As organizations have started to implement cloud computing and started to realize some of the potential cash savings, patent holders have started to see cash of another sort. Over the past twelve months there has been a sharp increase in patent litigation related to cloud computing. As a result it is important to make sure that any organization you enter into the cloud with is financially stable enough to deal with the financial strains of potential patent infringement issues. In some ways this is nothing new in that this has been the crux of the cloud computing value proposition. The costs savings of cloud computing has to off set the potential risks of giving your critical data to an outside vendor.
Nolan Goldberg, a patent and trade secret litigation attorney for Proskauer Rose LLP in New York recently suggested a far more concerning risk. Due to changes in patent law organizations can seek infringement licenses and damages from an individual company or end user. According to Goldberg:
One model of enforcing patents says I can go after the manufacturer, but once I do I’m done because then all his sales are licensed, But if I keep going after all his customers, I can keep going forever and the customer is really not in the best position to fight back. So it creates increased risk.
So it is important to evaluate these potential costs in relation to any savings you may have by entering the cloud. Your organization may want to consider seeking some sort of indemnification from patent infringement liability. As always it is important to be sure that your organization doesn’t get singed by being on top of the cloud.
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