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Google's New Patents
Monday, August 01 2011 @ 09:00 AM EDT

We read last week that Google acquired 1000 patents from IBM. This raises some questions. What is the nature of the patents transferred? Will these patents help Google in its immediate fight with Oracle? What policy and practice positions should FOSS-oriented companies take when it comes to "software" patents?

This is not the first batch of patents that Google has purchased from another company. If you go to the U.S. Patent and Trademark Office database of patent assignments you can search for patents assigned to (Assignee) Google. What you will find is that about half of Google's 2,400 patents and published patent applications are "home grown." The rest have been purchased in a series of transactions starting with a purchase from Verizon that occurred in the fall of 2010 (these show up starting on page 46 of the search results list). There are also purchases from Hitachi and Motorola Mobility and earlier transactions with IBM.

However, all of these earlier purchases pale in comparison to the most recent purchase from IBM. By adding 1,000 patents from IBM Google has virtually doubled the size of its patent portfolio. Unfortunately, most of these were acquired after Oracle asserted its patents, and, whether any of them related to Oracle and its product offerings, Google was not in a position to assert them in the litigation.

We have not examined the nature of the portfolio Google acquired from IBM. A list of the acquired patents by title is available here. A random sampling indicates that they are not all "software" patents. Rather, a good number of the transferred patents relate to devices, chips, and other electronics. So it is not clear whether this was a purposefully selected group of patents or simply a random sampling from IBM's rather vast portfolio. In any case, one would believe Google sees this acquisition as adding strength to its overall portfolio of patents. The focus of the non-software patents in this purchase could be handset makers that don't use Android and who may also attempt to attack Google.

Of course, the other question this acquisition begs is the proper stance on "software" patents by a company that relies so significantly on FOSS. I have read the remarks of a number of folks either in or on the fringe of the FOSS community and their criticisms of Google, Red Hat, and others who produce or use FOSS that those companies are hypocrites, arguing at times against "software" patents and at the same time amassing significant patent portfolios of their own. Much of this criticism comes from Europe where the battle to contain "software" patents has at least some prospect of being effective. I would assert that in the U.S., given that "software" patents have been a fact of life for twenty-five years and are supported by a lot of moneyed interests, the prospect of rolling back the clock to life without software patents is remote.

I think, by and large, the FOSS community in the U.S. understands why companies must build patent portfolios to protect themselves (think insurance policy), and the only question left is whether they are likely to slip to the dark side, i.e., start asserting patents offensively. This has been one of the biggest disappointments with Oracle which had long opposed software patents:

Oracle Corporation opposes the patentability of software. The Company believes that existing copyright law and available trade secret protections, as opposed to patent law, are better suited to protecting computer software developments.

Patent law provides to inventors an exclusive right to new technology in return for publication of the technology. This is not appropriate for industries such as software development in which innovations occur rapidly, can be made without a substantial capital investment, and tend to be creative combinations of previously-known techniques.

Even if patent law were appropriate for protection of software, due to the large volume of recently-granted software patents and the rising number of new applications, the current patent process would continue to be troublesome for the software industry. Software patent examinations are hindered by the limited capability of searching prior art, by the turnover rate among examiners in the Patent and Trademark Office, and by the confusion surrounding novelty and innovation in the software arena. The problem is exacerbated by varying international patent laws, which both raise the cost and confuse the issue of patent protection.

Unfortunately, as a defensive strategy, Oracle has been forced to protect itself by selectively applying for patents which will present the best opportunities for cross-licensing between Oracle and other companies who may allege patent infringement.

Quite a contrast to Oracle's current position.

So companies like Google or Red Hat, even though they truly believe "software" patents are a bad idea, cannot unilaterally disarm. The boards of directors of those companies cannot take such a risk on behalf of their shareholders, and no board of a U.S. technology company is going to want to be the guinea pig that unilaterally disarms. That would clearly expose their shareholders to loss. So the arms race continues.

Google has strongly indicated this is what is driving them in their patent acquisitions:

The tech world has recently seen an explosion in patent litigation, often involving low-quality software patents, which threatens to stifle innovation. Some of these lawsuits have been filed by people or companies that have never actually created anything; others are motivated by a desire to block competing products or profit from the success of a rival’s new technology. The patent system should reward those who create the most useful innovations for society, not those who stake bogus claims or file dubious lawsuits. It's for these reasons that Google has long argued in favor of real patent reform, which we believe will benefit users and the U.S. economy as a whole.

But as things stand today, one of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services. Google is a relatively young company, and although we have a growing number of patents, many of our competitors have larger portfolios given their longer histories.

So after a lot of thought, we’ve decided to bid for Nortel’s patent portfolio in the company’s bankruptcy auction. Today, Nortel selected our bid as the “stalking-horse bid," which is the starting point against which others will bid prior to the auction. If successful, we hope this portfolio will not only create a disincentive for others to sue Google, but also help us, our partners and the open source community—which is integrally involved in projects like Android and Chrome—continue to innovate. In the absence of meaningful reform, we believe it's the best long-term solution for Google, our users and our partners.

Posted by Kent Walker, Senior Vice President & General Counsel

In 2002, when Microsoft first started making noises about Linux infringing its patent portfolio, Red Hat had one patent. By the way, by that time Red Hat had also already published its Patent Promise. In response to the saber-rattling by Microsoft, Red Hat began more aggressively seeking patents itself and, in 2005, helped found Open Invention Network (OIN). The principal purpose of OIN, from Red Hat's perspective, was to buy time since a patent portfolio can't be produced overnight.

Now, some 11 years later, Red Hat's portfolio of patents and published patent applications is approaching 1,000. In the past six years OIN has also played a stabilizing role in helping dissuade some from attacking the Linux environment. And while Red Hat has faced a number of patent infringement claims from so-called trolls, it has not been the focus of attack from competitors that some had long predicted. At least on its face, the strategy pursued by Red Hat, Google and others seems to have been largely effective, at least from a shareholder perspective.

IBM, despite its continued pursuit of thousands of patents every year and occasional enforcement of its patents to protect its core business, has shown a willingness to help stabilize the patent scene around software. IBM was one of the founders of OIN, but it has also willingly sold patents to parties like Google that needed to quickly build their portfolios, like LCD.

That still leaves open the question of what position these companies can (or should) adopt when it comes to "software" patents, both as a matter of policy and practice. We will continue to examine this issue in future columns. Stay tuned.

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