SMOS: The Kiss of Death of IPR – another view

Since the publication of SMOS last week, we have had several discussions with different people about patents – whether patents are essential and does it really matter for a small company to have patents or not. The answer is, of course, yes and no. But even with yes, it is not always as clear as one might expect as Jakke presented in his previous blog.

What is today’s IPR about? It is about litigation, and litigation itself is a game of power and strategy. But even those rules are changing.

I believe that Jakke was a bit optimistic when he was looking at patents from their utility aspects. In practice they are much more.

I may be harsh with my statement, but to some degree patents are like weapons. They are everywhere and can be used both for good and evil. But when one is manufactured, you never know whether it will harm someone someday. For gun exports and trade, and ultimately war, we have regulations. But for using and transferring patents, and eventually litigations, not so much. I am not a lawyer, but for a small company or a single entrepreneur the unwritten rules of the game are quite literal.

Let’s take an example that company LetterZ finds out that company SillyNumber is infringing one of its patents. What will LetterZ do? Most probably it does its homework to know their own position and carefully document everything that works for them. And most probably it plans counter measures if SillyNumber has something against them. If SillyNumber is a small company, LetterZ can wait for it to grow. It is not good business to pay lawyers to sue companies that do not have money. Basically it is a time bomb that only company LetterZ knows exists.

Just like in warfare, the company can plan its strategy carefully over time before striking. With SMOS we would have had no idea who we might have been eventually facing. It would be polite to let the one infringing know and give a chance to change their approach, if possible. But as said, this is more about power and influence than being right. It is warfare.

Traditionally biggest headlines have been written about clashing titans. One party will either pay a lot and/or case ends in cross-licensing. During the last 10+ years there has been other, new type of development. Some companies acquire licenses after careful studies that someone (lucrative enough) is infringing exactly those patens. For the most successful suing companies it is enough to threaten the infringing party to keep the case out of courts. Some of such companies, patent trolls, don’t actually produce anything else than money.

Recent tactics has been to move away from the frontline clash of titans towards guerilla wars. Instead of suing the provider, suing e.g. individual hotels and restaurants for 5000 USD each, there is decent money to be made out of hundreds or thousands of cases. The sum has to be small enough that it definitely will not cover litigation and lawyer fees. Many companies may end up paying without putting up a fight, regardless of the actual case details. The threat and uncertainty are much bigger.

As courts may decide the compensation based on the number of devices made or sold that include infringing technology, corporations are separating their manufacturing and patents. Patents are turned into the hands of portfolio companies, who “do not have anything” to do with the originating company. There is only a licensing agreement, but no other relationship what comes to potential damage based on production numbers. Patents are truly becoming intercontinental missiles of the cold war era.

In August 2011 US Patent Office granted its 8 millionth patent. Two days ago, May 1st 2012, patent number 8 170 000 was granted. That is in the USA alone since the 18th century. There the growth of granted patents has been exponential since the early 1900s. It is a fact that nobody can tell what exactly has been patented and what other prior art exists around all those ideas. In principle all inventions are equal, big and small. We as people have just built and ended up with this kind of a system we face today. It probably is better than anarchy, but can it survive? Is it ultimately so that elephants have the right of way in traffic what ever the highway code says?

There are some efforts to change the status quo, for example https://www.eff.org/patent-busting, but there is much more to patents than corporations and litigation. It still is a possibility for the tiny to have their rights protected. Just as humans as a species have decided. To our knowledge ants do not have proprietary rights for certain lifting techniques, but people may have.

For an individual company patents may be crucial when seeking investments or selling the business. But should the system be reviewed and changed accordingly and be more than a weapon of distraction/destruction?

Do we need a common database of free ideas that are exempt from official patents that may be used for humanitarian purposes and collectively against patent trolls? Yes, I know I am reinventing patenting process just as labor exchanging communities are reinventing money.

But if data wants to be free, could some inventions be agreed to be free as well? It is for our own benefit after all.