Microsoft v. TomTom - First thoughts

Today, Microsoft announced that it had filed a legal action with the International Trade Commission (ITC) against automotive navigation systems maker, TomTom for infringement of several different Microsoft patents. 

Given the size and notoriety of the two companies, it’s clear that this will get a lot more attention the hundreds of other patent suits that happen every year. From the news reports and information on Microsoft PressPass it appears that Microsoft has already licensed the patents to Alpine, Pioneer, 123Map and Kenwood, and been discussing these patents with TomTom for months before launching the suit. TomTom has a patent portfolio of its own and has used it to sue Garmin and Toyota for infringing its patents in the past. And while battles between patent holders are commonplace, this one includes a dispute over some pretty significant Microsoft-held patents that may have broader implications.

As regular readers know, ACT believes that IP licensing agreements will play an increasingly important role in our industry as everyone focuses on delivering interoperability across devices and platforms, while still protecting investments in research and development. 

As many SMEs have found, attempts to negotiate license deals sometimes fail and leave the IP holder with little other choice but to bring legal action. While it is unclear where this litigation will lead, it does seem to be a good opportunity to focus on the importance of patents to software innovators of all sizes. 

Based on what the articles I have read and a quick skim of the complaint, Microsoft seems to be in the position so many entrepreneurs with patents find themselves in: another firm is infringing on its core innovations and is unwilling to discuss licensing terms. While this is an “issue” for a company like Microsoft that has thousands of patents, it is “critical” for startup that has three. 

When we've done focus groups and member polls, the vast majority tell us that a predictable and accessible intellectual property system is critical in creating the incentives necessary to drive innovation and entrepreneurism.  In simplest terms, IP helps to get them paid for innovating.

And Innovation, after all, is one of the fundamental components of progress and growth in the IT industry. It serves as an essential foundation for the delivery of great new products, spurring economic growth and furthering R&D. As we wrote about in our National Policies as Platforms for Innovation paper, IP is a key ingredient to enable innovation to flourish. Businesses large and small need to know their patents, copyrights and trade secrets are protected in order to enable returns on their investments.

UPDATE:

We are seeing a lot of discussion on the web about what this suit means for companies that distribute linux.  So we here at ACT are going to keep a close eye on this lawsuit, and post as we know more.

Comments

[Jan van den Berg]

"while still protecting investments in research and development"

Patents and R&D substitute each other, patent litigation eating the budget of the R&D department:

http://www.youtube.com/watch?v=bSOIK-tlN8g

More litigation, less R&D!

[martin]

This blog entry has a heavy pro-Microsoft bias. And you say you represent _small_ business?

Software patents are bad for everyone in the industry except corporate giants like Microsoft.

[AndréR]

Microsoft against Automotive and Linux-embedded. That unilateral war declaration will certainly cause great business opportunities for you and for me. There is absolutely no legitimate role for patenting in the software field and patents on interfaces are just harmful. I know that, you know that (after work) and the case mainstreams that opinion in the automotive industry.

"As regular readers know, ACT believes that IP licensing agreements will play an increasingly important role in our industry as everyone focuses on delivering interoperability across devices and platforms, while still protecting investments in research and development." -- come on, not even the most brainwashed persons at DG Enterprise will buy that anymore when the European automotive industry gets targeted and Microsoft exactly jumps in the stereotypical media role model of an anti-Linux software patent rogue. I don't really understand why they want to wear horns and smell sulfur. Whom do they want to impress with that costume?

The case is a fantastic opportunity because it will further impact and stimulate the political debate in the European industry. The Commission recently talks a lot about European digital independence.

[Morgan Reed]

Jan,

I respect that you feel that IP protection and R&D are at odds, but there is overwhelming empirical evidence to the contrary. Studies by the US National Academy of Science, Harvard's Berkman Center, and even a study funded by the European Commission came out in strong support of the links between protecting IP and funding for innovation.

In fact, I would stipulate that the very money you fear is lost through litigation only exists because of the rights derived from IP.
R&D generates IP, IP rights protect the value of the R&D, and Licensing or sales generate the money to pay for tomorrow's R&D. It's a virtuous circle, not a zero sum equation.

And litigation is an example of a failure of two parties to reach an agreement as to the use of property. It's not a replacement for R&D at all. In the vast majority of situations, both parties would much rather find a different solution - either by taking a license or creating a workaround.

And this rule holds true for Open Source as well as for proprietary IP. Never forget that the power of the GPL is derived from its aggressive use of IP law. In fact, the FSF is currently suing Cisco for not living up to the spirit of the GPL; so should we pillory the FSF because they are reducing the amount of money Cisco will spend on R&D?

Of course not! The FSF is attempting to protect the rights of the people who contributed to Linux. The FSF/Software Freedom Law Center does little or nothing to support R&D, but yet their role in protecting the GPL is critical.

So the fact that TomTom spent more money on litigation than R&D speaks more to the problems TomTom created, rather than the system itself. TomTom has a long history of acting irresponsibly toward the intellectual assets of others. I don't think gpl-violations.org was the bad guy when they sued TomTom for GPL violations any more than Microsoft is now.

(here's a link the EC study: http://www.ebusiness-watch.org/studies/special_topics/2007/documents/Study_08-2008_IPR.pdf)

[Izzy]

You guys should check out what that idiot Roy Schestowitz is claiming about ACTnline over on www.boycottnovell.com.

http://boycottnovell.com/2009/02/27/irc-log-26022009-2/

harrytuttle http://blog.actonline.org/2009/02/microsoft… Feb 26 13:44
harrytuttle just read it Feb 26 13:44
harrytuttle who are those shills? Feb 26 13:44
harrytuttle act online? Feb 26 13:44
schestowitz Yes Feb 26 13:53
schestowitz I’m writing about them ATM Feb 26 13:53
schestowitz They do nasty stuff in Europe at the moment. Feb 26 13:53