As innovations such as
data deduplication spread throughout the storage arena, the
proliferation of new storage products and new storage companies has
established vendors grabbing more aggressively for ownership of
intellectual property (IP).
There's been a recent spate of high-profile patent lawsuits, and
the longer this patent litigation goes on, the more potential it
has to become a drag on innovation and to drive up the costs of
doing business, experts say.
The first major patent infringement spat occurred on Sept. 5
whenNetApp launched a lawsuit against Sun
Microsystems with much more fanfare than is usually reserved
for IP disputes. On the day Sun CEO Jonathan Schwartz was
presenting his vision of taking over the world through giving
away IP to the open source community, Network Appliance Inc.
(NetApp) was holding a press conference to send Schwartz a
message: "Not with our IP you don't."
According to Illuminata Inc. analyst John Webster, the lawsuit
launched by NetApp points to a greater cultural clash going on in
IT as the open source movement gains momentum. "In a way it reminds
me of the counterculture movement of the late '60s," he said. "You
have a new generation which has new ideas about making a
contribution to the world with software, without getting all hung
up in all this stuff about owning it. And you have the old guard
which says, 'You guys do whatever you want, just not with our
stuff.'"
Power struggle in the storage world
While the trend toward open source creates strife in one corner
of the market, the rise of new technologies and the proliferation
of successful newcomers such as Riverbed Technology Inc. is causing
a power struggle between new companies and the old guard. Hence the
lawsuit brought this week by
Quantum, alleging that Riverbed's data
reduction technologies violate data deduplication patents held
by Quantum subsidiary Rocksoft Ltd.
"Now's the time for Quantum to take action, because Riverbed has
been quite successful," said Tony Asaro, senior analyst with the
Enterprise Strategy Group. "If Quantum is going to get anything out
of it, it would be following Riverbed's successful initial public
offering (IPO) and proof to the market it's a force to be reckoned
with." Quantum has been aggressive in enforcing Rocksoft's IP and
was granted a stake in Data Domain's IPO earlier this year.
Disk drive patent in question
Last week it also came to light that the U.S. International
Trade Commission (ITC) is investigating whether Seagate Technology
LLC, Western Digital Corp., Toshiba America Information Systems
Inc., Hewlett-Packard Co. (HP) and Dell Inc. violated patents
involving a method of bonding electrical components within disk
drives. The patents are formally held by two individuals, Steven
and Mary Reiber of Lincoln, Calif.
According to Colleen Chien, assistant professor of law at Santa
Clara University Law School and an expert in U.S. patent law, it's
difficult to tell if a business is hiding behind the Reibers' names
in this case or if the Reibers are representing themselves. She
said it is unusual for individuals to bring patent investigations
before the ITC in matters like this. The seemingly random
collection of defendants in this case (seemingly off the hook are
disk drive vendors Hitachi Global Storage Technologies and Fujitsu
as well as other big storage systems vendors) could be based on
where overseas the drive components in question are being
manufactured.
According to Chien, patent lawsuits of all stripes have
proliferated over the last decade as patent law, once a
state-by-state crazy quilt of statutes, has consolidated and
solidified under federal authority. "There have been some big
awards granted, and people have come to see [patent litigation] as
a worthwhile endeavor."
But both Chien and Asaro warn that if patent litigation becomes
more popular, it will ultimately present a drag on innovation and
raise the cost of doing business, with increased costs being passed
on to the customer.
"Small companies are more vulnerable and hurt more by lawsuits
brought against them by big companies," Chien said. "Small
companies are also highly innovative and can come up with patents
of their own to assert against the larger companies, but they don't
have the time or bandwidth to do it."
As a result, patent litigation could become a blunt instrument
in the hands of legacy vendors that don't want new upstarts
infringing on their turf. "If someone gets a broad enough patent,
it can prevent others from entering a new area of research."
Then there are the costs associated with litigation, settlements
and licensing agreements for companies of all sizes. "How much of
that cost is passed on to the consumer is a matter of how captive
the audience is for a given product," Webster said. "If you have a
lock on your customer base, you can [raise prices] -- it depends on
your competitive position."
Worst of all, according to Asaro, patent litigation among
vendors can create fear, uncertainty and doubt (FUD) among users of
their products. "If I just invested a million dollars in Riverbed,
I don't want to hear there's a lawsuit that threatens the product,"
Asaro said. "I don't want to be involved at all in something like
that. Don't bring me any more problems."
Meanwhile, storage analysts were divided on what impact the
cluster of cases, brought in the last month, will have on the
industry long term. "It may be just the law of averages playing
itself out," Webster said.
But Asaro predicted the IP strife will only continue. "Companies
are creating a lot of capital right now, and the IT landscape is
changing dramatically," he said. "Whenever big money is at stake,
these things are going to occur more frequently."