Let's play a game! I'll talk about three current trends that span business and technology and you try to guess what is at the heart of all of them. The first one who guesses wins a pat on the back and a deeper level of insight into how our litigious society is stifling both innovation and growth along with spurring a whole new industry.
Trend 1 -- Acquiring Irrelevance: Google bought Motorola. HP bought Palm. X bought Y who had just bought Z long after both Y and Z (along with Motorola and Palm) were decades into a long decline into irrelevance.
Trend 2 -- Downside of Success: Even as upstart competitors are biting off pieces of your business with sniper apps, your legal department at a large company with a large budget says that you can't fight back and launch your new mobile offering as part of their overall customer and user experience. It's got all sorts of really cool UX features like phone numbers with click to call and short code links to help users not freak out when they see a link.
Trend 3 -- Startup Non-Starter: Do you have an awesome idea for an app that will change the world? Ready to launch a startup? Do you have 15 million dollars and a intellectual property lawyer you trust? No, I thought not. Then get ready to see your creative energy and wit go to waste as you are unable to defend your innovation from the hordes of imitators (especially the ones with deep pockets).
Any guesses? No it's not the Hawley-Smoot Tariff act. It's the current environment around patent law! Let's give a big hand to those who guessed right! So how is patent law connected to the acquisition of big but irrelevant companies? How does it hurt both big companies and little startups? And how on earth did it spawn a whole new industry?
For those unaware, anybody can file a patent for "anything under the sun that is made by man". More specifically, this includes inventions that are: new, useful and not obvious. And just like any attempt to break down and codify a set of rules around behavior, the litigious incrementalists come out to play.
So, just like when Apple and Microsoft bought a whole bunch of nuclear weapons (i.e., patents) from the defunct Nortel, Google decided that, just like your high school social studies teacher taught you, Mutually Assured Destruction is better than destruction by itself. Google went out and bought Motorola in order to stock up on its own weapons in order to avoid the same sort of highly expensive fight that as drug Apple and Samsung into the mud.
Trolls Aren't Just In Fairy Tales
So why does this stop large companies from launching new products and services? This is a result of that new industry I referred to; the patent trolls! Patent trolls go around and buy hundreds, if not thousands of little patents for things many of us consider obvious now (but that they claim is hindsight) like sending a clickable URL as part of a text message.
Patent trolls acquire patents, often from bankrupt firms, with no discernible intention of manufacturing the described product or offering the intended service. The trolls not only have no intent, they have no infrastructure or capabilities to do anything other than enforcing the patent rights by twisting the arms of anyone they consider a target, i.e., big companies with deep pockets. This phenomena has become so common place and is so entrenched as a part of the American culture that renowned story teller, Ira Glass and This American Life did a show on trolls and the bridges they hide under.
This isn't a problem reserved for the big boys. Startups are plagued with this problem as well. It costs upwards of 10 to 20 million dollars to defend a patent from the myriad of companies who follow down the path that start-ups blaze. That means the couple of million you might need to get a company off the ground has now ballooned to more than $20 million dollars, cause investors don't really want to invest in a company without a defendable differentiator (i.e., a patent). The bigger investment required doesn't come free either, it costs the startup equity given out to investors and this just starts the whole downward spiral of time, money and energy being spent on amassing nuclear stockpiles and defending patents rather than building a business or a compelling product.
Infestation Protecting Infestation
How far has this gone? Monsanto has made headlines for more than the last decade suing farmers who grow corn based on seeds that the farmers claim inadvertently infested their fields. Yes, you understood that right. Monsanto invented a strain of corn that is invasive, just like a weed, and then either threatens or sues the farmers when they sell the corn that comes from the infestation. What will it take to stop the madness that has brought innovation and creativity to its knees? If I knew, I think I'd go patent it and laugh all the way to the bank!