03 June 2010

Why Patents are Like Black Holes

When a big enough star dies, it generally implodes, and forms a voracious black hole capable of swallowing anything that comes too close. When a big enough company dies, all that remains is a bunch of patents that can have a similarly negative effect on companies whose business models are too close.

He's Mike Masnick's commentary on the area:

It looks like just about all that's left of former telco equipment giant Nortel is a whole bunch of patents, that are now expected to sell for somewhere in the range of $1.1 billion. The big question, of course, is who ends up with those patents, and what they do with them. Generally speaking, you don't see companies spend $1.1 billion on a bunch of patents, unless they're planning something big. It's entirely possible someone will buy them for defensive purposes, but equally likely that they're used to sue lots of other companies (or, perhaps by the likes of Intellectual Ventures, to scare people into paying up to avoid the possibility of being sued).

And of course, in the field of open source, the really worrying dying star is Novell, as Matt Asay points out:

As reported, as many as 20 organizations have registered bids for Novell, most (or all) of them private equity firms. While an Oracle or a Cisco might acquire Novell for its maintenance streams and product portfolio, it's unclear that private equity firms will have the same motivation. For at least some of these, there will be serious pressure to sell Novell's assets to the highest bidder, regardless of the consequences to Novell's existing customers or to the wider industry.

This wouldn't be so bad if it weren't for the fact that Novell has a treasure trove of patents, with at least 450 patents related to networking, office productivity applications, identity management, and more.

Worth noting is that among those patents are some relating to Unix...

These cases show yet again why patents just don't do what they are supposed to - encourage innovation - but act as very serious threats to other companies that *are* innovating. As more and more of these software stars die, so the number of patent black holes will increase, and with them the unworkability of the patent system. Time to reboot that particular universe...

Follow me @glynmoody on Twitter or identi.ca.

5 comments:

Michael said...

The whole point of patents is they are a time limited government monopoly granted to allow you to exploit your innovation in return for making that innovation public knowledge. Surely this means that if you are unable to exploit this monopoly and your company goes under, so should the patent!

glyn moody said...

@Michael: nice idea...

Nick Barnes said...

I'm not sure whether any Novell patents pertaining to core Unix(TM) technologies are still current. And I seem to recall that Novell have certainly issued some pretty broad patent licenses to Linux and other open source developers. Groklaw would know.

hingo said...

Hi Glyn

You and Matt Asay bring up an interesting topic here.

In the background patents played a big role also in the acquisition of Sun. It's kind of not known to the public (you too didn't reference it in this post) so I decided now might be a good time for me to share what went on: http://openlife.cc/blogs/2010/june/software-patents-are-bad-legacy-leave-behind

It will be interesting to see what happens with Novell and others.

glyn moody said...

@hingo: nice piece, thanks - I've RT'd it on Twitter and identi.ca.