I got a note from a senior figure in the IP market last night following up on the Twitter IPA blog we ran yesterday. This is what it said:

You write:

As long as inventors are on side, Twitter will still be able to pre-emptively assert patents where it suspects infringement; while the IPA makes clear that Twitter sees any entity that has filed patent litigation in the past 10 years as fair game for ‘offensive’ assertion. Given that this applies to myriad companies, including the likes of Yahoo!, Microsoft, Apple, Google (via Motorola) and perhaps Facebook too

However, it's not that simple. The IPA actually says:

(b) against an Entity that has filed, maintained, or voluntarily participated in a patent infringement lawsuit against another in the past ten years, so long as the Entity has not instituted the patent infringement lawsuit defensively in response to a patent litigation threat against the Entity; or

The second clause (beginning "so long as...") really muddies the analysis. It doesn't require that a lawsuit have been filed against a company which has asserted its patents (thereby removing that company from the list of those Twitter can sue), merely that there has been a threat of patent litigation. Thus, all the companies you list can claim that they were threatened by litigation and had to file first to argue that Twitter doesn't have the ability to file suit on patents covered by this IPA.

As you say, this will really gut the value of the Twitter portfolio.

Food for thought.

The companies we listed were Microsoft, Yahoo!, Google, Apple and Facebook. There are many others that we could also have named. What my correspondent is saying is that the way the IPA is written gives all of them wriggle room. If Twitter were to sue them pre-emptively at some stage on the basis that they are fair game because they had filed an offensive lawsuit in the past 10 years, they could come back and say “well actually, we have only ever sued people when we felt they posed a patent litigation threat”. Thus, by its own rules, Twitter could not take action against them.

I am not a lawyer and could be wrong here, but I doubt whether the IPA is a legally binding document – instead, Twitter gets to decide what it means. However, the problem the company has is that if it is seen to be going against the spirit of the IPA all the positives that it has sought to accrue through issuing it immediately go out of the window. Thus, even if this were not the intention, Twitter has created conditions which make it very difficult for it to defend its patent portfolio from infringers, unless it gets the say-so of veto-holding inventors.

My guess, however, is that this is exactly what the company intended. Clever lawyers could probably find a way through the IPA that would enable Twitter to justify suing anyone at any time. But Twitter does not want that. It wants its hands to be tied; it wants not to be able to sue, because that, it believes, is in its best interests. Making a moral statement about patents and the way they are used, Twitter’s management has decided, trumps strategic freedom.

Whatever the IPA means for the value of the patents the company owns, whatever it tells investors about Twitter’s commitment to differentiating innovation, has been deemed to be worth it. I find that extraordinary. For the sake of a few days of positive headlines and a bit of good karma among some programmers in Silicon Valley, Twitter has essentially thrown away any commitment to patenting and patent strategy beyond the accumulation of rights for defensive purposes.

That may look like an attractive option now, but how will it seem to those running the company in five years time when a potentially valuable invention they have patented is fair game for infringers? The likelihood of Twitter being able to develop a decent licensing revenue stream is now significantly reduced; while, as we saw yesterday, the chances of it ever selling patents for a meaningful sum has virtually been eliminated. Using patents to facilitate collaborative agreements or open innovation is now a forlorn hope, as third parties know they can pretty much use the company's inventions with no comeback. And as for using patents as collateral in any financial transaction at any time: forget it. 

Twitter clearly does not believe that patents are assets with any strategic value at all; they are just there to protect it from litigation. How very 20th century.  Obviously, it’s up to the Twitter board to do what it thinks is best for the company, but it would be interesting to know what input it received on the IPA from internal and external patent counsel. Were all the implications of what it meant in practice thought-through? Why was closing paths to protecting innovations underpinned by patents considered to be in Twitter’s best interests? Why has patent monetisation been almost completely ruled out? And, most important of all, did anyone think to ask these questions in the first place?

Sectors

IP management, IP litigation, Patents, IP business