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Blackboard - Fear, Uncertainty and Doubt

I wonder why Blackboard is suing Desire2Learn for patent infringement. Software companies usually don't enforce software patents except when defending themselves. Big software organizations routinely infringe each other's patents, but Mutually Assured Destruction prevents everyone suing the pants off everyone else. For example, before the acquisition, Adobe won $2.8 million from Macromedia in May '02 for patent infringement. Eight days later, Macromedia won $4.9 million in a counterclaim. They could have gone on all night, but instead declared a truce and made some fat checks out to the lawyers.

Many software companies have silly patents,
but they are usually reserved for defence

Patent trolls are different - they usually don't have anything to lose - so they have much upside, and no downside when enforcing trivial patents. Blackboard does have something to lose - a whole software business, and the people who use their software are the same people who are most infuriated by this kind of patent claim. (And everyone at SlashDot, of course).

So why piss off your users so much? Have they come to the conclusion that the goodwill and the software business are not worth keeping?

I think the going might be getting tough for Blackboard - Jim Farmer estimates (pdf) that it might cost upto $250,000 for Blackboard to acquire each new enterprise customer. When I heard that figure, I nearly fell off my Aeron - I could write the damn software for less than that.

Or even better, I could use an open-source alternative. Blackboard's sales prospects have been working that out in their droves too. Moodle is rapidly taking market share with estimates that 56% of all UK Further Education institutions are making use of Moodle.

Could it be that Blackboard is facing such bleak prospects that it sees the patent troll route as more profitable than the software business?

Or is it that they hope that this case might get settled without testing whether the patent is valid (it's probably not). That would leave the threat of lawsuits hanging over universities and schools using Moodle - you'd hear administrators arguing "It's better and cheaper, but we might get sued if we use it, we'll use Blackboard instead". And, assuming Desire2Learn license the patent, it might not be so bad for D2L either.

Either course seems risky for BB. It might be the new environment that is forcing them to take risks to maintain their position, but It seems counter productive to me to gratuitiously sue competitors or to frighten customers into using your software.

I'll leave you with some of Paul Graham's thoughts on patents -

When you read of big companies filing patent suits against smaller ones, it's usually a big company on the way down, grasping at straws. For example, Unisys's attempts to enforce their patent on LZW compression. When you see a big company threatening patent suits, sell. When a company starts fighting over IP, it's a sign they've lost the real battle, for users.

A company that sues competitors for patent infringement is like a defender who has been beaten so thoroughly that he turns to plead with the referee. You don't do that if you can still reach the ball, even if you genuinely believe you've been fouled. So a company threatening patent suits is a company in trouble.

Posted by Alexander on September 16, 2006 | Blackboard - Fear, Uncertainty and Doubt | Comments (2) | TrackBack