Well, it wasn't too difficult to see this one coming. A year ago, all that was left of Nortel was a giant patent portfolio that everyone knew would result in a bidding war. At the time, people predicted the portfolio was worth an astounding $1.1 billion. Back in April, Google made news by placing a $900 million "stalking horse" bid for the patents, which had many people shaking their heads at the size of the bid. Google had made it pretty clear that it was seeking to buy the patents to keep them from being used by others to sue and block Google. Of course, Microsoft whined and complained to the government about how unfair it would be if Google won the patents. The government was apparently unconcerned.

So, Microsoft apparently got together with Apple, EMC, Ericsson, RIM and Sony... and coughed up an insane $4.5 billion. It's kind of brilliant in a nefarious way. With six companies together, they could each spend less than the $900 million initially pitched by Google... and then just all agree not to sue each other, but leave open the option to sue anyone else. And, given just how aggressive these companies have been with patents lately, you can rest assured that "license" demands will be made and there will almost certainly be lawsuits. Progress via the courtroom, apparently.

When former telecom giant Nortel was reduced to just a pile of questionable patents, we knew there would be a fight over who got them. Google made a lot of news a couple months back, by placing a $900 million stalking horse bid on those patents. The company has made it pretty clear that it's mainly looking to buy those patents to keep them out of the hands of someone else who might shake down innovation in the mobile ecosystem. Obviously, Google would prefer that the Android ecosystem not be slowed down by patent trolling.

However, there is one company that's quite worried about all of this: Microsoft. Even though it's not clear who will win the bid for Nortel's patents (and many expect Google to be outbid), Microsoft has officially objected to Google's attempt to buy the patents, saying that it has a perpetual royalty-free license to those patents, and under the terms of the sale, any buyer could end that deal.

And here's why Microsoft is a steaming pile of hypocrisy on this subject: Microsoft has ramped up its own anti-Android patent trolling efforts, lately. It's been demanding licensing fees and/or suing all sorts of companies who use Android. In fact, some reports suggest that thanks to all this effort, Microsoft makes significantly more money from Android phones than from its own mobile platforms. Clearly, shaking down others with patents is good money.

And Microsoft doesn't think it's fair that someone else could do the same thing to it:

For Microsoft to complain is pretty rich, of course. Here it is, using patents to attack companies employing Android in an attempt to slow down the uptake of that rival to its own Windows Phone smartphone system. That's a clear abuse of the patent system to dissuade companies from signing up with a competitor (which, interestingly, it doesn't attack directly), rather than to protect real innovation (an aim that was thrown out of the patent system long ago.)

After all, those deeply innovative ideas that Microsoft is claiming that companies are infringing include “natural ways of interacting with devices by tabbing through various screens to find the information they need, surfing the Web more quickly, and interacting with documents and e-books”. Tabbed screens - yeah, right.

And yet when there is the prospect that Google might be able to threaten in exactly the same way, by pulling existing licences - not, admittedly, a very nice thing to do, but all's fair etc. etc. - Microsoft suddenly wants the government to intervene to protect it from this bullying.

I mean, let's be consistent here: if you want to abuse the patent system, expect to be on the receiving end of similar abuse. On the other hand, rather more laudably, why not stop abusing, in which case you can take the moral high ground when others start abusing the system to attack you?

Following last week's news of patent troll Lodsys going after a bunch of independent or individual iOS (iPhone/iPad) developers who were making use of Apple's in-app payment offerings (as required by Apple if you want to sell within an app), the company has put up a blog FAQ where it seeks to answer a bunch of questions that people have been asking.

It's basically a compendium of ridiculous, silly and debunked arguments for why patent trolling is awesome (while also denying that Lodsys is a patent troll). There were some weakly-sourced rumors over the weekend that Lodsys was a front company for Intellectual Ventures, but there wasn't much significant evidence to support that, and Lodsys denies it. It is true that the patents in question were once owned by IV, who sold them (and it's not clear if IV still has an economic interest in the patents -- something it allegedly keeps with some of its patent sales, though it's notoriously secretive in such deals). However, Lodsys insists that IV sold all of its rights to Lodsys.

Of course, the key question is what does Lodsys want. There was some speculation that it was pushing for a license from Apple, but it notes that Apple already has a license (though, it's almost certainly from when the patents were held by IV). It also notes that Microsoft and Google hold licenses (again, potentially via IV), so it may be going after developers on other devices soon too. Of course, Lodsys pretends that the licenses from Apple, Google and Microsoft show that the patents are legit, but that's being deceptive yet again. From the details, it's almost entirely certain that all three companies got the license as a part of a blanket license from IV, and had no idea about this specific patent, nor took any interest in the details of this particular patent. For Lodsys to pretend this legitimizes their patent is yet another example of patent trolls being misleading. This patent was not considered important by Apple, Google or Microsoft. It was almost certainly included in a bulk licensing deal.

Finally, Lodsys points out that it has no interest in receiving a single lump sum from big companies, claiming that it's likely to get "the best return" by shaking down developers one-by-one-by-one. So, what does Lodsys want? Well, it appears to want at least 0.575% of the entire in-app payment market:

In the case of an Application doing an in-application upgrade (and only this scenario), Lodsys is seeking 0.575% of US revenue over for the period of the notice letter to the expiration of the patent, plus applicable past usage.

Of course, since the power of in-app payments is that it lets you do a lot more than just app upgrades, you have to imagine Lodsys is asking for a lot more in those other cases.

And for what? For coming up with an insanely abstract idea that was a natural and obvious evolution of such apps. No one -- no one -- came up with the concept or implementation of in-app payments for mobile device apps because of this patent. And, of course, this assumes (incorrectly, of course) that this will be the only patent that someone digs up that appears to (broadly defined) cover things like in-app payments. If all such patent holders start demanding 0.575% (or more) this will put a huge burden on developers.

Lodsys talks high and mighty about "property rights" and paying those who are owed money in its blog, but those claims are laughable. First, it claims that it's Lodsys patents that are responsible for in-app payments:

The economic gains provided by the Lodsys inventions (increase in revenue through additional sales, or decrease in costs to service the customer) are being enjoyed by the business that provides the product or service that interacts with the user. Since Lodsys patent rights are of value to that overall solution, it is only fair to get paid by the party that is accountable for the entire solution and which captures the value (rather than a technology supplier or a retailer).

But that assumes, totally incorrectly, that Lodsys or even the original patent was instrumental in making this happen. It was not. This is the natural evolution of app development. But Lodsys can't let up and gets ridiculous:

As a comparative example, it is the owner of the hotel who is responsible for the overall service (value proposition) that guests pay for, not the owner of the land that the hotel may be leasing, not the travel agent that sold the reservation, not the manufacturer of tools such as hammers, nor the provider of materials such as nails or steel beams, which may be used in building the hotel; nor is it the outsourced linen washing service or the architect of the building who is responsible. Lodsys’ patent portfolio is being used as a part of an overall solution and we are seeking to be paid for the use of patent rights by the accountable party.

Except that whole first part disagrees with the conclusion Lodsys is shooting for. Yes, the owner of a hotel is responsible for its overall service, but if you went to the owner of a hotel and said "hey, I came up with the idea of putting bathrooms in hotel rooms, pay me," the owner of the hotel would laugh at you. Because that's just a basic implementation that's an obvious advance as a result of indoor plumbing. Ditto for in-app payments. That's an obvious advance in the evolution of mobile apps. Again, no one is doing in-app payments because they suddenly discovered this Lodsys patent and its vague and useless descriptions.

There's also the myth of the brilliant inventor shining the light on this concept via this patent for the rest of the world to learn from:

Dan Abelow is an independent inventor who visualized/created metaphors, documented for the world to see (in exchange for exclusivity) and created value for doing so. This ideation, as expressed in the patent, enabled a building block for others to build on and create more value.

That assumes that the people being sued actually built off of this patent. Lodsys presents absolutely no evidence to support such claims, because it almost certainly has none. Of course, Lodsys defends patent trolling and insists that people who don't like this are just freeloaders:

In aggregate, this cycle of patent licensing means that more invention can happen and it means that the economic profit pie is distributed more efficiently to suppliers of building blocks that are incorporated in the products or services.

This is false. And it's been shown false over and over and over again by various economic studies. It's based on the very false assumption that any economic activity is good economic efficiency. When the economic activity involves artificial protectionist barriers to innovation (which is what's happening here), then nearly every serious economist will point out the serious costs involved in hindering economics. To claim that this means more invention can happen is simply not supported by the evidence at all, which suggests more optimal results are found without patents getting in the way.

There are lots of bills in life that it would be preferable to not pay if one didn’t have to. Lodsys is just trying to get value for assets that it owns, just like each and every company selling products or services is, trying to do business and make a profit. Its odd that some of the companies that received notices had such a visceral reaction. Some of these companies have our favorite apps, for which we paid the asking price. We realize you have to get paid for your work and so do we.

It's not that people don't want to pay these bills. It's that they think it's ridiculous that some company that no one's ever heard of, holding some piece of paper that includes nothing of value or relevant to these developers, is suddenly demanding a cut for doing absolutely nothing. That's incredibly different than someone paying for an app that they liked.

Looks like it may be time to update our patent thicket graphic. Another company that's not actually doing anything in the space is suing everyone who is. A company named H-W Technology apparently holds a patent (7,525,955) on an "Internet protocol (IP) phone with search and advertising capability" and has sued Apple, RIM, Google, Amazon, eBay, HTC, LG, Smasung, Microsoft, Nokia, Verizon and others for violating it. Because, you know, I'm sure no one possibly could have figured out how to put search and ads on a phone without this patent.

Microsoft has been tiptoeing around its claims that Android violates certain Microsoft patents, carefully choosing who to sue. For example, it's sued Motorola, but hasn't sued Google. The latest is that it's suing Barnes & Noble for infringing on its patents, claiming that the Nook ebook reader, which uses Android, violates its patents. The patents in question all seem to cover astoundingly obvious concepts that Microsoft should be ashamed to hold patents on and be asserting:

• System provided child window controls: 5,889,522
• Remote retrieval and display management of electronic document with incorporated images: 5,778,372
• Loading status in a hypermedia browser having a limited available display area: 6,339,780
• Selection handles in editing electronic documents: 6,891,551
• Method and apparatus for capturing and rendering annotations for non-modifiable electronic content: 6,957,233

It's always sad when companies focus more on litigating rather than innovating. I mean, seriously, does anyone think that, without patents, people wouldn't have made these kinds of advancements? These aren't advancements that requires a patent at all. These are the kinds of advancements that happen naturally in the marketplace due to competition and multiple companies competing to offer a better product to customers.

Of course, it's nice to see the response on Microsoft's own blog involves comments trashing Microsoft for this decision. Scrolling down the comments, almost all of them are incredibly negative against Microsoft, pointing out that these patents are obvious, that Microsoft should be ashamed of itself for suing, and people swearing off Microsoft products for being a patent bully. Perhaps Microsoft might want to think its patent litigation strategy in recognizing that it's not particularly well received by consumers.

The comments really are great, but my favorite may be: "None of this BS will get anyone to buy a Windows phone anyway." And that's kind of the point. Microsoft should focus on innovating. Not bitching about what competitors are doing better than it did.

The first ever smartphone that got me excited about what smartphones could do was the T-Mobile Sidekick, made by the company Danger, which was amazingly hyped up for a time in Silicon Valley. It remains the only phone that I ever bought the day that it came out (even though I didn't really use it as a phone, but as a portable email/internet device). Danger made some big mistakes early on, such as taking a pretty big investment from T-Mobile, which meant that no other carriers had any interest in carrying the phone (why help a competitor?) in the US. That really hurt the company's ability to grow. The company also had a really dreadful developer strategy -- initially launching without an SDK for outside developers, and then remaining an extremely closed system that pissed off many developers, and simply made many developers ignore the platform.

In 2007, after the Sidekick had long fallen off the map, and after the initial iPhone had already hit the market, Danger announced plans to IPO, but with financials that were anything but appealing. Microsoft stepped in and bought the company instead, probably more for the (remaining) talent than anything else. A year later, there was a massive server failure, that caused a bunch of people to lose data. It became clear that the platform was really on its last legs.

And, now, finally, T-Mobile is putting it out of its misery and will be shutting off service to its Sidekick servers. If you don't remember (or never knew), the way the Sidekick worked was everything had to go through special Sidekick/Danger servers hosted by your ISP (in some ways similar to the way Blackberries work). So, without those servers, the few remaining Sidekicks become even more useless. Somewhere, buried in a box, I'm pretty sure I still have my original (black and white!) Sidekick. I might just have to put it on my desk as a reminder of how quickly technology changes.

It's always amusing when companies make some sort of blanket statement or policy... only to realize they did it so broadly as to go against their own interests. Then you watch them backtrack. Microsoft got itself in some hot water lately, when some people realized that the rules for Microsoft's phone app store appeared to ban certain types of open source software. The specific claim was that it said certain types of licenses were to be excluded. Among the excluded:

"Excluded License" means any license requiring, as a condition of use, modification and/or distribution of the software subject to the license, that the software or other software combined and/or distributed with it be (i) disclosed or distributed in source code form; (ii) licensed for the purpose of making derivative works; or (iii) redistributable at no charge.

The only problem? This appears to cover a few of Microsoft's own licenses. As Simon Phipps points out, both Microsoft's Reciprocal License and its Public License appear to violate those terms.

Upon realizing this, Microsoft is sorta trying to backtrack on this, saying that it is reconsidering the policy, but it had, in fact, done this on purpose. Still, it's apparently open to reviewing different open source licenses, meaning that it's likely trying to figure out a way to carve out rules that allow its own licenses, but still forbid GPL software. Whether you're a GPL supporter or not (and let's avoid a "holy war" discussion), this does seem a little petty.

Of course, in this rush to "app store-ify" everything, with various gatekeepers and restrictions, sooner or later people are going to remember that they can simply avoid all of this by building web apps instead.

If you travel a fair bit, as I do, you've noticed at almost every airport that there's an "ad hoc" (i.e., computer-to-computer rather than computer-to-WiFi) option called "Free Public WiFi." It seems to be everywhere. I've never connected to it, because I know enough not to connect to an ad hoc offering, but I was always amazed at the fact that I see it in pretty much every airport I've been to. I had wondered if it was a honeypot scam for a while, but I couldn't believe that scammers would be able to set up such honeypots in so many airports worldwide and no one would catch them and take it down. So how could there be such "Free Public WiFi" (which obviously was not what it claimed to be) in so many places?

The answer? Well, it's all Microsoft's fault.

Apparently, there was a bit of a bug (one of many...) in Windows XP in terms of how it handles certain situations, and it effectively created a "virus" in that unwitting travelers around the globe are all broadcasting "Free Public WiFi" from their computers without realizing it, after they tried to connect to such a network:

When a computer running an older version of XP can't find any of its "favorite" wireless networks, it will automatically create an ad hoc network with the same name as the last one it connected to -- in this case, "Free Public WiFi." Other computers within range of that new ad hoc network can see it, luring other users to connect. And who can resist the word "free?"

Not a lot of people, judging from the spread of Free Public WiFi. Computers with the XP bug that try to connect to the Internet will remember the name, create their own ad hoc networks and entice other users wherever they go.

And so it continues to spread. No one's quite sure where it started, but somewhere way back when, someone set up such an ad hoc network in an airport (perhaps as a joke or a honeypot), and it got picked up by others... and then it just continued spreading. Eventually, it should die out as Windows XP machines finally go extinct, but for now, enjoy (but don't bother connecting) the "Free Public WiFi" found in so many airports...

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.