The problems are two-fold; patent trolls and patent wars between the major players. All of these things surround software patents. There are issues with software patents being granted for overly generic concepts in several cases where prior art exists. This has lead to a bevy of problems, with companies getting sued once they become big enough to be a target for violating a patent they didn't know existed. Essentially the root of the problem is with US law allowing such patents to be granted in the first place. That still leaves us with problems to be fixed though.
Patent wars is the easier one to talk about as it's less contentious. Essentially, the big tech companies have built up loads of patents over the years and have now decided to unleash the dogs of war i.e. the lawyers on each other. In some cases this is a defensive act, counter-suing in response to being sued. The result is chaos. Companies settle for licencing fees rather than pay for long and expensive court cases. Those that do go to court get dragged out, with appeal after appeal, and are often perused in several jurisdictions simultaneously (e.g. Apple's actions against Samsung's Galaxy Tab 10.1 in most of the EU and Australia). You end up in a world where Microsoft make more money of a free, open source mobile OS (Android) than they do off their own, proprietary, licensed OS (Windows Phone 7). This is through suing HTC and extracting a licence fee from them for every Android phone shipped. Now they're going after Samsung too.
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| This is for patents referring to smartphones ONLY. It was produced in December 2010 so is a little out of date. |
Is this a problem? Like, big companies fight all the time; in marketing, in product development, in hiring etc. Does this limit the innovation within these big companies? Probably not. What it does do is create a culture of fear; encouraging companies to build up large patent libraries as a defence. This translates into the company patenting any idea that gets thrown out there, just in case, thus inhibiting other companies who may be seriously developing something in that line. It also means obscenely highly priced auctions, and some rather convenient alliances forming (see the Nortel patent licence auction and the anti-Google alliance). These sort of manoeuvres may not be anti-innovation, but they almost certainly are anti-competitive.
How to solve it? The short answer is you can't. These companies would fight each other if all they had at their disposal were plastic spoons and half-rotten cabbages. We should tighten up patent issuing though, which will hopefully result in these companies only being issued with relevant patents and leave room for competitors to create something similar but different.
The other issue is much more serious. Patent trolls just sit on patents, do nothing with them and then sue the pants of anyone who encroaches on them. This has also led to the Eastern District of Texas becoming the Cayman Islands of patent litigation with several of these companies sharing their registered address in tiny offices here so that they can file in what is seen as a court favourable to patent holders.
They target anyone big enough to pay. App developers have been sued. Spotify got sued a mere week after launching in the US. They're simply parasites, sucking the lifeblood out of companies while claiming to protect innovation. This is what really annoys me. I've learned over the past year that having a good idea or having a good product is by no means a guarantee on success. It all comes down to work, marketing and more work. Without that, your product is going nowhere. Innovation without production is not worthy of protection. The only reason we issue patents in the first place is to protect companies, particularly small companies, from having their ideas copied by larger rivals. Patent trolls don't add anything of value to society. They don't ever do the work getting to the innovation in the first place either. Patents are usually purchased rather than investing in original research.
This has an easy solution though. Make patents dependant on commercial use. A straight forward "use it or lose it" rule. Give the licensee two years, and after that if they haven't done anything with it, void the patent. There's no commercial interest to protect, so all that patent is doing is stifling other innovation. I think it would work. I'm not a law-talking-guy though so I may be wrong.
Note: This post was prompted by an excellent post from Michael Mace on his blog Mobile Opportunity. Read it.
Note 2: As if to underscore my point, Google just spent $12.5bn buying Motorola Mobillity, mainly for their patent portfolio.
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