Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Patent Madness: Who Invented The Telephone?

A week from today my younger daughter Amelia graduates from college and on May 13 she turns 22. Amelia is smart, ambitious, and motivated. She figures that if she plans out her life right now she can formulate a plan for her career by the end of the month at the latest that will solve all potential problems. So, she has been besieging me with intense questions about what to do with her life--questions that fathers in some fantasy world have readily at hand. What will the future bring and how should she prepare for it?

The fact that I do not know what the future will bring does not satisfy her.
The current situation regarding patents clarifies for me how little I know and how suspicious I am of what I do know.

The classic historical dispute over the patent for the telephone comes to mind. If you enter at the Google prompt "Who invented the telephone?" and also look at the Wikipedia entries on the subject, including this one: the story of Alexander Graham Bell's reported bribe of an alcoholic patent examiner makes one wonder.

More germane is that Western Union was offered to buy Bell's patent for $100,000. Western Union's CEO said the invention was "nothing but a toy."
In the late 19th Century, it was hard to believe that any innovation could supplant Western Union's dominance of communications and that the time would come that the mighty telegram would become obsolete.

As I see it, there are two issues involved with the current gold rush for patents for smart phones and related technology. The first has to do with how does our society encourage innovation and the second with how does an innovative company protect itself from lawsuits that could threaten its existence.

Bloomberg Business Week Magazine ran a fascinating cover story on April 2nd entitled "Steve Jobs' Last War." The war, which is ongoing, represents Jobs'
attempt to destroy the Android by proving that it is a rip off of Apple patents for the iPhone. So far, Apple has not done well in court and Android has filed counter-claims against Apple which have not been thrown out of court. The reporter observed that court costs in the dispute are higher than the budgets of some countries.

So, to go to the database for AOL patents, it is difficult to know the value of the example # 8,082,511, "Active and passive personalization techniques."

Is there another patent held by someone else that essentially does the same thing but has a different number and a different name? If so, is it likely that the other patent is really the valid patent and # 8,082,511 is worthless?

The New York Times has been reporting this month on world-wide lawsuits designed to determine the validity of patents in this complicated technical area. Indeed, the business strategies of large companies such as Facebook, Microsoft, and Google is to buy up as many patents as possible so that rather than letting the courts decide (at even greater expense) the companies can protect themselves. Therefore, in the process, patents of no intrinsic value are gobbled up with patents of significant value. At this point, it is up to the courts to decide whether a given patent has value or not. By one vote, the Supreme Court ruled at the end of the 19th century that Western Union's patent of the telephone was not valid. As for the truth....

The number of questions that follow as a consequence of this business strategy is more than I can hold together this morning. Consider this. Let us say you own stock in Microsoft. The corporate officers of Microsoft, who legally are in your employ, decide to spend $1 billion on AOL patents some of which may be valuable and some of which may be worthless. As a stockholder what do you think of a strategy that involves spending good money for a worthless item? Then, at the Securities and Exchange Commission, how do regulators deal with such activity?

I will now return to giving advice to my daughter. I will tell her how I once wrote a speech for a computer training program in Minneapolis. I wrote that keypunch card workers will never have to worry about getting a job again.

--Joel Solkoff, the author is a consultant on assistive technology for the disabled at Penn State's virtual reality lab for the construction industry. [Special thanks to Mrs. J. Hart.]