This post is not about the merits (or lack thereof) of The Pickens Plan, however. Rather, as an IP Business Strategist and Consultant (more info here: www.jackiehutter.com), I am intrigued by the patent issues that will invariably arise when so much money is available for the taking. In short, with his announcement of The Pickens Plan, I think that Mr. Pickens may have launched a “gold rush” of patenting, which will be followed by rampant patent litigation.
This gold rush mentality is not unique to Mr. Pickens’ plan. Rather, throughout American patent history, innovation leaps have spurred simultaneous patenting efforts in areas such as barbed wire, early telephone technology and television, and today’s innovation leaps are no different. As one recent example, we have seen simultaneous patenting activity in recent years in the area of voice over IP (“VOIP”) telephony (described here). Looking back at VOIP patent history, it appears that anyone with a modicum of expertise in the area of VOIP thought they would strike it rich by obtaining a patent from which they could extract patent rents (in the form of royalties) from a company that actually sold VOIP technology. To give you a sense of the order of magnitude of patents, this article states that there were over 2000 VOIP-related patents in early 2007, which is a huge number of patents for a technology that had not even been demonstrated to be commercially viable.
Given this large body of VOIP-related patents and litigation, it cannot be controversial to contend that patent complexity could have been substantially responsible for slowing widespread adoption of this technology by the marketplace. At a minimum, the massive investment in legal fees and time needed to manage this complexity took the participants’ eyes of their respective businesses. It appears that most of the VOIP-related patent issues have been resolved in the last year, and I am beginning to see a resurgence of advertisements for VOIP providers, such as Vonage. However, it remains to be seen whether VOIP technology will be able to make up for the time and money lost to several years of business uncertainty caused by patent complexity and contentious litigation.