Spotify and the US Patent System

Spotify is being sued for alleged patent infringement already - Techdirt:

just a couple weeks after entering the US market (finally), Spotify is being sued by PacketVideo for patent infringement. I knew the name PacketVideo sounded familiar... and then I remembered. A decade ago it was considered one of the hottest startups on the planet for trying to figure out ways to do streaming video on mobile phones

Now its not that their patents are probably any use, you understand, that is not the game - but by threatening a lawsuit it delays Spotify, costs them a lot of money and hassle....and thus creates an opportunity for PacketVideo to be paid to go away:

Once again, we see patents being used as a tool to shakedown companies who were actually innovative in how they executed, with a ridiculously broad patent that contributed zippo to the actual state of the art.

This is big business in the US now, in fact ex Microsoft CTO Natan Myrhvold's company Intellectual Ventures is dedicated to buying and enforcing such patents (and more - it tries to create patents around emerging areas, not for use but for the purpose of suing others). There was a rather good program on This American Life in the US last week on this issue:

"....people at companies that have been approached by Intellectual Ventures don't want to talk publicly.

"There is a lot of fear about Intellectual Ventures," says Chris Sacca, a venture capitalist who was an early investor in Twitter, among other companies. "You don't want to make yourself a target."

Sacca wouldn't say if Intellectual Ventures had been in contact with any of the companies he's invested in.

"I tried to put you in touch with other people in this community to talk to you about this and they almost uniformly said they couldn't talk to you," Sacca told us. "They were afraid to." IV has the power to "literally obliterate startups," Sacca says."

The irony is software patents have emerged despite the US Patent system supposedly not being allowed to patent algorithms! The US is trying to reform this now, but the proposed changes are deemed to be inadeqate and would come too late for Spotify anyway.

They'e just waitin' for the Shakedown....