Are patents killing Innovation?

Are patents killing Innovation? It seems “Yes”. It would be very sad to see a day where irrespective of whether a company is innovative or not, if it has tons of patents – then it can win the race. In Q3 2011, Microsoft has issued licensing fee for every android activation as the android platform uses some of the Microsoft patents. In response to this, Google has issued a notice for collecting licensing fee from Microsoft  to use some of its H.264 video patents that Google has got as a result of the planned takeover of Motorola mobility. Interestingly the amount charged by Google does not seem to be a fair price and hence Microsoft appealed to the European Union and the US Department of Justice. The ITC today has done a preliminary ruling for the case filed by Microsoft where Microsoft XBox360 infringes 5 of Motorola mobility patents. The settlement talks would soon be initiated between Microsoft and Google, to prevent banning of import of Xbox360.

It was earlier debated that the chances of Motorola Mobility winning the case was weak because  these patents were covered under Frand.  With Microsoft already fighting with Google on the patents, the news today that Microsoft has sold 650/925 of its AOL patents to Facebook for 550 million dollar came as a shock to me. These 925 patents were bought by Microsoft for 1.1  Billion dollar from AOL. It’s still not clear as to why these 650 patents seemed to be less interesting to Microsoft in less than 2 weeks.  Is it because Microsoft has to buy all 925 patents from AOL to get the patents that it is really interested in? Is Microsoft sure that it is not violating any of these patents, so that it can be sued back by Facebook?

The “who is suing-who?” part of the tech space is growing at a faster pace than ever. Here is a funny picture of “who is suing-who” that  was going around in facebook a month back.

You can add a few more arrows based on the noises that we heard in the last one month. Pretty clear, right?

With all these big companies having tons of cash in their backyard, they may be able to comfortably face the patent challenge. How about the startups which is looking for every penny for their expansion, but getting sued by these biggies? Is it going to hinder the birth of the next Facebook, Google, Microsoft?  Your thoughts?

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