Even Color’s patent portfolio is a lousy bet

While the fate of Color is still in flux — we originally reported that the company is winding down, then, after some confusing back and forth, there was word that Apple is hiring some of its engineers — one asset the company reportedly still has in play is its patent portfolio.

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Don’t bet on it.

First, let’s look at the promise of the Color app: A photo-sharing app on its surface, the Color app gathers additional data about the user’s environment and coalesces it all through data mining (and error correction algorithms, one assumes) to create a new level of location-based data. In addition, the app uses a new model of social networking, where relationships fade over time or remain strong based on interactions.

Fair enough. These sound like true innovations. But the company has not proven what it can actually accomplish with these innovations, and the interface of the app has been an obstacle for many users. While the company could conceivably pivot towards success, or be bought out by a much bigger firm, we shouldn’t automatically assign a high value to the intellectual property of a company that has not succeeded in the market.

Color owns a couple of trademark registrations for the word Color and a logo for use with a certain type of software and online services. They do not own the word “color.” In fact, another California company owns a registration for the trademark “Color Labs” for ink and toner-related products.

Trademark rights only exist to the extent that they are used to sell particular goods or services. Unless an app maker creates substantial goodwill among a large number of customers using a particular brand, the value of that trademark is very small. Trademarks are easy to register. The trick is to make them worth something by investing in enough marketing and PR efforts so that people associate a given product or service with that trademark. And if Color Labs, Inc. does shut down, they may arguably be abandoning any trademark rights that they had started to create.

At a minimum, a large company like Apple could invest a lot more in creating a brand for Color than Color ever did.

As for the patents behind Color’s technology, they are only patent applications—works in progress whose value is still uncertain. The innovations I mention above may yet yield issued U.S. patents. It’s a long process.

In the meantime, have a look at the current state of the first claim for each patent application owned by Color:

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“A method, comprising: receiving content from a first user device, the content having been generated in the first user device; determining, using at least one processor, a device group to which the first user device was associated when the first user device generated the content, the device group comprising a plurality of user devices, the determining of the device group being based on at least one logical relationship between the first user device and the plurality of user devices; and transmitting the received content to the plurality of user devices of the device group.” Patent App. Pub. No. 20120246267, Claim 1.

“A method, comprising: accessing logical relationship information describing logical relationships between user devices; determining, using at least one processor, membership in a device group of a plurality of the user devices based on the logical relationship information; receiving content from at least one of the user devices of the device group over a communication network; and forwarding the content received from the at least one of the user devices of the device group over the communication network to other user devices of the device group.” Patent App. Pub. No. 20120246266, Claim 1.

“A method, comprising: receiving from a first user device a message comprising location information indicating a geographic location of the first user device; calculating values representing logical connection strengths between the first user device and other user devices using the location information; and determining, using at least one processor, a first device group for the first user device based on the values representing the logical connection strengths, the first device group comprising a plurality of the other user devices.” Patent App. Pub. No. 20120246244, Claim 1.

“A method, comprising: defining a device group comprising a plurality of user devices based on logical relationships among the plurality of user devices; storing in a data storage device a group data structure corresponding to the device group, the group data structure comprising a parent data structure; receiving an item of content from a first user device of the device group; storing in the data storage device the item of content as a child data structure of the parent data structure; and transmitting the item of content to other user devices of the device group based on the item of content being stored in the group data structure.” Patent App. Pub. No. 20120221639, Claim 1.

If you can wade through these, your first thought may be, “Gee, these sound just like the lame patents asserted by patent trolls.”

Well, yeah, they do. Most software patents start out like this. Over a period of 3-4 years, a skilled patent attorney argues with a dedicated patent examiner to agree on revisions until the patent can actually be issued. (Remember, the claims of a patent define what is protected by the patent. In a lawsuit, they are what really matters.)

So Color may eventually end up with one or more issued patents that define something truly innovative, as Color has discussed in connection with its app and its business plans.

But it has become more difficult under recent court cases and recent changes in the United States patent laws to secure patent protection for software. Patent examiners are better trained now and the examination process is getting tougher all the time. The bar keeps being raised, so to speak. So for the moment, these patent applications owned by Color are an uncertain quantity. They will probably not issue until 2014. A patent cannot be enforced against anyone until it issues.

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Come to think of it, if someone funds the legal expenses until they issue, these Color patents are likely to end up as part of a fire sale and end up in the portfolio of a patent troll/patent assertion entity. And who knows what they will be worth at that point.

Nicholas Wells, CEO of Wells IP Law, is a trademark attorney with a Master of Laws (LL.M), with merit, in International intellectual property law.