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Microsoft poses a similar argument as Transmeta and Rambus before it -- it invested money in smartphone research, now it should be able to force licensing and/or sue competitors to compensate for its sales shortcomings.  (Source: Wikimedia Commons)
Google is "standing on the shoulders" of others -- Horacio GutiƩrrez, Microsoft General Counsel

In the smartphone market, Microsoft Corp. (MSFT) has undergone a transformation from a company that makes most of its money off facilitating the sale of physical products to end consumers and businesses, to a company that makes most of its money from pursuing intellectual property enforcement.

The approach isn't altogether surprising.  Microsoft has fallen from holding nearly a quarter of the smartphone market, to having less than 3 percent of the market locked down.  In short, a year into the Windows Phone 7.x project Microsoft is thus far lagging in sales in the smartphone market despite having very innovative -- but poorly marketed -- products.

Thus Microsoft has followed in the footsteps of past companies, such as Transmeta and Rambus Inc. (RMBS) and turned to a "forced licensing" approach of trying to force more successful competitors to pay to license its IP under threat of lawsuit [1][2][3].

Microsoft General Counsel, Horacio Gutiérrez, raises a familiar argument in an interview with the SFGate, commenting that Google Inc. (GOOG) is "standing on the shoulders" of Microsoft and other smartphone IP holders with its Android mobile operating system.

This is a familiar argument, as it's similar to the argument raised by Transmeta and Rambus -- quite successfully in fact.

Mr. Gutiérrez contends, there's essentially nothing wrong with the American intellectual property system, and that the spate of recent lawsuits is just the market "readjusting" itself to innovative new products.  

He comments:

Every time there are these technologies that are really disruptive, there are patent cases. People who lived in that particular time would look and say, "What a mess, we certainly must live in the worst time from an (intellectual property) perspective. The system is broken and something has to be done to fix it."

That's the situation we're in right now. If you think of a mobile phone or a tablet computer today, they're not your father's or your grandfather's cell phone.

The devices have evolved and become so much more powerful, because they've added a number of technologies that pre-existed the new devices. In general, they use software to become general-purpose computers.

As we've seen historically, there is a period of unrest and a period of readjustment, until the claims on the ownership of different pieces of technology are well known. There's a period of actually licensing and cross-licensing that makes these issues disappear into the background.

When you buy the device as a consumer, you get it out of the box and enjoy it immediately. What you don't see is an invisible web of licensing and cross-licensing arrangements that actually make it possible.

So licensing is not some nefarious thing that people should be worried about. Licensing is, in fact, the solution to the patent problem that people are reacting so negatively about.

Of course, again, this is precisely the kind of arguments Rambus and Transmeta made to justify their tactics.  But as the analogy to these firms shows, Mr. Gutiérrez is at least correct in that there's been a lot of historical precedence for this kind of use of IP.

Microsoft's perspective echoes that of Rambus and Transmeta.  It spent the money researching the technology, and now a more successful competitor is profiting off a similar implementation.  So it should be able to gain revenue secondhand by forcing licensing.  States Mr. Gutiérrez:

[T]here are all these other features that just make the phone much more efficient, things that are embedded deeply in the operating system. Microsoft has invested for decades more money than anyone else in research and development directed toward the efficiency of operating systems. These devices have moved from having a rudimentary phone system to being a full-fledged computer, with a sophisticated, modern operating system.

In doing that, they have really stood on the shoulder of companies like Microsoft who made all these billions of dollars in investments.

Mr. Gutiérrez defends even his company's most obvious patents -- such as two GUI patents, the first of which involve loading (and displaying) webpage content before images to load webpages faster, and the second of which involves displaying a loading animation as the images load.  These patents -- U.S. Patent Nos. 5,778,372 and 6,339,780 -- were used to force Barnes & Noble, Inc. (BKS), an Android tablet-maker, into a licensing deal.

Android Browser
Like Apple, Microsoft contends that patenting GUI features is acceptable.  Microsoft is suing or forcing licensing from Android manufacturers using a patent on displaying an animation for loading images in a browser.

He argues that patents only seem obvious because people aren't educated enough to understand them.  He states, "Many times when you express those ideas at a high level, they seem obvious to anyone who really doesn't understand the particular ways in which certain effects are achieved in software.  [W]e believe they're solid patents."

This could be a good approach for Apple, Inc. (AAPL) to take.  While Apple's goals are a bit different than Microsoft's (Apple wants to ban Android from sales, rather than profit off forced licensing like Microsoft), it also has a fondness for patenting GUI animations [1][2] and then using them to sue Google.

With Microsoft and Apple are seemingly in a race to patent seemingly obvious GUI components and sue or ban anyone who outsells them in the market, the validity of software patents will likely face increasing scrutiny.

But Mr. Gutiérrez says that software patents are similar to hardware patents, so they either are both valid, or both invalid.  He comments:

But I think the most important part here is that a lot of the innovation that is happening today is really happening in the software space. Many things that earlier were implemented in hardware - think of telephone switching and circuits - are now implemented in software.

So the question of whether software should be patentable is, in a sense, the same as asking whether a significant part of the technological innovation happening nowadays should receive patent protection.

But what if Microsoft used its GUI patents to sue Apple?  Well that's unlikely as the companies have essentially a patent "truce" -- they cross-license their IP to each other.  As a result they can focus their efforts on suing or banning other parties, without having to worry about attacks from each other.

As an interesting side note, a company that has been labelled the world's largest patent troll -- Intellectual Ventures -- was founded by Microsoft's former chief technology officer Nathan Myhrvold.  Mr. Myrhvold played a pivotal role in directing the future direction of intellectual property efforts at Microsoft, during his time with the company in the 1990s.

Source: SFGate



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RE: When you can't innovate, Litigate
By kleinma on 10/31/2011 3:21:25 PM , Rating: 4
Says the person who owns 0 intellectual property...

Go spend billions on research, and then give away your results to the competition to use for free.. Have fun.


RE: When you can't innovate, Litigate
By MeesterNid on 10/31/2011 3:25:08 PM , Rating: 2
Oh, kinda like Google did?


RE: When you can't innovate, Litigate
By sviola on 10/31/2011 3:34:28 PM , Rating: 2
Unfortunately, Google seems to not have spent billions in research of Android, as it is based on linux, using Java VM and copying many ip from MS.


RE: When you can't innovate, Litigate
By MeesterNid on 10/31/2011 3:48:22 PM , Rating: 5
Right, they just threw it all into a melting pot and it just magically worked no problem. You should do the same and create your own mobile OS!


RE: When you can't innovate, Litigate
By cjohnson2136 on 10/31/2011 3:51:55 PM , Rating: 2
But you still have to pay for the stuff you used even if what you did makes something completely different. By that logic Anyone can simple take something make a few changes and call it their own. Innovation would stop because no one could make a profit on it.


RE: When you can't innovate, Litigate
By sprockkets on 10/31/2011 4:09:57 PM , Rating: 1
If you work around something, no you don't have to pay. The key is did you improve something or improve on something already patented.

quote:
Innovation would stop because no one could make a profit on it.


Biggest myth from big companies. Profit was not the reason the patent system was created. Innovation stops because no one can do it period. Just as an example read up on the how Dyson got started, and how Hoover reacted.


RE: When you can't innovate, Litigate
By cjohnson2136 on 10/31/2011 4:14:53 PM , Rating: 2
Figuring out how the code works in a clean room design and making it yourself is a lot different then just using it and making it work with what your doing. Also with the innovation I was referring to just software stuff. The Dyson/Hoover thing was very interesting to read though.


By sprockkets on 10/31/2011 5:37:04 PM , Rating: 2
Well, that's the rub. Even if you do a clean room implementation, you still aren't clear of patents.

That's why software patents suck and isn't needed - copyright provides protection for it already.

For that matter, notice Android vs. iOS - so many people complain of polish between the two. It just goes to show you, patent protection isn't necessary. You can copy the idea of multi-touch all you want, but you still have to make a good implementation of it, and apple did a darn good job.


RE: When you can't innovate, Litigate
By nafhan on 10/31/2011 3:59:54 PM , Rating: 3
If you "stole java" and "copied IP from MS" and then combined those items with a Linux kernel... you wouldn't magically have a phone OS. Google has spent quite a bit on research (and acquisitions) in relation to Android. They certainly did not come up with every single aspect of Android from scratch. However, the same thing can basically be said about every modern piece of software.

Whether or not all the ideas were completely original isn't really important in regards to technology. What's important and relevant is whether or not the ideas were used properly within the context of our current legal framework (messy as it is).


RE: When you can't innovate, Litigate
By Da W on 10/31/11, Rating: 0
By sprockkets on 10/31/2011 3:45:31 PM , Rating: 2
So you are saying that Google owes MS money because they built their search engine off of IE technology???


By Cheesew1z69 on 11/1/2011 1:16:22 PM , Rating: 2
It's a website , they stood on nothing.


By sprockkets on 10/31/2011 3:32:12 PM , Rating: 2
OK, since I am forced to license everything from MS, I trust that they are most willing to give the actual source code of their inventions, you know, to save those billions of dollars myself.

Oh, no, that's right, I spent all that $$$ myself coding only to have to pay up since someone patented a software algorithm.


RE: When you can't innovate, Litigate
By dark matter on 10/31/2011 4:18:35 PM , Rating: 3
Are you saying it cost billions for someone to come up with the idea of displaying text before images on a webpage.

Sure.


By Solandri on 10/31/2011 6:53:34 PM , Rating: 2
That's not as simple a problem as it seems at first glance. If the image is delayed, the browser has no idea how large it's going to be, so it can't pre-allocate the space. Instead what happens is the brower renders the text without the image, then re-flows the text when it learns the size of the image. Now imagine doing this on a page with dozens of pictures and trying to optimize it so you aren't rendering the entire page dozens of times as each image arrives one by one.

This was actually a pretty big advantage for IE at the time. I remember frequently getting frustrated with Netscape or Mosaic because a site included a huge picture which stopped the display of text until the pic finished loading. The img tag was given height and width fields to combat this problem (so the brower would know the size of the pic before receiving the pic, and could pre-render text around the space and fill in the image later). But most people didn't use it, and some people abused it doing stupid things like putting a 2000x1500 pic on a web page, with the img tag resizing it to 150x120.

So this is one of those problems whose solution is simple to describe in words, but rather complicated when you try to actually implement it in code. The idea of rendering the text before the images is simple (and not patent-worthy). But the specific implementation of how exactly you do it is complicated enough that I do think it's patent-worthy.


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