Cisco Realizes It's A Waste Of Time To Focus On Patent Quantity

from the good-for-them dept

A few weeks back, we noted how some were freaking out over the fact that patent applications were down, without bothering to look behind the numbers at why. Instead, they jumped to the conclusion that innovation in the US was dropping. johnjac points us to an article where folks at Cisco suggests that it might just be tech companies realizing that patenting everything is a waste of time and money. In fact, the story states that Cisco recently changed its patent strategy from trying to patent everything to trying to focus on things that it believes is really innovative, rather than everything it can possibly get a patent on.

I can already hear the usual crowd of patent holders in our comments. They hate Cisco and pretty much any big company. They'll interpret this statement as meaning that Cisco has become less inventive and is more focused on "stealing" inventions. Of course, what's amusing is that they'll never present any evidence for those accusations (though, I'm sure they'll accuse me of being on the take for Cisco even though we've never done any business with Cisco in any way whatsoever).

That said, I do find some of the comments from Cisco odd and somewhat unsupportable:
"The arms race approach doesn't pay off," he says. "It doesn't do you a lot of good to have a lot of patents."

Why? The patent landscape has changed dramatically. Patents often land companies in court as they fight over who invented the idea first. Lawsuits still might involve competitors, but increasingly Cisco finds it is battling what Chandler calls "non-practicing entities." These are companies that exist only to acquire patents and then seek to extract money from big companies for infringing on them. The more patents you hold, the more likely one of these companies will sue you.
The first part is true. Lots of companies find themselves being sued by non-practicing entities, but it's not because of the number of patents they hold. The NPEs (patent trolls, patent hoarders, whatever you want to call them) aren't suing those who have the most patents. They're suing whoever has (1) products on the market and (2) a large bank account. Cisco could have no patents at all, and it would still be getting sued just as much by NPEs. So, frankly, I don't buy the claim that the more patents you have, the more likely you are to get sued. Instead, my guess, is that Cisco has realized that getting patents (especially in such large numbers) is an expensive process, for little benefit. It may help in some lawsuits against competitors (when Cisco can threaten to counter sue over other patents), but you only need so many patents for that. So, it looks like Cisco is building up a stable of defensive patents, and has realized that you don't need the largest number. That's a good thing, but the claim that more patents makes you more of a target just doesn't make sense.


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  1.  
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    Richard (profile), Jan 4th, 2010 @ 5:02am

    The more patents you hold, the more likely one of these companies will sue you.

    This sounds like a realisation that the conventional " The more patents you hold, the less likely one of these companies will sue you." doesn't apply to "non-practising entities" which has just overshot. Of course it doesn't reverse - it's just null. Maybe the person who wrote the press release didn't read the detailed briefing carefully enough.

     

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  2.  
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    The Anti-Mike (profile), Jan 4th, 2010 @ 5:22am

    Re:

    Actually, to some extent it is true. If you hold a patent on some minor concept, which you use in your products, and another company owns a slightly older patent that might be stretched to cover the same thing, you have in many ways made yourself a target. They can look through the patent databases looking for similar, newer work, and use that as a basis of attack.

    I have a feeling it is just someone at Cisco that totaled up their legal bills for fighting patent lawsuits, and their legal bills for researching and filing patents, and realized it would just be cheaper to fight (and occassionally pay) than anything.

    Clearly, when you fight against a NPE, there is no mutually assured destruction of cross patents and the like, as the NPE has nothing to attack. Much of the "patent everything you can" is designed to fight other companies in your field who might sue you based on one of their patents, as you can pull the trigger back using one of yours. It is essentially a patent cold war.

    I am a little surprised that Mike didn't pick up on this concept.

     

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  3.  
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    Overcast (profile), Jan 4th, 2010 @ 5:44am

    huh, that's odd - I can see the real benefit in patenting a bunch of things that really don't latter like 'LOL'.

    Other companies like IBM and Microsoft think so - how could the be wrong?

     

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  4.  
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    Overcast (profile), Jan 4th, 2010 @ 5:45am

    Re:

    **err. *that really don't latter* (correction)

     

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  5.  
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    Overcast (profile), Jan 4th, 2010 @ 5:45am

    Re: Re:

    Matter...

    my gosh, I need coffee, lol

     

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  6.  
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    Richard (profile), Jan 4th, 2010 @ 6:13am

    Actually, to some extent it is true. If you hold a patent on some minor concept, which you use in your products, and another company owns a slightly older patent that might be stretched to cover the same thing, you have in many ways made yourself a target. They can look through the patent databases looking for similar, newer work, and use that as a basis of attack.

    Yes that could happen - though it probably isn't a big effect. NPO's mainly just look for successful companies with big bank balances but it's possible CISCO might have been hit in exactly that way in the past.

     

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  7.  
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    Anonymous Coward, Jan 4th, 2010 @ 7:22am

    1. Patent application filings always drop during economic hard times as individuals and companies retrench in an effort to save money. Sadly, in such times one of the first budgets to get cut back if that for R&D, followed closely by RIFs.

    2. First to invent battles (aka "interferences") are exceedingly rare, with most lawyers never even seeing one during the entirety of their careers.

    3. There is no correlation between the number of patents a company or individual may hold when it comes to being sued. One does not get sued because he/she has pieces of paper. The potential for lawsuits does correlate to whether or not a company or individual has a commercial product or service that is potentially capable of or actually pulling in big bucks (bucks sufficient in number that might otherwise go to a competitor holding a relevant patent) and the product/service provider represents either a real competitive threat or has deep pockets. Lawsuits against ompetitive threats far exceed in number lawsuits based upon primarily upon deep pockets.

    4. Running up the number of patent applications and patents is a fool's bet and a poor use of available monies. I cannot speak to the practices of others, but I have always advised clients to save their money for truly big ticket items. Inventions highly pertinent to products and services planned for market introduction should be a company or individual's highest priority, as should products and services likely to be introduced into adjacent markets. Since trying to make money is the end goal of business, it seems foolhardy to spend hard earned dollars merely because an invention is "nifty".

    In a corporate setting most companies have a defined business plan and conduct R&D accordingly. Inventions critical to successfully implementing such a business plan are prime candidates for securing patent rights. I have always termed these "need to haves". The pursuit of patents for "nice to haves" are almost invariably money thrown willy-nilly over the transom. Of course, to truly understand the difference between a "must" and a "nice" requires that an attorney thoroughly understand the company's business plan and work intimately with the R&D, Program , Business Development, Finance, and Product Support managers to truly understand what is critical and what is not. Efforts directed to what is critical is more likely than not time and money well spent, and efforts directed to non-critical matters is an umproductive use of resources. Any lawyer who simply sits in his/her office and waits for others to come to him/her should quickly be shown the door. Unfortunately, in far too many companies such lawyers significantly outnumber those who get out of their offices and work hard to learn where a company is headed and why. The latter can provide value-added, whereas the former overwhelmingly provide value-subtracted.

    Bottom line: The blind pursuit of patents for the sake of securing patents is plainly silly and a waste of valuable company resources. Stated more bluntly, companies are well advised to save their "bullets" for truly "high value targets", and not simply pull the trigger just because the company may have bullets to spare.

    Experience informs me that patents may prove to be an important factor is pursuing a business plan, but only if such patents accurately reflect such plans.

    Merely by way of example, many years ago I was asked to review a very complex electro-optical weapon sytem to identify what aspects of the system should be considered for securing a patent. After weeks of discussion with all corporate functions associated with the system I came to learn that a single, seemingly trivial component was the one thing that actually made the system work to meet spec, and that such a component had never been successfully developed by competitors to meet the exacting requirements of the spec. This was the only feature of the system that was patented because of its criticality to the system and its natural exportability to other systems then under development. Competitors might have been able to easily design around or replicate the other system components, but this clearly was not one of them. Between the patent and the retention of trade secrets pertaining to the component, the company was positioned in a materially enhanced position to secure a production contract (which it later did, both domestically and internationally).

     

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  8.  
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    ernestinis, Jan 4th, 2010 @ 8:05am

    Re: Re:

    Good insight!
    By patenting you not only disclose your "way of making something" so creating "searchable basis" for attack, but also disclose your "know how" for those who do not care about patents (e.g. in some contries companies do not care about patents, at least in some industries).

    Sounds like: "Patent your invention - support China."
    In sentence above, "China" may be replaced with: Russia or ...

     

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  9.  
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    Richard (profile), Jan 4th, 2010 @ 8:29am

    Re: Re: Re:

    also disclose your "know how" for those who do not care about patents (e.g. in some countries companies do not care about patents, at least in some industries

    I don't think patent's really disclose anything. Firstly they are written in incomprehensible patentese. I saw a comment on another site recently where the actual inventor admitted he couldn't understand his own invention after the patent department had processed it!

    Add to that the large number of useless and obvious patents and it seems to me that searching patent databases for useful ideas is a needle/haystack operation.

    If the people in competing countries are wasting their time doing that I think we should be glad!

     

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  10.  
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    Sal, Jan 4th, 2010 @ 8:31am

    Re:

    What you're saying makes a lot of sense and it seems like you worked for a decent company, but there's also Apple's 100 patent iPhone and Amazon's one click patent.

     

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  11.  
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    Anonymous Coward, Jan 5th, 2010 @ 9:46am

    #7 is pretty spot on. During the boom, companies were patenting anything that crossed the desks of the patent attorneys. When the recession started, companies slashed the budget of the patent departments. So companies started being more selective of what they patented.

    The fact that Apple has "100" iPhone patents is not relevant here. A) Most of them were filed years ago, when the economy was flush. B) Apple is doing better than most companies, so may not have slashed the budget as much as others have.

     

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  12.  
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    staff, Jan 6th, 2010 @ 7:48am

    defense

    "The arms race approach doesn't pay off," he says. "It doesn't do you a lot of good to have a lot of patents."

    First, you ave to understand big companies primarily patent as a defense should they be sued for infringement by a competitor. That does not however protect them from suit by small entities who are not in their commercial space or whose patents substantially control their markets. Big companies looked to make up for a lack of quality with quantity and in the process gummed up the whole patent system with minor and minimal inventions.

     

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  13.  
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    patenthitman, Mar 13th, 2010 @ 5:04am

    I'd like to suggest a defense to patent trolls and frivolous patent lawsuits!

    http://patenthitman.com/

     

    reply to this | link to this | view in thread ]


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