The Twitter I.P.A.

(Photo: West McGowan)

Almost a year ago, we posted here about patent trolling – when individuals and firms use patents as a tool to extract settlements out of defendants who wish to avoid expensive patent litigation, even when the target thinks it can ultimately win.

Because they can be so valuable, patents are a big source of litigation, especially in the tech industry. Apple and Samsung have been at each other’s throats over smartphone patents, as have Apple and Motorola. Microsoft has been battling with Motorola over whether its Xbox violates Motorola’s patents, and Microsoft has also threatened smartphone maker HTC.  Oracle sued Google, claiming Google’s Android cellphone operating system infringed on Oracle patents.  Microsoft sued Barnes & Noble, claiming that its Nook e-reader violates Microsoft patents. Apple and Google are now eyeing each other warily over “slide to unlock” technology that Apple has patented and accuses Google of copying in its Android smartphone operating system. Google, as a defensive move, paid $12.5 billion to buy Motorola’s portfolio of nearly 25,000 patents. 

All this litigation raises a question. Are the costs associated with patent litigation diverting too much attention from the real business of the tech industry — inventing awesome products?

Some of the real innovators in the tech industry – the engineers who actually dream up and build the stuff that ends up in new gadgets – are starting to wonder about that.  A lot of engineers want to see their inventions have an impact on people’s lives, and they have mixed feelings when patents that they’ve assigned to their companies are used in litigation to prevent another firm from using a neat new technology or product feature. 

As is usual in the tech industry, when there’s a problem, someone innovates.  In this case, it’s Twitter.  Twitter recently put into place what they call an Innovators’ Patent Agreement, or I.P.A. Under Twitter’s I.P.A., if you’re an engineer working for Twitter, and you patent an invention and assign your patent to Twitter, Twitter promises it won’t use that patent to sue anyone, except for defensive purposes. So, for example, unless a party sues Twitter first, Twitter won’t use the patent in a lawsuit. The I.P.A. also provides inventors with legal tools to ensure that their patent is not used offensively in a suit even if a totally different party owns it down the line.

In other words, the I.P.A. is sort of a patent version of the more well-known Creative Commons License that some use to keep otherwise-copyrightable goods accessible to all.

Why is Twitter doing this?  Perhaps it hopes to appeal to engineers who value innovation over patents – those who, in other words, engage in innovation for its own sake rather than to get rich.  Second, and just as importantly, Twitter may be engaged in a bit of what social scientists would call “norms entrepreneurship.”  Twitter is a smallish company (less than $300 million in annual revenues).  And it’s not yet a big patent player.  If it can convince other companies in the tech industry to adopt something like its I.P.A., then it reduces its patent risk.  In the midst of the tech industry’s current patent war, that seems unlikely, but it can’t hurt to try. Twitter’s strategy doesn’t cost much – a few lawyer hours to draft the I.P.A. and some time spent by Twitter’s top brass promoting the I.P.A. to the public and to its tech industry peers. 

Of course, the I.P.A. may also be a nice piece of PR, one that makes Twitter seem like a good company that isn’t interested in grabbing every buck it can.  And that might be a good move if it helps Twitter compete better in the one contest in Silicon Valley that is even fiercer than the current war over patents – the cut-throat competition to hire the best engineering talent.

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  1. IE says:

    Am I the only one who clicked on the header thinking it’s about Twitter getting into the beer business?
    IPA = India Pale Ale.

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    • Valitahiana says:

      Because your scenario is not true and does not make any sense.A pantet is in effect a contract between the state and an inventor. The inventor is given a period during which he has a monopoly on sale, manufacturing, and use of his invention. In exchange for that, the inventor must reveal all the details of his product. Anyone can go to the pantet office online and search for any granted pantet. Since there are no magical pantets that make electric cars useful, it follows that nothing is being covered up or hidden by the poil companies. In fact, it would be idiotic for any company to do something like that. Let’s imagine that I invent a way to make a battery that would power a car for a week without a chargeup, and with no excess weight or other drawback (it’s a practical impossibility of course, but pretend). Why would I not SELL this product on the open market, generating billions in profits? In 20 yrs, this product will become available to anyone who wants to produce it so it would be idiotic to refuse to sell the product so I could sell more oil, oil that everyone knows is running out. Rather, it would make more sense to switch my business to selling electric cars, so that 20 years from now, I am the only company that customers even THINK about buying.It’s nonsense, and doesn’t work even if it wasn’t.

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  2. Tony says:

    I guess Patents aren’t like Trade Marks, which you have to defend in order to keep?

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    • Enter your name... says:

      That’s right. They work more like copyrights: you can defend or not, as you choose, including permitting infringement by one person and not by another. What keeps a patent on the books is continuing to send in the maintenance fees.

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      • Vesku says:

        My understanding is different. The case is about somebody infringing your patent _and_ them being able to prove you’ve known about their infringement for a long time. If despite this knowledge you’ve done nothing about it, the courts tend to deem that you’ve forfeited your right to defend the patent and not award you with royalties from that infringing party. If this happens of course all the other licensees can immediately stop paying as well.

        If I’m right, everyone will be queuing to tell Twitter that they’re infringing Twitter’s patents.

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  3. Chris Bredesen says:

    It’s worth noting that Red Hat published its Patent Promise many years ago, refraining from litigating patent infringement against open source software.

    http://www.redhat.com/legal/patent_policy.html

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  4. frankenduf says:

    “engineers… who engage in innovation for its own sake rather than to get rich”- heh- tell that to the cynical pharmaceutical industry, which claims that without patents, no new drugs would be developed (in my mind the rentier projecting his own motivation onto the more functional entrepeneur)

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    • Samara says:

      Nobody will give up a patent that has pfriot potential when the product can be commercially placed into service. Your posting had the solution incorporated into its very text. THE LEGAL COSTS are the prohibiting factor. Do away with lawyers, and the problem will go away. Universities need to learn to partner with entrepreneurs to negotiate such deals, to share the risks and the upside in a better fashion. Sunk costs in product marketing need to be given a preferred tax treatment. Perhaps the National Academy of Sciences could be empowered to award or grant a window (two years, five years, etc) to such newly patented technologies/partnerships during which the revenue generated from the endeavor is not tax deductible. Or give them tax credits for any product which is utilized in a developing country or non-profit which serves those in need.

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  5. Erik Dallas says:

    Hidden due to low comment rating. Click here to see.

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    • Peter Lange says:

      @Eric, while I agree with you, the Engineer could chose not to assign their patent to Twitter in the first place, in which case the decision to sue or not sure over patent infringement remains the engineer’s (as well as the cost of taking such an action.) Twitter is just saying they, *of the patents signed over to them* they will not use them aggressively.

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      • Katherine Derbyshire says:

        Not really. At most tech companies, the standard employment agreement gives the employer all rights to any patentable idea developed on company time or with company resources. And because filing patents is expensive, it’s usually the assignee company that does it, not the actual inventor. So I would say the number of tech patents personally controlled by the inventor is pretty small. Which means that “salary and nothing more (except maybe bonuses and stock options)” is all that inventors typically expect anyway.

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      • Erik Dallas says:

        If you are employed as an engineer, your inventions made in the course of business are required to be assigned to your employer, and it is your employer that files the patent. Patent law just added a new provision to allow the employer to finish the patent filing even with an uncooperative inventor employee who is unwilling to sign the paperwork. There is no longer any leverage to prevent automatic assignment to the employer, and all employment agreements require it anyway.

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  6. Mike Hunter says:

    The supreme court created this entire mess when it ruled that software can be patented as well as protected by copyright. I understand copyright protection for software, but; allowing companies to patent software features is just stupid. The supreme court needs to fix this by reversing it’s ruling. But I’m not holding my breath.

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  7. Defector says:

    In my own opinion, the Twitter “IPA” pledge is not much more than a publicity gambit to attract young talented engineers. It has a gaping loophole (section 2(c)) allowing Twitter to preemptively sue another party without the inventors’ consent, so long as they have a colorable argument that it is for the purpose of deterring litigation – it does not even require that the other party have any patents to assert. Take this example: Twitter sells the patents to a patent troll, which, under the terms of the IPA, also agrees to be bound by the IPA. The patent troll makes money by licensing patents. But, if the troll were to approach a company, say, Facebook, to offer a patent license, Facebook is likely to file a declaratory judgment action against the troll for a court declaration that Facebook does not infringe, and hence is not required to take a license. To deter that litigation, the troll preemptively sues Facebook for patent infringement in a venue of its own choosing, which provision 2(c) of the IPA declares is for a “defensive purpose.” I have not read anything that suggests this could not happen. Therefore, I think the IPA is fundamentally dishonest to engineers.

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