My Own Pirate Radio

While we’re on the topic of IP, Paul Graham has an essay worth reading entitled “Are Software Patents Evil?”. Thanks Mike for the link and summary.

I think Paul is right: patents aren’t evil, they just don’t matter much, especially at the startup end of the business spectrum. He states three reasons for this:

One is that software is so complicated that patents by themselves are not worth very much. … The second reason patents don’t count for much in our world is that startups rarely attack big companies head-on … The third reason…is public opinion– or rather, hacker opinion.

Public opion is by far the main reason big companies don’t sue other companies. The lawsuits just aren’t worth the pain of public acrimony.

For startups, patents mainly make you a little more attractive to a potential acquirer.

For BigCo’s, the steady accumulation of patents is almost purely for defensive reasons. Would-be litigators are greeted with a portfolio of patents that they are surely infringing on. It becomes a case of one superficial patent versus tens of fundamental patents, and the discussion ends quickly.

IBM is a notable exception in strategy, in that they license patents outbound for royalty generation. Read “Open Innovation” if you want to know more about this as a business model. See also this interesting EE Times article on patent auctions.

Unfortunately, as Graham goes on to say, the defensive strategy doesn’t work well with patent trolls.

“I’m not sure what the proportions are of the preceding three ingredients, but the custom among the big companies seems to be not to sue the small ones, and the startups are mostly too busy and too poor to sue one another. So despite the huge number of software patents there’s not a lot of suing going on. With one exception: patent trolls.

Trolls don’t make anything, and so by definition they aren’t stepping on anyone else’s turf. Must be nice, paying the bills with vapor.