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Mutual Assured Destruction for web companies

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Open ... and Shut There's no such thing as a "defensive patent." No matter how good the intentions of the companies amassing these patents, as the recent Yahoo! broadside against Facebook shows, desperate times make for desperate patent-holders. And a desperate patent-holder will struggle against the temptation to become a troll.

Just ask Andy Baio, who sold his company, Upcoming.org, to Yahoo!.

As Baio tells it, it wasn't long after joining Yahoo! before he was instructed to file for patents. Lots of them.

After we moved in, we were asked to file patents for anything and everything we’d invented while working on Upcoming.org. Every Yahoo employee was encouraged to participate in their 'Patent Incentive Program', with sizable bonuses issued to everyone who took the time to apply.

Now, I’ve always hated the idea of software patents. But Yahoo assured us that their patent portfolio was a precautionary measure, to defend against patent trolls and others who might try to attack Yahoo with their own holdings. It was a cold war, stockpiling patents instead of nuclear arms, and every company in the valley had a bunker full of them.

Baio goes on to say: "I thought I was giving them a shield, but turns out I gave them a missile with my name permanently engraved on it."

I experienced the same thing back in 2002 when I joined Novell. At the time Novell, much like when Baio joined Yahoo!, was in the process of trying to turn itself around. Not long after I joined we acquired Ximian, then SUSE, and tried to reinvent ourselves as an open-source powerhouse.

In tandem, I sat in meetings where then executive vice chairman Chris Stone and other executives encouraged employees to file patents. The intent, as Stone and others clearly stated, was not to litigate against other firms, but rather to defend Novell against those with superior patent portfolios.

That didn't work out so well, now did it?

Within a few years, Novell's turnaround hadn't materialised, Stone left to join StreamServe, and Novell helped Microsoft to levy a patent tax against the entire Linux ecosystem. Stone, as chief executive of StreamServe, insisted he was no fan of the deal, arguing that Novell had been duped and that others should "please run away" from similar overtures from Microsoft.

But he also stressed that patent licensing deals in the "right hands" are a productive part of our industry. Perhaps. But "right hands" today can easily become "wrong hands" tomorrow.

This is why, in the real world, nuclear terrorism is a serious threat, even if it's unlikely that the US will bomb France tomorrow. And it's why even the most conscientious, "good guy" patent-holders are a risk, because no one can predict how their patents will be used in the future if situations change, such as the management or the market.

And even the good guys do dumb things. Remember Microsoft co-founder Paul Allen and his attempt to sue anyone who ever thought about the web? That's an exaggeration, of course, but the potential damage to innovation by those often least qualified due to their inept execution is not.

When Yahoo!, with mountains of cash, hordes of smart people, and far too many patents eventually turns to those patents to rescue its business, we are clearly sitting on a time bomb. As Union Square Ventures managing director Fred Wilson writes, Yahoo! has "broken ranks and crossed the unspoken line which is that web companies don't sue each other over their bogus patent portfolios".

Well, now they do. When the going gets tough, the tough get litigating. Unless we fix the patent system, and soon. ®

Matt Asay is senior vice president of business development at Nodeable, offering systems management for managing and analysing cloud-based data. He was formerly SVP of biz dev at HTML5 start-up Strobe and chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears three times a week on The Register.

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