Imagine a world in which Microsoft (MSFT) wasn't allowed to sell Windows or Word, no one could use a Blackberry, Intel's (INTC) chips were taken off the market and every company that wanted to deploy Linux had to pay an exorbitant fee to an obscure software vendor.
That world doesn't exist, of course. But each of those scenarios could have been realized if the outcome of five major patent lawsuits had been different. It easy to dismiss the AAPL)" target="_blank">recent lawsuit by Apple against HTC, the maker of Google's (GOOG) Nexus One smartphone, as something that only lawyers need to care about. Indeed, most landmark patent suits are settled — often at great expense — without causing an upheaval in the technology industry.
Even so, patent litigation has become more than a cottage industry in Silicon Valley. On the one hand, it protects intellectual property developed by independent entrepreneurs and industry giants alike. But it also wastes untold millions of dollars a year that could be better spent on innovation, says Charlene Morrow, who heads the patent litigation practice of Fenwick & West. "When startup valuations were very high, and a new company got a round of funding, you could absolutely count on a non-practicing entity to file a patent suit," she says.
Non-practicing entity? That's a polite term for what others call a "patent troll," a company that purchases a patent, often from a bankrupt firm, and then sues another company by claiming that one of its products infringes on the purchased patent. Patent trolls typically have no actual technology or products on the market.
We've tapped the memory banks of Silicon Valley veterans who recount five of the most sensational patent cases ever to roil the technology industry.
1. Who Invented the GUI?
Although it seems like a relic of the distant past, it's only been 30 years since Microsoft launched Windows 3.0, its first successful operating system to sport a graphical user interface. It was a great idea, but whose idea was it anyway?
According to Apple founder Steve Jobs, it wasn't Microsoft's; it was Apple's. Or was it? Legend has it that Jobs actually got the idea when he took a tour of the famed Xerox (XRX) PARC and saw an early version of a windowed operating system, recalls long-time semiconductor analyst Nathan Brookwood of Insight 64.
Whether that's true or not, Apple claimed that the "look and feel" of the Macintosh operating system, taken as a whole, was protected by copyright, and it sued Microsoft in federal court in 1988. Not to be outdone, Xerox jumped into the fray before the original action was resolved and sued Apple for stealing its ideas.