Jonathan Schwartz: How to play patent games with Steve Jobs, Bill Gates
Former Sun Microsystems CEO Jonathan Schwartz chimed in on patent lawsuits, threats from the likes of Steve Jobs and Bill Gates and how to manage a staredown properly.
Schwartz on his blog outlined the patent lawsuit showdowns he's run into. Exhibit A: Apple chief Steve Jobs:
In 2003, after I unveiled a prototype Linux desktop called Project Looking Glass, Steve called my office to let me know the graphical effects were “stepping all over Apple’s IP.” (IP = Intellectual Property = patents, trademarks and copyrights.) If we moved forward to commercialize it, “I’ll just sue you.”
My response was simple. “Steve, I was just watching your last presentation, and Keynote looks identical to Concurrence – do you own that IP?” Concurrence was a presentation product built by Lighthouse Design, a company I’d help to found and which Sun acquired in 1996. Lighthouse built applications for NeXTSTEP, the Unix based operating system whose core would become the foundation for all Mac products after Apple acquired NeXT in 1996. Steve had used Concurrence for years, and as Apple built their own presentation tool, it was obvious where they’d found inspiration. “And last I checked, MacOS is now built on Unix. I think Sun has a few OS patents, too.” Steve was silent.
And then there's the run-in with Microsoft's Gates, who makes a nice exhibit B on patent lawsuit strategy. Schwartz writes:
As we sat down in our Menlo Park conference room, Bill skipped the small talk, and went straight to the point, “Microsoft owns the office productivity market, and our patents read all over OpenOffice.” OpenOffice is a free office productivity suite found on tens of millions of desktops worldwide. It’s a tremendous brand ambassador for its owner – it also limits the appeal of Microsoft Office to businesses and those forced to pirate it. Bill was delivering a slightly more sophisticated variant of the threat Steve had made, but he had a different solution in mind. “We’re happy to get you under license.” That was code for “We’ll go away if you pay us a royalty for every download” – the digital version of a protection racket...
Schwartz said Sun was prepared for Gates.
So when they created their web application platform, .NET, it was obvious their designers had been staring at Java – which was exactly my retort. “We’ve looked at .NET, and you’re trampling all over a huge number of Java patents. So what will you pay us for every copy of Windows?” Bill explained the software business was all about building variable revenue streams from a fixed engineering cost base, so royalties didn’t fit with their model… which is to say, it was a short meeting.
What can we learn from Schwartz? A few lessons:
- If you have patents you have an arsenal to discourage claims and lawsuits. That's why Apple is suing HTC and not Palm or Motorola.
- You have to be prepared with some bluster of your own.
- You can't be bullied by larger players.
The one thing where Schwartz runs off the rails is this comment:
Suing a competitor typically makes them more relevant, not less. Developers I know aren’t getting less interested in Google’s Android platform, they’re getting more interested – Apple’s actions are enhancing that interest.
Sun was sued numerous times – most big companies are sued almost constantly by entities or actors whose sole focus is suing others.
Now it's quite possible that Android will get developers to rally around it. But the Sun analogy falls a bit flat. Sun lost relevance a little bit at a time---intellectual property portfolio be damned.
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