NY Times Piece on Microsoft's Patent Purchase Opens Opportunity ...

In the Technology section of the New York Times today, I came across an article about Microsoft?s recent $1 billion+ acquisition of 800 old AOL patents.

The lofty price ? $1.3 million a patent ? reflects the crucial role that patents are increasingly playing in the business and legal strategies of the world?s major technology companies, including Microsoft, Apple, Google, Samsung and HTC.

This is an astounding figure, $1.3 million for early iterations of email, chat, and other programs which are since out-of-date and likely no longer directly utilized on personal computers. ?However, one can hardly open up a newspaper today without reading an article about Yahoo suing Facebook, or Google being sued by <insert random Canadian, ?Eastern European, South East Asian company here> or feuds between Oracle, Microsoft, Apple and ?over who owns a small line of code and how many millions should be paid for those 35 words.

In the past, patents were often bought by specialist patent firms from start-ups that had failed, and used in suits against major technology companies to reach lucrative settlements or win big paydays in court. These days, though, big companies are increasingly using patents?as strategic tools, said Colleen Chien, an assistant professor at the Santa Clara University School of Law.

The specialist patent holders, sometimes called trolls, are still around, but the main litigation and deal-making now are among big companies themselves, Professor Chien said.

This is the legal landscape that technology firms face when attempting to develop and market new products. ?Although intellectual property protections are designed in theory to support innovators and stimulate intellectual development, it seems that the current application of law leaves so much grey area that development might actually be hindered.

David C. Drummond, Google?s chief legal officer, estimated that a modern smartphone might be susceptible to as many as 250,000 potential patent claims, depending on how broadly those patents and claims were interpreted.

In fact, according to the researchers at Boston University School of Law,?the costs of litigation for software might outpace investor benefit two to one.

?In pharmaceutical and chemical industry, the boundaries of a chemical composition patent are well defined,? Mr. Bessen said. ?But in fields like software and telecommunications, the claims are often so broad and vague that it is completely unpredictable what the patents cover and don?t.?

Patrick has previously staked out a position of complete abolition of all of our copyright and patent laws, but I am not convinced that such a measure is appropriate. ?I do, however, think that articles such as this one, and an earlier one from August about Google?s $12.5 billion of 17,000 patents from Motorola?highlight the importance of reflecting on the current laws concerning intellectual property and their application in industries like telecommunications and software.

I won?t even touch on (in this post) the absurdity of the penalty difference for illegally downloading a single song (up to $150,000 per licensed work under?17 U.S.C. section 504(c)) versus the theft of a CD from a retail store.

As Joanna Blakely suggests in the TED Talks video linked on Patrick?s prior post, it is time to critically evaluate the appropriate ownership model in the digital world and consider the options which will spur the most innovation over the long term.

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