Intellectual Property Directions

During the Cold War era, the United States and Soviet Union engaged in a game of nuclear chicken called MAD, Mutual Assured Destruction. Essentially the doctrine said that the two superpowers realized that each had such large nuclear stockpiles that any preemptive attack would be tantamount to suicide. For smaller nations, the implicit threat was that a first strike would be assured destruction for them, without the “mutual” part. In the IP world, we call MAD a “defensive patent strategy”. With an appropriately designed, strong patent portfolio, anyone who tries to sue you for infringement is probably infringing your patents, so you both stand down and don’t actually end up in court.

Happily, the Cold War is over and MAD is gone too (at least as a stated policy). However, on April 17 Twitter posted their new “Inventor’s Patent Agreement” which is really not much more than a statement that they will utilize a purely defensive patent strategy. Their blog post suggests that they are eschewing offensively asserting their patents against alleged infringers because they don’t want to stifle innovation; in reality, given their dominance in their social media niche, NOT going after alleged infringing competitors unless sued for infringement gives them a license to steal any small competitor’s ideas without much cost to their business.

How so? First let’s posit that in the short text message space – or whatever tweets are – Twitter has a first mover advantage so large as to become nearly impossible to unseat. Unlike hardware or software products, social media products have a tipping point or critical mass after which competition is almost useless. Unlike hardware products, where what coffee maker I use has almost no effect on your choice of a Kurig or Mr. Coffee, your choice of social media tools  is very much affected by what social media I use… or more to the point, what social media most people you know use. If you “short message”, you tweet; if you want to share your life, you use Facebook.

Second, let’s posit that anyone trying to out-twitter Twitter is likely to infringe some Twitter patent, even as they perhaps add some interesting feature on top of Twitter’s IP. And if they don’t infringe, they probably come close enough that it would not be a frivolous suit if Twitter sued.

SO, what do you do if you are Twitter and a startup, Quacker, has developed a novel and interesting addition to tweeting? Do you pull out your patent suite and use it offensively (and look like an ogre)? NO, you copy their novel and interesting addition, taking away any competitive advantage it might have given little Quacker before more than a handful of tweeters become quackers.

And what if the interesting addition is patented by Quacker? You don’t care(!) since if they try to sue you then, well, your Inventor’s Patent Agreement says you’ll only use the patents “defensively” to deflect patent suits. Out come all those defensive patents which just happen to be able to crush Quacker, so they’ll cross-license with you…but you’re “paying” with the patents you were letting them infringe for free anyway.

The bottom line for Twitter is that they have turned potential competitors (innovators) into an unpaid R&D source. By letting them infringe, Twitter loses very little because of the critical mass nature of social media; by copying the innovators’ innovations, Twitter removes any competitive advantage the potential competitor might have developed; by having a “defensive” strategy, Twitter can position itself as a “good guy” even as it holds its WMD’s over the heads of the little guys.

The lesson for the rest of us… if you are not in the social media space, think twice about forswearing the offensive use of your patent portfolio since your customers are unlikely to have “brand loyalty” if your competitors have a better/faster/cheaper product. And if you are in the social media space, well, don’t try to compete with Twitter unless you are very, very good.

This entry was posted on Tuesday, May 1st, 2012 at 6:14 pm and is filed under defensive strategy, IP strategy, Patent Strategy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.