How Patents May Stifle Innovation!

Thomas Friedman once famously said – The world is flat! While I did not completely agree with him when I read it, I am beginning to see some truth to it. At least as far as Innovation is concerned. Yes, Patents have been around for a while now. So have Patent Infringement Lawsuits. Most of them wrangle on for years in the confines of a court, without ever breaking into mainstream media unless there is a monumental judgement involved. This ‘flattening’ of the Innovation world has made the Big Boys realise that they are more vulnerable than ever. Patents are being used less to protect what you have and more to prevent the competition from catching up. Thanks to that, the technology industry is now sitting on a Patent Minefield, new entrants, old timers alike have to tread to very carefully to avoid stepping over these imaginary patent lines. A task, which is seemingly impossible to do.

In November 2009, I came across an Apple Patent that would certainly have serious implications in the long run. With Steve Jobs named as one of the five inventors, this patent audaciously attempts to embed display advertising into your OS and also outlines ways to ensure that you have to pay attention to them..and the icing on the cake is that they can decide to veer  their ugly heads at any time! I highly doubt that Apple will ever implement this, but this does give them a clear stranglehold on OS embedded advertising. A direction i figured Google’s ChromeOS may be headed in. If this patent does manage to keep Google away from OS embedded advertising and Apple does not do it either – aren’t they stifling innovation?

Another patent in recent times that caught my attention was the iKey (rumoured name). The patent says “The device can communicate with an external device to open a lock. The external device may be any suitable electronic device such as a portable media player, personal data assistant or electronic lock that may be used to access a door, car, house or other physical area”. While most have argued that it will limit itself to the iPhone, the device has not been mentioned anywhere in the Patent. Apple has cleverly employed the term ‘the external device’ which can cover a whole gamut of devices. Surely they weren’t the first the think of the One Device to Rule(or in this case, Unlock) them all concept. But this patent does give them power to go after anyone else who forays into this area.

Intellectual Ventures, founded by Nathan Myhrvold – former CTO of Microsoft, in 2000 has been repeatedly accused of Patent Extortion. The ‘Intellectual’ in their names seems to be targeted more at Intellectual Property Rights than the Intellect behind invention. One part of their operation is to collect Patents from bankrupt companies, universities, students at dirt cheap price and then license them out. The other part is summed up brilliantly by a BusinessWeek article “A rocket scientist, a mathematician, a brain surgeon, and a lawyer walk into a room. It sounds like the beginning of a joke, but at Intellectual Ventures it’s something more serious—a business model.” That’s right! Get some of the smartest people on the planet to brainstorm for a day, have IPR lawyers tune into their discussions and file patent applications which will be of significance – both in terms of Intellectual and Monetary value in the years to come. The fund has collected over 20,000 patents in the last 10 years and if they plan to use them only for licensing and extortion – there is plenty of cause for concern!

Google was awarded Patent 7668832 which further put into perspective its acquisition of Admob and simultaneously delivered a blow to Apple’s attempt to enter Location based advertising. The patent, filed in 1998, is a very comprehensive one and covers a lot of aspects of geo targeting both on PCs and mobiles. At the face of it, it is a seemingly innocuous patent aimed at improving the efficiency of Localised Ads using the internet. But it has serious implications and if Google chooses to enforce it aggressively it could go after some existing players and keep many new ones out. Hampering innovation? I think so.

These are just some of the potentially volatile patents out there and I am sure that I haven’t even scratched the surface. The Hardware industry is a bigger minefield. Almost every aspect of hardware design is covered by some patent or the other.

The reason Patent Trolls are able to get away with such practices are because the system in place have allowed patents to involve into an exclusionary right. Until the system is fixed to reward innovation and invention instead of litigation, expect to see many more Patent Infringement Lawsuits. Many of the above examples may not hold good back home, but in the coming years it could very well be. Let’s hope we take adequate measures to ‘fix’ our system and avoid the – dig the well when there is a fire syndrome!