Cloud Computing and Patent Trolls: How To Prepare Now

Cloud computing, like any hot technology, has caught the eye of the patent trolls. Your developers need to avoid their day (or month, or year) in court with them.

Here's the scenario: Your IT team writes a web service, and part of its WSDL interface includes a hash algorithm the team came up with on their own. You publish the API and your business partners use your clever little hash in integrating with across cloud services. Years later, you get a letter from a lawyer from a town in Texas you've never heard of, claiming you've infringed on a patent you never heard of. Your team scrambles to replace that hash algorithm, but that means a change to your API and some of your business partners resist making the change. It doesn't matter though: the infringement has already occurred, and you're going to pay somebody quite a bit of money even if you can prove your innocence.

This is going to be difficult, because you're in the domain of patent trolls, legal firms that specialize in very tight arguments and skillful identification of their prey.

Before I go any further, this disclaimer: I am not a lawyer, I don't even play one on TV. This article must not be construed as legal advice, and you need to consult with your attorneys before taking action on the issues raised here. Yes, my lawyer made me write this.

Patent Mills

All too often, the Patent and Trademark Office grants patents that are overly broad and seem to ignore much of prior art. I used to work for a software company that had been issued a patent that could have covered most of distributed computing.

Recently, I came across a single patent that seemed to cover all the most interesting parts of CRM and ecommerce. The fact that much of what the patent claimed as a new innovation had been bundled in Windows 95 didn't seem to bother the PTO's patent examiner. Yet this patent is now being used to shake down ecommerce companies all across the U.S. The fact that none of them knew about this patent when they built their ecommerce systems doesn't matter: the royalties and the damages probably will be paid. Even if the alleged infringers win their cases, at $500 an hour the lawyers and expert witnesses get expensive.

That's why large software companies are patent mills. On any given Tuesday, both Microsoft and IBM are probably issued a dozen patents. These patents aren't used as much to protect their innovation as they are to ward off patent trolls — first with patents that may contradict what the trolls have, and second with a mountain of IP that will be used as cross-licensing fodder during the settlement negotiations.

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