August 30th, 2010 5:33 pm | by MARK ZUSMAN News | Posted In: CLEAN UP, Business, Business, CLEAN UP

Paul Allen Sues Google, Facebook and Others and is Called All Sorts of Names

Paul Allen at Training Camp Day 1

The tech community in the Northwest and across the country has its underwear in a twist over a lawsuit filed last week by Paul Allen.

The Trail Blazers owner and co-founder of Microsoft is already one of the more interesting billionaires on the planet. He has the biggest toys, has spent millions searching for extraterrestrial intelligence, has built museums dedicated to Jimi Hendrix and science fiction, and, of course, is the reason that Portland still has a professional basketball team.

Allen's lawsuit, however, is moving him into another sphere entirely—that of a "patent troll," the pejorative given to enemies of the entrepreneurial spirit. At least it is if you read the press clippings over the past few days.

First a bit of background: Allen filed suit last week in U.S. District Court in Seattle, charging that Facebook, Google, eBay and eight other companies are using technology that he owns. Many years ago, Allen financed a now defunct Silicon Valley laboratory called Interval Research that over a decade was issued about 300 patents. While that company is no longer in business, Allen retains ownership of the patents, patents that include, Allen argues, the technology that allows ads or stock quotes to flash on a computer screen and the technology that provides suggestions for related reading next to a news article. Google and others use that technology and therefore, claim Allen's lawyers, Allen is owed squillions.

While you might think that a billionaire with a philanthropic streak suing huge companies might find some support, he's not getting much. Almost universally, the media reports have been damning, calling Allen's effort a shakedown, silly and unconscionable. Worst of all, critics have labeled him a patent troll, which is somewhat akin to calling a journalist a plagiarist.

A patent troll is person who sues companies for patent infringements in an opportunistic fashion without himself ever having any intention to manufacture or develop the patented product. A troll is also a person who files an application for a patent and then interprets that patent so broadly that he or she can then claim infringement. As one writer put it, a troll exists "for the sole purpose of extorting money from businesses by threatening them with lengthy and expensive litigation. . . win, lose, or draw, it costs $3- to $5-million dollars to defend against a patent lawsuit." Patent lawsuits have been doubling in number over the past few years and some experts say patent trolls stifle innovation.

It's not clear why Allen, whose net worth is more than $13 billion, is motivated to undertake this legal attack given the bad publicity he is receiving, though his lawyers state that the principles of protecting patents are as important as the money involved.

Nonetheless, a self-interested Portlander, particularly the self-interested liberal Portlander, might come down on the side of patent trolls. For one thing, Allen gives about 12% of his philanthropy to Oregon non-profits, so more money for him means more money for good causes in Oregon. For another, this state has been the beneficiary of perhaps this country's biggest patent troll. That would be Jerome Lemelson, an inventor with more than 600 patents. Lemelson filed hundreds of patents and then sued when others brought them to market. To his supporters, he was brilliant. To detractors, he was a pirate.

In 1997, Lemelson passed away but his wife and one of his sons, Eric, live in Oregon, and control a foundation that has more than a quarter of a billion dollars of assets. In addition to the millions that the foundation has bestowed upon Portland organizations from OMSI to Ecotrust to Ilahee, Eric Lemelson has become, in a few short years, the single biggest giver to Oregon Democratic candidates and causes. Lemelson, who is also a fine winemaker is, to give but one example, the biggest donor to Bob Stacey's candidacy for the president of Metro. Of the $404,000 Stacy has reported raising to date, more than 18 percent has come directly from Lemelson.
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