Patents, Patents Everywhere

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Timothy Lee has an interesting column in the American on the current course of patent law in technology, using the Vonage/Verizon dispute as his launch pad [hat tip: Matthew Yglesias].

Lee writes: “Theoretically, the patent office is only supposed to award patents for "non-obvious" patents, and the concept of converting between an IP address and a phone number certainly seems obvious. In an ideal world, the patents that were issued would be narrow enough that companies could "invent around" others' patents if they were unable to come to acceptable licensing terms.

Unfortunately, our patent system has long since departed from this ideal. In recent decades, the courts have dramatically lowered the bar for obviousness. As a result, some of the patents being granted are so broad that inventing around them is practically impossible. The patents that allowed NTP to win a $612 million settlement from BlackBerry maker Research in Motion, for example, essentially covered the concept of transmitting new email notifications wirelessly. There's no way RIM could have "invented around" that.

Technology companies have responded to this proliferation of bad patents by engaging in the patent equivalent of nuclear stockpiling. By obtaining dozens, hundreds, or even thousands of patents, a company can develop a credible deterrent against patent lawsuits: if someone sues it for patent infringement, it will be able to find a patent the other company has infringed and countersues. Vonage's fundamental mistake was that it chose not to join this arms race. As a result, when Verizon sued, it was completely defenseless.

I asked an analyst why Verizon would sue Vonage when other VoIP providers — like Comcast — were taking equally big chunks of their business away. The analyst said, in effect, just what Lee said — that to sue Comcast would invite a counter-suit.

Who knows if that’s really the case. You’d need to be a patent lawyer to sort this out, and I, alas, am not one. Shame too, it seems like a growth business.


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