We've discussed in the past the fact that Google has never used patents offensively. That is, while it has many patents, it has never (that anyone can point to) used them to threaten another company to force them to pay up. Instead, it has only used them defensively. Over the summer, Google got even more aggressive, speaking out about how patents had become a tax on innovation, rather than enabling innovation. In fact, we pointed out that Google actually seemed to be a perfect example of how innovative companies didn't need to be aggressive on patents -- a feeling that is pretty strong in the Valley.

Of course, about a week later, Google bought Motorola Mobility, almost entirely for its large patent portfolio. Given Google's outspoken viewpoint on patents, the assumption was that the company would continue to use those patents defensively against the increasing number of attacks by patent holders on Google. However, as MG Siegler is reporting, it looks like Google might at least continue Motorola's patent strategy post acquisition (which is about to be approved):

Google is saying that they don’t plan on making any changes to the way Motorola was enforcing their patent pool. This presumably means, among other things, they’ll now be suing Apple and trying to block the iPhone from being sold in certain countries.

This also presumably means they’ll be suing Microsoft and trying to bring down the H.264 video codec — which, by the way, Google created a competitor to (WebM) out of fear that someone would come along one day and try to enforce patents that would kill the H.264 video codec.

How’s that for a mind fuck?

The tables have gotten so turned that it’s now Apple and Microsoft who are complaining about patent enforcement. Specifically, both want assurances that patents licensed under fair, reasonable and non-discriminatory (FRAND) terms, are actually just that — fair.

In Motorola’s eyes, “fair” is Apple paying 2.25 percent on each iPhone and iPad sold. John Paczkowski of AllThingsD did the math: this would mean Apple paying about a billion dollars a year in royalty fees to Motorola.

A billion dollars. The mobile unit that Google is buying lost $285 million for the year last year. Apple would be indirectly keeping them, a competitor, afloat.

Of course, with some of these, the lawsuits are well underway, but Google could seek to dismiss some of the lawsuits if it wanted to. I think Siegler goes a bit far in claiming that Google automatically becomes "the villain" for gaining control over offensive patent moves that it's inheriting with this purchase. The bigger question will be what Google does going forward. However, if Google really does want to send a larger message around patents, it will get itself out of those efforts pretty quickly once taking over the company, reinforcing that the larger picture is more important than being able to extract a tax on competing products.

Of course, there is one other thing that makes this a bit more complicated, which I think Siegler ignores. He mentions how Google had to "make assurances that they would act fairly with patents they were acquiring." But he doesn't quite highlight the possible significance of that statement. If Google does get itself out of some of these lawsuits, and then chooses either to not enforce its patents against others or (better yet!) to freely license its patents to many other players, how long would it take Google's competitors to claim that Google was somehow "unfairly" using the patents to its advantage by giving them away for "free." Google competitors have used Google's free services as a stick against Google in the past, pretending that this meant they were abusing their position. I could definitely see some sneaky and ridiculous legal argument that if Google isn't making companies pay up for its newly acquired patents that it's unfairly abusing its position. This is, of course, a ridiculously stupid argument, but it's the nature of the world these days, where aggressive IP enforcement is seen as the norm.

Either way, I hope that Google stands by its words from last summer and is quick to extricate itself from offensive patent situations. But we'll find out soon.

It's pretty clearly established at this point that Google bought Motorola Mobility in large part because of the patents. The number being tossed out is that 50% of the price was for the patents. A big part of the reason for those patents was to fend off Microsoft, who has been quite aggressive in claiming patents over things in Android. In fact, multiple sources have reported that thanks to patents and licensing, Microsoft actually makes more money from Android than from Windows Phone. Talk about perverted patent economics.

Of course, the big question that many raised when Google did this deal was whether it would actually push some handset makers away from Android, out of a fear of competing with their own supplier. While big Android players like HTC quickly downplayed that risk, insisting that they were committed to Android, at least some are speaking out about being less willing to bet on Android, and how it might even drive them to look more closely at Microsoft's Windows Phone operating system.

Let's unpack this for a second, because it begins to show just how ridiculous this overall situation is:

• Microsoft, thanks to patents, makes more money from Android phones.
• In order to fend off patent threats, Google buys Motorola to get its patents.
• In doing so, handset makers scared of competing with Google, start looking at Microsoft as a partner.
• The end result: Microsoft may get more handset partners, but less money, since Android is a pure licensing profit center.

So, the Google buy may result in fewer Android devices and more Windows phones... but less money for Microsoft. Whatever happened to the simple system where companies just compete in the market place and the best one wins?

In response to Google's deal to buy Motorola mostly for its patents (most people are now saying that the patents represented at least half the value of the deal), we're seeing two responses. The first is that companies with lots of patents are suddenly being re-evaluated for their patent value. Because of the demand, otherwise practicing firms are suddenly being told their patents may be worth more than they are. Such is life in a market where the value of patents is massively inflated due to dangerous thickets, where patents are necessary to play.

But at the same time, more people are finally realizing what a massive economic and innovation loss this represents, entirely contrary to the intentions and purpose of the patent system. That last link is to the NY Times, which quotes Harvard economist Josh Lerner (who warned of this problem years ago) highlighting what a ridiculous economic loss it is when patent values are so ridiculously inflated:

“You’d much rather see Apple spend some of that $4 billion on new inventions, and Google invest that $12 billion to generate new knowledge,” said Josh Lerner, an economist at the Harvard Business School. “It’s a transfer of wealth from innovators to bondholders and stockholders who have no motivation to innovate. It’s disturbing.”

It's beyond disturbing. It's harmful. It hurts these companies' ability to innovate. It hurts our economy's ability to grow. It costs consumers a massive amount in economic rents, and it acts as a massive shift in wealth from consumers and companies that actually innovate... to those who aren't innovating. It's really dangerous, and will open up more opportunities for foreign competitors to focus on real innovation, while we move money away from innovation to lawyers.

So, we can now add the NY Times to the list of mainstream publications highlighting the problem. Why is Congress still focused on a patent reform bill that does nothing to address this problem?

Lots of talk today about Google's surprise decision to buy Motorola Mobility for $12.5 billion. The deal is leaving some people scratching their heads, because it seems like a business that Google had always stayed out of, preferring to provide the tools (Android) for others to go and do things. But I'm betting a big part of this deal is because of Motorola's patents. You have to think that a big chunk of mobile device and mobile OS-related patents are likely included in the deal, and it gives Google something else to use in response to the Nortel patents going elsewhere. Of course, it may cause some other problems, as Motorola Mobility competitors, who also work with Google, start wondering if they should keep using Google as a partner. It also makes you wonder what Google will really do with Motorola Mobility. It would be nice to see a Google-like approach from the hardware side, but I just don't see that as likely. My guess is that the hardware side will fizzle, but Google will still be happy it has the patents.

Weren't patents supposed to be about encouraging innovation? Of course, the reality is that they're mostly used for the opposite purpose, which is holding back innovation, stopping other companies and cashing in on the lawsuits. It seems that some analysts aren't even pretending that patents are useful for innovation any more. Trip Chowdhry, a somewhat well known analyst in the tech space, is claiming that Motorola has failed in selling its Android-based Xoom tablets, and should give them up. He then suggests that the company go full on patent troll and sue everyone else making Android tablets. Because that will help the market. Think of it as Chowdhry's scorched earth policy: if Motorola can't succeed in Android tablets, no one should succeed in Android tablets. Apparently, Chowdhry thinks this is a good thing, because Android sucks in his opinion (though, not in the opinions of plenty of folks who are happily snapping up Android devices at an increasingly rapid rate...):

The successful launch of the iPhone on Verizon, he writes, has "taken the wind" out of Android's sails. The Google app store is "a disaster." Honeycomb, the operating system on which Motorola has hitched its wagon, is "incomplete," "unstable," has a "poor UI" and is basically "dead on arrival."

All in all, Motorola's "competitive fixation" on Apple (AAPL) and Research in Motion (RIMM) is misplaced. Rather than trying to innovate on software, Chowdry suggests, "selectively attacking with patents other Android phone OEM's is a better strategy."

Or, you know, the company could take that effort and focus on making a better product and improving the overall market. But, suing everyone else and burning down the whole Android market is apparently more fun... at least for those with a ridiculously short-term focus on quarterly results, rather than a long-term focus on innovation and actually building out profitable business lines.

For years we've pointed out that among big tech companies, patents represent more of a nuclear stockpiling strategy, where they build up a bunch, and if anyone else sues them they can sue back. In theory, this should prevent a lot of patent lawsuits, but patent nuclear wars do break out every so often. These days, it seems like the whole smartphone patent thicket is leading to quite a few nuclear blowups: We've seen patent suits and countersuits involving HTC and Apple as well as Nokia and Apple. Apparently we can now add Motorola and Microsoft to the list. We had already covered how Microsoft had sued Motorola for its use of Android. Things escalated when Microsoft sued Motorola again arguing that the royalties Motorola was charging for certain patents licensed, for use in the Xbox, were inflated.

In response, Motorola quickly spun around and countersued Microsoft, claiming that Microsoft infringed on 16 of its patents. The countersuit took all of one day to go out, suggesting Motorola certainly had it ready. In the end of course, the lawyers will make plenty of money and products we all buy will be more expensive. Just the way the patent system was supposed to work, right?

A few folks this week sent over a story in the Guardian by Josh Halliday and Charles Arthur with a graphic purporting to show who was suing who in the smartphone space, following the news that Microsoft had sued Motorola. You can see that graphic here: Meanwhile, someone in our comments had pointed to a very similar graphic.

The problem is that both of these graphics are wrong. The Guardian one admits that it was built off of the NY Times post from back in March that that showed a similar graphic, which we wrote about at the time. Here's that graphic: However, Joe Mullin quickly pointed out that the graphic was wrong and included a bunch of lawsuits that never happened. NY Times blogger Nick Bilton posted a correction to his story way back in March... so I'm unclear on why the two Guardian reporters were still using that as the basis of their own drawing.

Either way, with Motorola suing Apple for patent infringement, the already wrong graphic was now also out of date. So, I figured why not create my own, correcting the original errors and adding in the new information.

I ended up spending many hours on it, because once I started, I realized that to really show the state of the patent thicket, I couldn't just include the big name companies that were suing each other, because that's only a part of the story. What about all of the non-practicing entities (so-called "patent trolls"), who were suing lots of these companies for infringement as well? Doesn't that matter in understanding the thicket? Of course, there are lots of them, so I focused on the higher profile NPE lawsuits -- the ones involving multiple defendants -- and added them to the chart too (in green). And then, I added in a few other companies who actually make stuff but have been suing as well. Once you start, it's difficult to know where to stop. There are so many companies involved in so many lawsuits, some you just have to leave out. However, I believe the image below gives you at least some sort of picture of the lawsuit situation concerning smartphones. Some of these lawsuits have settled, but many are still ongoing. Now, here's the crazy part: this is just lawsuits. I thought about showing licensing deals in this chart as well, but that would have killed my whole weekend (in fact, just as I was finishing up this post, I saw that Microsoft has just licensed 74 smartphone patents from Acacia). And then I thought about including companies like Intellectual Ventures which apparently are sitting on a bunch of other smartphone patents but haven't yet sued over them. However, I'd already wasted hours that could have been spent doing other, less brain-damaging work, and decided to leave it like this and move on.

Anyway, I'd say this does a damn good job demonstrating the concept of a patent thicket. It also explains how such thickets are hindering innovation. Anyone who wants to get into the smartphone business knows that they're facing lawsuits from a large number of the companies listed on the graphic.

Update: Someone just pointed out that Ars Technica apparently made their own graphic, which is really pretty.... but also relies on the same bad data that the NY Times used and corrected months ago.

Update 2: Apparently everyone had the same idea. The folks at Information is Beautiful made another version of the same chart... again including the incorrect information from the NY Times (though, at least they admit those lawsuits are about LCD price fixing, not patents).

Just as Microsoft is out there trying to make bad patents easier to invalidate, it's still acting like a big patent bully itself. Remember a few months back when it got HTC to license some patents, which Microsoft claimed covered Google's Android mobile operating system? Well, apparently, Motorola wasn't willing to do any sort of deal like that, so Microsoft has sued Motorola. Microsoft itself was kind enough to send us the press release, which is full of some pretty ridiculous statements from Microsoft's Horacio Gutierrez (with whom I rarely agree on anything):

"We have a responsibility to our customers, partners, and shareholders to safeguard the billions of dollars we invest each year in bringing innovative software products and services to market."

Really? Please explain how suing some other company helps your customers? Amusingly, on Microsoft's own blog post about the lawsuit, nearly all of the comments are trashing Microsoft for litigating rather than innovating.

And, of course, to be extra obnoxious, rather than just suing, Microsoft is using the ITC loophole to get two cracks and forcing Motorola to pay.

As for which patents are being claimed here, Gutierrez in the blog post and in the press release makes some crazy statements implying that the only way to do synchronized email, calendars and contacts, or to notify apps of battery power is to violate Microsoft's patents. Below is the list of patents that Microsoft is suing over. It's hard to pick out which one is the most ridiculous:

• 5,579,517: Common name space for long and short filenames
• 5,758,352: Common name space for long and short filenames (yes, again)
• 6,621,746: Monitoring entropic conditions of a flash memory device as an indicator for invoking erasure operations
• 6,826,762: Radio interface layer in a cell phone with a set of APIs having a hardware-independent proxy layer and a hardware-specific driver layer
• 6,909,910: Method and system for managing changes to a contact database
• 7,644,376: Flexible architecture for notifying applications of state changes
• 5,664,133: Context sensitive menu system/menu behavior
• 6,578,054: Method and system for supporting off-line mode of operation and synchronization using resource state information
• 6,370,566: Generating meeting requests and group scheduling from a mobile device

Looking over a bunch of those, you have to think that Microsoft is praying that this case gets settled/decided before it possibly gets the Supreme Court to weigh in on more easily invalidating ridiculously bad patents. That last one is a favorite of mine. Just like we always make fun of patents that are basically "just add internet," this one certainly looks like "just add mobile." In the meantime, it's pretty amusing that Microsoft still won't just come out and sue Google over these patents. It seems to know that Google would actually hit back hard.

Part of the key selling point of the whole concept of Android-based smartphones was that they were open to tinkering. Apparently, Motorola thinks somewhat differently about that. paperbag was the first of a whole bunch of you to point to variations on the story that Motorola has put a thing called "eFuse" on the Droid X which will effectively brick your phone if you try to mess with the software.

If you look around, a lot of people who said they would originally buy a Droid X are saying they won't do it now, just on principle. Bricking a phone that someone bought, just because they want to change the software themselves is pretty abhorrent. Motorola's response to the concerns isn't winning over many people either. They flat-out say that if you don't like it, you should buy another phone:

We understand there is a community of developers interested in going beyond Android application development and experimenting with Android system development and re-flashing phones. For these developers, we highly recommend obtaining either a Google ADP1 developer phone or a Nexus One, both of which are intended for these purposes. At this time, Motorola Android-based handsets are intended for use by consumers and Android application developers, and we have currently chosen not to go into the business of providing fully unlocked developer phones.

The use of open source software, such as the Linux kernel or the Android platform, in a consumer device does not require the handset running such software to be open for re-flashing. We comply with the licenses, including GPLv2, for each of the open source packages in our handsets. We post appropriate notices as part of the legal information on the handset and post source code, where required, at http://opensource.motorola.com. Securing the software on our handsets, thereby preventing a non-Motorola ROM image from being loaded, has been our common practice for many years. This practice is driven by a number of different business factors. When we do deviate from our normal practice, such as we did with the DROID, there is a specific business reason for doing so. We understand this can result in some confusion, and apologize for any frustration.

I think they're missing the point. The fact is most consumers won't tinker with the underlying software of their phone, but if they do want to, they should be allowed to do so without having Motorola destroy the device.

NTP, a patent holding firm that is really just a bunch of lawyers with incredibly broad and questionable patents, is at it again. As you probably know, NTP was locked in a long and contentious patent fight with RIM over NTP's claimed patents covering the concept of mobile email. Even as the US Patent Office was telling the world that NTP's patents almost certainly weren't valid, pressure from investors (and the judge in the case who refused to wait for the Patent Office's final rejection of the patents) resulted in RIM settling the case for $612.5 million. For RIM, it became something of a no brainer. Even though its legal position was strong, its investors were killing the company over the uncertainty (there were threats that the judge could issue an injunction shutting down the entire Blackberry network). Settling the case helped RIM's stock price jump up (increasing its market cap more than the cost of the settlement).

But, from a legal perspective, the lawsuit and the end result became the centerpiece of attention for efforts at patent reform. While I still think that the patent reform process in Congress has been misguided and the end result probably a lot more damaging than helpful, many of the politicians involved will point to the RIM-NTP case as evidence of the problems with the patent system. You might think, then, that NTP's investors might sit back and enjoy the spoils of the RIM settlement, but the company quickly went back out and sued all the major mobile operators in the US for violating its patents. However, judges in those other suits said (unlike the judge in the RIM case) that those trials should wait until the Patent Office has made a final decision on the validity of NTP's ridiculously overbroad patents.

However, NTP is not waiting around. It's now suing again. This time, rather than the mobile operators, it's going after device makers and platform vendors, suing Apple, Google, Microsoft, HTC, LG and Motorola. Basically, it appears that NTP has decided that if anyone does email on a phone, they have to pay NTP.

There might not be a better example of how incredibly screwed up the patent system is than this. NTP was involved in an attempt to do mobile email ages ago (and it wasn't the first actually... but NTP paid off some folks who had prior art). The idea itself wasn't new or all that innovative, and the timing was off, so NTP failed. In a functioning free market, that's a good thing. If a company can't execute, it should fail. Unfortunately, thanks to a ridiculously overbroad patent award, NTP has been able to live on as a bunch of lawyers suing any company that does figure out how to execute.

Perhaps the only good thing coming out of this is that it may help draw more attention to just how broken the patent system is.