CDN – Patent conundrums

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How can one company (Level 3) state that broad patent coverage is necessary to even enter the business, and another to all the way through an IPO (Limelight) with almost none? The whole patent situation amongst CDNs makes it virtually impossible to pinpoint value, and it is a symptom of the breakdown in our patent system, especially as applied to software and the internet. Here’s a quick summary of some of the players in the CDN patent soap opera:

• Akamai – dozens issued, more applied for,aggressive in the courts
  
• AT&T – dozens
• Level 3 – dozens issued, more bought from IBM, both offense and defense
  
• Limelight – 1 patent, 15 more pending, being sued by Akamai and Level 3
• Internap – none on CDN that I can find, 7 on intelligent routing, not yet being sued by anyone for it
  
• Mirror Image – 1 patent
• Panther Express – none I can find
• Velocix – none I can find

There are many other small ones, but that will do for now. Akamai has sued the assets Level 3 now owns, it is suing Limelight, and it has sued, broken, and bought several CDNs in the past (Speedera comes to mind). Mirror Image sued Speedera back in the day as well. Why has nobody sued Panther or Velocix yet? It is probably because they aren’t a threat yet, because the actual coverage of the patents isn’t the determining factor in whether a suit is filed.

Today, if you do any sort of business on the internet, there is no way to definitively say you are or aren’t infringing on a patent. There is no reference you can check to see if any action is infringing or not infringing. Thousands of patents out there might apply, but there is no way to judge which do, which are enforceable and which are not. You are infringing if a judge or jury says you are – but before it goes to court literally nobody knows. It is often lamented that the judge and jury lack the tools to understand or even clarify the subject, but it is worse than that – the jury could be 12 Nobel laureates in the field and they would still lack a logical framework on which to hang their decision. Every case makes it up on the fly. The claims on which patents are granted and enforced are so ambiguous that enforcement seems entirely arbitrary.

The result? Intellectual property in the CDN space is a total mess. Nobody knows what is patented and what isn’t, what constitutes a new invention and what doesn’t. Not even Akamai. So you can either ignore the risk (properly noted in your filings to cover your butt), you can stockpile patents to deter attacks, or you can sue anybody who might be a threat – who knows, maybe you might win, and if not, at least you slow them down. We see all three cases in the CDN space, along with some hybrids, and who is right defies analysis – at least until the jury comes back. When that happens, we know who ‘won’, but we rarely know why.

Ike Elliott wrote several posts on this subject a while back, concluding that the entire idea of patenting software should be ended. I’m of the same opinion, but I’ll go one step further. The world has outgrown a simplistic patent system that was originally designed as protection for individual inventors making small items in their workshop. The entire concept of a patent has mutated into unrecognizable form, these days patents are of the lawyers, by the lawyers, and for the lawyers. The rest of us just get to pay for them. We need to redesign the whole system from scratch.

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