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Where Amazon went over to the dark side was not in applying for the patent, but in enforcing it. A lot of companies (Microsoft, for example) have been granted large numbers of preposterously over-broad patents, but they keep them mainly for defensive purposes. Like nuclear weapons, the main role of big companies' patent portfolios is to threaten anyone who attacks them with a counter-suit. Amazon's suit against Barnes & Noble was thus the equivalent of a nuclear first strike.

That suit probably hurt Amazon more than it helped them. Barnes & Noble was a lame site; Amazon would have crushed them anyway. To attack a rival they could have ignored, Amazon put a lasting black mark on their own reputation. Even now I think if you asked hackers to free-associate about Amazon, the one-click patent would turn up in the first ten topics.

Google clearly doesn't feel that merely holding patents is evil. They've applied for a lot of them. Are they hypocrites? Are patents evil?

There are really two variants of that question, and people answering it often aren't clear in their own minds which they're answering. There's a narrow variant: is it bad, given the current legal system, to apply for patents? and also a broader one: it is bad that the current legal system allows patents?

These are separate questions. For example, in preindustrial societies like medieval Europe, when someone attacked you, you didn't call the police. There were no police. When attacked, you were supposed to fight back, and there were conventions about how to do it. Was this wrong? That's two questions: was it wrong to take justice into your own hands, and was it wrong that you had to? We tend to say yes to the second, but no to the first. If no one else will defend you, you have to defend yourself. [2]

The situation with patents is similar. Business is a kind of ritualized warfare. Indeed, it evolved from actual warfare: most early traders switched on the fly from merchants to pirates depending on how strong you seemed. In business there are certain rules describing how companies may and may not compete with one another, and someone deciding that they're going to play by their own rules is missing the point. Saying "I'm not going to apply for patents just because everyone else does" is not like saying "I'm not going to lie just because everyone else does." It's more like saying "I'm not going to use TCP/IP just because everyone else does." Oh yes you are.

A closer comparison might be someone seeing a hockey game for the first time, realizing with shock that the players were deliberately bumping into one another, and deciding that one would on no account be so rude when playing hockey oneself.

Hockey allows checking. It's part of the game. If your team refuses to do it, you simply lose. So it is in business. Under the present rules, patents are part of the game.

What does that mean in practice? We tell the startups we fund not to worry about infringing patents, because startups rarely get sued for patent infringement. There are only two reasons someone might sue you: for money, or to prevent you from competing with them. Startups are too poor to be worth suing for money. And in practice they don't seem to get sued much by competitors, either. They don't get sued by other startups because (a) patent suits are an expensive distraction, and (b) since the other startups are as young as they are, their patents probably haven't issued yet. [3] Nor do startups, at least in the software business, seem to get sued much by established competitors. Despite all the patents Microsoft holds, I don't know of an instance where they sued a startup for patent infringement. Companies like Microsoft and Oracle don't win by winning lawsuits. That's too uncertain. They win by locking competitors out of their sales channels. If you do manage to threaten them, they're more likely to buy you than sue you.

When you read of big companies filing patent suits against smaller ones, it's usually a big company on the way down, grasping at straws. For example, Unisys's attempts to enforce their patent on LZW compression. When you see a big company threatening patent suits, sell. When a company starts fighting over IP, it's a sign they've lost the real battle, for users.

A company that sues competitors for patent infringement is like a defender who has been beaten so thoroughly that he turns to plead with the referee. You don't do that if you can still reach the ball, even if you genuinely believe you've been fouled. So a company threatening patent suits is a company in trouble.


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