He is co-founder of Microsoft. He has expensive test for yatches. But is Paul Allen a Patent Troll? Google “Paul Allen Patent Troll” and you shall find —- entries on the subject. Thousands of websites, blogs and forums debating whether Paul Allen after his recent decision to sue Ebay, Apple, Google and and a dozen other technology giants for intringement of patents taken more than 10 years back on currently day-to-day features of the web by a research laboratory funded by Mr. Allen that has shut shop 10 years back. The case was thrown out in early December by a district judge for failure to identify specific products in the plaint, but Allen’s company has relaunched the suit now with specific allegations against products of the companies, which include google android and iPhone.

This is definitely one of the biggest patent suits over software ever, especially because for big software companies this is a very unusual move. Speculations are abound on whether this is going to inspire some dramatic changes in the software patenting regime, as more and more people are now up in arms against software patents as these patents have ended up giving broad protection over some of the simpler and very common features of the web as we know it today. In words of Ed Every “Never in my lifetime was innovation and invention held in such low regard. Eventually laws will reflect this short-sightedness. Of course the consequences are predictable.”

Richard Gibbs commented on Wall Street Journal that “Bringing a patent infringement suit doesn’t usually affect a large company that is doing well. It tends to destroy the smaller companies in the field, because when they go to raise money, and they have to tell prospective investors that they may be infringing patents based on lawsuits currently in the mill, the investors head for the hills, or the nearest bar, whichever is closest.”

Startups are usually safe from Patent Trolls: what happened now?

In reality, startup companies are seldom sued by a big company – simply because there is not enough incentive. To start with, there is the stigma of steamrolling smaller companies, then there is little chance of recovering any big amount from a startup which is yet to find major financial success. Therefore, startup owners rarely bother about patent issues such as this, unless they are planning to patent some of their own innovation.

However, it seems the table has turned with Allen’s move. He is suing erstwhile startups when they have grown really big, and it will certainly be extremely profitable should he succeed, and it could be a really trying situation for some of the startups at the receiving end.

The takeaway simply is that even if you are building a startup, if you are into the tech business, you need to look out for patents you are ending up infirnging, even if the patent holders are yet to put the technology to use. Otherwise, you are safe until you grow big enough to be noticeable by the patent trolls.

What does it mean for day-to-day business on the Web?

If these patents are enforced, some of the business models of day to day internet services we use, such as GMail, blogger, eBay could fail or become costlier (may not remain free or viable if huge license fee have to be paid) and many features of WordPress and millions of freewares and widgets that you are so used to seeing on various websites and perhaps use yourself may not remain available.

The other concern is that this may trigger a huge patent war – which seems sort of inevitable. If important features of the web that are widely used by big and small corporations and individuals alike are under attack of patent hoarders, the natural reaction will be to challenge validity of these patents – and foreseeably many of these patents would not stand the challenge. This may bring more technology to the public domain and make them available for exploitation by anyone out there.

It has been observed that most of the internet giants have ‘patent arsenals’ but they use restraint as any sort of patent war would lead to “mutually assured destruction” – that is, their product and services offerings through the internet will suffer either by loss of ability to offer certain products due to enforcement of patents, or their own patents may be lost due to post-grant oppositions which may reduce attractiveness or valuation of a company to investors.

From a patent law perspective this also is indicative of the non-suitability of a patent regime to the web. The web is a fast developing medium where new features and innovations spread through overnight, and newer and better technology is developed by thousands of developers. The ease with which softwares are patented may seriously affect the growth of technology on the web.