Patent Trolling or Intellectual Property?

December 24th, 2009

In recent months, Apple and Nokia have been fighting it out in the courts over various and sundry patent issues. This is quite normal, actually. At any one time, Apple may be embroiled in a number of legal disputes. Some they win, and, frankly, some they lose. Indeed, some years back, Apple had to pay $100 million to Creative Labs for allegedly infringing on some of their intellectual property covering digital music players.

In recent days, Microsoft has found itself in the uncomfortable position of being ordered by the courts to stop selling Microsoft Word because they lost a lawsuit over the rights to edit so-called Custom XML. The suit, filed by a Canadian firm, i4i, claimed that the company first patented the technology back in the 1990s. Indeed, XML appears to be a magic focus of their services which, according to a statement at their site, “is a key enabling technology for the development and deployment of standards-based collaborative content solutions.”

What separates i4i from other companies that hold patent portfolios is the fact that they evidently actually use their intellectual property in providing products or services. You wonder, however, how the world’s largest software maker, with billions of dollars in the bank, somehow overlooked the possibility of infringement in incorporating XML support in Word. It’s not that I am concerned that Microsoft will have any problem paying a $290 million judgment, but you have to wonder if they just took a chance, or screwed up.

Of course i4i evidently got great legal advice. I mean, it’s a very chancy proposition to file a court action against an opponent that is much richer than you are. I was directly affected by a situation in which my sister-in-law was embroiled in a set of nuisance actions filed by someone with $100 million in spare change who happened to take a dislike to my relative, and those entanglements are only now nearing a successful conclusion.

However, i4i was smart in choosing the eastern portion of Texas to file their action, even though neither they nor Microsoft have offices there. That’s because that part of the U.S. appears to be patent suit central as far as successful outcomes are concerned. Sure, many of the complainants in those cases are from patent trolls, companies that hold large portfolios of intellectual property but never do anything other than collect money in licensing deals or as the result of legal settlements.

But it’s also true that some of these legal actions appear to have merit. TiVO, the pioneer inventor of digital video recording technology, successfully sued Dish Network over the rights to build devices that can record one show while playing another. That’s a fundamental DVR capability, and one where Dish found itself on the losing side, although they are appealing to the courts to reconsider a workaround that, they claim, doesn’t infringe on any of TiVO’s rights. I just want to point out that this particular action was also filed in that infamous region of Texas.

In any case, you can bet that Microsoft will release a version of Word that doesn’t contain the offending Custom XML code, or a workaround that doesn’t violate i4i’s intellectual property rights. On the long haul, however, you have to wonder whether U.S. patent law is perhaps behind the times.

Yes, I understand that individuals and companies have the right to protect their inventions. They should also get full support from the courts without going broke to protect themselves, particularly when going after large companies with endless pockets. By the same token, when does a minor refinement to an existing technology merit a patent all by itself?

That’s a question the authorities are wrestling with, because individuals and companies these days are doing what I’d regard as defensive registration. Anything that might vaguely smack of innovation will be given appropriate treatment and sent on to the patent agencies in various countries for resignation. More to the point, the bureaucrats that run those agencies are simply overworked more than ever and are therefore highly likely to grant patents to so-called inventions that really don’t merit them.

When it comes to the companies themselves, you wonder how many of those things ever turn up in actual products, or whether those applications were filed to prevent a competitor from getting there first. It’s a lot less expensive to rush to apply than to defend themselves against the inevitable lawsuit later on.

Of course this explains why the ongoing Apple patent watch doesn’t always provide evidence of a genuine product. Maybe there is one in Apple’s test labs, or maybe they just wanted to make sure they got their first rights before someone else came up with a similar idea, even though there’s little prospect the innovation will ever show up in a finished product.

But that’s still better than the companies who build nothing but make themselves rich by defending rights that only have value if some other company is smart enough to actually use those inventions.

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2 Responses to “Patent Trolling or Intellectual Property?”

  1. Joe S says:

    According to my understanding, Microsoft was much nastier than you suggest. M$ touted i4i as a partner to heir customers. I will bet dollars to donuts, I do like donuts, that there was an NDA and M$ had access the i4i’s code. Then M$ incorporated that feature into their own code and started badmouthing i4i to their customers. This was very deliberate theft of IP by M$.

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