Stupid, Stupid, StupidStupid, Stupid, Stupid

A while back I wrote that the U.S. Patent and Trademark Office should declare all software and business-process patents void and invalid, and stop issuing them. The Netflix suit against Blockbuster shows why in a nutshell. Netflix actually has a patent that covers the idea of renting DVDs online. Some innovative idea, huh? And as if that weren't ridiculous enough, last week it got a second patent that covers renting DVDs without charging late fees. Wow, I wish I'd thought of that! But Blockbuster beat me to it, which is just as well. Otherwise Netflix would be suing me instead of Blockbuster. Congratulations, Netflix, you've won this month's Pond Scum Award for finding a way to engage in anti-competitive behavior and get away with it, casually helping to destroy the patent system in the process.I get lot of e-mail from various sorts of people when I write things like this. Most of it is of the pro-business "any dollar of profit is an honest dollar" sort of weak-mindedness. Obviously I disagree.

The idea that a corporation like Netflix has no obligation except to maximumize its profit is, in my view, immoral. It isn't a legal principal it's a smokescreen for people like Dennis Koslowksi, Richard Scrushy, Jeffrey Skilling, Kenneth Lay, and Bernard Ebbers, all previous winners of the Pond Scum Award. And then there are the more or less anonymous people at Polaroid and United Airlines and other corporations who stripped employees and retirees of their pensions and medical benefits.

These are people who ran sizable companies and in both the executive suite and the courtroom maintained that they did nothing wrong, they just had all the privileges of their positions and none of the responsibilities. The fact that employees of their companies were losing jobs and security had no relationship to their own multi-gazillion entitlements. They weren't responsible.

I beg to differ. People are responsible for what corporations do. Corporations don't apply for patents on spurious "business processes." People do. Corporations don't file harassing lawsuits. People do.

The people who run companies have great privilege, but precisely because they do, they must accept corresponding responsibility. If they don't, they are not behaving morally.

It's personal with me. I've given a lot of people as hard a time as I could in this space (bully boy Ed Whitacre, Jr., CEO of AT&T, comes to mind), and I'm always bothered when a reader doesn't understand why. The reason is this: Corporate directors and officers don't get to operate by different codes and standards than your family and neighbors do. They have the same obligation to treat others with respect and fairness, to exercise self-control and restraint, that you and I do. They have the same obligation to behave the same way at the office that they would at home.

Reed Hastings, Bill Henderson, Neil Hunt, Leslie Kilgore, Barry McCarthy, Patty McCord, and Ted Sarandos need to to think about this. They're the Netflix corporate officers listed on the Web site. They are on a slippery slope.

I imagine their response would be that they're only doing something everybody else is doing, and if they didn't abuse the patent system and seek unfair advantage somebody else would. Unfortunately, I suspect they're some truth in that.

But there is a solution. Netflix Founder and CEO Reed Hastings could decide to drop the Blockbuster suit and cross-license the patents on an open basis with any company that would agree to a mutual intellectual-property armistice. It wouldn't stop the ceaseless search for unfair business advantage, but it would at least help take the courts out of the business plans of these companies.

If Hastings has the courage to try, I'd bet Pierre Omidyar (eBay) and Jeff Bezos (Amazon) would be very interested. And that would be a start.