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How Steve Jobs Patent-Trolled Bill Gates 307

Posted by Soulskill
from the might-as-well-aim-high dept.
theodp writes "Apple, which is currently waging IP war on Android vendors, is no stranger to patent trolling. Citing the Steve Jobs bio, Forbes' Eric Jackson recalls how Steve Jobs used patents to get Bill Gates to make a 1997 investment in Apple. Recalled Jobs: 'Microsoft was walking over Apple's patents. I said [to Gates], "If we kept up our lawsuits, a few years from now we could win a billion-dollar patent suit. You know it, and I know it. But Apple's not going to survive that long if we're at war. I know that. So let's figure out how to settle this right away. All I need is a commitment that Microsoft will keep developing for the Mac and an investment by Microsoft in Apple so it has a stake in our success.' Next thing you know, BillG was lording over Jobs at Macworld Boston, as the pair announced the $150 million investment that breathed new life into then-struggling Apple. So, does Gates deserve any credit for helping create the world's most valuable company?"
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How Steve Jobs Patent-Trolled Bill Gates

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  • Patent Troll? (Score:4, Insightful)

    by Denis Lemire (27713) on Saturday March 03, 2012 @08:09PM (#39234867) Homepage

    Don't you have to be a bottom feeding shell corporation with no actual products to be a patent troll?

    Not sure Apple fit this definition at any stage of it's history.

    • by denzacar (181829) on Saturday March 03, 2012 @08:33PM (#39234965) Journal

      Don't you have to be a bottom feeding shell corporation with no actual products to be a patent troll?

      Not sure Apple fit this definition at any stage of it's history.

      "Don't you have to be poor, with no actual possession, to be a crack addict?"

      Patent trolling is an act, not a profession. Though some people/companies do base their business around that single act.

      • by Tharsman (1364603) on Saturday March 03, 2012 @08:51PM (#39235105)

        The common accepted definition of "patent troll" is:

        Patent troll is a pejorative term used for a person or company who buys and enforces patents against one or more alleged infringers in a manner considered by the target or observers as unduly aggressive or opportunistic, often with no intention to further develop, manufacture or market the patented invention.

        (Taken from wikipedia) [wikipedia.org]

        Another trait of patent trolls is they want to make sure you stay in business, albeit with low margins, since you going out of business means you cant pay licenses.

        Apple's patent wars have never been done with the goal of get licensing fees from anyone. Their goal is almost always to kill products they despite (for one reason or another, but are mostly motivated by personal company grudges.)

        I'm not saying Apple is a nice kid playing by the rules, but they are far from being a patent troll.

        As for the article itself... what retard wrote that, and how am I not shocked it's posted in Forbes? Yes, Apple (not jobs, the lawsuits had been going for years and Jobs had just returned) was running a legal battle against Microsoft at the time, but as Jobs said, Apple was going to go under way before they were able to win or lose. And to be honest, Microsoft had the money to even pay if they ever won.

        Losses were not what was in Gate's mind at the time. The reason Gates actually bailed Apple out was that Apple going out of business would had been horrible for Microsoft's defense in their anti-trust monopoly abuse case since Apple's competition was one of the points that was constantly brought up by the defense during the case.

        • Actually... (Score:2, Insightful)

          by denzacar (181829)

          That Wikipedia quote, while it does have a leg to stand on, its one leg is not in any remotely good condition and it is missing several toes.

          It cites an article where it is said the following, about patent trolls:

          "The long-anticipated eBay case gets to the heart of the debate over so-called patent trolls â" companies that obtain patents only to license them, often using the threat of an injunction to extract a high price from infringers." Woellert, L.: eBay Takes on the Patent Trolls. Business Week, March 30, 2006.
          One of the arguments that eBay made was that non-practicing inventors, quaintly nicknamed "patent trolls," should not be entitled to an injunction as a matter of course.

          Oh, my! Now non-practicing inventors are "patent trolls" too.

          And then it goes further along that way:

          Who are these evil âoepatent trollsâ anyway? The term was first coined by Intel, whose in-house counsel was quoted to have said, âoeA patent troll is somebody who tries to make a lot of money off a patent that they are not practicing and have no intention of practicing and in most cases never practiced.â(TM)â Sandburg, B.: Inventorâ(TM)s Lawyer Makes a Pile from Patents. The Recorder, July 30, 2001. According to this definition, a non-practicing inventor is a patent troll.

          And there is more:

          Later, the definition of âoepatent trollâ was modified to describe those who buy patents, which they do not practice, for the sole purpose of assertion. Under this definition, to be a troll one needs to (a) buy a patent, (b) not practice the patented invention, and (c) assert the acquired patent. As I have argued in Making Innovation Pay â" Turning IP into Shareholder Value (B. Berman, ed., John Wiley & Sons Publishers, Inc.) (2006), this definition is patently absurd.

          And in the end, the author decides that there is no such thing as a patent troll at all:

          To summarize, the so-called "patent trolls" are stuff of myths and legends, not of sound reason.

          So, you saying that "they are far from being a patent troll" makes sense - but only because

        • by msobkow (48369)

          I'm not saying Apple is a nice kid playing by the rules, but they are far from being a patent troll.

          The whole point of the patent system is to encourage cross licensing, sharing, and development of ideas while ensuring that real inventors can be paid for their creations.

          Apple uses the patent system to suppress and eliminate competition.

          You don't need to have a profit motive to be a patent troll -- you just need to abuse the patent system to ensure it costs other people money to defend against the bogu

          • by Tharsman (1364603) on Saturday March 03, 2012 @11:32PM (#39235793)

            The whole point of the patent system is to encourage cross licensing, sharing, and development of ideas while ensuring that real inventors can be paid for their creations.

            I'm sorry but you are living in fantasy land. The whole point of the patent system is to encourage people to invent things and have a legal resort to make sure no one steals their invention, that way they can justify the time and money invested to invent since now they can actually profit from the invention.

            I do accept the patent system is broken and sucks, and should be abolished or heavily revamped, but patents were always about roadblocks and restrictions.

            As for the origin of the name "patent troll" listen to This American LIfe's coverage on the topic [thisamericanlife.org]. They talk to the guy that originally coined the term and the reason: fantasy trolls that live under bridges and bully you to pay money if you want to use the bridge. Unlike some users like to think, patent trolls are not named after the forum variety that is there just to bother and annoy.

          • by zzatz (965857)

            Apple may be abusing the patent system, but not all abuse is trolling. Patent troll has a specific meaning.

            Companies who sell products which use patents have incentives to cross-license with other similar companies. If you need my patent and I need your patent, we can come to agreement about reasonable terms. If I don't need your patent because I found a way around it, then you have incentive to drop your demands down to the cost of my work-around. But if I don't need your patent because I don't sell any pr

            • by teg (97890)

              . But if I don't need your patent because I don't sell any products at all, then I can demand unreasonable royalties. The royalties don't make me a troll, it's not selling products that makes me a troll. Patent trolling is all about asymmetrical relationships between patent holders; those who need patents because they make things, and those who don't need patents because they don't make things.

              If an inventor actually has invented something and licenses it rather than setting up a lot of factories himself, does that make him a patent troll?

      • by Absolut187 (816431) on Sunday March 04, 2012 @12:08AM (#39235925) Homepage

        Yes, but I think the action here is the antithesis of patent trolling, is it not?

        Here we have Apple, an actual tech company with
        (1) products in the marketplace
        (2) legit patents for meaningful inventions
        (3) a desire to stay OUT of court so it can produce the products
        (4) a settlement with the biggest name in computers at the time - not for cash, but for an INVESTMENT.

        This is absolutely not patent trolling.

        In fact, one could argue that this is the patent system operating at its best.
        An innovative company with good ideas flounders in the marketplace temporarily (possibly due to anti-competitive behavior by MS?), leverages its patents to get an influx of capital, and subsequently becomes one of the profitable companies in the history of civilization?
        Yeah, that sounds about right.

  • by BWJones (18351) * on Saturday March 03, 2012 @08:16PM (#39234907) Homepage Journal

    Patent troll nothing. Microsoft was caught red handed with code lifted *DIRECTLY* from the Quicktime codecs. This was not trolling with a concept or buying patents to then leverage against someone else, this was outright plagiarism.

    • this was outright plagiarism.

      Which has nothing to do with patents.

  • Enough Already (Score:5, Insightful)

    by whisper_jeff (680366) on Saturday March 03, 2012 @08:28PM (#39234949)

    Oh my f'ing gawd! If you're going to use the term "patent troll", make damn sure you know what it means. When a company infringes a patent and is sued for doing so, the suing party is _NOT_ a patent troll. When the CEO of a suing company opens a dialogue and negotiates a settlement that is mutually beneficial to both companies, that is _NOT_ a patent troll.

    A patent troll is a company that makes nothing of note (typically nothing at all) yet sues other companies for patent infringement. In fact, it can be best summed up that a patent troll's business model is generating revenues from suing other companies for patent infringement. Now, before anyone tries to be witty and claim that describes Apple, pull your head out of your ass and be honest - Apple makes BILLIONS of dollars _MAKING AND SELLING ACTUAL PRODUCTS!_ They invest a massive amount of money into R&D and thus have numerous patents covering their inventions. Thus, when a company infringes one of those patents, it is entirely within their right and understandable that they would sue for infringement but APPLE IS NOT A PATENT TROLL.

    Seriously. You may not like their actions; you may not like Steve Jobs; you may think everything related to Apple is crap but be honest and understand what a patent troll is and recognize Apple is NOT a patent troll.

    The major issue I have with people watering down the meaning of the term is that it weakens the debate against actual patent trolls who are leaches of the worst order. When you use "patent troll" to describe Apple, just because you don't like them, you weaken the ability to rightly vilify the real patent trolls.

    Apple is NOT a patent troll. You don't have to like them - hate them all you want - but be honest and recognize they are NOT a patent troll.

    • by Anonymous Coward on Saturday March 03, 2012 @08:34PM (#39234969)

      I don't understand. are you saying Apple is NOT a patent troll? If you are it in no way came across in your post.

    • by russotto (537200)

      A patent troll is a company that makes nothing of note (typically nothing at all) yet sues other companies for patent infringement. In fact, it can be best summed up that a patent troll's business model is generating revenues from suing other companies for patent infringement.

      Not all trolls are non-practicing entities. A company which does make stuff, but makes a practice of filing broad patents on every aspect of what they make, however trivial, and then digs them up and uses them to extort payment from o

      • by PCM2 (4486)

        A company which does make stuff, but makes a practice of filing broad patents on every aspect of what they make, however trivial, and then digs them up and uses them to extort payment from others is also engaging in patent trolling. Thus Unisys with the LZW patent, Microsoft with the various FAT long-file-name patents, etc.

        But when do you get to use a loaded word like "extort" and when is it merely ordinary, run-of-the-mill patent licensing, which is very clearly part of the purpose of having patent law in the first place? IBM has one of the largest patent portfolios [ibm.com] in the world. Is it a "patent troll"? I hardly think so. Wall Street and economists don't appear to think so, either; IBM is considered a blue chip stock.

        • by russotto (537200)

          But when do you get to use a loaded word like "extort" and when is it merely ordinary, run-of-the-mill patent licensing, which is very clearly part of the purpose of having patent law in the first place?

          Guess that depends on how you feel about the patent system. If you think the whole thing is bad, you probably use words "extort" even for run-of-the-mill patent licensing. Personally I use it whenever a company appears to be offensively using an obviously bogus and overbroad patent -- Honeywell suing "The

    • Re: (Score:2, Insightful)

      by Absolut187 (816431)

      This is Slashdot - IP stands for imaginary property.

      Anyone who would _dare_ to even file a patent application is a patent troll here.

  • by rb12345 (1170423) on Saturday March 03, 2012 @08:46PM (#39235053)

    So, does Gates deserve any credit for helping create the world's most valuable company?

    The reality is that he probably had little choice in the matter. Not investing in Apple would risk having Microsoft as pretty much the only operating system company in existence (OS/2, Solaris and others had virtually no market share, and Linux was not really a competitor on the desktop back then). With the IE antitrust suits just starting around that time, killing off Windows' biggest competitor was a bad idea. So, you could argue that keeping Apple alive was necessary for MS, even if it might cause future problems, and those could be minimised via network effects (people needing Windows to run their applications).

    • Microsoft did not get to be a monopoly by kowtowing to threats of patent lawsuits from failing competitors.

      the DOJ lawsuits against MS had more to do with MS supporting Apple than, well, anything. The DOJ was about to get all into MS's business, with bizarre stuff like forcing them to ship Windows without the IE browser, and other harebrained schemes.

      this experience it also probably kept MS out of the phone market and the retail store market, vertical integration, etc. - apparently someone didn't give Redmo

  • First, a patent toll isn't a company protecting their intellectual property. A patent troll is a 'firm' that makes nothing, but simply collects patents and hires a lot of lawyers in an attempt to squeeze some cash out of the victims of such tolling.

    Second, when you have BILLIONS of cash in the bank, a $150 million 'investment' is better called, a token gesture.

    • by catmistake (814204) on Saturday March 03, 2012 @09:13PM (#39235227) Journal

      $150 million investment that breathed new life into then-struggling Apple

      when you have BILLIONS of cash in the bank, a $150 million 'investment' is better called, a token gesture.

      This tiny detail of history is always presented wrong... but you have a wiff of the truth. Bill Gates' and Microsoft's $150 million investment was exactly that, a token gesture, and it is not what 'saved' Apple from bankruptcy. It was Jobs and his radical reshaping of the company, the elimination of failing product lines, and the introduction of the iPod/iTunes paradigm that probably saved Apple. Had that $150 million never changed hands, the result would not have been much different. Jobs wanted Microsoft's Office products for the Mac... that's ALL that was. Did MS Office save Apple? Fuck no... that's absurd.

  • Why would Bill Gates invest in Apple if Jobs admitted that Apple wouldn't survive long enough to win a patent lawsuit against MS anyway? Something's fishy. Gates could just wait 'em out and let Apple go away and gobble up the patents. Must be something more to the story.

    But I have no trouble believing that MS was infringing... I don't think they (or, probably, anyone else back then) paid much attention to "patents". They were paying more attention to copyright but even then, not very much.

    • by Swampash (1131503)

      Or Apple could have sold those patents for short-term cash to a third party that DID have the necessary longevity to win a billion-dollar settlement from Microsoft.

      Meh. This whole article is just ad keyword spam. Any second now Slashdot's gonna start posting news from the fruit and produce industry just to ensure more of its articles contain the word "Apple".

    • by PCM2 (4486)

      Why would Bill Gates invest in Apple if Jobs admitted that Apple wouldn't survive long enough to win a patent lawsuit against MS anyway?

      You know the answer to that. Apple wouldn't survive as such, but the lawsuit would. See: SCO Group. Jobs was saying he had a strong enough case to win a massive settlement somewhere down the line, and Gates knew it. To get that settlement would take years, though, and investing Apple's resources in lawsuits while it struggled in the products market would probably mean the death of Apple's products business. The effect would be to take Apple the tech company and replace it with Apple-as-SCO-Group. Jobs was b

  • by cold fjord (826450) on Saturday March 03, 2012 @09:03PM (#39235161)

    Microsoft has played many roles over its long history with Apple. It has been benefactor, beneficiary, competitor, and on occasion extortionist.

    As a benefactor, Microsoft has invested in Apple, more than once IIRC. They have also produced many solid productivity applications, and once upon a time a number of programming tools (MS Basic, QuickBasic, Fortran) for the Mac. Apple desperately needed applications for the Mac, especially during the early years when people were wrestling with the enormous increase in complexity that programming the Macintosh interface represented at the time.

    As a beneficiary, Microsoft has reaped a nontrivial amount of money from sales of Microsoft products on the Macintosh platform. It also benefited from early exposure to the GUI ideas in the Macintosh and Lisa that popularized and built upon earlier work at Xerox. It could see the many interesting things Apple was doing with object oriented programming, multimedia, and other innovations.

    As a competitor, Microsoft modeled Windows after Macintosh and used it to largely drive Apple from the market for many years. Microsoft used its position as the prime application vendor to shape how Macintosh was used, making it more difficult to use Macintosh in business by withholding key applications or dropping others. (Microsoft dropped Microsoft Project and Foxbase/Foxpro for Macintosh, and never produced Access.) Apple has repeatedly aided Microsoft through brilliance in conception, idiocy in execution, and almost non-existent follow through with future products - both hardware and software. (They are doing much better over the last 10 years.)

    Business being business, extortionist may be too harsh a word, but Microsoft is rumored to have forced Apple to sell its marvelous Macintosh Basic to Microsoft for $1.00 [folklore.org] if it wanted to get another license for the Microsoft Basic in the ROMs of the Apple IIs - Apple's bread and butter money maker for years after the Macintosh was released. Funny how much Microsoft Basic -> Quickbasic improved around that time. I seem to recall that Microsoft stopped development on Macintosh applications when Apple sued them over the look and feel of Windows as being too close to Macintosh. I don't believe those were the only times that Microsoft played hardball with Apple either, although it probably went both ways at times.

  • by NicknamesAreStupid (1040118) on Saturday March 03, 2012 @09:35PM (#39235317)
    This is best explained by analogy, and I will try to put it into a /. context. Here goes --

    Professor Xavier (a.k.a. Jobs) once started a school for the gifted, called Apple Computer. There, he and his close associate, Beast (a.k.a. Woz), created a wondrous thing, the personal computer. Upon hearing about this thing, another mutant, Magneto (a.k.a. Gates), came to visit with his close associate, Sabretooth (a.k.a Ballmer), to find out more about Apple. Magneto wanted to plunder Apple but knew that Dr. Xavier had a mysterious 'reality distortion field' that could probe his mind. So Magneto took a special shell (called DOS) that kept Dr. Xavier from reading his mind (there was no point to reading Sabretooth's). Dr. Xavier thought that Magneto was fairly benign and agreed to supply Magneto with his new invention, the Mac. Magneto took the Mac back to his lair in Redmond, and invented 'Windows' (BTW, Sabretooth wanted to call it 'Doors').

    Since that day, Dr. Xavier and Magneto would meet at trade shows and Davos, where Magneto would boast of how his mutant Windows had conquered the other OSes -- MVS, VMS, Unix, OS/2, and even the Mac OS. Then, one day Magneto left his helmet in his luggage on the way to Davos, and it was lost by United Airlines (how odd?^). Upon meeting Magneto at Davos, Dr. Xavier realized all the things that Magneto had been hiding from him. So, he cranked-up his reality distortion field to super-strength, entered Magneto's mind, and left thoughts of tax shelters, charities, and vaccines in his head, along with the 'brilliant idea' of turning Magneto's company, Microsoft, over to Sabretooth. And, to top it off, Microsoft would bite a chunk of Apple for $150 million plus promise to develop Microsoft Office for the Mac OS FOREVER.

    With that, Magneto 'retired' to save the world from disease and left Microsoft in the hands of Sabretooth, who made Microsoft more profitable than ever AND more irrelevant than ever. The rest is history.

    THE END

    Apologies to Stan Lee
  • There is this famous song: AC/DC - Dirty deeds done dirt cheeps....
    I could not tell my impression of this story more clear and in just one sentence...
  • I really wish Bill Gates let Apple die...

  • by andersh (229403) on Sunday March 04, 2012 @01:31AM (#39236453)

    How is it possible to write this garbage without mentioning that Apple had $4,000,000,000 in cash at the time?

    Bill Gates's token $150 million investment pales in comparison! It was symbolic!

    Also how is it "trolling" when Microsoft actually did violate Apple's patents?!

  • by DarkDust (239124) <marc@darkdust.net> on Sunday March 04, 2012 @03:54AM (#39237093) Homepage

    I don't think Bill was threatened by the patents since, as Steve himself said, Apple wouldn't have had the endurance to fight this war. But during this time (1997) was already eyed for abusing its almost-monopoly, and losing the only "serious" competitor (which, compared to MS at that time, was still tiny) wouldn't have helped Microsoft on that front. So I guess it was more valuable for MS to avoid additional antitrust trouble. Also, despite their competition, Bill respected Steve (but the other way round I'm not so sure; Steve said he respected Bill, but while reading the bio I'm sure he lied).

    For Apple, it really was an act of desperation that in hindsight payed off. But at the Macworld Expo, there was this famous presentation where Apple announced the deal, that MS would do Office for Mac and made a kind of teleconference with Bill. Bill appeared super-big on the screen, with a grin. The audience booed, which Bill didn't hear. Steve later described this as his biggest failure on stage: it made Steve look little and weak, at the mercy of the Evil Overlord Bill.

  • -1 Flamebait (Score:4, Insightful)

    by Tom (822) on Sunday March 04, 2012 @05:15AM (#39237435) Homepage Journal

    Mod article down.

    Oh, wait. Why can't we do modding for articles again? Oh yes, the /. frontpage would be very empty on some days.

    There's so much flamebait in this, I don't even know where to start. Pathetic, really.

  • by JohnnyMindcrime (2487092) on Sunday March 04, 2012 @07:25AM (#39237957)

    ...Jobs went to Microsoft on his knees and begging for money to stop the final death of his company.

    Good to see that at least one point in his career, Jobs understood the word "humility".

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