Twitter wants to reform the patent system. But for the moment, it's still paying big bucks to avoid the kind of software patent lawsuits that have become all too common in recent years.
According to documents filed with with the Securities Exchange Commission, Twitter has paid IBM $36 million for 900 patents in order to avoid a lawsuit. IBM threatened to sue Twitter over at least three patents in November, just ahead of the social network's initial public offering. The companies first announced the patent acquisition in January, but didn't disclose financial details.
The price only became public Thursday, when the SEC published Twitter's Form 10-K, an annual disclosure of a company's financial performance. According to the SEC document, Twitter now owns 956 patents -- up from just nine before it filed its IPO in November. It also has 100 more patent applications outstanding.
From Yahoo and Facebook to Apple and Samsung and Google, it seems that just about every big-name tech company is facing various patent suits -- or at least the constant threat of suits. The world is now crawling with "patent trolls," companies that exist solely to make money from intellectual property lawsuit. But the big-name companies are also facing off against each other over patents. Apple and Microsoft, for instance, are investors in a patent company that has now sued Google. And IBM, the largest patent holder in the U.S., has now squared off with Twitter.
Twitter has vowed to take the high road and use patents only as a means of avoiding lawsuits, and not to sue other companies for infringement. Like Google, it has called for serious reform that would cut back on frivolous patents and unwarranted suits and license deals. That's earned Twitter accolades from software developers, who are often skeptical about whether software patents should be granted at all. But it remains to be seen how shareholders respond.
Twitter's resolution will surely be tested over the years. After all, many companies become more litigious as they age. Before 2010, Microsoft had filed only four patent suits in its entire history. But that year the company began filing suits against Android phone makers like Motorola, and sued Salesforce.com for patent infringement. The temptation to strike out at a competitor may one day be too great -- especially now that Twitter is a publicly traded company. Let's hope we can have reform before it gets to that point.
