Photo: Anna Bialkowska via Flickr
Here’s a great example of how broken the patent system is.Yesterday, a jury in the Eastern District of Texas ruled against a company called Eolas Technologies, saying that Eolas’ two patents were invalid.
Most people have never heard of Eolas, but it’s a familiar — and little-loved — name in the tech industry.
Eolas is a non-practicing entity. It makes no products. Its business model is getting companies to pay it for patents, and suing them if they refuse.
The impolite name for such entities is “patent troll.”
Eolas was founded by Michael Doyle. He did some research for the University of California in the early 1990s. Some of that research related to technology that was later used in Web browsers. In 1998, he got a patent — #5838906 — for one of these inventions. That patent got assigned to Eolas.
In 1999, Eolas sued Microsoft for patent infringement in Internet Explorer.
Microsoft got experts to testify on its behalf, including a man named Pei-Yuan Lee, who invented an early browser called Viola. One of the inventors of the Internet, Tim Berners-Lee, wrote a letter on behalf of the W3C (a Web standards body) in Microsoft’s favour.
But in 2003, Eolas won. Microsoft had to make changes to Internet Explorer and was fined more than $500 million.
(For a moment, it looked like Microsoft would have to make big changes to IE that would break millions of Web pages unless developers changed them, but the eventual changes were less dramatic.)
The huge fine was eventually thrown out on appeal, but Microsoft ended up settling with Eolas in 2007 and paying some unknown sum — probably tens of millions — to make it go away.
Eolas then got another patent, #7599985, in 2009. This wasn’t for some new invention. It was a second patent on the work that Doyle had done back in the early 1990s.
Over the years, Eolas sued a bunch of other tech companies, including Apple, Amazon, Google, and Yahoo, and non-tech companies, like Citigroup, over these two patents.
Some, like JP Morgan Stanley, Oracle, and Texas Instruments, and licensed the patents. The rest fought.
That fight is now over. Not only did the jury invalidate the two patents, but three upcoming damages trials were canceled. Eolas will have to start all over again if it wants to pursue these lawsuits.
Thousands of hours of court time and lawyers’ time. Tens of millions of dollars. All for what?
Tim O’Reilly, who worked with Pei back in 1992 and 1993, celebrated the verdict on a Google+ post, and added this warning:
The current patent system is a terrible tax on invention, as it requires real inventors to spend time in court rather than focusing on making real things happen. We must remember that the patent system was supposed to “promote the progress of science and the useful arts,” not to enrich people who know how to work the legal system.
Amen to that.
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