Introduction
After six rounds of proceedings since 2003, in April 2012 American Online (AOL), an American organization finally won the patent licensing court case against Microsoft, an American based international big 500 organization. This is the first time that an American company prevails in the United States patent law.
But the costs are large: six years time together with more than $20000 thousand dollars (Kelleher, 2012). The proceeding has resulted to an extensive discussion in US on how and whether patent need to be secured. It is an unending current discussion: is patent framework actually financially sufficient or is it an excellent way of bringing development to the entire community (Henry, 2003).
Old patent premise emphasizes that patent legislation promotes originality, enhances the financial growth and chips in the technology promotion.
United States patent legislation specifies in its initial period that the patent legislation is integrated with a view of protecting the intellectual property of the inventing company or individual, promote novelty, aid in widening the utilization of the intellectual property and in improving the improvement of technology (Bruce, 2002). Basically, this paper presents summary of the article, additional research on Microsoft’s decision, relevance, contribution to knowledge, and lastly presents advantages and disadvantages of patent law.
Summary
Recently, Microsoft dominated headlines when it decided to purchase 800 patents belonging to American Online for $1000 million. From the article, an emerging report asserted that Microsoft Company intended to dispose majority of those patents since the organization does not really require them (Yarow, 2012). The article, which refers to undisclosed sources, does not provide details of patents that Microsoft is intending to own and which patents it will dispose.
From the article, the American Online patents do comprise of those related to the Netscape search engine, which American Online purchased a decade before. American Online maintained the real Netscape brand name during its agreement with Microsoft Company. Also, the article indicates that Facebook made a bid of purchasing AOL’s patents as well, but that its bidding value was too low for American Online to agree.
Facebook indicated its plan of buying Instagram patents at $1000 million the same week American Online and Microsoft made public their patent agreement (Yarow, 2012). The author claims that Microsoft was anticipated to declare its first 3-month 2012 incomes later that afternoon. Possibly people will get to know more concerning the organization’s intention as far as AOL’s patents are concerned. The author asserts that American Online has plans of using the $1000 million from the deal to pay back its shareholders (Kelleher, 2012).
Background
The patent followers claim that patent framework produces great monetary gains, that is patent framework incentivizes more novelty and thus provide new products or latest methods to the world. They contend that innovations are types of the society wellbeing and public need to promote their recognition.
However, realizing such innovations or other scholarly properties requires huge quantity of personnel and financial resource, and if the innovations have been made public; they may be duplicated or copied easily. In case there is no security against the innovation, other companies can imitate the intellectual property at a reduced price.
This led to the commonly known “free-fall” concern, which implies the inventing organization or individual incurs large exploration and improvement cost while potential business rivals benefit from the innovation at lesser cost. Basically, this will definitely discourage the introduction of latest products by organizations and individuals (Henry, 2003).
Advantages and disadvantages
The merits and demerits of patent legislation in regard to software and business methodologies have been broadly debated in the last 5 years. One of the key issues in this debate has been the patent beneficiary’s right of preventing other individuals or organizations from coming up with copied items.
However, holding a patent and utilizing it are two diverse issues. Although an organization may have it, it may be interested in licensing its patented intellectual property, and it may thus be careful when disclosing its business methods even without standardization procedure.
Usually, not all companies are interested in relinquishing ownership, and serious arbitration may be necessary prior to entering into agreement. From society’s viewpoint, one should however be chiefly interested in the latest business frameworks known as “patent trolls”, made possible especially by the United States legal framework, comprising of very high lawsuit expenses and dents that can become overpowering (Bruce, 2002).
Conclusion
A patent has numerous roles. It gives security against reproduction, and may therefore aid organizations in differentiating their services from those provided by other organizations. It increases the worth of technologies and provides innovation-licensing incomes. It in addition has leverage functions, which may aid organizations in positioning themselves profitably in the marketplaces through cross licensing, alliances, and partnerships, for instance. Additionally, a patent and the manner in which organizations manage their rights influence their brands and their worth from the investors’ viewpoint. Usually, the significance of a patent to an organization defines its maximum patent plan, and how much force it carries in its daily operations.
References
Bruce, M. (2002). From ideas in assets to investing wisely in intellectual property. South Melbourne, Australia: Wiley & Sons Inc.
Henry, W. (2003). Open innovation, the new imperative for creating and profiting from technology. London: Harvard Business School Press.
Kelleher, K. (2012, April 13). The patent wars: Microsoft’s patent grab likely doesn’t constitute an offense. Technology and Markets Contributor, p. 24.
Yarow, J. (2012, April 19). Microsoft is planning to sell most of the patents it bought from AOL. Business News, p. 17.