It is only Monday, yet all hell has broken out in the tech industry’s insatiable desire to create a de facto intellectual property (IP) attorney annuity protection act. Maybe the U.S. Congress should set aside consideration this week of what should have been a non-controversial cyber security bill that has turned ugly, and instead agreed to protect IP lawyers’ incomes de jure instead.

What else can one make of the decision – which, according to Microsoft was always part of the plan -- by Microsoft to sell to Facebook for a tidy $550M 650 patents of the 925 it acquired from AOL (News - Alert) on April 9 for $1.056B? And, what about the revelation today that this past Friday, a Pennsylvania company named FlatWorld (an irony I will get to later) filed suit in the U.S. District Court for the Northern District of California, everyone’s favorite IP suit court, claiming that any Apple (News - Alert) product with touch screen capabilities was infringing upon FlatWorld’s patents? Clearly I should have gone to law school.

Of Microsoft, Facebook (News - Alert) and AOL — ecosystem plates shift causing minor tremor  

For those of you who follow items I have written in the past many months about the IP wars, it should come as no surprise that I think the appropriate context for Microsoft (News - Alert) being the stalking horse for Facebook on the AOL patent front is one of those “you could knock me over with a feather” developments.  Given the alignment of interests between Microsoft and Facebook (which includes Microsoft’s 1.6 percent interest in the social media giant), this was far from shocking. In fact, as my colleague Beecher Tuttle pointed out in his excellent summary of this transaction on our TechZone 360 site, this was good for:

• AOL, which needed cash, wanted an all or nothing sale and kept the patents it felt were core to its long term needs.
• Facebook, which got groundcover in front of its IPO for capabilities it is already being sued over by Yahoo! or would/may still be sued over by Yahoo! and others.
• Microsoft, which had no real need for most of the patents and was, in essence, made whole for the original purchase in the form of cash. It retained the IP it found interesting, a license to the patents it is selling to Facebook (presumably on very friendly terms) and a license to approximately 300 patents AOL did not sell. 

Microsoft and Facebook issued a joint press release that had a couple of juicy quotes which have been widely quoted and I reproduce for your viewing pleasure.

Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction,” said Brad Smith, executive vice president and general counsel, Microsoft. “As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio.”

“Today’s agreement with Microsoft represents an important acquisition for Facebook,” said Ted Ullyot, general counsel, Facebook. “This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.”

In short, this was a booster shot to inoculate the three parties to the extent possible from the risks of incredibly expensive and exhaustive litigation. It shores up some loose ends on the ecosystem front as the three entities go forth in their battles with the Google and Apple ecosystems. It was also just another shot across the bow of struggling Yahoo! which has dissipated a position as a possible ecosystem anchor and has turned to the courts to help it while new CEO Scott Thompson tries to right the ship.

The ecosystem tectonic plates may have shifted a bit, but this is no major temblor that sets off a tsunami.

Don’t touch that!

The FlatWorld suit would be almost laughable if their claims were totally specious. They are not. The rapper MC Hammer nailed it in the video below, “U Can’t Touch This.”

The FlatWorld suit seeks permanent injunctive relief saying that Slavko Milekic, the company’s founder, when he was a professor at the University of Arts in Pennsylvania, filed a provisional patent application on August 28, 1997, claiming priority from that date in his definitive patent application. He applied for his patent on June 12, 1998 and was granted it as U.S. patent 6,920,619 on July 19 2005, according to the U.S. Patent and Trademark Office. He assigned the patent to FlatWorld in 2007 and the patent was reissued to the company as U.S. Patent RE43,318 in April 2012. The patent was for touch screen capabilities which Mikekic was using in gesture recognition system designed to help children manipulate images on interactive screens more easily.

As a ComputerWorld item on the subject points out, this is provocative. Having just finished the Steve Jobs biography, the history of Apple’s interest in touch technology in terms of things like moving icons on and off a screen and opening apps does seem to be an interest cultivated in this century and not last. However, it is hard to argue that touch technology was not an area of Apple interest. Going back to 1987 when then Apple CEO John Sculley pushed the development of the Newton PDA with its touch screen, stylus and handwriting recognition, Apple and touch have been kind of synonymous.  In fact, the inventor E.A. Johnson described his work on the development of a captive touch screen as early as 1965 and Engineer Bent Stumpe of CERN developed a transparent touch screen in the early 1970s. IBM was also actively working in the area at the same time.

Why a company called FlatWorld -- and without innovation we’d all still think the world was flat -- is pushing its claims right now is a bit puzzling (other than trying to cash in on the company’s getting USPTO recognition of patent ownership this month). While all litigation needs to be taken seriously -- and I am not a lawyer and have zero legal training -- just looking back at the history of developments in this area seems to not auger well for FlatWorld’s chances. That said, it is wise to caution that truth can be stranger than fiction so this will bear watching.

Apple should be all atwitter?

Ok, so I sank to the lee of Forbes contributor Eric Jackson in his posting, “Why The Next Shoe To Drop Post-Instagram Is Apple Buying Twitter (News - Alert) for $10 Billion.” It was a great headline, and surely got great SEO, but that was about it. I think we can all come up with equally intriguing headlines like, “Apple to buy Amazon” or “Google to buy SalesForce.com” or “AOL to purchase Pinterest.” We could even come up with a slew of reasons why all of this would make sense. It is, after all, easy to spend other people’s money.

You actually should read the entire Jackson piece. It is a great yarn, especially coming on the heels of Facebook’s grab of Instagram. And, if you believe that all markets end up being oligopolies, or at a minimum highly inter-related and connected ecosystems, contemplating a world where big tech mimics big banking may not be far-fetched. However, in this instance consider a couple of things:

• Twitter does not make much -- if any – money.
• Smartphone users have not taken kindly to mobile ads, which is cited as the long-term reason for paying $10B for Twitter.
• What happens if Twitter is blown away by a short messaging video service, not of its creation but easily created by who knows whom, which turns out to be “the next big thing”?

In fact, on the last point, is YouTube or Facebook really that far away from doing this without having to spend $10B or worry about IP wars? They are much closer than you think.

IP³ will likely give way to IP⁴ next week. For the time being, enjoy the show.