Stupid Costly Patent Nuclear War By Microsoft & Apple Against Android Averted

Patents

from the stupid-this-had-to-happen-in-the-first-place dept

We’ve written a few times about Rockstar Consortium, a giant patent troll that was created when Microsoft and Apple (and a few others) teamed up to outbid Google, Intel (and a few others) in buying thousands of Nortel patents. Nortel admitted that it had bulked up on many of these patents for defensive measures, but once Nortel went bankrupt they went to the highest bidder (and the bidding went pretty damn high). The winners of the bidding kept a few of the patents for themselves, but then dumped them all into “Rockstar Consortium” which was a new giant patent troll and which, importantly, was not subject to promises that Apple and Microsoft initially made (to avoid antitrust problems) to license the patents under reasonable terms.

Last year, Rockstar launched its massive patent attack on Android, suing basically all the major Android phone makers and Google. While some have argued that big company v. big company patent attacks aren’t a form of patent trolling, some of us disagree. This, like most patent trolling, is just trying to extract money from companies and has nothing to do with actual innovation. In the tech world, some have referred to this kind of thing as “privateering” in which a big company puts the patents into a shell company to hide their trolling activity.

Either way, it appears that a settlement of sorts has been reached, with Rockstar Consortium agreeing to sell its patents to RPX (with Google and Cisco picking up much of the bill). RPX is sort of the “good version of Intellectual Ventures.” It’s a company that collects a bunch of patents with the goal of using those patents for member companies for defensive purposes. Even though RPX has generally been “good,” the business model basically lives because of patent trolling. Its very existence is because of all the patent trolling and abuse out there. In this case, though, it’s making sure that basically anyone can license these patents under FRAND (fair and reasonable, non-discriminatory) rates. The price being paid is approximately $900 million. While that article points out that this is considerably less than the $4.5 billion Microsoft and Apple paid originally, again, this is only 4,000 of the 6,000 patents, and you have to assume the 2,000 the other companies kept were the really valuable patents.

In short, this is basically Google and Cisco (with some help from a few others) licensing these patents to stop the majority of the lawsuits — while also making sure that others can pay in as well should they feel threatened. Of course, Microsoft, Apple and the others still have control over the really good patents they kept for themselves, rather than give to Rockstar. And the whole thing does nothing for innovation other than shift around some money.

Cisco’s Mark Chandler celebrated the deal as a “common sense” solution. And, it certainly beats all out patent litigation war. But it’s still just about moving money around, rather than encouraging innovation. He notes that in settling this as a group, it helps keep things from getting totally out of control:

While we have no quarrel with companies using their patents to stop the copying of differentiating features without permission… the driving up of patent valuations as each side in the war sought to bulk up for battle ended up serving no one other than lawyers and middlemen.

In the end, this is a better solution than years of legal battles. Making this offering open to others (at least for a limited time) is also a better result than might otherwise have been achieved. But it still shows how patents are abused and misused to shake down companies, rather than for any legitimate purpose. And, as Chandler also notes, the real issue still has to come down to fixing the broken patent system:

What is most critical, however, is changing the law to level the playing field and restore a patent system that rewards innovation, not litigation gamesmanship. The chance will come later this spring to enact meaningful patent reform. We will be there as advocates, and hope you will be too.

Filed Under: android, licensing, patent trolling, patent war, privateering
Companies: apple, cisco, google, microsoft, nortel, rockstar consortium, rpx