Titans of Tech Clash in Courts for Claims to Prized Patents

The Washington Times (Washington, DC), March 21, 2012 | Go to article overview

Titans of Tech Clash in Courts for Claims to Prized Patents


Byline: Tim Devaney, THE WASHINGTON TIMES

Some call them patent trolls.

They might not hide under bridges, but critics say they come out of nowhere, demanding payment for the theft of inventions no one knew they owned. They are despised in Silicon Valley for stunting innovation, but that hasn't stopped the growing industry from slapping established tech giants with patent-infringement lawsuits after they hit it big.

And with technological innovation and e-commerce exploding in tandem, the unclear legal outlines of what can and cannot be patented is only encouraging more firms to try their luck in court.

Indeed, there has been a general and dramatic rise in patent litigation that some analysts attribute to rapid growth in the number of patents with unclear or unpredictable boundaries, according to an extensive study of the phenomenon by researchers at Boston University.

Some of the biggest names in the business are getting into the game.

Yahoo's decision to sue Facebook last week charging patent infringement is just the latest lawsuit over who invented what and who ripped off whom. The pre-Google search-engine giant is suing Facebook for what it says are 10 patent infringements over social-networking technology, online-advertising methods, privacy, and customization.

The lawsuit was filed shortly after Facebook submitted its first public stock offering - a time when the industry giant might not welcome a protracted and expensive legal battle hanging over its head.

Yahoo officials argues that Facebook in its basic business model is employing technology and techniques that the search-engine giant developed and owns, and wants the popular social network to pay up.

Facebook's entire social-network model, which allows users to create profiles for and connect with, among other things, persons and businesses, is based on Yahoo's patented social-networking technology, the company contended in papers filed with the U.S. District Court of Northern California.

Facebook vowed to vigorously defend itself against these puzzling actions, while a number of high-tech bloggers suggested Yahoo was trying to bully a rival that had surpassed it in the marketplace.

Protecting the little guy

Some argue that patent litigation is the only way smaller-industry players - who may have no immediate prospect of bringing their product to market - can defend their property rights against richer rivals.

Some investors lack the resources and expertise needed to successfully license their technologies or, if necessary, enforce their patents, says the Boston University study, conducted by James Bessen, Jennifer Ford and Michael Meurer.

But the legal battles have real costs to the real economy.

The BU study found that on average, patent lawsuits cost defendants $122 million. That led to half a trillion dollars of lost wealth from 1990 to 2010, averaging some $80 billion annually over the past four years.

The prospect of ruinous legal bills can decrease the incentives for these firms to innovate, the study found. …

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