Legal Issues

by Mike Masnick

When All Else Fails, Litigate For Patent Infringement

from the rewarding-the-losers dept

Tim Lee, over at the Technology Liberation Front, is pointing to the latest story about Transmeta suing Intel for patent infringement, where he notes that it's a case of the market loser litigating. This is an issue we've discussed in the past, but it's a good example to highlight. One of the points of patent protection is to add incentives for innovation, encouraging companies to invest in a space, knowing that if they succeed, they have some protectionist policies allowing them to hold a monopoly for a period of time. However, it's never quite clear why this kind of protection is necessary if the market gives all the incentives that are needed for innovation. One of the consequences of tinkering with the market, then, is that you get results that go against everything that "free marketers" should believe in. As with this case, it allows the company that failed in the market, because it failed to execute properly, to then come back and sue those who succeeded. This is the same thing that happened in the RIM-NTP case. NTP had completely failed in the market and did nothing but take millions away from the company that had executed properly. The market is there for a reason, and it rewards the companies that successfully deliver the product people want. In cases like this, patents allow the companies that screwed up to take money from those that succeed. It's difficult to understand how this is a good policy for promoting innovation.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    TriZz, Oct 13th, 2006 @ 12:25pm

    A prime example of idealism is...

    A prime example of how well this works is Nextel. They had the market on the cell phone to cell phone PTT Walkie-Talkie. It allowed them to be the only carrier which provided that service due to patents...which gave them a fair chance against the big dogs (ATT, Verizon, Sprint...)

    Even now, they got such a headstart in the industry that the other providers are trying to make the same offer, but can't perfect it like Nextel has (instant connection time, as opposed to Verizon's 6 second connection time).

    Now the technology is available for all players and it made more competition in the market, because now we have another choice as consumers to one which might not have been there if they hadn't innovated.

    Unfortunately, they all can't be like this...

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

  2. identicon
    Anonymous Coward, Oct 13th, 2006 @ 1:17pm

    How can you tell the difference between a company that failed because they didn't do a good enough job marketing their technology and a company that had it's patents infringed upon and lost market share because of that? I'm not saying that that's why Transmeta failed, but the assumption here seems to always be that patents are bad and anyone who attempts to enforce a patent is only doing so because of their own failings and not because of wrongdoing on the part of their competitors.

    And what is the solution here? I'd like to see patents limited to such technologies that are believed to be experiencing limited innovation in.

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

  3. identicon
    Ben(Damnit), Oct 13th, 2006 @ 1:17pm

    The system sucks.

    I hate how the system works, if there were no patents, then the free market system would truely be a free market.

    But then what happens to the invintor that figures out how to do something, spends years working on it, then when he tries to take the product to market gets blown away by a Microsoft, ATT, GM, GE, or what-have-you who takes their years of work, adds it (in part or whole) to their own products and then devours the market share? (invintors aren't usualy the best at marketing, or product development, ya know?)

    Shouldn't he get something for all his hard work?

    But the current system is almost as bad as none at all because of all these patent infrigement cases (like RIM-NTP). Where sometimes, the patents aren't even any good. It's just ridiculous that people are still being so asinine, and some even seem to base their business on aquiring patents, and then sueing people who are actualy making use of the idea instead of just sitting on it.

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

  4. identicon
    drjones, Oct 13th, 2006 @ 1:18pm

    Transmeta executed quite well, actually

    They had THE superior product in the low power CPU market.

    In the computer world, landing a big deal with a large hardware reseller, like HP, Dell etc will make or break your company.

    Unfortunately, Intel is rather like Microsoft in this area. Any new start up in the CPU market that directly competes against Intel is doomed. Transmeta was on the verge of landing deals more than a few times, but was always beaten by Intel.. who is basically willing to bribe companies with rediculous amounts of money for ad campaigns etc AS LONG as they dont make any deals with company X. Sorry, but thats not really legetimate competition, its bribery. Thats not the only reason transmeta has failed, but thats the biggest contributing factor I would imagine.

    I will repeat: Any new start up that directly competes against Intel will fail. Transmeta learned the hard way.

    Intel intentionally spoonfed AMD for years till they become a legitimate competitor, precisely so they avoid antitrust litigation. They basically have free reign to engage in all the monopolistic practices they want, with a managable competitor (although less so in the last couple years).

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

  5. identicon
    Anonymous Coward, Oct 13th, 2006 @ 1:40pm

    Re: Transmeta executed quite well, actually

    Spoonfeeding is Bill Gates "giving" 200M to Apple.
    But the DOJ has no teeth when it comes to a company with the size and success of MSFT.
    Anti-trust Laws only apply to those who won't be missed.

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

  6. identicon
    drjones, Oct 13th, 2006 @ 1:55pm

    Re: Re: Transmeta executed quite well, actually

    "Spoonfeeding is Bill Gates "giving" 200M to Apple"

    Yep. Quite a few of AMD's chips would have never made it to market if it werent for Intel engineers helping them develop their product.

    Make no mistake.. there was no benevolence in any of it.

    Transmeta unfortunately, never got that kind of "love".. quite the opposite.

    Mabye if Transmeta had gone the AMD route, and made an iferior product for a number of years at a cheaper price. Then ramp up your technology to compete on a more level playing feild. Coming out with something thats better, cheap and functional right out of the starting gate, I guess, didnt put them in Intel's good graces;)

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

  7. identicon
    Anonymous Coward, Oct 13th, 2006 @ 2:18pm

    I disagree completely!

    The only why a company does well is BECAUSE they stole a patent and use dit to sell their product.

    This is just patent bashing!

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

  8. identicon
    Mousky, Oct 13th, 2006 @ 4:04pm

    Re: The system sucks.

    Shouldn't he get something for all his hard work?

    No one is entitled to something for their 'hard' work. Inventing something is one thing. Getting the market to accept is another.

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

  9. identicon
    Rob, Dec 26th, 2006 @ 7:31am

    Transmeta,AMD start seeing the light

    I sorry you don't have the insight into what has taken place in Intel's business practices.First of all they have documented executives that told of arm twisting in the case with AMD.It seems your monopolistic cpu maker wanted it their way.As far as the other major litigation going on served by Transmeta.They were grated patents that were clearly broke.In the case of adaptive power control a patent granted too Transmeta August,2006.If you know the claims of Intels recent changes to low power cpu's.You would understand that the way they are abusing Transmeta technology.The case if it does come to court will clearly show Intels abuse.That they step over the line without giving a second thought of rightful jurisdiction.To our governing way of abiding by our laws.

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

  10. identicon
    Jaek, Jan 3rd, 2007 @ 5:33am

    Re: Re: The system sucks

    Um... I think you missed the point, Mousky. The patent system doesn't attempt to guarantee that anyone will get anything for their hard work - it just attempts to guarantee that others don't. So yeah - he should get something for his hard work - if his hard work actually amounts to something.

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

  11. identicon
    Ben Strackany, Jan 3rd, 2007 @ 8:33am

    The patent system is supposed to encourage innovation and help companies spend time & effort doing R&D & be able to profit from it. Without protection, if you worked & worked on a new process, as soon as you brought it to market, all the "big boys" could copy from you, making it hard to build your business. Hmm, lotta commas in that last one.

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

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