Good for Google, bad for you

Monday's news was dominated by Google's $12.5 billion acquisition of Motorola. What's not making the headlines are the quiet, yet serious patent wars driving such acquisitions. In the business world, lawsuits are as commonly used as innovation to compete and that reality is driving business decisions that affect everyone.

LOS ANGELES (Catholic Online) - Unless you study business, you may hardly be aware that the corporate landscape is more than competitive, it's downright thuggish. And Google's latest acquisition is more about that reality than innovation. And why should the consumer care? Because dollars spent on lawsuits mean fewer dollars spent on new technology, improved service, or jobs. And worse, stocks driven by such practices may be on a bubble.

Patent lawsuits are nothing new. The purpose of a patent is to protect the inventor and to permit that person or business to sell their product without unfair competition from people who simply copy ideas rather than developing their own. However, poorly defined or little-understood patents like those common in the tech industry, are easy grounds for lawsuits from competitors; it is a routine matter that tech companies sue one another for patent infringement regardless of merit. Patent suits can take years to settle and can cost millions to defend against. The result is many corporations are forced to spend millions, or as in Google's case, billions, to preemptively defend themselves against future suits.

Worse, many smaller innovators are downright unwilling to develop or market new technology because any one larger tech company can simply file a suit which will destroy any chance for the small-timer to make money. And without the hope of profits, but a promise of a lawsuit, no sane inventor would dare challenge the tech establishment. Meanwhile, the public suffers with less innovation, less reliability, less improvement because of this practice. But, it gets worse--

Google purchased Motorola to obtain its portfolio of patents. That helps to protect Google from lawsuits from its competitors such as Apple and Microsoft. It also drives up the stock price of both companies and encourages investment, and there's the problem. Patents are no longer regarded as useful to promote innovation. Instead, they're being weaponized by the corporate world and used as tools of legal mass destruction.

This makes bundles of patents valuable, but only as long as those patents are subject to lawsuit. With the stroke of a pen, Congress could enact much discussed, but little tried patent reform, making lawsuits over patents more difficult and less profitable. Such reform would be a disaster for patent mongers but it would be in the interest of the people and innovation.

For now, patents will be valuable both as a corporate sword and shield, but a caveat is appropriate, for as soon as Congress gets serious about fostering innovation as a strategy to make America competitive again, the value of patent portfolios will fall rapidly and woe to the investor holding that paper.

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