Patent Trolls Eat Microsoft’s Dinner

A ruling was just confirmed that orders Microsoft to pay well over $140 million dollars for the violation of a patent owned by Z4 Technologies. The patent, which may seem a little general, essentially covers asking a user for two passwords on Microsoft’s software.

Microsoft had used the technology to curtail piracy, however, I’m doubtful that this patent has offered them any true economic benefits. You can read more about the ruling at Mashable.com where Mark Hopkins wrote an interesting piece here.

The lawsuit was filed and won in Texas which is considered a patent troll friendly court.

Mark Hopkins goes on to discuss that it is even questionable as to whether or not the patent should have been issued. The one thing that is clear is that if the patent system is to be improved, it has to happen at the point of approving a patent. If the patent system was reformed then we would not have overly broad patents which individuals would have incentive to exploit.

However, it is important to note the substantial benefit that patents offer the U.S. economy in terms of economic incentive. If we had no intellectual property protection there would be less incentive to take risks both in terms of time and financially to innovate and better the economy.

Wikipedia has an excellent article(here) on what a patent troll is and how they effect the patent system. Below is an excerpt;

Patent troll

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Patent troll is a pejorative term used for a person or company that enforces its patents against one or more alleged infringers in a manner considered unduly aggressive or opportunistic.

Over the past seven to ten years, Microsoft has been on both sides of numerous patent law suits with settlements totaling billions of dollars including creative patent pacts with software companies.

What’s interesting regarding this particular patent is that it was a functionality of a large piece of software whose added use added little value nor did it cost consumers extra capital to have integrated (aside from possible development costs carried over which is negligible). So, essentially what Microsoft paid for was that they were using an infringed patent to further protect their software from being pirated. Isn’t that ironic?

Eric Corl is the Founder and CEO of Idea Buyer, a marketplace for new technology and products that allows inventors to showcase their intellectual property to consumer product companies, entrepreneurs, retailers, and manufacturers at www.IdeaBuyer.com. You can email him at EricCorl@IdeaBuyer.com.

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