« PubPat Spits at Microsoft | Main | Death by Patent? »

March 26, 2005

The Patent Tax

Intermec Technologies and Symbol Technologies Inc. are embroiled in a patent suit/countersuit cook-out. Corporate caterwauls invariably justify themselves in a marketing spin for sympathy, and attempt to pacify understandably skittish stakeholders. In the background, Elvis Costello sings, "you never see the lies that you believe."

Symbol sued Intermec over Symbol patents covering 802.11, a wireless standard. Intermec countersued with RFID patents.

Phil Lazo, vice president and general manager of RFID infrastructure at Symbol Technologies Inc., said, "[Symbol] believes that the basic RFID technology ... should be royalty-free.... We believe that we should all be thinking about how to grow this new [RFID] market. We don't think that 'placing a tax' on this industry provides the best environment." Phil, in a obtuse failure to appreciate symmetry, was not quoted as saying that basic 802.11 wireless communication technology should be royalty-free in order to grow the market, and then go on to lament the 'tax' that Symbol was trying to impose on Intermec.

Last August, Bill Harmon, Microsoft department head of patent conflicts and intake (licensing), explained to me why Microsoft wouldn't even consider paying for a license to a patent of mine for a technology that Microsoft was apparently adopting: they didn't want to "pay the tax" on top of development costs. [ As a side note, I hadn't asked Bill to pay for a patent license, nor was I asserting the patent. Microsoft was a longtime client, and I had simply made Bill aware of the patent as a potential opportunity for Microsoft. Bill didn’t get the clue. The patent slumbers. ]

Meanwhile, back at square one, a patent is granted for being first with an invention. The basic theory behind patents is to encourage innovation and its eventual widespread adoption through a negative grant, a limited-duration right to deny others practicing an invention in return for a public exposition of the invention, so that others may readily adopt the technology once the monopoly power expired. The only alternative to a patent system would be a futile recourse to trade secrets, coupled with epidemic corporate espionage and reverse engineering, and a throttling of innovation because companies wouldn't invest extensively in research and development just to have their inventions copied shortly after hitting the market.

A patent is readily likened to a toll booth on the road to profits: don't own patent? - must pay toll. First to build booth gets to take toll. So simple.

If both parties have patents of mutual interest, most logically trade, no pay tax; most foolishly sue each other, pay tax to IP law firm. So simple.

There are many viable strategies for monetizing a patent portfolio, including a passive/defensive strategy of minimizing operating costs and optimizing public relations by not asserting one's own patents, while avoiding assertions by others through implicit threat of countersuit.

What is neither viable nor mature is whining. If you meant what said, Phil & Bill, about not "paying the tax", grow up.

Posted by Patent Hawk at March 26, 2005 1:23 AM | Patents In Business

Comments

Post a comment




Remember Me?

(you may use HTML tags for style)