A Patent “Don’t Be Evil” Policy

by Stephan Kinsella on June 22, 2011

One of my comments on a recent thread about Apple and Microsoft, where someone asked whether it is moral when companies use the patent system, e.g. sue others for patent infringement:

So, the problem is that if Apple (say) did not acquire and even use its patents offensively, this is not in the interest of the shareholders. Suppose the board decided on libertarian grounds not to sue someone for patent infringement that they could extract $100M from. Then this is a waste of the shareholders’ resources; it’s a violation of fidiciary duty, and could lead to termination and liability for the directors. You just can’t substitute your pet political preferences for the pecuniary interests of your shareholders.

This is the problem with having a corporatist state: it makes it almost impossible for a pure comapny to rise to the top. Even if one person owned a company 100% and thus had the right to refuse to, say, use patents in the normal way, this puts them at a competitive disadvantage with respect to others, so we can expect that most companies that emerge and prosper will be those with few ethical qualms about using the existing rules. That is why it is important to change the existing rules.

But I do think there is no excuse for lobbying the state for more rules. Further, I have in my mind that somewhat along the lines of Google’s slogan “don’t be evil”, you start a company with the express company policy that it will never use the state courts aggressively against other companies, but that it will use them defensively. So this way shareholders who buy shares know what the policy is so they cannot blame managmenet and directors for not suing someone for patent infringement. Then you announce to all your customers and competitors that you will never sue someone for patent infringmenet but you have no qualms about countersuing someone who sues you first. So then you would acquire patents like others do, but you would be acquiring them expressly for defensive purposes–and you would let the world know this.

Now that would be a genuinely “don’t be evil” policy, and to be honest, I don’t think it would hurt the company much. Might even give it good will with customers, a good image, good PR, etc. But it is unfortunately essential in today’s world for such companies to acquire patent arsenals for defensive purposes. The problem is that once they have them, they feel obliged to use them offensively when the opportunity arises.

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