Monday, July 25, 2011

Patent Trolls, Lodsys and Business Methods Patents

Cue the Soprano's music...

Listen to NPR's This American Life podcast "When Patent's Attack" a great piece of reporting on the scourge of the patent trolls, their impact on companies and innovation, and what's going on with the cookbook developers at Intellectual Ventures. The reporting has an interesting spin on the current Lodsys attacks on Apple and Android app developers.

It's worth a listen.

Then have a look at the RICO laws.

Saturday, July 9, 2011

Rockstar Bidco and the Patent Wars

Rockstar Bidco is the name of the consortium set up to bid on the Nortel patents - AAPL. MSFT, EMC, ERIC, and RIMM. Nice to see that these guys have sense of humor.

The early press noted that the Google bid seemed to be some kind of nerd play on math. The Rockstar Bidco was the announcement that the big guys have come out to play. Now the drama continues.

According to the Washington Post the Justice Department is stepping in to see if this move will block the development of Android devices. Don't patent provide the owner with the exclusive right to block someone else from using the patented invention unless they buy a license? Isn't that one of those patent basics?

This is another article about patents that reports that activity in the patent space is going to have a dramatic impact on markets and innovation without any real discussion of the patents or why they are important or why we should care.

"Google's rivals...combined forces to prevent the company from buying a critical trove of patents." (Did they prevent Google from buying the patents or simply make sure that they bought them? Is there something nefarious here? Didn't Google let everyone know their price point before the actual auction date?)

"..6,000 patents covering an array of wireless and Internet technologies.....touching nearly every aspect of telecommunications and additional markets as well, including Internet search and social networking."

Here's Google the Internet search giant who missed out on the acquisition of this treasure trove of patent goodies but the article doesn't have word on what the Internet search patents are about or if these will have any impact on Google, the Internet search giant. Perhaps it is 7,895,183 - Associative Search Engine - an invention that relates to an advertisement machine which provides advertisements to a user searching for desired information within a data network. (Didn't Google invent this business model?)

Then there's the question of why the portfolio was worth a "whopping $4.5 billion" and the question from a leading antitrust lawyer about "Why is the portfolio worth five times more to this group collectively than it is to Google?" There are lots of potential reasons. Bad bidding by Google. Bad advise. Failure to recognize that a consortia can form just for the purposes of buying the patents. Insurance that the Rockstars would get the patents vs. not knowing how they will surface later. A good investment decision to lock out the new kids on the block. Fear of one of those patent assertion entities aka "The Trolls getting their hands on them."

My favorite quote in the article that the price paid demonstrates, "the growing dysfunction of the country's patent system, where even the most amorphous ideas can be rubber-stamped by the government and protected for years." First, ideas can't be patented. Please refer to that whole Bilski Supreme Court thing that makes clear that abstract ideas aren't patentable. Second, even a cursory look at what was in the Nortel portfolio makes it clear that there are some extremely valuable inventions there. Finally, rubber-stamped? Really? If USPTO was rubber-stamping everything it wouldn't take so long to get a patent. (Yeah, I know there is some junk in there but I think "rubber-stamping" is a little naive about the tortuous process of getting a patent in the first place.)

Then there's the quote in the Financial Times from Eric Schmidt that the $4.5B exceeded Google's value threshold. Mr. Schmidt added that Google is worried that this is an attempt to use patents rather than to innovate. The Nortel patents are very valuable innovations. The Rockstars thought they had value so they spent some serious dough. But then there's this whole discussion about patents vs. innovation. Patents are what you get for innovating. When you innovate you want to get patents. This statement about using patents rather than innovating is discordant to say the least. Besides Google has a market cap of $171.43B and $36.68B in cash. $4.5B seems like a good investment to protect the future of Android.

Who knows where this will end up but it will make for some interesting drama.

The end of this discussion is no where in sight.

Rock On.