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Weekly Column

I Report, You Decide: Patent cases like Apple v. Burst.com deserve better news coverage.

Status: [CLOSED] comments (142)
By Robert X. Cringely
bob@cringely.com

It has been a long time since I worked at a newspaper, but in the old days reporters were supposed to cover beats, develop sources, and really bring a perspective to the stories they covered. It wasn't necessarily a personal perspective (Lord knows we have enough of that now with blogging) but more of a factual perspective: reporters were supposed to know what was actually happening on their beats and to not be fooled by spinmeisters. Well this week there has been a heck of a lot of spinning going on having to do with a story I broke years ago and have followed off and on ever since -- the trials of little Burst.com -- and even the revered New York Times (and nearly everyone else) this time got it shamefully wrong.

In case you have forgotten, Burst.com is a three-person company based in Santa Rosa, CA, where I used to live before moving to Charleston, South Carolina. Burst, which was started with a seed investment from the Irish rock band U2, has many issued patents on ways of sending digital video and audio over electronic networks. In 2000 it looked like Burst was about to become a huge success, but then a succession of Microsoft dirty tricks put the company on the ropes and today -- despite a $60 million settlement from Microsoft -- the company is still trying to pick itself up and resume licensing its technology. Burst's current adversary is Apple and in this case Apple sued Burst rather than the other way around, trying to invalidate Burst's patents following months of license negotiations.

This week Apple lawyers filed a motion to have Burst's countersuit thrown out of court and Burst's 30+ patents invalidated as obvious, not novel, and certainly not the basis for Apple's iPod, iTunes, or QuickTime, no sir. This motion and some colorful Apple lawyerspeak was dutifully reported by more than 100 news outlets, including the New York Times, most of them picking up what appears to have been a Bloomberg line that stated Apple, which has sold 100 million iPods, was trying to have thrown out a case from little Burst, which lost $500,000+ last year, claiming that the success of iPod, iTunes, and QuickTime were all based on infringing Burst patents. The implication in these stories was clear that Burst, as a tiny company from a small city, can hardly stand up to mighty Apple. This was made even more clear in an especially deplorable story in Ars Technica, which should have known better. You'll find that story among this week's links.

There is both a lot at stake in this case and a very fundamental underlying issue. What's at stake is about $500 million, which is what Burst feels it is owed by Apple for patent infringement to date. That's a lot more than the $60 million Burst got from Microsoft and for a good reason: Microsoft generally gave away the technology they stole from Burst while Apple sells it. Those six billion iTunes song downloads, for example, are claimed by Burst to infringe its patents. The underlying issue here is whether only big companies should get to benefit from owning patents.

The context nearly every article on this topic was missing this week starts with the fact that to this point Burst has been pretty much wiping the court floor with Apple. Most significantly a Markman claims construction ruling earlier this year, which defines the actual words in the Burst patents -- what those words do and don't mean and what they do and don't cover -- went very much in Burst's favor. The judge in the case, Marilyn Hall Patel of the U.S. District Court for the Northern District of California, was the one who issued that claims construction ruling and she seemed quite surprised this week in court that Apple was even moving to have the case dismissed, probably given that most intelligent observers would see that Apple was losing, not winning.

The other bit of context that the stories were generally missing was a correct sense of the David-and-Goliath basis of this legal and technical matchup. Yes, Burst has three employees and almost no sales. Yes, Apple has sold 100 million iPods and six billion songs. But what the stories generally missed for lack of simple effort was that Burst's technology was developed over a period of 20 years by far more than three people at a cost in excess of $66 million. That's more than Apple spent to develop the original iPod, more than they spent to develop iTunes, and probably more than Apple spent to develop QuickTime, itself. The implication in many of these stories is that Burst cobbled together some dubious patents and tried to coerce real companies into taking licenses, that they are so-called "patent trolls."

Trolls don't spend 20 years and $66 million building the bridges they defend.

What's especially odd about this is that back in 1999-2000, Burst's technology was hailed as groundbreaking by many companies, including Intel. Nobody was claiming it was derivative or obvious, yet that is exactly what Apple claimed this week in court. Maybe that's just what lawyers do.

I met with Apple to discuss this very issue several years ago and their position at that time was that Microsoft would likely invalidate the Burst patents and, if they didn't, then Apple would probably buy a license. There was no "we already invented that," or "our technology is superior." Apple was clearly infringing, knew it, but didn't want to buy a license if Microsoft was going to destroy Burst. I had an almost identical conversation, by the way, with RealNetworks, another possible infringer. Well Microsoft didn't destroy Burst and never came close to invalidating the patents, so here we are.

There are evidently a lot of lazy or -- more likely -- overworked reporters, but there is another, probably more important, issue playing in this week's little legal drama and that is patent reform, which is under consideration now in the U.S. Senate. Earlier this year the U.S. House of Representatives passed a bill that would change the way patents are issued and adjudicated in such a way that big companies will be helped and little companies will be hurt. Switching to a "first-to-file" patent system as exists in most of the rest of the world and taking from inventors the right to force infringers to stop using patented technologies takes the teeth out of the U.S. patent system and places most power with whomever has the largest legal budget. Big companies with big legal departments tend to support the proposed law, though there are exceptions: the CEO of Corning recently called the bill a "license to infringe." Independent inventors including, ironically, QuickTime and WebTV inventor Steve Perlman, are of course outraged. So should we all.

Not to beat up on Apple too much this week, but a number of stories have appeared since my item last week about problems with the new iPod classic. This time independent testers are finding the new iPods have lower audio quality than the iPods that preceded them. Perhaps this stems from Apple's switch from PortalPlayer to Samsung as the source of its iPod chipsets.

American readers may also have seen stories this week about NBC starting next month allowing viewers to download free ad-supported episodes of its top programs. Though the stories never mention it, the NBC service is based on technology from an Israeli company called Hiro Media that was revealed for the first time in this column back in April.

And speaking of clever inventions, I want to give fair warning that next week I will make an announcement in this space so astounding that even my 83-year-old mother may pay attention. I intend to change the world a little bit and -- as always -- will need your help if I am to be successful.

Editor's Note: The MP3 file originally posted with this column was incorrect and has been updated. You can download the correct file here.

Comments from the Tribe

Status: [CLOSED] read all comments (142)
Ed | Sep 29, 2007 | 8:34PM

New report on Streaming video out. The BBC reports on Video Cache and Peel a Pear technology.

http://news.bbc.co.uk/player/nol/newsid_7010000/newsid_7019000/7019041.stm?bw=bb&mp=wm&asb=1&news=1#

Ed | Sep 29, 2007 | 9:08PM

Logic? File motion after motion to drag out the current court case and at the same time the Quicktime/Mp3/skip protection audio/skip protection video/patent pending, remains patent pending. Forever? While it's infringing? wow ... really? ... wow ... forever? ... really? ...wow

Ed | Sep 29, 2007 | 10:18PM