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How Silicon Valley Views Patents

By Casey C. Sullivan, Esq. on April 18, 2016 | Last updated on March 21, 2019

When it comes to patents and intellectual property, the techies down in Silicon Valley often repeat a familiar mantra: patents are anticompetitive, anti-innovation, just plain bad. But that simplistic outlook was challenged, a bit, in a recent talk by Ted Ullyot, former general counsel for Facebook.

In a presentation entitled "Innovation, Disruption and Intellectual Property: A View From Silicon Valley," Ullyot told students and professors at Marquette Law School that the relationship between technological innovation and intellectual property law was slightly more complicated than typical dogma allows.

The Anticompetitive Patent

"The relationship between intellectual property law and today's Silicon Valley innovators and technologists is complicated," Ullyot told Marquette Law last week, according to Marquette Wire, the university's student newspaper.

"Technological advancement is more likely to grow from sharing and collaborations rather than buying the exclusive rights in the paradigm of intellectual property rights," the paper reports him saying. "The fundamental purpose of IP law, after all, is to promote innovation."

As Facebook's first GC, Ullyot oversaw the social networking company's patent battle with Yahoo. On the eve of Facebook's IPO, Yahoo sued the company, claiming Mark Zuckerberg et al. had violated 10 of its patents regarding Internet advertising. It was the first major legal dispute between social media companies.

That move, Ullyot argued, alienated Yahoo from the greater tech community, which rallied around Facebook and the "freedom to innovate." (Yahoo's suit was later settled, resulting in greater integrating of Facebook products in Yahoo content, but no cash payout from Facebook.)

Beyond Silicon Valley Groupthink

But Ullyot, we hope, is smart enough to not buy fully into the standard anti-IP worldview prevailing in Silicon Valley. After all, the tech industry was founded on exclusive intellectual property, whether it's Intel's computer chip technology or Apple's iPhone patent. In these first few months of 2016, Facebook itself has already applied for more than 200 patents.

Indeed, the importance of protecting intellectual property is spreading well beyond Silicon Valley. Automakers, those dinosaurs from the industrial Midwest, now hold more patents for self-driving cars than tech companies do. Even the financial industry, who had largely shied away from public patents, is now jumping into the IP game -- all in an attempt to "beat Silicon Valley at its own game," according to a recent report by Bloomberg.

After all, patents can be both a sword and a shield -- and more companies outside of the tech world are getting in to that arms race.

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