Microsoft: Patents Are About Sharing, Not FUD

Last month, Microsoft went on the offensive in playing up its patent portfolio in an attempt to scare other companies into agreeing to licensing deals. This showed a complete flip-flop from Bill Gates' own words from the early '90s about how innovation is stifled by patents. It seemed to only underscore the idea that patents are used not to encourage innovation, but to protect legacy business models against innovation. Now, Microsoft's deputy general counsel is trying to spin the patent story in a nice, fuzzy way to make us think that patents are all about sharing. This guy came to Microsoft after 20 years at IBM, the company that famously threatened employees at a young Sun by saying: "We have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?"

Anyway, his claim is that patents are fantastic because they let multiple companies share in the wealth. As he says: "We used to define competitive advantage as 'I've got and you don't.' Or 'You've got it, but I got better.' Well, today it's 'You got it and I got it, but I make money when you use it.'" That would be nice, if true, but it ignores reality. The reality is that those patents aren't for unique or novel ideas, but for broad and obvious ones, and when you bundle all of those ideas into a patent thicket it makes any additional innovation prohibitively expensive. It's not, as he says "you got it and I got it, but I make money when you use it," but, rather, "you may have figured out what consumers want, but you still owe me and 17 other patent holders money every time you use it, even if you figured it out entirely outside of our patents -- and now the product is too expensive for any consumers to want to buy anyway." That's not quite as pithy, I'll admit, but it's a lot more accurate.