As The Patent Wars Escalate, Investors Worry About Jobs At Startups

Give Google credit for lighting the fuse with its harangue last week entitled “When Patents Attack Android.”

Now investors and entrepreneurs are weighing in on the heels of a Department of Justice probe. This weekend, Dallas Mavericks owner Mark Cuban offered a scathing assessment of the troubled patent system on his blog when he claimed that “one of the hidden job killers in our economy today is the explosion of the patent litigation.”

With patent litigation on the rise, big tech companies buy collections of patents not because of the intellectual property but to respond with their own patent lawsuits when faced with litigation from rivals, wrote Cuban (pictured).

It was a clear shot at Apple and Microsoft for climbing in bed together last month to pay $4.5 billion for the old Nortel patents, an excessive price. The purchase follows a similar deal last year when the two companies teamed up with EMC and Oracle to buy Novell’s old patents. (The DOJ since decided to review the Nortel deal, as it did the Novell transaction.)

Of course, patent trolls are nothing new. The tech industry has been through cycles of activity in the past and survived. It is worth wondering nonetheless whether the escalation represents a greater threat now, with innovations in mobile bringing dramatic change to high tech and companies including Apple and Oracle showing no hesitation to file suit.

Brad Feld, who penned a piece on his blog on Sunday, might say yes. “In the past few months, the issue of software patents – and the fundamental issues with them – have started to be front and center in the discussion about innovation,” writes this managing director at the Foundry Group. (Feld is a believer that software should not be patentable, a question at the heart of patent reform.) “I hope my friends in the White House are listening.”

Despite the warning, the patent clash is not likely to end soon. Cuban offers his recipe for a solution in a subsequent blog post. End all software and process patents, he suggests.

“Afraid that some big company might steal the idea?” he asks. “That is life.”

While this proposal is probably too cavalier, it is a worthy point for discussion as the proposed Obama Administration patent reform legislation meanders its way through Congress, otherwise, startup innovation could feel the impact of inactivity.

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1 Comment

  • Patent system not working? To the contrary:

    Sun engineers invented Java. Silicon Graphics engineers did not invent Java.

    Ten years later, the big box makers were in big trouble.

    As a reward for funding the invention of Java and for patenting it, Sun shareholders (including employee-shareholders and -optionholders) were rescued by an Oracle buyout. A number of Sun employees even kept their jobs.

    SGI went bankrupt and shareholders all lost their investment, and employees all lost their jobs.

    So, the patent system in its profound justice, rewarded the company that invented Java and ignored the company that didn’t invent Java.

    QED.

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