BUSINESS

Google deal says more about the patent industry

TAGs: Intellectual Entures, patent trolls

Google patent trollYesterday there was much excitement around the globe at the news that Google had acquired Motorola Mobility for the princely sum of $12.5bn. Early signs were that it would shake up the smart phone market and pilfer away more of Apple’s share of the worldwide tablet market. This was an elaborate cover up as they were paying out for a defence mechanism akin to having a nuclear weapon program. $12.5bn for a nuclear weapon is pretty cheap. The pity is there’s nothing nuclear involved. It’s all about dem patents.

Google’s purchase is much the same as Apple and a coalition of other companies and their recent acquisition of Nortel’s patents for around $4.5bn (for those wondering that was five times the opening bid). Getting hold of a large number of patents is basically getting protection from the advances of parasitic patent trolls that populate the technology industry and they have been around in the online gaming industry for some time as well.

The acquisition by Google is also to give the company and its Android platform protection against lawsuits from other cell phone manufacturers. This has already been the case with Samsung and HTC who have both been sued by Apple and it’s no coincidence that they are both mainstays of the Android OS. The deal with Motorola will give them more of a bargaining chip and mean that they are less susceptible to patent infringement proceedings.

One company in particular has started hitting the news pages more often than they care to and that is Intellectual Ventures (IV). Co-founder of IV, Peter Detkin, may well have come up with the term patent troll back in 1999 but it now seems like this company is the biggest parasite of them all. Their presence alone moved one observer to say that they have the power to “literally obliterate start-ups.” Why all the criticism of IV though?

As we know with patent trolls in the online gaming industry, such as Scott Lewis, it sometimes seems anything successful that you start to develop, they have a patent for it. As some have described IV as “a department store for patents”, you see where the reputation comes from. The fact that people consider them to be up there alongside Apple, Microsoft and Google when it comes to the amount of firepower they have will send a chill down the spine of many small start-ups.

The way that IV works is different to the super powers though. IV has the portfolio of patents under their belt and companies can buy them for over exorbitant fees in order to defend themselves. Well that’s one line. Another is that they go to technology firms with their portfolio and demand money from technology firms in a mafia-style operation. As in “you give us money or we burn down your butcher’s shop.” You get the picture.

IV’s system of buying up thousands of patents to start-up lawsuits certainly highlights what is wrong with the patent system in the US right now. It’s not a coincidence that an NPR article cites the fact that 80% of software engineers say it stifles innovation in its current guise. They also added that some patents are so broad that everyone’s guilty of infringement.

parisitic patent trollThe online gaming industry can definitely sympathize with this and is one of the industries where the trolls just seem to love hanging out. Must be something in the water, no? Although if the cases in the online gambling industry show anything, it’s that these slimy patent trolls can be seen off. It’s just that in most cases, they aren’t just going after one company and chances are one of those being sued for infringement may pay up. (Yes, we’re looking directly at you 1st Technology and Lottotron). Patent trolling in the online gaming industry is something that we like to flag up whenever it becomes apparent and all we can do is sit hoping that the stockpiling of patents doesn’t end up stifling innovation for everyone.

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