Andy Grove: Patents Are Like Mortgage Backed Securities
from the and-innovation-will-suffer dept
Intel co-founder and former CEO Andy Grove gave quite a speech this weekend at the National Inventors Hall of Fame, where he explained how patents are looking increasingly similar to the sort of financial derivatives that have brought down today's economy:The true value of an invention is its usefulness to the public. Patents themselves have become products. They're instruments of investment traded on a separate market, often by speculators motivated by the highest financial return on their investment....It's an interesting comparison and one that does seem apt the more you think about it. In separating out the "security" from the underlying asset, we tend to distort things. It was that distortion that resulted in the financial crisis, as it enabled those who wanted to sell risky things to obscure the actual risks and pretend that their securities were safer than they were. With patents, the system has been distorted to present the patent itself as being valuable, rather than the ability to execute and implement an idea in a manner that the market appreciates. It's definitely an area that could stand further thought and scrutiny.
The patent product brings financial derivatives to mind. Derivatives have a complex relationship with an underlying asset. While there's nothing wrong with them in principle, their unfettered use has damaged the financial services industry and possibly the entire economy.
Do these patent instruments put us on a similar road? I fear our patent system increasingly serves those who invest in the patent products... It may be time to use Jefferson's principle as a test and ask if we meet it.
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Filed Under: andy grove, derivatives, patents
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you cannot spout anti-patent rhetoric
intel is one of the top tier licensing companies on the planet. do you really think they want less patents?
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Re: you cannot spout anti-patent rhetoric
What makes you think he hasn't?
the last 3 years of patent law have increasingly snowballed into a much more reasonable system.
More reasonable, yes. That's not the same as reasonable, however.
intel is one of the top tier licensing companies on the planet. do you really think they want less patents?
Grove is no longer working at Intel. Besides, he's long been known to speak his mind on any subject beyond just what's good for Intel.
And I'm not sure what Intel wants, but my guess is that they know their real business isn't in patent licensing, and they'd be more than willing to give up that revenue if it meant they could do much more on the innovation product side.
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Re: Re: you cannot spout anti-patent rhetoric
I wasn't talking about him. I was talking about you. You're writing an editorial on a blog where you bash IP multiple times per day. But if you have no idea what IP actually entails (there's not even one big case a month... just read that one), how the hell are we supposed to accept your opinion as informed and valid?
And even here, you guys here at TD even admitted Oceantomo's auction was a total flop. Big firms with reputations for representing trolls (like Dechert) are laying off patent attorneys in droves. If you'd only put away the fanaticism card and think with a rational mind for about 5 seconds, you'd realize that Grove's opinion is filled with rhetoric and exaggerations too. Yes, companies still pool patents and others buy them for pennies in bankruptcy sales. But that's calmed down a lot now, and if you knew anything about the patent system, you'd know that by now.
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Re: Re: Re: you cannot spout anti-patent rhetoric
Er. I have read all the decisions you mentioned. In fact, I've written about most of them. In detail. What makes you think otherwise? And I'm curious why you think that I shouldn't be allowed to comment on something Andy Grove said if I hadn't read a bunch of recent court decisions (all of which I have read).
You're writing an editorial on a blog where you bash IP multiple times per day. But if you have no idea what IP actually entails (there's not even one big case a month... just read that one), how the hell are we supposed to accept your opinion as informed and valid?
I'm quite familiar with what IP entails. I'm not sure why you insist otherwise.
And even here, you guys here at TD even admitted Oceantomo's auction was a total flop.
Right. What does that prove?
Big firms with reputations for representing trolls (like Dechert) are laying off patent attorneys in droves.
You're improperly framing the issue as being "trolls" vs. big companies. That's not the issue at all.
The problem isn't with patent trolls. It's with the fundamental system itself.
If you'd only put away the fanaticism card and think with a rational mind for about 5 seconds
I'm not fanatic at all. I've been studying this stuff for years, and I've been slowly convinced of my position after seeing more and more evidence. Insulting me doesn't convince me to change my mind. It just makes me think you don't have any evidence to support your position.
you'd realize that Grove's opinion is filled with rhetoric and exaggerations too.
You seem to read way too much into what we wrote. I just thought the comparison was an interesting one, and in many ways accurate and worth thinking about in how the core asset is separated from what's traded. That's a point that I thought was worth discussing.
You seem to think that I shouldn't even be *ALLOWED* to bring it up.
Which is a more credible position?
Yes, companies still pool patents and others buy them for pennies in bankruptcy sales. But that's calmed down a lot now, and if you knew anything about the patent system, you'd know that by now.
Um. I do know that, but that's not what this post is about.
Please. Try reading before you insult. Otherwise, it's difficult to take you seriously.
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Re: Re: Re: Re: you cannot spout anti-patent rhetoric
I never said that you can't understand economics without heavy experience in the economy. But you can't understand quantum mechanics or biochemistry without experience and multiple degrees in either field. Comparatively, economics is an incredibly easy concept to grasp (especially for us engineering folk). Law, and especially IP law, is usually a mix of technical fields and the law, both of which are incredibly more complex than economics.
If you've really read (and understood) these cases (they're almost all from the last 3 years), you'd know how utterly ridiculous your arguments (and Grove's) are. And you wonder why the pro-IP (and even the moderate-IP) crowd doesn't take you seriously.
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Re: Re: Re: Re: Re: you cannot spout anti-patent rhetoric
Uh, no. I didn't say that. Please, I beg you, read before you say stuff like that. I do post my opinion on things, and I don't consider it to be anti-IP at all. I consider it to be pro-innovation. Since we keep seeing how IP gets in the way of innovation, I can see how you might misinterpret my position, but I'm not "anti-IP." If you can show how IP helps innovation, I'd love to see it.
That's like saying Fox doesn't endorse Republicans.
That's quite different anyway. This is quite clearly an opinion site, not a news site.
I never said that you can't understand economics without heavy experience in the economy.
I didn't say you said that. Your reading comp skills aren't very good today. You want to start again?
But you can't understand quantum mechanics or biochemistry without experience and multiple degrees in either field.
Indeed. Who said otherwise?!?
Comparatively, economics is an incredibly easy concept to grasp (especially for us engineering folk).
Heh. Funny. Since you seem to get it pretty much entirely wrong, I find that statement hard to support.
Law, and especially IP law, is usually a mix of technical fields and the law, both of which are incredibly more complex than economics.
I don't disagree. But you seem to have missed my point. You claimed that I could not comment on the ECONOMIC impact of patents without understanding patent law. That's wrong.
I was pointing out how silly it was by comparing it to the economic equivalent. You seem to have missed the point despite me spelling it out directly.
If you've really read (and understood) these cases (they're almost all from the last 3 years),
I have. Please go ahead and look. I've written about most of them. Suggesting otherwise doesn't make you look more credible.
you'd know how utterly ridiculous your arguments (and Grove's) are
Hmm. Again, this is simply wrong. As I noted earlier, those cases have brought the bar back in a reasonable direction, but have hardly solved the problem. Not even close. To say that there's no more problems any more, and that Grove's comments are "ridiculous" is to miss the entire point of Grove's argument.
The problem with patents isn't solved by a few Supreme Court cases that moved the bar just slightly and mostly focused on the issue of trolls. NPE aren't the issue.
And you wonder why the pro-IP (and even the moderate-IP) crowd doesn't take you seriously.
Heh. If they didn't take me seriously, they wouldn't keep stopping by here and posting ignorant rants telling me to shut up.
I appear to strike a nerve much closer than you would like.
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Re: Re: Re: you cannot spout anti-patent rhetoric
Granted, viewing and treating grants purely as negotiable instruments is at this point in time a miniscule bump in the road, but it does give me pause to reflect what would be the likely reaction by Congress and the courts if what is now "miniscule" gained significant traction? Merely by way of example, and not limitation, might is result in changes to the "patent misuse" doctrine?
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Re: Re: Re: Re: you cannot spout anti-patent rhetoric
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Re: Re: Re: you cannot spout anti-patent rhetoric
Furthermore, I should respond to this argument the same way I have in the past. The folks, like yourself, who insist that no one should be allowed to comment on patent law unless they are deeply versed in the legal aspects of it, never seem to recognize that the argument runs the other way too.
Are you a trained economist? Have you read all the economic research outlining how much harm the patent system does? No? Then, clearly, you are not allowed to comment either.
That's obviously a dumb statement. Yet, it makes about as much sense as claiming only those who work with patents can comment on the system.
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Re: Re: Re: you cannot spout anti-patent rhetoric
You're writing an editorial on a blog where you bash IP multiple times per day. But if you have no idea what IP actually entails [...], how the hell are we supposed to accept your opinion as informed and valid?
Actually, we're the ones who actually *produce* something. And every time we try to innovate and bring technology further we get stuck with this "IP" non-sense barring the way. Making interoperability impossible between platforms. Rendering new ideas useless for 30 years until they can be implemented without paying a prohibitive tax.
You "IP law" experts are just a bunch of parasites. You really have no idea on what's actually making the world work. So please do us all a favor and move on do something else.
Thanks...
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Re: you cannot spout anti-patent rhetoric
Frankly, I could care less about how Intel feels about losing its patents...I'm personally tired of watching and receiving the backlash of this patchwork Intellectual Property/Copyright/Patent system. And, yes, I understand that they are different. But that kind of argument is just BS and a straw man. All of them stem from the concept that giving someone a temporary monopoly over their creation (be it art or an idea) will encourage more innovation.
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Re: Re: you cannot spout anti-patent rhetoric
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Re: Re: Re: you cannot spout anti-patent rhetoric
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Re: you cannot spout anti-patent rhetoric
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Ya Baby
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Talking about economics...
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Re: Talking about economics...
Define "you folks."
http://stanleybing.blogs.fortune.cnn.com/2009/04/
Heh. You can't even figure out how to link directly to an article, and you want me to take you seriously on these issues?
Economics is a bunch of bushwah. Now we know it. Economists are obviously not only behind the curve on what has occured, they are in many cases the cause of it
So, uh, because some random person on the internet I've never heard of declares it without support, it must be true? Yikes.
But, again, you seem to be 100% missing the point. I didn't say economics was brilliant or that it was right or that economists were always smart or right. I've never said anything of the sort. Just earlier today I took apart an economists' argument right on this site.
But I'm not saying anything along those lines. I was just pointing out that it's ridiculous to claim that people without a background in patents can't comment on the economic impact of patents.
Patent licensing is not similar to derivatives. That is gross exaggeration
Man. Reading comprehension. Try again. No one said they're the same. It was just pointing out where they were similar.
What's amusing is for all you folks insisting that it's ridiculous, no one has actually offered up an argument for why. You just insist it's ridiculous and say we should shut up.
That's when I *know* I'm a lot closer to being right.
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Appreciate Techdirt.
Anyway Mike keep up the good work, unlike most blogs, you generally offer insight to go with the information.
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Squeel
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Patent Bubble, but how it will explode?
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maximize
So Grove never attempted to maximize Intel's investment? That's rich!
Ahh, the good old days when corporate titans could license inventions for a song and laugh about the pittance they paid poor old inventors. That's because the patent system in those days was fraught with uncertainty for inventors so they were often desperate to get anything they could. Check out the movie Flash of Genius.
patent reform is a fraud on America...
please see http://truereform.piausa.org/ for a different/opposing view on patent reform
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Re: maximize
Er... he didn't say that, and assuming that he did suggests a near total lack of both historical knowledge and reading comprehension at the same time. What he said was that the way to maximize *overall* investment is to build product that satisfies the market. His PROBLEM is with those who focus just on maximizing the investment in the *patent* (which is just the idea behind the invention) rather than maximizing the value of the invention itself.
Ahh, the good old days when corporate titans could license inventions for a song and laugh about the pittance they paid poor old inventors. That's because the patent system in those days was fraught with uncertainty for inventors so they were often desperate to get anything they could. Check out the movie Flash of Genius.
Heh. The mythical past. That didn't happen.
patent reform is a fraud on America...
We agree that patent reform, as currently written is bad. But it's not fraud. It would improve somethings and make others worse.
And, anyone who links to RJR's sites loses immediate credibility. His "different/opposing" view on patent reform is to falsely accuse any big company of "theft." Yeah, that's convincing. You do realize that he has no credibility anywhere, other than a few reporters who need a good quote every once in a while, right?
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Re: maximize
Ahh, the good old days when corporate titans could license inventions for a song and laugh about the pittance they paid poor old inventors.
That's where you get it all wrong. You see, unless your name is Edison, being inventor is not a profession. Ideas just happen; most specially when you're working on a specific field on a daily basis rather than pursuing a "patentable asset".
Since this "starving inventor" meme is an invention itself, I wonder how would you feel if you couldn't use it anymore in an argument without paying a royalty to its legitimate owner. It's a rather disturbing thought, isn't it?
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Informed opposition to patents
This epitomizes the arrogance of the patent lobby: they insist that they know best how to benefit the economy, and all opposition to them must be the product of ignorance. Frankly, such a position is both absurd and infuriating.
Government-granted monopolies are uniformly evil. In each case, they must be justified by a greater counterbalancing benefit to society. In the case of the patent system, it is perfectly resonable to conclude that, especially in some fields such as computer software, the balance is decidedly against society in general and unjustifiably in favor of the patent-holder. Of course, the patent industry is hardly a disinterested party to this discussion, and its views are necessarily colored by that fact.
So there you have it, the patent industry on one side calling its critics ignorant fools, and the critics calling the patent industry greedy parasites. To some extent both claims may have some validity, but does the name-calling really advance the discussion?
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Re: Informed opposition to patents
The difficulty with having beneficial exchanges of views stems in substantial measure from what is noted above.
I have no problem with the views of persons who are not steeped in the vagaries of the law, but it is a tad frustrating to try and follow/respond to arguments where the one making an argument clearly misunderstands what patents actually address.
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Re: Re: Informed opposition to patents
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Only in Andy Grove's fevered brain
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