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07.07.11

Federal Agents Unhappy About Microsoft’s and Apple’s Patent Strategy, Reversals Possible

Posted in Apple, GNU/Linux, Google, Microsoft, Patents at 1:14 pm by Dr. Roy Schestowitz

Christian ParadisSummary: News about software patents that affect Free software and Android developers in addition to the increased backlash from the public and some people inside government

TECHRIGHTS is pleased to see the opposition to software patents growing. More people are made aware of the problems and they also speak out about these problems, sometimes passionately. Sooner or later we might all win this fight for sanity. It’s definitely achievable if the population is on the right side and those in power (the monopolists, oligarchs, or whatever we may wish to call them) will perform an analysis and realise that the backlash from the public outweighs the benefits (protectionism) they get from software patents. It would not be a simple matter of altruism as that alone is never enough to make power-greedy people become more civilised and considerate.

Anyway, an Apple booster notes that the socipaths from Apple got Nortel’s patents and we soon learn that the Canadian “Industry Minister [Christian Paradis, based on this report] tells Bloomberg he plans to look into Nortel patent sale under foreign investment law.” Muktware even calls for a boycott following the outrageous sale:

Enemies of Google, the world’s largest open source company, are acquiring software patents after patents through direct or proxy acquisitions. Earlier it was Novell’s patents and now its about Nortel’s patents. The companies which are acquiring these patents are not only known monopolists or abusers but have also been seen lately to discourage innovation and kill competition by using patents as threats.

One common player in these two acquisitions is Microsoft, a company which earlier tried to hide behind a consortium to acquire Novell’s patents.

Microsoft has signed 5(+-) deals in a week with small Linux players over Android/Google Chrome. The details of the deals were not disclosed so we don’t even know which patents Microsoft is using to threaten small companies with lawsuits forcing them to sigh such deals.

What is the guarantee that Microsoft or Apple will not use the patents that they acquired through these acquisitions to block innovation and kill competition in the market? Patents were meant to protect the inventor, but softrware patents are nothing more than a way to kill competition.

Regarding the government’s action:

According to a report today by The Canadian Press, the auction may come under government scrutiny. Industry Minister Christian Paradis has reportedly asked his department to examine how the Investment Canada Act could apply to the auction. If the auction us found to be reviewable under the act, Paradis could potentially block the sale if it’s found to not be a “net benefit” to Canada.

Groklaw‘s Webbink wonders why the US DOJ and FTC are missing in action:

Last year the big news was that Attachmate was buying Novell, but that Novell’s patent portfolio was being sold separately to a little known buyer named CPTN Holdings LLC. It was known that Microsoft was one of the companies behind CPTN, but then it came out that CPTN was not just a single company, it was a consortium, and more importantly, it was a consortium of competitors. Included in the CPTN fold were Microsoft, Apple, EMC and Oracle. Their common enemy? Google.

But Google was not the only entity concerned about this alliance of the largest companies in the information technology sector, almost all of which compete with each other on some level. The Free Software Foundation and Open Source Initiative filed complaints with competition authorities in the U.S. and Germany. In the end German and U.S. competition authorities extracted changes in the transfer, ownership, and licensing of the Novell patents to assure a level playing field that allowed room for free and open source software.

So where are they now that Nortel’s patents cast doubt on fair competition? This is a lot worse than CTPN, but as we demonstrated before, the federal system is inherently corruptible and tilted in favour of the USPTO (which is a sibling of sorts)

As the Australian press puts it this week, it is a lot worse, and to quote verbatim:

New legislation shows how much sway banks have over Congress, writes Andrew Ross Sorkin.

WALL Street often tries to play down its influence in Washington. As the US Congress pushed through financial regulations that seemed to get watered down last year, Wall Street’s chief executives tried to suggest, somewhat surprisingly, that their highly paid lobbyists did not have much sway.

If there is still any question about how much power Wall Street actually has in Washington, here is some fresh evidence worth examining.

In a piece of legislation recently passed by the House of Representatives and the Senate to revamp patent law, a tiny provision was inserted at the last minute called section 18. The provision has only one purpose: to allow the banking industry to skirt paying for certain important patents involving ”business methods”.

Here is a report of interest about the position Google is in. Google should really spend that famous “Pi Billion Dollars” on abolishing sofwtare patents, not acquiring some. But this is how Bloomberg puts it:

Google Inc. (GOOG)’s loss in bidding for the $4.5 billion portfolio of Nortel Networks Corp. patents last week means the Internet-search company will be looking to buy other inventions to build a bulwark against lawsuits targeting its Android system, patent brokers said.

“There are a lot of phenomenal portfolios for sale,” said Dean Becker, chief executive officer of ICAP Patent Brokerage in Palm Beach, Florida, the world’s largest patent seller. “Every operating company is in the market because of the expense, distraction and the potential financial risk of patent litigation.”

Google ought to just quit this conformism and do what is right for the population as a whole — that is — ending software patents. We urged Google to do this many times before and we shall continue to do so.

Meanwhile, Microsoft goes to companies that are partners (like Samsung and HTC) for a tax on Android and the Linux sites are finally starting to wake up [1, 2] and cover such shocking news that changes the whole way software is made and sold. Tim and I talked about this in last night’s TechBytes episode. See the show notes from Tim.

HTC pays Microsoft for Android and Apple sued HTC using software patents. HTC picks up some patents now, maybe for defensive purposes (e.g. against Apple).

It is mostly Apple that is going to lose from Android’s growth, but Microsoft is ahead of Apple when it comes to extortion although they increasingly collaborate in their patent attacks on Linux. The Linux-hostile and pro-Microsoft lobbyist is doing what he can to spin the news. Yes, he is a lobbyist, not an analyst (he also told me that he has had 4 clients this year but refused to name them). “Thumps [sic] up, Apple,” writes the lobbyist, “for buying the Nortel patents. Thumbs down, Google, for not doing so.”

Wait, what?!

Well, coming from the same lobbyist who reposts many other Google-hostile articles and tweets, even some from Rob Enderle and other Microsoft boosters (also celebrating patent extortion against Android) this week, this oughtn’t be too shocking. He also found friends like Miguel de Icaza and one can call him a liar for painting Google as the “bad” party for being the victim of Apple’s patents acquisitions (if anyone is bad here, it’s Apple). This is part of a pattern we explained here before — even when Google is victimised, it is still the “bad” party in the eyes of Microsoft Florian.

One has to be very dishonest to carry on with this spin. I spent a lot of time yesterday and the day before that challenging him in Twitter. The more he speaks, the uglier his activity seems. He probably enjoys the attention, but nevertheless, lobbyists like him need to be exposed, just like Zuck; otherwise, their posturing (e.g. as an ‘analyst’ or ‘activist’, even though he has no qualifications in this area) might fool some reporters who are being mass-mailed.

Last month we showed Florian pushing Lodsys’ agenda by urging developers to pay the patent troll. He turned out to be wrong when Apple stepped in. Well, he tells them to give up — the same defeatism on which he was wrong before. How can anyone takes him seriously? Just because he is mass-mailing people with publications and blogs does not mean they should just publish it and that others should take him seriously.

Groklaw has this update on the case:

Another day and three new declaratory judgment actions against Lodsys with respect to the four patents it has been asserting. While one of the three new actions is in the Northern District of Illinois, where several of the other declaratory judgment actions have been filed, two of them are in new venues – one in Arizona and one in the Southern District of California. This changing of venues is important. While Lodsys may seek to consolidate the cases in the Northern District of Illinois for the sake of efficiency (and saving Lodsys attorney’s fees), Lodsys will likely have to defend in each of the other jurisdictions where a declaratory judgment action is filed, thus increasing the cost of defense as local counsel is retained in each case.

One of the latest to be attacked is the New York Times and over at Forbes, Martin Zwilling writes that software patents have become a “tax on innovation”, citing the Lodsys saga:

I always advise software startups to file patents to protect their “secret sauce” from competitors, and to increase their valuation. The good news is that a patent can scare off or at least delay competitors, and as a “rule of thumb” every patent can add up to $1M to your startup valuation for investors, or for M&A exits (merger and acquisition).

The bad news is that patent trolls can squeeze the lifeblood out of innocent and unsuspecting entrepreneurs, as exemplified by the current mess around Lodsys patent No. 7222078. This patent holding company is charging infringement and demanding royalties from every app developer for the iPhone and Android, for a feature most agree has been in apps for many years.

Yes, the software patent process is a mess. I say this with conviction even after I survived the process, and have a software patent pending. Consider this list of commonly recognized software patent flaws, as summarized from my research, Paul Graham’s “Are Software Patents Evil?” essay, and the most recent “Enough is Enough” article by VC Fred Wilson, sparked by the Lodsys case

AP speaks of a story we have mentioned for a while about automobiles becoming victims of software patent litigation too, raising the cost of vehicles. Here is another take on it (less formal):

According to AP, the lawsuit centres on patents involving software and electronic components that are used in features to make phone calls, play music and access navigation tools with vocal commands.

As we noted a while ago, the developer behind Winamp made his stance clear on this quite recently (his take became popular this week for whatever reason). The opposition to software patents grows, thanks in part to Lodsys and the patent it got from Microsoft’s former CTO. We need to keep fighting the enabler of monopoly abusers, not just the monopoly abusers themselves.

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2 Comments

  1. Needs Sunlight said,

    July 8, 2011 at 2:57 am

    Gravatar

    That’s an interesting proposal. If companies like Google spend the money on abolishing software patents, the overall bill for them is likely to be lower than having to constantly out bid competitors or consortia of competitors.

    Dr. Roy Schestowitz Reply:

    However, Google is being advised by lawyers it has hired and they, in turn, try to justify their occupation that depends on all these layers of bureaucracy. Years ago, Techrights posted some videos where PHBs from Google speak about patents. It was rather appalling.

    Google needs to decide what type of company it is.

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