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Business - Written by on Wednesday, July 2, 2008 15:03 - 4 Comments

Big Tech Companies Form Patent Alliance, and are Corporations the Future of Government?

Tech companies have long suffered from patent trolls: companies that bulk-buy cheap, unused patents from bankrupt companies, wait until someone becomes successful at doing something similar, and then launch a frivolous infringement suit that gets settled out of court. Well now the big tech companies are teaming up to fight back. Verizon, Google, Cisco, HP, Ericsson, and others have formed Allied Security Trust (AST): a venture that will buy-up patents that members might be interested in using down-the-road.

From Dan Slater at the WSJ Law Blog:

To head off concerns that the group will use litigation as a strategy, Allied Security Trust will sell the patents they acquire after they’ve granted themselves a nonexclusive license to the underlying technology. “It will never be an enforcement vehicle,” said [AST CEO] Hinman. “It isn’t the intent of the companies to make money on the transactions.”

(Too bad they are selling the patents instead of making them public, along the lines of projects like Open Invention Network and Patent Commons. )

The need for AST underscores how broken our intellectual property legal framework is. Rather than foster innovation, as it was designed to do (and was perhaps once effective at), it is allowing rent-seeking patent trolls to tax business and stifle innovation.

It is disgraceful how incompetent government has been at acting on intellectual property reform. But AST is an example of how businesses are addressing government’s failings by using their market power to make the intellectual property environment more open and collaborative.

Government has traditionally been seen as the instrument for openness and collaboration within an otherwise competitive economy. But I think that is changing.

Companies, not governments, are increasingly leading efforts to deal with social ills: car makers are following Toyota’s lead in going green, Starbucks sells more fair trade coffee than anyone else in the world, and shoe companies like Nike and Reebok are voluntarily audited by the non-profit Fair Labour Association. Legislators have tried, and failed, to act on all of these issues. But companies have made progress.

In my post The End of Capitalism, I argued that we are moving towards a post-capitalist society in which power within companies shifts from shareholders to stakeholders,  and the source of value within companies is its social value. This trend may include the replacement of our governance institutions (developed in parallel with capitalism and now losing their legitimacy and effectiveness) with a much flatter, collaborative, and business-led model for government.


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Jul 2, 2008 16:03

It’s less a problem with government than the relationships between corporations and government agents. With an administration like the one we have, which hates the idea of government (unless it’s used to wage war), of course the government is going to deteriorate. I’d much prefer to replace the people in government who do not believe in government than replace it with institutions motivated by nothing but profit.

Will Dick
Jul 2, 2008 17:45

Thanks for the comment.

But I think that the problems with government run deeper than those in power.

Our political system is setup to reward conflict, not collaboration: power is gained by defeating opponents, not reaching compromises. Politicians are meant to oversee thousands of government programs, making it impossible for them to know enough about each one. And perhaps most importantly, politicians have little knowledge of the daily runnings of those programs. Most organizations choose leaders who have experience within the organization, or at least similar experience at another organization. But the only experience many of our politicians have is getting elected.

We need a new form of government that addresses these issues.

In my End of Capitalism post, I explain that the role of the corporation is evolving from being a tool of shareholders (that maximizes profit) to a tool of communities that maximizes social good.

If this is true, then corporations might be appropriate entities to take on governance roles.

Wikinomics » Blog Archive » Open Source Political Party to Runs Candidates Bound to Consituent e-Votes
Jul 11, 2008 12:01

[...] Government is engaging with the old system and building their new system on top of it. Last week I posted about how the big tech companies’ new patent alliance is a work-around for ineffectual IP laws [...]

Jul 23, 2008 11:11

Alright, so you say “If this is true, then corporations might be appropriate entities to take on governance roles” and name a few corporations like Nike and Starbucks that have made some improvements.
First, as government deteriorates, there are no guarantees of corporate responsibility – only isolated examples. What about Wal-Mart, for example? They’re certainly not going to be developing sustainable business practices in the near future.
Second, the thing you are almost getting at but haven’t quite made it is the power behind both the government and corporate forces. That is the power of social movement. I don’t need to back up my case in regards to government – obviously that is based (albeit imperfectly) on people; in regards to corporate responsibility, those examples you gave only came about BECAUSE of social pressure. Nike and Reebok allow for auditing of their production because there was a massive movement and boycott against them. Not because a board of directors had a change of heart. The same is true for the Fair Trade coffee movement and the green energy movement. Corporations will always be ruled by profit – the question is how much can social movements become a market factor (ie, boycotts) in pushing for progress.

Just a though, but if you want to look at the future of government and business, look at the underlying power structures, not just the movement of politics and corporations.

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