Why All The Suits

Looks like we have another patent infringement suit in the technology arena. The latest involves Kodak versus Apple and RIM. While I'm sure there are some interesting aspects to this (such as how Kodak has already prevailed against other smart phone manufacturers in similar suits) it is just one of many that have been launched over the past few years.

This started me thinking. In my (relative) youth, one hardly heard of patent infringement or any other type of intellectual property (IP) suits amongst computer tech companies. When it did occur, what stood out was how damaging they were to the companies that initiated them. The Crossroads suits against a number of Fibre Channel bridge manufacturers in the 90's sticks out in mind as an example. In the end, lots of damage but little reward.

So what's changed? Three things I think:

1. Computer and consumer technology have merged. What is a smart phone if not a hand held computer?

2. We are in the midst of a recession that is depressing R&D budgets. That makes it hard to create new technology.

3. The computer and electronics technology industries have grown up. What used to fit in a garage now fills many office parks worth of buildings worldwide.

These factors amount to a perfect storm from an IP point of view. Without the ability to generate significantly new technology, the value of existing technology becomes high enough that litigation is worth it. Also computer technology and electronics companies are running smack dab into the consumer electronics market. The rules are different in this arena. The collegial, cross-licensing culture of the computer industry does not exist here. Consumer business are based on smaller margins and control of markets. There is no “a rising tide lifts all boats” attitude here. It's more of a “my battleship will sink your battleship” mentality. IP is an effective weapon in maintaining these margins and markets.

Finally, the computer industry has grown up. Businesses that started in a garage are now the homes of captains of industry. They are no different from the steel or auto industries of bygone eras. They have shareholders who do not understand the gentlemen agreements that were typical in the industry. Collaborations that could be sealed with a handshake in the past now require lawyers, accountants, and 50 page agreements. A mature and aggressive IP policy comes with the territory. If you want to be a billion dollar business you have to act like one.

These factors practically insure that we will see more IP related suits. More patent infringement suits, more copyright infringement suits, more trademark infringement suits, and lots of IP problems with non-disclosure agreements and partnerships.

This situation brings to mind the great line that Sir Lawrence Olivier speaks in the movie Spartacus. He says “the problem with being a patrician is that sometimes you have to act like one.” This same problem exists for big companies, even computer technology ones. Sometimes you have to act like a big company and IP related lawsuits are part of the big company game.