When dealing with venture capitalists, entrepreneurs get used to questions about what kind of intellectual property they have. Usually that means, "Do you have any patents?"
Yet to most consumers the idea of patents is a faraway idea. Their computers all seem to look alike and have the same components. Many software companies look like clones of one another, and within a few days after one company announces a new program, there seems to be a competitor ready to unseat it.
What actually happens behind the scenes seems like good fodder for Will Rogers. There's a lot of politicking, deal making and legal wrangling. That's one of the reasons your cell phone looks a lot like the cell phone of your next door neighbor -- feature-wise, that is.
Cellular phone companies own lots of patents, covering everything from the way you touch the screen to the way your device works on the inside. In the past, you didn't hear much about these patents -- because the market kept expanding and because, recognizing the expansion, the cellular companies made deals with one another licensing their patents to one another.
That Motorola phone you're holding probably is using technology developed (and patented) by Nokia -- or Apple -- or Google. And that goes for your iPhone, Windows phone, Blackberry or Droid. Cross-licensing is a way to expand the market, make it easier for standards to develop -- and also for one vendor to make money when some other vendor sells a phone that uses its technology.
But the cellular vendors are playing hardball these days, which have led to court battles between Apple and Motorola Mobility (now part of Google), Samsung and Apple, and other pairs of opponents from the same industry. Most industry analysts suggest that Google's acquisition of Motorola was motivated by the treasure trove of patents owned by Motorola. Patents give control.
Most of the time when a company oversteps the bounds of someone else's patent by using it in a product, it's by accident -- but some executives do it on purpose. Call that a calculated risk. One of the best known legal calculated risks was when Steve Jobs decided to name his then-new product the iPhone, even though he knew Cisco Systems had already registered iPhone as a trademark. (Although not patents, trademarks are similar to patents in many respects.) He had his company go full bore with the name, confident that he'd be able to convince Cisco to turn over the rights to Apple to use the iPhone name.
Now, there's a question about whether Siri, the coolest of the cool features in the current iPhone, is infringing on Motorola (and therefore Google) patents. That's one of several legal fronts that Google and Apple are battling in the cell phone market, as Apple's iPhone and Google's Android phones continue to battle in the marketplace.
As these cases wind their way through the courts, it's nice that we get to learn a bit more about the decision making process that brought us a slew of great products at various innovative companies. But it also makes the future cloudier. Will our phone device costs go up because one company owns a key feature that is needed or wanted on every device, requiring large license fees or expensive work-arounds? Will some features be left off devices due to competitive reasons? These scenarios will play out between the lawyers and in the courts.
When Will Rogers said, "I bet after seeing us, George Washington would sue us for calling him 'father,' " he couldn't imagine that we'd be using Twitter or Skype when referring to our first president in such endearing terms.interact