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Is Microsoft A Patent Troll?

Marc Benioff, CEO of Salesforce.com, says that Microsoft is a patent troll. Given that Microsoft has just <a href="http://blog.seattlepi.com/microsoft/archives/206398.asp">sued</a> the company for patent infringement just this month, that comment might not be a surprise. Looking a bit deeper though, I don't think Benioff's name-calling is justified.

Dave Methvin

May 23, 2010

3 Min Read

Marc Benioff, CEO of Salesforce.com, says that Microsoft is a patent troll. Given that Microsoft has just sued the company for patent infringement just this month, that comment might not be a surprise. Looking a bit deeper though, I don't think Benioff's name-calling is justified.First, lets' look at the definition of patent troll from Wikipedia:

Patent troll is currently a controversial term, susceptible to numerous definitions, none of which are considered satisfactory from the perspective of understanding how patent trolls should be treated in law. Definitions include a party that does one or more of the following:

  • Purchases a patent, often from a bankrupt firm, and then sues another company by claiming that one of its products infringes on the purchased patent;

  • Enforces patents against purported infringers without itself intending to manufacture the patented product or supply the patented service;

  • Enforces patents but has no manufacturing or research base; or focuses its efforts solely on enforcing patent rights.

  • Asserts patent infringement claims against non-copiers or against a large industry that is composed of non-copiers.

So at least by the elements of that definition, Microsoft doesn't meet the patent troll definition at all. The patents that Microsoft is litigating aren't ones that it has purchased, but ones that were filed based on the research of their own employees. Some of those patents are ones that are already being used in Microsoft products, and others are at at least potentially usable in future products. For the time being, patent royalties are a small part of Microsoft's revenues. And finally, Microsoft is going after companies that are in its own technology back yard.

Far from being a patent troller themselves, Microsoft has been a patent-troll victim, losing several lawsuits that have cost hundreds of millions of dollars. Still, there's no doubt that Microsoft has increasingly gone after competitors that it believes are using its patented ideas. Just last month, phone-maker HTC cut a deal to license patents that Microsoft said were being used by HTC handsets.

I understand the logic that has led to Microsoft's comfort with the patent system, and can't really blame them. As long as the patent system encourages filing a patent for every trivial idea or concept, technology companies like Microsoft will be forced to compete by creating their own cupboard full of throwaway patents. That way, when other companies come calling with a claim of patent infringement, the two can come to an agreement to simply cross-license their piles of worthless patents and everyone can be happy. Yet that strategy still won't work against patent trolls, who have nothing to lose by squeezing companies for outrageous licensing fees.

The big losers in this game are the small innovators, who don't have a portfolio of patents to license and can't afford to fight patent lawsuits. The Microsoft of 1980 wouldn't have a chance against the patent portfolio of Microsoft 2010. Whether it's trolling or simply enforcing weak patents, it stifles innovation. Only a reform of the patent system can solve this problem, and I don't see that happening with so many big companies -- including Microsoft -- now invested in playing it.

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