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Come On Yahoo! – Try Competing, Not Dirty Pool

Today it was intimated that Yahoo! may enter the world of patent trolling.  If you haven’t seen the article, it’s here.  In short,  it appears that Yahoo! is increasing its patent filing activity and shopping itself, in part, based on the value of its patents.  Their patents generally revolve around search and social networking.

Now if they have real deep algorithms in search that are patented, I can get my head around it.  What I fear is that their “social networking” patents are business method patents that will cover business process ideas, but no real innovation.  And they’ll use these patents either to sell or to offensively go after real innovative companies like Facebook.  The article suggests that something like this could potentially derail a Facebook IPO even.

I can’t event begin to tell you how furious all of this patent trolling activity makes me.  My partner Brad wrote yesterday a great piece about Another Day, Another Patent troll.  There is a lot more behind his post than just what he says, but, unfortunately, we aren’t at liberty to talk about particular portfolio company situations.

If only the Supreme Court had not allowed itself to become politicized and actually decided Bilksi on the merits, then the world would be a better place.  I was at the oral arguments for Bilksi and I can assure you not one single justice was even partially sympathetic to Bilksi’s case, but evidently politics won out over reason.

Yahoo!  Don’t be evil.  Try competing on the merits of innovation, not the perverted incentives of a broken patent system that this country currently “enjoys.”

 

 

November 8th, 2011     Categories: Uncategorized    
  • http://twitter.com/peteskalla Peter Skalla

    This is an abstract issue for most everyone not bitten by it.  Are there any resources documenting and summarizing the damage being done by software and business process patents?  Making the abstract more real seems like it would help in gaining policy visibility Brad blogged about yesterday . . . and maybe the “don’t be evil” visibility Yahoo seems to need!

  • http://patrickfoley.com/about Patrick Foley

    I have a hard time asking this question without using a sports analogy (sorry) … 

    Bob Gainey was the general manager of my favorite hockey team, the Dallas Stars, when they won the Stanley Cup in 1999. Gainey HATED the practice of defensemen dropping to the ice to block shots, even though his team was probably the best in the league at this technique. He actively worked to change the rules about players dropping to the ice, but until the rules changed, he encouraged his team team to be the best at it if it helped them win.

    Do you think it can be responsible for a company like Yahoo to take this approach as well with patents? One might disagree with patent laws – even work to change them – but until the rules change, shouldn’t a company increase its value by pursuing patents?

    Closer to home, how do you ask your portfolio companies to think about their own patents? Isn’t it fair to say that with laws the way they currently are, a company of yours can protect itself against some downside risk by building a patent portfolio? If a company of yours flamed out but had some patents seen as valuable, wouldn’t that help you recoup some of your investment, thus allowing you to bet on more companies? I’m not saying that’s good overall – I’m just asking if you can be like Gainey and work to change the rules about something you hate while exploiting the system as well as you can until the rules change. You could still work hard to prevent patents from your portfolio companies winding up in the hands of “non-practicing entities” – but if one of your firms sold a few patents to Yahoo, would that hurt the world in any meaningful way with laws the way they currently are?

    I’m not a significant investor, I don’t own any patents, and I’m not asking any rhetorical questions here – I’m genuinely interested in your opinion on these things. I do work for a company with a large patent portfolio, Microsoft, but I am far removed from any of our dealings with these things – I’m just an interested observer on the subject.

    Thanks!

    • Anonymous

      Patrick, great and thoughtful response. I think the Gainey analogy is spot on. The question is do you need to be a bad actor to maximize the outcome? In the case of hockey, it was clear (to me, at least) that he didn’t have a choice. (See also fake soccer injuries).

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