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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.

Patricio Robles

Published 23 March, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2377 more posts from this author

Comments (4)

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staff

"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. "

Have you ever invented anything? Have you ever started a business based on that invention? Have you ever started any business? If you had, you would understand that startups and small firms have only their IP standing between them and ruin. Otherwise, large would be competitors can with their greater resources and capital copy your invention and elbow you out of the market you created. Large multinational infringers only whine about patents they are adverse to. Their patents are of course valid and reasonable. Obviously, they are biased.

Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now some of those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don’t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back in the patent system with injunctions fully enforceable on all infringers by all inventors, large and small.

For the truth about trolls, please see http://truereform.piausa.org.

Just because they call it “reform” doesn’t mean it is. Patent reform is a fraud on America. This bill will not do what they claim it will. What it will do is help large corporations maintain their monopolies and kill their small entity and startup competitors (which is exactly what they intended it to do) and with them the jobs they would have created. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” This bill is a wholesale slaughter of US jobs. Those wishing to help in the fight to defeat this bill should contact us as below.

Small entities have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Yet small entities create the lion's share of new jobs.

Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.
http://docs.piausa.org/

over 5 years ago

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Greg Hora, Engineer at Ultrasonic SYstems

I have a hard time understanding how you can patent an idea or "business method" patents. Patenting actual code or something truly unique makes sense...isn't one of the requirements for a patent to be issued that "someone who is equally skilled in the art would not be able to come up with"?

What if Henry Ford patented a business method of putting four wheels on a chassis and hooking it up to an engine? How much better off would we have been with that?

These business method patents are just straight crap.

over 5 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

"staff",

When I speak of "patent reform", I'm not speaking of any specific proposal. Like Greg, I think the broader issue here is the patent system has been stretched to support ridiculous "business method" patents that government bodies are ill-equipped to evaluate.
Case in point: one of MercExchange's patents covered eBay's "Buy it Now" button.

There are many legal scholars who to this day criticize the court decisions that extended the patent system well beyond its founding ideals.

You speak of startups and small businesses, and the importance the patent system has to them. Yet in 2003, the American Intellectual Property Lawyers Association published a report which found that the average cost of litigating a patent lawsuit was $2m. In 2006, Lawyers USA estimated the average cost to be between $3m and $10m. It reportedly takes $1m just to get into court. How many startups and small businesses have millions to defend their patents, legitimate or not?

Any way you cut it, bigger businesses will always have an advantage -- whether it's entering a new market or litigating an intellectual property lawsuit. The best solution for software, in my humble opinion, is to limit patent protection to what it was originally intended to protect. That won't solve all of the problems, but it will be a good start.

over 5 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

And by the way, I once consulted for a startup that applied for patents in multiple countries. It certainly made sure the partners at the company's law firm were eating well, but didn't do much more than that.

over 5 years ago

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