In today's competitive market, building a great technology company requires great ideas, great execution and great intellectual property.
Increasingly, however, it also requires something else: a great number of attorneys.
Thanks to patent systems that allow companies to patent just about everything, companies in the tech industry have little ability to operate without fear that they're infringing at least one patent.
From social media to online video, there's a good chance that anything you can think of has been patented somewhere, or is the subject of a pending patent application. Patents are such a big deal that some companies exist solely to exploit them.
It's a war out there, and now the war has come to a mature market that has largely been spared from the nonsense: web analytics.
As reported by paidContent, Nielsen has filed a lawsuit against comScore, alleging that it is infringing five of its patents "that relate to measuring and displaying online content." Apparently, Nielsen has identified 30 comScore products that it believes are infringing.
Nielsen says it's protecting its intellectual property, and the decision to sue was not made lightly. While time will tell whether Nielsen's infringement claims are as strong as the company believes they are, it's safe to say that the lawsuit is probably bad news for the web analytics market.
As paidContent notes:
The most common strategy in responding to a patent attack is to sue back with one’s own patents, and that could mire both of these companies in expensive litigation if they don’t reach a quick settlement. Even if comScore doesn’t have patents of its own to counter-sue with, it’s not terribly difficult to purchase patents for that purpose.
What's interesting here is that two of the patents Nielsen claims comScore is infringing were granted a decade ago, and were actually used in a lawsuit against Nielsen before it acquired them as part of the settlement.
This is a stark reminder that companies have no real ability to move ahead reasonably confident that they're not infringing a patent that has been on the books for some time. Patents are a formidable weapon that can be unleashed at any time.
Of course, the real losers in all this are customers, as the uncertainty created by the threat of seemingly endless litigation hurts them most.
After all, if your analytics provider is found to be infringing a patent, there's always the risk that an injunction that will cut you off from services you've invested heavily in. And even when lawsuits are settled (as many of them are), the cost of defense and settlements are almost always passed on to customers in some form.
Even if you're not a Nielsen or comScore customer, you lose. You can be sure that other parties own patents related to web analytics, and they could come out of the woodwork at any time.
Will they file lawsuits against comScore and Nielsen? What about Google; is a patent that threatens Google Analytics lurking? And let's not forget all of the innovative web analytics upstarts that can't afford to defend themselves and would probably fold in the face of a lawsuit.
The concept of a patent is a valid one, and companies that have legitimate claims should defend their intellectual property. The problem, obviously, is that the patent system is broken.
The government bodies responsible for granting patent rights have created a mess with business method patents and the like, and they're woefully incapable of dealing with the onslaught of patent applications these have invited.
Clearly, some sort of patent reform is necessary, but given that meaningful, sensible reform is probably not something we'll see anytime soon, customers had better get used to the madness.