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Steve Jobs Used Patents Like A Mob Boss: Threatened To Sue Palm Over Patents If It Poached Any Apple EmployeesBy Techdirt
Ed. note: This post appears courtesy of Techdirt. We’ll be sharing business-related posts from Techdirt from time to time on Dealbreaker.
It’s long been clear to us that, rather than acting as incentives to innovators, or serving an important function by disclosing details about innovation, patents are little more than weapons to be used against innovators. We’ve highlighted numerous examples over the years, but recently-revealed emails between Steve Jobs and Ed Colligan (who was the CEO of Palm) highlight how Steve Jobs almost certainly illegally used patents as a weapon to threaten Palm away from hiring Apple employees. This all goes back to a DOJ investigation we wrote about years ago, concerning big Silicon Valley tech companies stupidly agreeing not to poach employees from each other. Not only is that an unfair restraint of trade, but as we’ve noted repeatedly, the free flow of employees between tech companies has been shown fairly conclusively to be a big part of why Silicon Valley companies tend to be so innovative.
While the DOJ settled with the tech companies, workers at those companies filed a civil lawsuit against their employers. Those companies have been trying to keep certain communications sealed and unavailable to the public, but Judge Lucy Koh rejected that request, leading to the public filing of an amazing declaration from Colligan that includes an email exchange between Colligan and Jobs, highlighting how Jobs sought to use patents as a weapon. Jobs told Colligan that if Palm hired more Apple employes, Apple would sue Palm for patent infringement. In the declaration, Colligan first explains how Jobs relayed the threat during a phone call:
In August 2007, I received a call from Steve Jobs, the Chief Executive Officer of Apple. In the months before the call, several employees had moved between the two companies. On the call, Mr. Jobs expressed concern about employees being hired away from Apple by Palm. As a solution, Mr. Jobs proposed an arrangement between Palm and Apple by which neither company would hire the other’s employees, including high tech employees. Mr. Jobs also suggested that if Palm did not agree to such an arrangement, Palm could face lawsuits alleging infringement of Apple’s many patents.
I did not agree to Mr. Jobs’s proposal and responded by sending an email on 15 August 24, 2007
The email exchange is worth reading. Colligan makes a case for why it’s silly to worry about employees changing companies, noting that every company wants to hire the best employees period, and that there’s a big enough market for everyone. He notes, correctly, that the proposed agreement is “not only wrong, it is likely illegal.” As he points out: “We can’t dictate where someone will work nor should we try. I can’t deny people who elect to pursue their livelihood at Palm the right to do so simply because they now work for Apple, and I wouldn’t want you to do that to current Palm employees. We can both try to persuade them to stay but, at the end of hte day, it is their choice, and a choice we should respect.”
From there he discusses just how dumb the patent threats are, pointing out that suing over patents doesn’t help anyone:
Steve, we don’t want to hurt Apple. As I said on the phone, Palm is focused on building the best team in the industry, and we know there is a lot of quality talent outside of Apple. On the other hand, this is a small space, and it’s inevitable that we will bump into each other. Threatening Palm with a patent lawsuit in response to a decision by one employee to leave Apple is just out of line. A lawsuit would not serve either of our interests, and will not stop employees from migrating between our companies. This is a very exciting time for both of our companies, and the market is certainly big enough for both of us. We should focus on our respective businesses and not create unnecessary distractions.
He follows it up by noting that any such lawsuit would just create a nuclear war situation, since Palm has its own patents, though he clearly notes that the only people this benefits are the lawyers:
That said, I want to be clear that we are not intimidated by your threat. Palm has a very robust portfolio of patents, having been in the handheld and smartphone businesses since the early 90’s. in addition, Palm now owns the former Siemens mobile patent portfolio, most recently held by BenQ Corporation. This mobile computing and communications portfolio includes over 1500 patent assets, the majority filed in Europe. If you choose the litigation route, we can respond with our own claims based on these patent assets, but don’t think litigation is the answer. We will both just end up paying a lot of lawyers a lot of money.
Entirely true. And then Steve Jobs hits back, first mocking Palm by noting that Apple has a lot more money, so it doesn’t mind throwing money away to lawyers on a bogus patent lawsuit as long as it hurts Palm, and then mocking the quality of Palm’s patents that it acquired from BenQ:
I’m sure you realize the asymmetry in the financial resources of our respective companies when you say: “We will both just end up paying a lot of lawyers a lot of money.”
Just for the record, when Siemens sold their handset business to BenQ they didn’t sell them their essential patents but rather just gave them a license. The patents they did sell to BenQ are not that great. We looked at them ourselves when they were for sale. I guess you guys felt differently and bought them. We are not concerned about them at all. My advice is to take a look at our patent portfolio before you make a final decision here.
As Dan O’Connor notes in the Patent Progress blog post above, this is no different than a mob boss protection racket, using the patents to warn Palm not to hire any more Apple employees or (effectively) “someone might get hurt” — with the patents standing in for the traditional baseball bat.
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