Microsoft, Skype Patent Case: Big Target - InformationWeek

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5/7/2013
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Microsoft, Skype Patent Case: Big Target

Patent troll or David fighting Goliath? CopyTele CEO Robert Berman, whose company filed two claims last week against Microsoft's Skype service, says his case is nuanced.

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From Google to President Obama, more than a few powerful voices have spoken up recently against the U.S. patent system. Particular criticism has been directed at patent trolls, or firms that generate revenue by claiming their broadly drawn patents have been violated by others' seemingly unrelated inventions.

But according to CopyTele CEO Robert Berman, whose company filed two patent infringement claims last week against Microsoft's Skype service, the situation is more nuanced than it has popularly been portrayed.

"Patents can be a great equalizer, and can give a small company a lot of strength against a large one," he said in an interview. "Each patent case needs to be judged on its own merits. It's unfair with a broad brush to say anytime someone sues somebody, it's in bad faith."

In the case of Microsoft and Skype, one of the alleged offenses involves the video-chat service's reliance on a "secure Web-based peer-to-peer communications" method that uses "a microprocessor-based device that provides secure peer-to-peer communications over a communications network." The other complaint similarly stems from Skype's use of "microprocessor-based devices that provide secure peer-to-peer communications with other devices over a network."

[ Besides fighting lawsuits, what is Skype up to? Read Skype Gets More Versatile. ]

If the language sounds overly broad, it speaks to the controversial nature of patent assertion. If offending parties include all services that use microprocessor-based devices connected to a network, are there any tech companies that don't violate the patents?

Skype is a big target, to be sure; Microsoft purchased the company for $8.5 billion, a huge sum even for an enterprise as large as Redmond, and has since begun to integrate the service in its larger set of product offerings. CopyTele could reap millions if its suit prevails -- but given the language in the patent complaints, Microsoft might be only the beginning.

"It's not our policy to call out potential infringers by name, but we think there are a substantial number of companies that are infringing," said Berman, who added that CopyTele is unlikely to wait for the Skype case's resolution before filing additional suits. The range of potential litigants includes some obvious targets. Google and Cisco also have large stakes in the kind of videoconferencing arguably covered by the patent, for example.

To Berman, such suits against large companies represent smaller players' only hope of competing. "I'm a big believer that in today's environment, it is almost impossible in consumer products or electronics to bring a product to market," he said. "If Apple was started today, they would have to partner with a much larger company."

He pointed out that the suit is "going after one of the largest, most sophisticated companies out there," calling it a "David vs. Goliath confrontation" and remarking, "I don't think anybody in their right mind can accuse us of picking on small companies." Still, when patents use such all-encompassing terms, minor players are sometimes the casualties. Big companies have the legal resources to fight back; fledgling startups often don't.

When asked if CopyTele's efforts will include suits against smaller companies, Berman said, "We are not in the business of bringing nuisance lawsuits" but countered, "However, if there are small infringers -- and there are some we believe are infringing these patents -- they will be hearing from us."

Berman said that legitimate suits have to address what the inventor intended when he or she filed the patent. But given that some cases claim that patents from decades ago apply to recently developed technology, the creator's intentions are open to a degree of interpretation. "Patents are a bunch of words on a piece of paper," he said. "Lawyers are great at twisting words."

Even so, Berman suggested that most patent suits aren't the work of dishonest and greedy attorneys. That is, the lawyers are simply defending their clients' intellectual property, and working within the confines of the system as it is currently defined. Still, when it came to revisions in that system, Berman did not focus on the laws themselves, but rather on other players in the process.

When patents go awry, he argued, the blame should fall to Congress, whose underfunding of the Patent Office has led to patents being issued when they shouldn't have been. Berman did not criticize the lawyers who defend these questionable patents but instead cast additional criticism on the companies being sued.

"Large companies can search the Patent Office for potential patents that apply to products and services they offer," he stated. "In most cases, they choose not to do that. In my view, you can't put your head in the sand, ignore the intellectual property you know is out there, and then scream bloody murder when [lawyers] come to you after the fact."

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Michael Endler
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Michael Endler,
User Rank: Author
5/7/2013 | 5:59:07 PM
re: Microsoft, Skype Patent Case: Big Target
Thanks for the comment, Terabyte Net (and for some of your tablet/ PC comments over the last few weeks-- I haven't had a chance to reply to all of them, but I appreciate the contributions you've added to the conversations).

Yeah, I find it troubling that so many "everyone thinks of that" ideas are awarded patents. Market success is almost always driven by execution, not by so-broad-they-include-everything concepts. When we value the product that executes best, everyone wins; businesses work harder to make the best product, and consumers benefit from the competition. When we value "whoever filed a vague idea first," it stops others from innovating and allows the patent-holder to sit back and grow fat while contributing nothing of value.

To be fair, Berman insisted that though the complaints are broadly-worded, CopyTele's IP nonetheless describes specific and patent-worthy technologies. Berman said CopyTele is prepared to go to court if it needs to, and
several sources (Seeking Alpha, for example), praise him as a leading
patent attorney. So I guess we'll see what Microsoft does. When I contacted them for this story, they issued a predictable reply: "No comment."

But I concur with your general sentiment; so many companies get bullied into settling just to avoid court costs, I wouldn't mind seeing a major player (assuming the circumstances warrant it) pulverize a patent troll. But some of the trolling is, as President Obama stated, essentially extortion. It stinks that some litigants settle merit-less cases just because the threat of court costs are so high. I did a few interviews last year for a patent story that we didn't end up doing, and literally every lawyer or law professor with whom I spoke was critical of the current system.

I'm also pretty suspicious of the notion that patent enforcement firms are helpful to small businesses. Sure, in theory, they can help a little guy stand up to a thieving big guy. But the Internet Age has meant, among other things, that having a great idea is enough to start a something big. If patent trolling isn't reigned in, that won't be the case; you'll need not only a great idea but also a ton of money for lawyers. To me, that sounds like a system that mostly reinforces existing power structures.
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