April 23, 2014

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Google+Motorola = Software Patent Indictment

Google’s announcement this morning that it had agreed to purchase Motorola Mobility for $12.5Billion sent MMI’s stock price soaring and set off another conversation about software patents and the smart-phone ecosystem.

Larry Page himself emphasized the patent angle of the merger in the corporate blog post:

We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

Android-users already faced several patent lawsuits, and after a coalition of Google’s opponents, including Microsoft, Apple, and Oracle, purchased Nortel’s patent portfolio for $4.5 Billion, Google and its Android partners (including HTC and Motorola) had reason to fear a deepening thicket. Without many patents of its own, Google couldn’t make the traditional counter-strike of suing its attackers for infringement. Motorola’s mobile portfolio (17,000 issued patents and 7,500 pending applications) adds to Android’s arsenal.

Of course Motorola also makes hardware — smartphones that run Android — but few analysts are emphasizing that point. There, the acquisition raises strategic questions for Google: Can it convincingly offer the Android platform to others with whom it now competes? Even if Google maintains Motorola as a separate business, as Page says it intends, will now-competing vendors such as HTC, Samsung, and Acer be reassured of Google+Motorola’s neutrality among them?

Owning a handset maker could improve Android, if it shortens the feedback loop for problem-reporting and new ideas, but it could hurt the platform — and its end-users — more if it scared off competing hardware vendors, shrinking the base to which new applications are written and reducing the diversity of options available to end-users. As proprietor of an open, multi-sided market, Google needs to serve Android’s hardware vendors, app developers, and end-users well enough that a good-sized group of each continue to bring it value — and so the end-users watch the ads whose sale puts money into Google’s pocket from it all. (Oh, and maybe the acquisition will revitalize GoogleTV, as Lauren Weinstein points out.)

The patent motivations are more straightforward. As we know, it doesn’t take deliberate copying to infringe a patent, and patents are granted on small enough increments of software advance that an independently developed application may incorporate dozens to hundreds of elements on which others claim patents, and at millions of dollars a lawsuit, it’s expensive to disprove them. At least if those others are also making phones or software, Google is now more likely to have patents on what they are doing too, paving the way for a cross-license rather than a lawsuit.

Wouldn’t we all be better off skipping those patent threats and cross-licensing transaction costs? As Google’s pre-Motorola travails showed, it’s almost* impossible to opt-out of the patent system by choosing to publish and not patent your own inventions. Unlike in copyright, where you can share under Creative Commons, for example, and just have to prove you never accessed another’s work if accused of infringement, you can only save yourself from patent claims by assuring that every bit of technology you use was published more than 17-20 years ago! (*Rare but not impossible: Richard Hipp of SQLite says he only uses 17-year old, published algorithms to keep his code free of patent clouds.)

In a work-in-progress, I argue that patent’s incentives aren’t working right for software, because they come at too early a stage in development. Patents for software motivate lawsuits more than they induce or reward product development. Google+Motorola may prove to have non-patent benefits too, but its early indications shine a spotlight on the thorny thickets of the patent landscape.

Comments

  1. golden says:

    Not sure I understand what you mean by “too early”. In my view, the problem with software patents is that that they virtually always cover a triviality or something that someone “normally skilled in the art” would have thought of. If you look at the stuff Oracle is suing Google over, no one would look at it and say, “Wow, how innovative! I would never have thought of that”. Microsoft’s FAT patent, which you pay for every time you buy a digital camera, is another great example.

    Possibly you mean that software in general is in “too early” a stage of development as a science, and therefore everything that is thought of is thought of for the first time, even if it’s not particularly clever. This seems to me to be a good argument.

    Leaving that aside, a question really does exist on whether patents really ever work properly. The history is not too good. For example, Alexander Graham Bell’s original telephone patent is surrounded by controversy even today. Though Edison invented the phonograph, his invention was essentially taken from him by nickpicking over wording in his patent, allowing the competing Columbia record company to be founded.

    • wseltzer says:

      Patents are protecting too small an increment of development in software — something that it’s too easy for others to invent independently, in the necessary course of solving their own problems.

      Because patents are offered for those small improvements — and those patents are valued by some bosses, VCs, or potential litigants — people have incentives to patent well before they have an actual product to sell or protect. That’s why I think software patents are wrongly-placed incentive. In other industries, with different capital requirements and modes of development, patents might serve as incentives closer to innovation.

      • Anonymous says:

        If you look at other industries, I think you’ll find that the same thing is happening. It’s not dependent on the capital requirements of the R&D so much as it is on the expense requirements of having patent lawyers around. (Look, for example at the history of shotgun patenting of biomolecules.)

        Once an obstructionist/parasitic business model becomes recognized as more reliably profitable than actual making new stuff, it’s bound to spread. Hmm, I wonder if it’s possible to patent patent trolling…

        • sjs says:

          Sadly, too much prior art.

          • Anonymous says:

            Yes, even a science fiction novel from the 80s, named Mother of Storms. In that there was a prototypical IV-sized mega patent troll that had no products of its own to make it immune from the threat of counter-suit.

          • Lynx says:

            An even earlier SF story is “Gladiator at Law”, which specifically deals with a computer-based patent troll. Worth reading.

  2. Lawrence D’Oliveiro says:

    Patents originated in the mercantilist era, when it was thought that competition was fatal to successful businesses. The only thing special about software patents is that the damage they do is a bit more obvious than in other areas, that’s all. Other sectors of industry have managed to survive in spite of patents, not because of them.

    • Anonymous says:

      Patents originated in an era when one new invention every decade was considered awesome technological advancement.