash will stockpile more weapons. But, the primary difference here from the days of the US/Soviet cold war is that these patent weapons WILL be used. So, if Apple successfully acquires new patent portfolios -- which many believe it will (at a price tag of billions upon billions) -- Apple's A-bombs WILL be deployed to block competitive innovation. This is how Apple seeks to "Think Different" in its fight against Google.

Just think if those billions, instead, would be used to fund new jobs instead? Ahh, what would the Swomee Swans, Barbaloots and Lorax say?

(For more perspective in this regard, click here to read a great post from TechCrunch that was published just this past weekend -- what's fascinating is that I had already written much of my post, a similar perspective, when I first read the TechCrunch post. I am not alone here in bemoaning the current state of affairs ...)

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