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December 29, 2008, 8:51 am · By Crawford

Talkback: Dumbest Moments in Business

You’ve seen our picks for the Dumbest Moments in Business in 2008. Tell us which blunder you think was the dumbest of all – or, better yet, a moment you think we missed. Post a comment below.

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December 24, 2008, 10:44 am · By Nadira

‘Tis the season to be social, not a social networker

Just when I think the Gen Y conversation’s gone stale, a new theme emerges that proves me wrong, and this year, it was a social one. But perhaps not the one you’d expect: It wasn’t social responsibility, or even social networking, but (our lack of) social connection, and by extension, aptitude. If it seems I’ve been harping on this a bit (witness “Making true connections in a Facebook world”), I have — because this might be the area where we have the most to learn, and the most to lose if we don’t learn it.

What better time to start those lessons, then, than right now, as many of us head home to family and holiday parties galore this December, situations that often traditionally elicit at least as much dread and drinking as goodwill? So this December, I vote we actually (gasp) talk to people, and (double–gasp) mean it. As New Year’s resolutions go, it’s a basic one, I know. But after all my cheerleading and translating for our cohort, I’ve also learned a few things about where we fall down. And making substantive connections, whether they’re on or off the web, is increasingly becoming one of those places, especially if what I’ve been hearing from you all is any indication.

Consider Hannah Seligson’s November New York Times story, “For Help Finding a Job, Friends in Low Places.” Hannah, a Gen Y author I met when I wrote about her book last year, told me I might be the “contrarian” voice in her piece, which explored Yers’ efforts to utilize their peer network — instead of, say, their parents’ friends — to find job opportunities. Hardly in a rush to read my curmudgeonly comments, I waited a while to read the story.

And then an odd thing happened: I started to get e-mails and calls from people (my own younger sister included) thanking me for being honest and realistic about what one Yer might have to offer another, especially over something like Facebook. “It’s very easy to just send out a friend request,” I’d told Hannah, “but when you are looking for jobs, you want to make sure your peer network is comprised of people who can speak to your qualities, not just vouch for you as a friend on Facebook.” It certainly wasn’t revolutionary, but it resonated, likely because — like me — many of you are finding yourselves drawing that new distinction between Facebook friends and real ones, too. And let’s just say Facebook friends don’t always make great references, mentors, or, well, friends.

So in the interest of having real relationships, let’s treat every connection we make from now on as sincerely as possible. And let’s keep the connections we already have from going generic. That friend you only see on IM? Drag him or her out to lunch. If you’re home this break, take the time to catch up with old friends in person, rather than updating them via Facebook status (or relying on that most formidable of networks, the Former PTA Moms Phone Tree).

Or if you run into someone you haven’t seen in a while on Facebook, take the time to write a quick note instead of sending a blank friend request. This makes you a person, instead of a profile your would-be friend has to poke around in till s/he remembers who you are and confirms that you aren’t insane. (And this goes double for people you don’t know, but would like to; they’ll be much more likely to respond to an “I love your work!” than nothing at all.)

Even when it comes to folks who’ve made themselves available as part of your university alumni network or company mentoring program, reach out to them first as an individual and second as an opportunity. And always do it with some humility and gratitude. After all, there’s a huge difference between an e-mail that says, “You’re in a field I love, and I’d really appreciate a bit of advice,” and one that says, “Here are the three jobs I’d like at your company, and my resume’s attached.” (Both of which I’ve gotten, by the way.)

The moral of the story: Use all the tools available to you, but use them to build relationships, not just networks, social or otherwise. A Boomer parent/executive stopped to chat with me recently about the seeming contradiction between Gen Yers’ affinity for technology and our need for interpersonal connection, and as we wrestled with it, he said something that stuck with me: “The technology is actually getting us back to where we used to be.” A few generations ago, one’s hometown alone offered a lifetime’s worth of deep connections. In today’s sprawling, mobile, hyperactive world, not so much. And while technology’s helping us to (re)create some of that community online, we’re still a long way from replicating the lasting bonds that used to form naturally in our neighborhoods and help shape us into the people we were supposed to become.

Good news is, those bonds still do exist in the real world. So, as a present to ourselves and everyone who’ll ever have to know us, let’s go get them back.

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December 24, 2008, 9:33 am · By Adam Lashinsky, Editor at Large

Behind Dell’s snippy attitude

A couple years ago, right around the time Dell’s exploding laptop batteries were getting a fair amount of media attention, I had breakfast in San Francisco with a senior Dell executive. He was seriously annoyed by all the focus on Dell (DELL), even though his company wasn’t the only one with the spontaneous combustion problem caused by Sony’s (SNE) batteries.

I used, with little success, an explanation I like to give subjects trying to understand their media coverage. It revolves around a key scene in the fabulous Ron Howard movie “The Paper” in which a tortured city hall official pleads with a columnist to know why the latter is targeting the former in his columns. “You don’t get it, do you,” replies the news man.  “It’s your turn.”

My point then was that Dell, which had been among the smuggest of successful companies — ‘Our business model is our innovation’ … Michael Dell saying in 1997 that if he ran Apple (AAPL) he’d “shut it down and give the money back to the shareholders” — was about to experience the reverse of adulation. When you brag on the way up your critics will gloat on the way down. The mistake is to think the media takes sides. Not really. It joins in the praise as well as the scorn.

Anyway, fast forward to 2008, and it’s interesting to see just how defensive and downright snippy Dell has become, having been humbled by the likes of once lowly Apple and the former PC industry doormat, Hewlett-Packard (HPQ). Michael Dell, the current and former CEO, clearly picked the wrong reporter to get his back up with when he told Ashlee Vance of the New York Times, “I don’t appreciate the tone of your reference,” in response to a question about Dell’s culture. (My only quibble with Vance’s article is that it doesn’t explain why acquisitions are necessary for Dell. I don’t doubt that they are. I’d just like to have had it explained to me.)

More recently, Dell has been publicly suggesting that it’s greener than Apple, using the kind of intemperate and schoolyard-like taunting one typically doesn’t see from Fortune 500 companies. (Read John Paczkowski’s spot-on overview, titled, “Dell Green, All Right — Green With Envy.”)

It’s easy to understand why Dell (the person and the company) are so sensitive. Its once world-beating stock trades where it did about 11 years ago. Its management has largely turned over. Its reputation lags the competition.

Will Dell have its turn to shine again? Most likely. First, though, it’ll  have to lose the attitude. Then, when it starts to succeed again the ‘Dell is Back!’ stories will appear.

And the cycle will begin anew.

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December 16, 2008, 6:38 pm · By Adam Lashinsky, Editor at Large

Facebook’s best face

Facebook held a holiday party Monday night for journalists at its headquarters in rainy, cold Palo Alto. The conversations there were strictly off the record, so I can’t quote what people told me over egg nog and finger food.

I’ll share a few thoughts anyway because Facebook’s an interesting company that’s in the news a lot. First, it has acquired interesting DNA. Much has been made of how young and inexperienced CEO Mark Zuckerberg is. (The young-and-inexperienced one has become totally adequate at making small talk at cocktail parties, by the way.) I can’t tell you what Zuckerberg said to me, but I can tell you he’s pleased that Facebook is getting easier to use; he’s jazzed by the company’s new deal with IAC’s (IACI) CitySearch that makes it easy for people to share info with their “friends” about places to go and things to do; and he talks about the news biz with pal/mentor/new board member Don Graham of Washington Post Co. (WPO).

But I digress. Facebook has pulled in nearly grey-haired talent from places like Google (GOOG), Amazon (AMZN) and eBay (EBAY). They’re the kinds of people who’ve seen what works and what doesn’t in the tech business. Without saying which exiles from those companies I talked to, I’ll mention one I didn’t: Gideon Yu, the former YouTube/Google executive who’s currently Facebook’s chief financial officer. Where were you Gideon?

What else? Various Facebookers pooh-poohed the recent ruckus over its inability to sell employee shares at their anticipated valuation. Whose stock hasn’t gotten hammered, after all, goes the argument.  (A more effective way of downplaying such stories would be to discuss it with me on the record. I’m just saying.)

Someone familiar with her thinking reports that Chief Operating Officer Sheryl Sandberg, the former chief of staff to incoming Obama economic advisor (and former Treasury secretary) Larry Summers, isn’t sorry she’s not going to Washington. Sandberg isn’t a banking expert anyway, and that’s the kind of expertise that’s called for right now.

Facebook also is smart about its journalist schwag. It distributed two party favors to journos on their way out the door: A $100 gift card from DonorsChoose.org that allows its holder to donate the money to any school of their choice. I love that. The second is a little bag that looks like a compact-disc holder that unzips and unfolds into one of those crunchy granola bags people bring with them to the supermarket. Also smart. My wife will LOVE that.

Oh, one last thing. I’m beginning to crumble on my well-documented aversion to Facebook. It’s probably all my old pals from Kroehler YMCA Camp who have friended me lately that have caused me to reconsider. But that’s a story for another day.

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December 16, 2008, 12:25 pm · By Nadira

Yers won’t settle

As stressful as the last few weeks have been to anyone with a pulse and a 401(k), nothing’s been quite so disturbing to me as the inordinate number of times I’ve been asked, “With the economy the way it is now, will Gen Y stop being so demanding?” It may sound innocuous at first, but once you’ve heard the line a few times, it quickly becomes clear that what it really means is, “Now that you don’t have any choice, will you finally stop forcing us to do right by you and just settle like everyone else, for crying out loud?”

Well, thanks, folks. Good to know that, in all this turmoil, the silver lining for some people is the potentially broken Gen Y spirit.

But don’t start celebrating just yet. As a high-profile Los Angeles businesswoman told me last week, what said schadenfreuders don’t realize is that the outcome of the financial crisis may not be a defeated Gen Y, but a more determined one — determined, that is, to follow fulfilling work. “There won’t be any trust in companies,” she said. And the fact of the matter is, without that trust, corporate America becomes even less attractive to standout young employees than it was before the recession hit. The security that a Lehman Brothers or Merrill Lynch business card used to mean — never mind the cachet that they carried — began to evaporate as even those peers who chose the “stable” path of, say, financial services found themselves jobless. And as the list of the white-collar unemployed grows longer every day, it’s beginning to look like they’re gone for good.

Believe it or not, a paycheck doesn’t necessarily make up for all that. True, it may get a few young candidates in the door. It may even get them to stay a little while. But as today’s far more footloose Yers wait longer for spouses, kids, and mortgages — the trifecta of entrapment for the company men of generations past — they’ll be harder to corner. Every time they get a paycheck, they’ll be wondering if it’s their last. And they will always resent a company that uses that paycheck as a shackle — not to mention as an excuse not to improve the myriad other aspects of worklife — rather than as a reward for a job well done. So much so that the moment something better appears– whether it’s an NGO in Bangladesh, their own small business, or a plain old better job as the economy stabilizes — they will be out like The Flash.

So what’s a company do? (Besides advise managers not to hope for a generation of employees cowed by financial instability, of course.) It’s simple: See this time as an opportunity, not to snare young candidates while they’re down, but to distinguish your organization as one that can shine in difficult times and, as a result, attract and retain the very best employees. Yers are all about partnership, so talk to them about the challenges your company’s facing, and use those challenges to build that stirring startup energy that gets young hearts beating. And even when layoffs are a must, do them humanely, so all your employees can stay and go with dignity (and without saying mean but true things about you on every blog this side of Gawker).

As a Washington utility executive reminded me recently, Shakespeare wrote, “Sweet are the uses of adversity.” We Gen Yers are learning that, I think. Let’s see if the people in charge can, too.

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December 10, 2008, 3:22 pm · By rparloff

Law and economics 2.0

On Thursday the Kauffman Foundation will announce that it is making $10 million in initial contributions to found an initiative aimed at reinvigorating, and, to some extent redirecting, the exceedingly influential school of thought that has come to be known as “law and economics.”

The discipline uses economic analysis to try to shed light on which legal rules will most benefit society in all areas of the law, but especially in antitrust, torts, contracts, and property cases.

Kauffman’s new “Law, Innovation and Growth” initiative seeks to refocus the law-and-economics debate to center on the promotion of entrepreneurship, which has long been one of the key goals of that Foundation, which was started in 1966 by pharmaceutical magnate Ewing Marion Kauffman (who started Marion Laboratories). The Foundation, based in Kansas City, Mo., says it currently has a corpus of about $2 billion.

Though the field of law and economics has often been seen as a politically conservative movement, the leader of the Kauffman initiative will be Robert Litan, Kauffman’s vice president of research and policy. Litan has held prominent governmental positions during Democratic administrations and has been affiliated with the centrist-to-liberal Brookings Institution for nearly 20 years. Among other things, Litan was deputy assistant attorney general in the antitrust division of the Clinton Justice Department when Justice first went after Microsoft in the 1990s. (Litan has both a Ph.D. in economics and a law degree from Yale.)

“I’d characterize the law-and-economics school as a mode of economic thinking,” says Litan in an interview, contending that it is politically neutral. “There are many people in the field who are Democrats as well as Republicans, liberals rather than conservatives.”

Indeed, the field’s two most towering figures, he stresses, are positioned toward opposite ends of the political spectrum: Richard Posner, the conservative, former University of Chicago Law School professor and now Reagan-appointed, federal appeals court judge in Chicago; and Guido Calabresi, the liberal former Yale Law School professor and dean, and Clinton-appointed federal appeals court judge in New York.

In Litan’s view, the law-and-economics movement to date has focused on the issue of achieving “static efficiency” — in essence, how best to allocate the existing pie of wealth — while giving insufficient attention to dynamic efficiency, i.e., the need to ensure that the pie keeps growing. For example, a raging issue lawyers are wrestling with today, he notes, is the question of how to reform the current patent and copyright laws to ensure that they spur entrepreneurship and invention, rather than stifle them. This is the type of issue that is right smack in the new initiative’s wheelhouse.

Even before the current economic crisis, Litan says, the law-and-economics movement needed a shot of adrenaline for at least two reasons. The first was age: the school, after all, got rolling in the late 1940s at the University of Chicago. “Like all revolutions when they mature,” observes Litan, “they change. They hit sort of a wall. What’s happened to law and economics is . . . that it’s become incredibly mathematical, very niche, highly theoretical, and difficult to understand.”

Secondly, he explains, the movement has not only lost its momentum, it’s lost its funding. Since at least the early 1970s, the law-and-economics school had been able to purchase premium shelf-space in the marketplace of ideas thanks to generous funding from two (politically conservative) foundations: in its early days, the Liberty Fund, and, later, The John M. Olin Foundation. But the latter group disbanded in late 2005, having spent down its corpus in accordance with its benefactor’s direction that his bequest be entirely used up within a generation.

“So what better time for another foundation to come along,” asks Litan, to not only pick up the slack, but “to try to torque the movement away from static efficiency to growth.”

How does the current economic collapse — and its implicit lesson that over-reliance on market mechanisms have led us to disaster — affect his and Kauffman’s plans?

“Ironically,” he responds, “it may be an even bigger deal now that economy is collapsing. We are now about to have a huge national debate on the role of markets and regulation … and how much are we going to roll back from the market-oriented philosophy in which a lot of law-and-economics participated. … From our viewpoint we’re hopeful that whatever repairs we make in the economic system, we don’t kill off risk-taking and entrepreneurial drive, because that’s what we need for growth.”

The foundation’s initial $10 million investment will include a $2.8 million grant for researchers to examine the impact of law and regulation on growth at eight top law schools, including Yale, Harvard, Stanford, Columbia, Northwestern, Boston University, George Washington, and the University of Iowa. Another $2.8 million will go the Harvard’s Berkman Center for Internet and Society; and $2.2 million more to fund research by young assistant professors at law schools, to be called Kauffman Legal Research Fellows. The rest will be used to fund seminars at law schools , and to fund the new Stanford Intellectual Property Litigation Clearinghouse, which launched Monday, and is being run by professors Mark A. Lemley and Joshua Walker.

Litan’s role model here, he acknowledges, is Henry Manne, a dean emeritus at George Mason University School of Law in Arlington, Vir., who was law-and-economics’ chief proselytizer and salesman. Beginning in the early 1970s, Manne set up seminars for influential professors, followed by seminars for federal judges, followed by, eventually, law-and-economics centers at many prominent law schools, typically with backing from either the Liberty Fund or Olin Foundations.

Manne has written a very engaging history of this missionary work, entitled “How Law and Economics was Marketed in a Hostile World: A Very Personal History.” In it, Manne notes that in the early 1970s, when he was first trying to attract top law professors to a summer program in economics he was launching, “we paid everyone the then princely sum of $1000, plus all expenses and some very fancy meals.”

Now there’s some economics we can all understand.

[Correction: The original version of this post inadvertently omitted to mention Northwestern University Law School from the list of schools where researchers will be receiving Kauffman grants. Regret the error.]

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December 10, 2008, 9:35 am · By Adam Lashinsky, Editor at Large

Fortune 500 Forum wrap-up

I’m always too slow to get around to reporting about our great Fortune conferences. Once again, in the better-late-than-never category, here are a few thoughts from the Fortune 500 Forum, held last Monday to Wednesday (Dec. 1-3) in Washington, D.C., at the Ritz-Carlton hotel near DuPont Circle.

This conference draws together a group of CEOs and other big shots to go high level: the economy, corporate governance, state of the world, and so on. Officialdom made an appearance in the form of Treasury Secretary Henry Paulson and FDIC Chairwoman Sheila Bair.

Regrettably, I flew in too late to catch Paulson. Bair I did see, and she is as impressive as I expected. A Kansan and a just-the-facts-ma’am type. She’s not charismatic, and she has a bad habit of swallowing the ends of her sentences. But she’s clearly smart and in control. And she’d like to not be asked by President-elect Barack Obama to leave her job before her term is up. (Clearer version: Bair wants to keep her banking watchdog job.) One question I’d like to have asked Bair but didn’t: Does the FDIC approve the too-high CD and money-market rates you constantly see troubled banks advertising in the newspapers? It’s so clear those rates are designed to pull in depositors and that the FDIC is on the hook to insure the deposits up to the regulated levels. As such, the FDIC ought to bless each rate before a GMAC Bank or Washington Mutual advertises it in the San Francisco Chronicle, for example. But do they? Does anyone know?

As for business leaders, one word describes the mood at the conference: bleak. Blackstone (BX) co-founder Peter Peterson sees the recession lasting through 2009, and he also forecasts housing prices continuing to plummet. Free-market types like Brad Anderson of Best Buy (BBY)  and AT&T’s (T) Randall Stevenson didn’t have anything good to say about the stimulus plans being plotted by Congress. But they assume they’ll happen anyway.

On energy policy, a high-power panel moderated by my colleague Marc Gunther came to an interesting conclusion: A carbon tax would have a much bigger and better impact than a cap-and-trade system supported by both former presidential candidates and the Democratic Congress. I had one nagging question for the panel, which included legendary FedEx (FDX) founder Fred Smith, Conservation International’s Glenn Prickett, U.S. Shell Oil boss Marvin Odum, and Andy Karsner, the Bush administration’s former emissary to the alternative-energy industry: If a carbon tax is such a smart idea, why aren’t any politician’s talking about it?  (The short answer: This debate is just getting started.)

***

One of the highlights of the conference was a dinner in the Benjamin Franklin Room at the State Department. Lots of china and portraits from the early days of the Republic, giant seal of the United States on the ceiling, that sort of thing. Rick Stengel, managing editor of Time Magazine, Fortune’s kissing-cousin publication, interviewed former Secretary of State Madeline Albright, now a consultant as well as Obama transition team advisor. She wasn’t any more upbeat than the business chieftains. She said Pakistan has “everything that gives you an international migraine,” including nuclear weapons, corruption and the like. She called Russia’s president, Dmitry Medvedev, “stunningly young.” And this was while she was just warming up.

***

Speaking of Pakistan, the following evening the group split up among several embassies and I was privileged to dine at that country’s well-fortified embassy. Ambassador Husain Haqqani is a charmer, a former journalist and academic who went into exile under his country’s previous regime and only recently came back into political life with the change in government there. Asked how the Pakistani people view Obama, a different diplomat explained that his people are emotionally excited about Obama but concerned because of his debate comments that he would attack Pakistan if necessary. (John McCain was more cautious on the question of Pakistan.) It’s a good reminder that while Americans suffer through the ennui of endless debates, people around the world hang on whatever words most impact them.

Two panels on our final day, one of which I moderated, danced around the topic of the role boards of directors play in over-the-top executive compensation. The severe recession will probably do more to address that problem than all the hot air that compensation experts and shareholder-rights activists blow on the subject. (Pearl Myer, a leading compensation consultant, made what sounded to me like a ridiculous comment, that boards have a tough time finding worthy candidates with industry knowledge. That didn’t seem to stop the boards of Ford (F) and Chrysler from going outside the auto industry.)

I asked every executive I could if they’ve been able to borrow money from banks. Western Refining CEO Paul Foster told me he can, but at rates that don’t make sense. He’s selling a refinery to pay down debt.

And in the crazy times category, James Turley, CEO of Ernst & Young, checked out of the Mumbai Oberoi the afternoon of the tragic attacks. We were pleased to have him at our conference  the following week.

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December 8, 2008, 9:26 am · By rparloff

A no-fly zone to protect Linux from patent trolls

On Tuesday a consortium of technology companies, including IBM (IBM), will launch a new initiative designed to help shield the open-source software community from threats posed by companies or individuals holding dubious software patents and seeking payment for alleged infringements by open-source software products.

The most novel feature of the new program, to be known as Linux Defenders, will be its call to independent open-source software developers all over the world to start submitting their new software inventions to Linux Defenders (Web site due to be operational Tuesday) so that the group’s attorneys and engineers can, for no charge, help shape, structure, and document the invention in the form of a “defensive publication.”

Linux Defenders will then also see to it that the publication, duly attributing authorship of the invention to the developer who submitted it, is filed on the IP.com Web site, a database used by the U.S. Patent and Trademark Office and other patent examiners throughout the world when they are trying to determine whether a proposed patent is truly novel, as any patentable invention is supposed to be.

In effect, the defensive-publications initiative mounts a preemptive attack upon those who would try to patent purported software inventions that are not truly novel — i.e., innovations that are already known and in use, though no one may have ever previously bothered to document them, let alone obtain a patent on them, a process usually requiring the hiring of attorneys as well as payment of significant filing fees.

“The idea is to create a defensive patent shield or no-fly zone around Linux,” says Keith Bergelt, the chief executive officer of Open Invention Network, the consortium launching the site. The core members of that group, formed in 2005, are IBM, NEC, Novell (NOVL), Philips, Red Hat (RHT) and Sony.

OIN’s Linux Defender program is being co-sponsored by two of the most prominent guardians of the free- and open-source software community, the Linux Foundation in San Francisco and the Software Freedom Law Center in New York. In addition, the site is being hosted and “co-developed” by New York Law School, which has, since June 2007, been sponsoring, in coordination with the U.S. Patent and Trademark Office, its own well-received, complementary project, known as the Peer to Patent Community Patent Review site. That site solicits assistance from the open-source community to produce evidence that an invention for which a patent is currently being sought was actually already known or in use prior to the patent applicant’s filing.

So-called free- and open-source software is software that, by its licensing terms, confers certain “freedoms” upon users that are usually forbidden by conventional proprietary software companies, like Microsoft. These freedoms include the right to see the software’s source code, alter it, copy it, and redistribute it. The best known open-source product is Linux, or GNU/Linux, a complete open-source operating system that has become quite popular among Fortune 500 corporations for use on their data-center servers. Patents threaten the whole free-and-open-source eco-system, however, in that none of the key open-source freedoms can be practiced if an outsider can establish that a given piece of software infringes a valid patent he holds.

The Linux Defenders program is largely the brainchild of Bergelt, who took over as Open Invention Network’s CEO this past February. The program also reflects a new, more proactive role Bergelt envisions for OIN than the group has played in the past.

Until now, OIN’s purpose has been one-dimensional: to acquire a defensive portfolio of strategically crucial patents, which OIN makes available, royalty free, to any company that reciprocally agrees not to assert any of its own patents against the Linux community. (About 50 companies have already entered into such formal agreements with OIN, of which the best known are probably Google (GOOG) and Oracle (ORCL).) The implicit threat is that if any outsider — a Microsoft, (MSFT) say, which declared publicly in May 2007 that open-source software then violated 235 of its patents — were to ever bring a patent suit against a player in the Linux community, that outsider would, in turn, risk countersuit by OIN or its member companies asserting infringement of their own patents by the outsider.

While this IP-acquisition program remains a central one for OIN, Bergelt says, OIN will also now seek to “think more creatively” about other ways to protect and foster Linux’s development by means of “relationship-building” and “information-sharing,” including efforts to explain the importance of open-source and open-platform approaches to the media, patent officials, and competition authorities, among others.

Befitting someone who plans to tackle this ambitious range of goals, Bergelt has a background that is more diverse than that of his intellectual-property lawyer predecessor, Jerry Rosenthal, who, prior to heading OIN, had served as IBM’s IP-licensing chief. Though Bergelt is also an IP lawyer, he is, in addition, an entrepreneur and diplomat. Immediately prior to joining OIN, Bergelt was the president and CEO of the intellectual-property focused hedge fund Paradox Capital. Before that, he was a senior advisor to private-equity fund Texas Pacific Group (now TPG); headed the strategic intellectual asset management unit at Motorola; and co-founded the strategic intellectual asset management unit within the electronics and telecommunications group at SRI Consulting in Menlo Park. Earlier still in his career, he spent 12 years as a U.S. foreign service officer, including a posting to the U.S. Embassy in Tokyo, where he negotiated IP rights agreements with certain Asian countries, including China.

The Linux Defenders program will actually have three components. The first will be a peer-to-patent component that, like New York Law School’s existing program, will reach out to the open-source community in search of evidence of “prior art” — proof of preexisting knowledge or use of certain inventions — that can be used to challenge applications for patents that have been filed but not yet granted. The goal here is to persuade patent examiners not to grant the patent being sought because the invention is not truly novel.

The second component will be a natural extension of the first, to be known as “Post-Grant Peer to Patent,” which will enlist similar community assistance in the search for prior art relevant to patents that have already actually issued. In this case, the goal would be — assuming such prior art is found — to initiate an administrative reexamination proceeding before the U.S. PTO to get the patent invalidated. (There have been some earlier post-grant, peer-to-patent efforts — sometimes referred to as peer-to-issue programs — by both nonprofits and private companies, but none with the commitment, and on the scale, that OIN envisions, Bergelt says.)

The third component is the defensive-publications initiative. The phenomenon of defensive publication is also not new, Bergelt acknowledges, although it has primarily been used in the past by private companies protecting proprietary business models. Since at least the 1970s, he says, when the filing of an important patent by one company would often spur rivals to respond by seeking inter-related patents designed to restrict the usefulness of the first company’s filing, proprietary companies began using defensive publication to beef up and buffer their core patents.

“They’d file one patent,” Bergelt explains, “and then the next day they’d file thirty defensive publications that would protect all of the extensions of it they could think of, so the core patent was fenced off by layers of barbed wire, if you will. . . . What I’ve done is turn that idea on its head a little bit.” (Defensive publications are cheaper and easier to prepare than full-fledged patent-applications.)

Although some factions of the free- and open-source community are ideologically opposed to the whole notion of software patents — most notably and passionately Richard Stallman, the founder of the Free Software Foundation (which is a client of Linux-Defenders co-sponsor Software Freedom Law Center, which, in turn,  supports the End Software Patents organization) — neither Bergelt nor OIN fall into that camp.

“We’re not anti-patent by any stretch of the imagination,” says Bergelt. “More patents is fine with me, as long as they’re high quality. Quality is the drum we beat.”

In fact, Bergelt says, if a developer wants to get an actual patent on his invention, and then put defensive publications around it, Linux Defenders will help him do so — so long as the developer will ultimately be contributing the patent to the Linux community.

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