“Patents as Swords”? — More like Patents as Bombs

A great New York Times article this morning (link below) details ways in which the patent system gets used as both an offensive and defensive weapon, with billions of dollars of collateral damage to start-ups, consumers (see the “patent tax”), and innovation in general. The victim in the opening Vignette (Vlingo, a voice-recognition software start-up) might have been saved by a simple change in the rules: make the losers of patent lawsuits pay the legal costs of the winner. It turns out that it’s rather easy to kill small firms (or force them to sell to you) by launching a patent lawsuit against them that bleeds them dry with legal fees. You don’t have to win — you just have to force them to fight until they no longer have any money.  Vlingo ultimately won the patent lawsuit that had been filed by a much larger rival, but had to loot its own meager coffers to pay the legal fees of doing so. Vlingo slumped home with its patent lawsuit victory and shut its doors for good. If losers of such battles paid the legal fees of winners, such fights might both be less common, and less likely to be fatal.

The article also points out that software patents have proven particularly dangerous because they are prone to protecting vague claims like “a software algorithm for calculating online prices,” thereby granting the patent holder vast tracks of technological real estate. An interesting talk by Tilo Peters at the Strategic Management Society conference yesterday points to another useful tool for rationalizing some of this misuse of the patent system: Strategic disclosure. If, for example, you decided to publish a manifesto about all of the things you might do with software in the reasonable future (remember patents have a “usefulness” condition so you’re not allowed to claim something deemed non-feasible), you might be able to essentially proclaim that technological territory as unpatentable. It wouldn’t prevent competitors from developing in those areas, but it could keep them from patenting in those areas. In essence, it transforms a space in which property rights may be allocated into one in which property rights may not. I’ve left out some details but you get the idea.

Now it occurs to me that a fair amount of strategic disclosure in the smart phone space took place in the form of Star Trek episodes. I’m going to go look for references to prior art…

-Melissa Schilling

http://www.nytimes.com/2012/10/08/technology/patent-wars-among-tech-giants-can-stifle-competition.html?smid=pl-share


3 Comments on ““Patents as Swords”? — More like Patents as Bombs”

  1. Corey says:

    A very timely and insightful article. We recently filed for a design patent at my startup. While wrapping up the process, our lawyers asked whether we want to make the patent application private or publish it publicly. We chose the latter option. Main reason was to use the patent application as a signal to other market entrants not to compete with us in our particular space. However, this article brings up an interesting and problematic scenario; what if, for sake of argument, Google decides to imitate our concept and patent design? We certainly do not have the resources to fight Google on this issue, but what we do have is a voice through the internet community to cause quite a bit of damage to Google’s reputation.

    The point is, there are other weapons that small firms can use against larger more resourceful firms. Of course, this does not mean that the smaller firm will prevail, but it does give the underdog some ammunition (or credible threat) to fight the wolves off. Large firms spend millions of dollars to build their reputation and brand, whereas small firms have neither. Therefore, large firms have much more to lose in that war than the small startup who is trying to carve a niche for themselves through patent protection. Using social media to attack the larger firm’s reputation would be an effective tool if it’s a kill or be killed game.

  2. […] conversation, posts, links etc by some strategy professors “Patents as Swords”? — More like Patents as Bombs […]


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