Legal Issues

by Mike Masnick


Filed Under:
hoarding, patents

Companies:
microsoft



Microsoft Hoarding Patents Like They're Going Out Of Fashion

from the 200-here,-200-there...-soon-you're-talking-about-real-innovation dept

A few years back, Microsoft decided to shift its strategy on software patents. The contrast in what Microsoft was saying publicly about patents was stark:
Brad Smith, Microsoft general counsel, 2007: "Protection for software patents and other intellectual property is essential to maintaining the incentives that encourage and underwrite technological breakthroughs. In every industry, patents provide the legal foundation for innovation. The ensuing legal disputes may be messy, but protection is no less necessary, even so."

Bill Gates, Microsoft CEO, 1991: "If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today... A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose."
If you needed any proof that Microsoft has shifted from a "young company innovates" to an "old company litigates" stance, just take a look at the massive ramp up in patents awarded to Microsoft over the last decade and a half. It's been steady growth, with a massive leap in the past two years.

Every week, if you follow patents granted to Microsoft you see huge numbers. In the past four weeks alone, Microsoft has been granted 49 patents (June 24), 44 patents (June 17), 42 patents (June 10) and 76 patents (June 3). That's 211 patents this month alone. Compare that to a company like Google, who was granted a grand total of 7 patents in June.

The patent system was designed to award incentives in the rarest of circumstances -- when the free market alone wouldn't provide the incentives necessary to bring a technology forward. When a single company is getting over 200 patents a month, the system isn't functioning as intended. It's not an incentive to innovation. It's a tax on innovation.

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  1. identicon
    Anonymous Coward, 26 Jun 2008 @ 6:37pm

    Re: Re: Corrupt system?

    "...for the rest of their natural life..."

    Patents in the US have a 20 year term that is measured from the date an application is first filed. After a patent issues it is subject to maintenance fees, which if not paid causes the patent to lapse. Under US patent law, maintenance fees are due 3.5, 7.5, and 11.5 years after a patent is issued, with the amount of the fees ascending for each period. For example, a large entity (e.g., Microsoft) would have to pay at current rates a first fee of about $1K, a second of about $2K, and a third of about $4K. The rates are cut in half for patent holders qualifying for what is known as "small entity" status.

    In practice maintenance fees serve as a strong disincentive for keeping a patent in full force if the patent holder is not realizing any benefit from it. As a consequence, it is customary for patent portfolios to be continuously reviewed to ascertain which, if any, should remain in force.

    In 2006 Microsoft received about 1500 patents. Thus, during 2009 its legal department budget would have to pony up about $1.5M if it wanted all of them to stay in force. In 2013 that number jumps to $3M, and in 2017 to $6M. Mind you, the fee amounts change periodically to even larger numbers. Microsoft may be a large company, but even its Legal Department operates under tight budget constraints.

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