Patent Sense: Understanding Risk with Legal Eagles and Black Swans
August 21, 2008
Intelligent Enterprise publishes a Web newsletter. Curt Monash, a highly regarded wizard, tackles “Patent Nonsense in the Data Warehouse DBMS Market.” You will want to read this essay here.
The topic is two recent patent lawsuits in the data storage sector.
Teh key point to me is this statement:
Perhaps I’m getting senile, but I can recall only one software patent case in those 27 years that wound up having any material effect on enterprise software users — Marcam/Ross Systems, about process manufacturing ERP software.
I agree for the most part with the practical impact of legal eagles’ squabbling.
I’ve been touched by a couple of legal matters as an expert witness (a pretty tough bit of work). Here’s what I have concluded based on my experience in matters regarding patent documents.
First, litigation is expensive. Companies that embark on a legal matter have to [a] have lots of money, [b] a belief their interests have been in some way affected, and [c] are likely to be pretty consistent in those beliefs–regardless of the outcome of the legal matter.
Second, the wacky approach to patent applications and their kin in the United States is confusing to amateurs and professionals alike. When there is considerable confusion, boundary conditions can look like islands of stability only to dissolve in chaos. Chaos is tough to manage. Just ask Research in Motion whose management found out that beliefs, no matter how strongly held, may be meaningless.
Third, if the parties in the squabble don’t settle, think jury. A jury trial is a very risky operation for both sides in the matter. What pops out of a jury deliberation can be surprising. Judges and tribunals can be almost as startling when required to adjudicate.
My View
For that reason, when I am working for an organization and the issue of litigation comes up, I follow these practical guidelines, which you may find silly or useful depending on your mental stance.
First, I read the patent documents and try to learn something about what systems and methods are in operation or dispute. I’m no attorney, but those claims provide useful hooks for analyzing the system and methods disclosed, particularly in software.
Second, I want a back up plan. In some procurement environments, risk is an issue. Therefore, assuming that because something didn’t happen in the past is meaningless, when a black swan settles on the contracting officer’s desk or becomes known to the money mavens writing checks for an organization.
Finally, when a patent issue comes up, I try to look for other brush fires. My approach is to assume that the specific matter is one of an inter related activity. For example, a company hires a reasearcher away from a competitor, “invents” something, and then finds itself in the midst of a legal matter. The issue is not the invention; the issue is the management judgment that triggered the sequence. For my analytic approach, that’s the key to understanding some activities. I want to look under the hood, poke the innards, and try to find more interesting ways to understand a particular situation.
Net Net
For me, patent documents, hiring practices, and issues that are often off the radar become windows into the organizations involved.
Not surprisingly, I take any patent related litigation at face value and dig to learn more. For that reason, certain types of generalizations and placebos like “don’t worry” are of zero interest to me.
Agree? Disagree? Let me know.
Stephen Arnold, August 21, 2008
Comments
2 Responses to “Patent Sense: Understanding Risk with Legal Eagles and Black Swans”
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Stephen,
That all makes sense. I’d go on to add that a company with deep pockets is even less likely to have to shut a product line down due to a patent squabble than one that’s in tenuous financial shape. Companies and their shareholders do get hurt, at least somewhat, by patent squabbles. However, in the vast majority of cases they pay cash to make the problem go away, without their customers ever being affected.
CAM
Curt Monash,
Companies with deep pockets are one major factor in the US patent mess. Toss in trolls, Nathan Myrvold’s outfit, and presidential appointees who think patents are the type of leather formal loafers sport, and we have a situation in the US of considerable disadvantage to some. Keeping secrets may work better. I have zero patents and many, many secrets. Smaller outfits may want to follow my approach. It’s cheaper and permits an addled goose to make observations without giving away too many goodies such as the method for locating information; for example, Google’s dataspaces and their relationship to a drowning world of Codd databases. Oh, the Myrvold write up http://www.businessweek.com/magazine/content/06_27/b3991401.htm is useful even today.
Stephen Arnold