Twitter and Patents

Twitter and Patents

I, like many of the innovative people in the startup world, am very uncomfortable with the way patents are being used today.  Market economies succeed because c competition based on usefulness and price.  Today, instead of trying to innovate in ways that will increase usefulness or decrease price, too many companies are trying to squash their competition by purchasing patents that they have no intent of actually using and suing their competitors.  It’s the kind of thing that kills an economy.

Twitter announced yesterday that they were going to be changing the contract they sign with their employees.  Essentially, employees who are named on a particular patent will have to give consent for a company to use a patent offensively. I was going to try to explain exactly how/why this is important, but I was beaten too it.  Fred Wilson on his blog summarized it in a perfect story which I’ve included below.  The rest of his post his certainly worth the read for a better explanation of just what Twitter did.

Many years ago now, my prior venture capital firm, Flatiron Partners, invested in a company called Thinking Media. It was an early Internet company. They developed some browser based javascript tracking technology. The company ulimately failed but was sold in a fire sale including the patents. Those patents eventually made their way to an incumbent, the big marketing research company Nielsen. Fast forward ten years or so and Nielsen sued two of my portfolio companies, comScore and TACODA, and a bunch of other companies too, on the basis of the Thinking Media patents. So IP that was partially funded by our firm was used to sue other portfolio companies. It is so galling to have this kind of thing happen and it is one of the many reasons why I have come to believe that software and business method patents are an enemy of innovation in the tech sector.

If Thinking Media had the patent hack in their documents, the story I just told would not have happened.