While the violent and depressing patent wars that are being waged in the technology industry aren’t new, Yahoo’s patent infringement lawsuit against Facebook has created a firestorm in Silicon Valley.
From bloggers to venture capitalists to former employees, individuals are lashing out at the once-dominant portal, criticizing it for being desperate, evil or some combination of other less-than-nice words.
One of the most vocal critics of Yahoo is venture capitalist Fred Wilson of Union Square Ventures. In a blog post yesterday, Wilson wrote, “The patents that Yahoo! is suing Facebook over are a crock of shit” and suggests that Yahoo has “crossed the unspoken line which is that web companies don’t sue each other over their bogus patent portfolios.” In fact, he’s so mad, he says that he “hate[s]” Yahoo so much that the company is “dead” to him.
Wilson isn’t alone in his anger, but is all the Yahoo ‘hate’ really well placed?
While Wilson’s tirade is worth reading, one can’t escape the irony that so much of the technology industry has been involved in promoting this patent insanity. Take venture capitalists like Wilson. Many VCs back companies that themselves develop portfolios of sometimes dubious patents, often in an effort to build ‘asset value.’ And others back companies that settle lawsuits with patent trolls, effectively emboldening them and indirectly financing their future lawsuits.
While Wilson says his firm doesn’t push its portfolio companies to pursue aggressive patent strategies, it’s not as if Wilson and his firm are disinterested parties.
For instance, Wilson’s partner, Brad Burnham, has argued for an “independent invention defense” that would enable companies to beat back a patent claim with a “We didn’t know about the original invention when we invented something that might infringe upon the original invention’s patent” defense. Sound good? Perhaps, until you think about where such a defense would lead: an even more tortured litigation process heavily focused on discovery, as plaintiffs would logically seek document after document, email after email in an effort to show that defendants did know about their inventions. In other words, such a defense would be unlikely to reduce the costs of litigation, which already surpass what many small startups can afford, and might even raise costs.
Of course, Burnham’s suggestion also fails for a more fundamental reason: the purpose of patent is to protect those who invent novel things. Just because you invented something independently that was already patented doesn’t mean that you should be able to copy and commercialize the original invention so long as you didn’t know about it. If this were the case, patents would effectively be rendered useless. That might benefit Wilson and Burnham, whose investments would be quite a bit less risky with the threat of patent litigation removed, but it’s not the solution.
If we’re going to throw the baby out with the bathwater, we might as well ban process patents altogether. They provide for the so-called “software patents” that are the subject of so much criticism and which should be a primarily focus of meaningful patent reform.
But back to the real world, where it’s important to be clear: there is no “unspoken line which is that web companies don’t sue each other over their bogus patent portfolios.” Perhaps Wilson and Yahoo critics haven’t been looking, but just about every major technology company, from Microsoft to Google to Apple, has been amassing a patent portfolio and putting it to use in some fashion.
That’s the game. Yahoo is but one player. The company it’s suing, Facebook, has filed for patents too, by the way, and will almost certainly build up a larger portfolio in the coming years. It would be naive to assume that Facebook won’t use its patent portfolio to its advantage.
At the end of the day, companies have two choices today: realize they’re in the patent game whether they like it or not, and try to play it to the best of their ability, or pray that long overdue patent reform will be enacted soon. In an ideal world, we’d see the latter, but unfortunately, we don’t live in an ideal world and technology businesses that pretend we do put themselves in a very precarious situation.