Timothy B. Lee

Timothy B. Lee, Contributor

I write about how technology shapes society

7/07/2011 @ 8:00AM |59,370 views

Microsoft's Android Shakedown

Image representing IBM as depicted in CrunchBase



This story sheds light on the recent string of stories about Microsoft demanding royalty payments from various companies that produce smart phones built on Google‘s Android operating system. Intuitively, this doesn’t make much sense. Most people would say that Google has been more innovative than Microsoft in recent years—especially in the mobile phone market—so why is Microsoft the one collecting royalties?

The reason is that Microsoft has more patents than Google. A lot more. The patent office has awarded Google about 700 patents in its 13-year lifetime. Microsoft has received 700 patents in the last four months. Microsoft’s total portfolio is around 18,000 patents, and most of those were granted within the last decade.

Even if you think Microsoft is more innovative than Google, the engineers in Redmond obviously haven’t been 25 times as innovative as those in Mountain View. So why the huge discrepancy?

Getting software patents takes a lot of work, but it’s not primarily engineering effort. The complexity of software and low standards for patent eligibility mean that software engineers produce potentially patentable ideas all the time. But most engineers don’t think of these relatively trivial ideas as “inventions” worthy of a patent. What’s needed to get tens of thousands of patents is a re-education campaign to train engineers to write down every trivial idea that pops into their heads, and a large and disciplined legal bureaucracy to turn all those ideas into patent applications.

Creating such a bureaucracy has a high opportunity cost for small, rapidly growing companies. Most obviously, it requires spending scarce capital on patent lawyers. But it also means pulling engineers away from doing useful work to help lawyers translate their “inventions” into legal jargon. And that, in turn requires a shift in corporate culture. Startups are innovative precisely because they avoid getting bogged down in paperwork. Convincing engineers to pay more attention to patent applications necessarily means that they spend less time doing useful work, and that can be fatal to a young startup.

The opportunity costs to getting patents is much lower for mature software companies like Microsoft or IBM. They tend to have more money and engineers than they know what to do with. And their software development processes are already slow and bureaucratic. So it’s much easier to add a “fill out patent applications” step to the official software development process, and the negative effect on engineers’ productivity is much smaller.

These differences are exacerbated by the long time lag between when applications are filed and patents are granted. Most of the 52 patents Microsoft received this week were filed between 2006 and 2008. One was filed as early as 2003. In 2006, Microsoft had been steadily cranking out patent applications for years, while Google was only just becoming large and profitable enough justify devoting serious resources to patent filings. So even if Google cranks up its patenting machine to Microsoft’s level this year, it won’t start seeing the fruits of that effort until around 2015.



The result is a transfer of wealth from young, growing, innovative companies like Google to mature, bureaucratic companies like Microsoft and IBM—precisely the opposite of the effect the patent system is supposed to have.

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  • krsaborio krsaborio 2 years ago

    I’ve gathered documents that show innovations made by Blackberry, Microsoft, Nokia, Sony Ericsson, Sun and Symbian. At this point I’ve covered the years 1993 through 2005:


    People that claim “Google has been more innovative than Microsoft” usually avoid discussing about hardware constraints the early innovators had to deal with.

    By the time Google entered the market in late 2007, hardware capacities in terms of processor speeds, memory and screens had improved greatly both in capacity and price.

  • Excellent piece-
    I filed a software patent application through my employer (which has an army of patent lawyers). When the lawyers had finished it and I read the application, I was completely lost and confused. If I was reading that patent from scratch, I would not have been able to tell you what was being patented.

    The solution is to have very different patent process for software- it needs to be simple and fast. Probably a good place to start would be to have actual software engineers in the patent office.

  • waltfrench waltfrench 2 years ago

    Google deserves our support and recognition for its great advances in building connections between words, ideas and sites. Yes, that is a great innovation.

    The Android system? Not so much. A public-domain OS; interfaced to a bunch of off-the-shelf chips; a java run-time explicitly modeled after Sun’s; UI very much in the same mode as Apple introduced a year earlier. Nearly unusable in its early release, and ergo, not solving a problem that nobody else had solved. Good work, for sure, but the definition of “not innovative.” Yes, parts of it certainly are; I’m very impressed by Dalvik and others like the notifications. But those are bolt-ons.

    Its innovation was in its business model of providing free, and increasingly refined, software to handset manufacturers whose own software skills were too limited. And THAT is where it becomes obvious that its NON-innovations were in fact the original work of firms that it was competing against.

    The entire tech industry relies on licensing each others’ work. To my knowledge, there are NO freely-available CPU designs in use on desktops or mobile devices; EVERYBODY pays for access to Intel’s and ARM’s talents because the going price for the intellectual property is so much less than developing one’s own. EVERYBODY licenses GSM and/or CDMA because It Just Works. Soon, most everybody will be licensing LTE, paying Apple for work that Nortel transferred to it.

    So if you claim that IP stifles innovation, you gotta show that Nortel would’ve been able to develop LTE, and make it available as a standard, if its backers had been willing to support the effort with loans and equity, knowing that they would get a guaranteed ZERO return on it. Fat Chance Department: Engineers might love to change the world with their efforts, but somebody has to organize and incent them to do so.

  • When I worked at Microsoft, it was clearly evident that they encourage patent submissions, no matter how trivial. They issue patent cubes to employees and pay you a small amount for a submission and then you get a nice plaque and a bigger amount for an actually patent award. One colleague had over 75 cubes, but no plaques. Others had about 5 to 1 cubes to plaques, but they all had a cube wall in their office.

    So until Google gets that same culture, of rewarding and having that be a badge of honor, for simply trying to get a patent, they will lag behind.

    This is all part of Ballmer’s plan on how to compete with Android…can’t out innovate them, the culture at MSFT is way too cumbersome on OS development to be that agile, so become like the companies they fought in the 80-90′s and simply sit back on your IP and license fee them to death. People forget that the key feature that allowed explosive growth on the iPhone was Exchange coming in the iPhone 3, along with some of the apps, but without Exchange, how many people would really have gone ahead with the device to create the app market seen today?

  • Chunka Mui Chunka Mui, Contributor 2 years ago

    Nice piece, Timothy. You nicely illuminated the general problem and brought it home with a timely case. It’s an especially perverse problem with software patents. Dan Bricklin has a nice discussion about this: http://www.bricklin.com/patenting.htm Imagine how the software industry might have evolved if he and Frankston had patented Visicalc? But, as Dan writes, software patents are a fact of life now (for now) and innovators have to adjust accordingly, whether they like it or not. I can’t help but think, however, that institutionalizing the pursuit of trivial patents would have significant cultural and economic cost for companies that do so.

    More generally, old in the tooth companies will wield whatever club they can against competitors, and patents are a too easy bludgeon. I guess it is one of the advantages of old age, as evidenced by the habits of MSFT, IBM, Kodak, Oracle, TI, etc. Unfortunately for them, that advantage is offset by numerous other infirmities. In this case, MSFT might be able to exact a tax on Android. Do you think it’ll do much to help grow market share for Windows phones? Perhaps it might even hurt.

  • serafin serafin 2 years ago

    Patents are definetly a good thing, but they must help to encourage to be innovative. If they are only used as a weapons in a business war, I do not see the origin idea of itelectual properties. Do you really think, it helps that there would be a smart phone monopol? No! So, keep samsung away from the US market by the right of some – in my opinion – stupid patents does not help the innovative process at all. So, we are trying a new approach by proofing that a lot of these patents are invalid. If you wanna help, just check out the samsung apple case on our homepage:

  • capt3292 capt3292 1 year ago

    All high tech corporations raid their employee’s intellectual property under the guise that the corporation provided the tools and that the concepts that the employes conceived were created on their property using their facilities and resources. If one line of code is changed in an existing software a patent applied for immediately. Corporation allocate millions to just the legal staff to maintain the patent flow lest some enterprising employee would take his or her’s concept and create a wealth of their own. So if one has a unique concept, develop it off premises with privately owned equipment and make it outside of the corporations core market thrust.