We're about to get a hands-on lesson in the Law of Unintended Consequences. A small company is suing lots and lots of major businesses for patent infringement. While little Eolas is looking for a quick cash boost, its lawsuit has the potential to change how the patent system works.
What's going on?
Eolas' lawsuit targets 23 companies you may have heard of, like megabank Citigroup
Eolas' claim to fame so far is that the company sued Microsoft
OK, so what's the damage?
The suit is for real and might cost millions of dollars in legal fees, possible settlements, and potential court-ordered damages. But it also builds on a patent for seemingly obvious technology in the controversial field of software patents. The patents at issue deal with Web browser technologies like plug-ins and scripts -- technologies that Web developers often take for granted because they seem so ubiquitous. But Eolas seems to have a patent or two on these ideas.
I can see Eolas' side of the story: if I invented the wheel, I'd be furious to see people using it for free all around me. But then again, you can't patent math or universal truths, like the fact that a circular object can roll, or "2+2=4." Linux veteran Red Hat
The new Eolas suit is big enough that it might force a rethink of what you can and can't patent. I don't know which side of the fence our courts will land on, but either way, the ramifications of the rethinking process will be huge. Going far beyond just software patents, that close-up examination could raise questions about granting patents on other abstract ideas such as business models.
Keep a close eye on this suit, Fools. If Eolas comes out with a big win, the company might be able to collect damages and license fees from pretty much anybody with a modern Web page. And then we'd have a new set of legal thumbscrews that places additional pressure on entrepreneurs with a software-based idea or innovative business model: "What if there's some prior art for what I'm doing? I can't afford to go to court!" There'd be much more legal muscle and enforcement powers behind these suits than what they have today.
Or on the other side of the pendulum, we could end up with a looser or nonexistent framework of patent protection for these abstract concepts. Businesses would compete on how well they can put good ideas to work rather than on how their lawyers can protect those ideas. That might be bad news for some innovators, but I believe we would end up with more innovation, less courtroom wrangling, and a healthier digital economy. On the whole, that's my preferred outcome because it's better for almost everyone. At the very least, putting a leash on patents with "vague and uncertain boundaries" would be a boon to innovation in the industry.
Nothing personal, Eolas, but I sure hope you lose -- and lose big.
Is Anders a clear-eyed visionary or just plain insane? Discuss in the comments below.
Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.