Does Paul Allen own vital technology powering most e-commerce and search sites? He seems to thinks so, but few other people seem to agree. On Friday, Allen's Interval Licensing sued a score of companies for infringing on its patented technologies. While I'm no patent lawyer (however, I did stay at a Holiday Inn Express last night), I'll wager the companies being sued have little to worry about. Allen's patents involved are all sizzle and no steak.
The 11 companies named in the lawsuit range from Internet giants Google
Four different patents are singled out in the suit. Looking at the each patent, they're fairly generic. One patent is for a news aggregator, another is for alerting users about news in their "peripheral attention," and another alerts users to areas of "current interest." I'd love to give a better description of the patents, but describing them is pretty difficult. They're all extremely vague and are based upon broad ideas.
This brings up a larger problem with today's patenting process in technology. Companies are all too often able to patent generic ideas, without creating any of the specifics that make them commercially viable. Call it the equivalent of patenting a "box that allows information input" and then suing computer makers for infringing upon your "innovation."
In a statement, Allen's spokesman said, "We recognize that innovation has a value, and patents are the way to protect that." However, the statement touches on the problem with this lawsuit. There was no innovation from the patents. Interval created some overriding ideas that could be loosely applied to where technology moved to over the last decade, but it didn't drive any innovation. Interval didn't create any way of making its broad ideas commercially viable. No, that work was done by the true innovators like eBay and Google, who are now being sued. These kinds of "patent troll" suits actually destroy the ability of companies to innovate.
I don't think the companies being sued have much to worry about from this specific lawsuit. In the long run, investors in these companies should be more concerned with the broader theme of heavy payouts to patents of dubious "innovation." Strong protection of intellectual property is necessary in knowledge-worker-heavy fields, but the system is allowing too much idea patenting that doesn't contribute real value. Over time, that will only impede the real innovators in America.
Eric Bleeker owns shares of no companies listed above. Google and Microsoft are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers selection. Amazon.com, eBay, and Netflix are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a bull call spread position on eBay. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.