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The Key to Ending Patent Disputes: Crowdsourcing

As the mobile patent wars intensify, Microsoft (Nasdaq: MSFT) has plenty of reasons to celebrate.

Despite its struggle to gain a foothold in the smartphone space (its marketshare actually dropped 0.1% between May and August), the company has boasted one victory after another in patent disputes. Many of which have taken place outside of the courtroom.

Back in July, I explained how Microsoft’s deal with HTC (Taiwan: 2498.TW) requires the Asian phone maker to dish out $5 for every Android phone it sells.

This deal alone handed Microsoft five times more cash in 2010 than it pulled in from its own Windows Phone platform.

All told, Goldman Sachs reports that Microsoft could skim $444 million from Android phone sales in 2012.

So why are companies like HTC just rolling over and paying Microsoft off instead of taking the fight to court? Let’s have two patent experts weigh in on the matter…

~ Opinion #1: It’s Tough to Take Down a Giant

Keith Bergelt, of Open Innovation Network, suggests that rival phone makers actually have more valuable patent portfolios when it comes to smartphone development. But companies like Microsoft are simply too powerful for the smaller companies to handle.

As he tells Business Insider, “When you are incredibly cash rich, when you can outspend people, it’s about tying people up and creating issues that can slow or stall a platform. It’s not about who is necessarily right or wrong, it’s about the effect that you can exact by taking advantage of that dynamic.”

So Bergelt seems to think that the little guy would rather enter a licensing agreement than enter a never-ending court battle with a superpower like Microsoft. But can you blame them?

~ Opinion #2: 10,000 Patents Aren’t Exactly Easy to Dissect

Intellectual property management firm, M-CAM, believes that one reason Microsoft is able to collect licensees so easily is because its patent trove is simply too massive to dig through.

As the firm wrote in a report last Friday: “How many manufacturers are going to look through not only Microsoft’s 10,000-plus patents, but its own sizeable portfolios as well, just to determine which patents they may or may not be infringing? We doubt even Microsoft’s patent lawyers know what’s in their own portfolio, let alone what’s in their competitors’.”

So what option is left when companies can’t compete financially and don’t have the resources to comb through thousands of patents to develop an adequate defense?

Why not give Article One Partners a call?

Instantly Put a Global Team of Patent Researchers to Work

Article One provides a platform for companies in need of patent research services. And its approach is simple:

It helps companies at the wrong end of a patent infringement claim by identifying “prior art” – or a similar concept that was established before a company’s patent.

For instance, Samsung (SEO: 005930) is reportedly using this approach to try to invalidate Apple’s (Nasdaq: AAPL) iPad patents. It’s claiming that a scene from an old science fiction movie depicts characters watching the news on a tablet-like device.

You see, prior art nullifies the patent claims of the opposing party. Because you can’t claim ownership of an idea if someone thought of it first.

Using a practice called crowdsourcing, Article One streamlines the time-consuming search for prior art. Essentially, the company delegates a job to a large network of researchers around the world.

If any of Article One’s contributors dig up valid material to defend the client, he or she gets paid. So the job is incentivized. And with the patent minefield getting more treacherous by the minute, contributors are staying busy.

Even though Microsoft is already a partner in Article One’s litigation avoidance initiative, don’t be surprised if the company is called upon next time Microsoft takes aim at a smaller phone manufacturer.

After all, its crowdsourcing platform promises to be a valuable tool for technology companies coming under pressure to protect their patents. Stay tuned for further updates as patent disputes continue to heat up around the globe.

Good investing,

Justin Fritz

Justin Fritz

, Executive Editor

View More By Justin Fritz