Investors Speaking Up About Patents Harming Innovation
from the good-for-them dept
One of the key things that we hear from people who defend the patent system is that patents are necessary for raising money from venture capitalists, and that investors won't invest if you don't have a patent. We've debunked that claim plenty of times, showing some of the most respected investors around who are equally as fed up with the problems of the patent system as we are. One of the most respected venture capitalists around these days is Fred Wilson. I have a friend (who once worked for a Wilson-funded startup) who insisted that should he ever start a company, he'll go talk to Fred, and if Fred won't invest, he'll know something's wrong with the idea. Over the past few years, Fred has been growing gradually more and more agitated by the problems the patent system causes, and has spoken out about it numerous times, with his latest words clearly showing his anger, as he says "enough is enough" when it comes to software patents specifically, mostly in response to the Lodsys lawsuits:The whole thing is nuts. I can't understand why our goverment allows this shit to go on. It's wrong and its bad for society to have this cancer growing inside our economy. Every time I get a meeting with a legislator or goverment employee working in and around the innovation sector, I bring up the patent system and in particular software patents. We need to change the laws. We need to eliminate software patents. This ridiculous Lodsys situation is the perfect example of why. We need to say "enough is enough."Fred isn't missing a chance to bring this up repeatedly, and he recently made the same point on a panel discussion with two other very highly respected investors, David Lee and Chris Dixon, who agreed about the problems of the patent system (with slightly different takes on it than Fred):
"The basic problem with patents is that you're trying to assign property rights to something that doesn't deserve property rights. The fact that these property rights end up in the hands of financial owners as opposed to the original inventors just exacerbates the problem. The basic problem is that Chris [Dixon] and a bunch of engineers can be sitting at Hunch designing some amazing new feature and somebody unbeknownst to them has a patent on this feature and never actually implemented it and can now screw them over… It’s just not right, it shouldn’t exist."Dixon points out a key part of the problem is that so many patents are clearly obvious to anyone skilled in the art. He notes that any competent engineer could create what's found in the vast majority of software patents, and notes that the examiners simply aren't competent enough to recognize what's obvious. Dixon, who is both an investor and a long-term entrepreneur, certainly knows these things. What's amazing to me, honestly, is how few people in Silicon Valley actually think patents are a good idea any more. The system has become so distorted that most of the people they're supposed to benefit the most don't want them, but feel compelled to get them due to the system. What a massive amount of waste, leading to a mess that holds back innovation.
Wilson makes one other statement that I thought was interesting. He compared patenting software to patenting music, noting that neither makes sense.
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Filed Under: chris dixon, fred wilson, investors, obviousness, patents, software patents
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Software folks usurping the patent system to use for themselves is the issue guys, be sure to keep your sht straight.
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Not always true. I was just involved with a roundtable of 7 SV entrepreneurs -- most of whom were hardware guys, and they *all* were mostly anti-patent (varying degrees...).
They just find them to be a waste. One guy was explicit: "They're useless. I'm happy to compete in the marketplace."
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What you miss is that in a system without patents, the investors (and companies) that put the money into the research to create the original products just won't do it if they don't see good economic return. If others can easily replicate their work, standing on their shoulders and claiming the profits, it pretty much makes the big investments hard to make.
If you talk to investment people who are working with the latter group (shoulder standers) they will always say they have patents. Patents are not to their financial benefit.
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There, FTFY.
You are welcome.
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The first thing (patents) is not the cause of the second thing (good economic return). So in a system without patents, investors will put money into original products because in the market they can still see good economic return. Do something. Do it first. Do it best.
If it is software, then it is extremely likely that it is obvious. If it is a business method then it shouldn't even qualify as patentable subject matter.
The fact that these ridiculous patents are always about something utterly trivial, that the inventor only did on paper, and then waited for someone else to commercialize, says it all. The fact that nobody seems to invent "machines" anymore, but just ink on paper with no followup, speaks volumes. The fact that patents are approved so quickly, and at an accelerating rate, and are presumed to be valid, should concern everyone.
If you are a supporter of the patent system, then you should be even more interested than I am in FIXING IT. Because if you don't get it fixed, the pendulum is soon going to swing too far.
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All progress stands on the shoulders of those who came before.
All knowledge is based on existing knowledge.
All science depends on previous science.
All art is to some degree derivative of previous art.
And so on.
It is nothing but hypocrisy for one person to claim that they get to stand on the shoulders of everyone before them, but no one can stand on theirs.
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Venture capital investors expect that most of the companies they invest in to fail and lose their money. For example, if a VC invests in 20 start-ups, 16 will fail and they'll get nothing out of it. 3 will break even or show small profits, just not really go anywhere, but that one remaining could be the next Google and will more than offset the losses by the others.
Obviously some VCs have better or worse track records, but they absolutely will invest even if success is not "guaranteed" by some piece of paper that the government gives you to claim you own an idea.
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Fantastic
Thanks!
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They have the funds and manpower to patent the most trivial of things and sow the market up as all the large corporates have armies of lawyers sueing each other. The resulting patent licensing all comes out in the wash due to cross licensing.
What is worse now is the number of companies that pool their patents into joint holding companies along with competitors. Essentially Keeping new entrants to the market out.
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Patenting music?
DON'T GIVE THEM IDEAS.
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Re: Patenting music?
Patent on using a percussion instrument to set the beat of a song.
Patent on accompanying a solo pianist with a full orchestra.
Patent on playing the notes in a chord in succession instead of simultaneously.
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Re: Patenting music?
"http://www.techdirt.com/articles/20110531/00303814468/dubious-record-label-insists-it-has- patent-pending-method-to-guarantee-platinum-selling-album.shtml"
And there off!
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Re: Patenting music?
DON'T GIVE THEM IDEAS.
Why not? It sounds like an excellent idea! Processes are patentable, and what is a process other than a series of steps? If I invent a series of steps (i.e. sequence of notes) to produce a certain sound, why shouldn't I be able to patent it?
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Re: Patenting music?
Now they just need to trademark music, and they'll have completed the arbitrary lawsuit trifecta.
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Their lawyers will be so happy.
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Obama, want to get the economy going again?
Govt is too dumb and too deep in the pockets of big business to ever consider this. Hence, we are doomed to permanent steady economic decline.
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No need to change the law, just enforce it.
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It's a Perception Issue
Consequently we are left with the motherhood perception that if you don't believe in "intellectual property" that you are depriving creators of their income and they will all starve to death.
People can be shown the "truth" as Galileo tried to do before an inquisition, but the "truth" may simply be deemed to heretical by the populace to be accepted. Not to mention that many of our politicians blindly accept the rationale of their contributory sponsors.
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Who Is This Punk Fred Wilson?
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an investor and a long-term entrepreneur (he should know) --- is he Madoff ?
If that was the case then why are there not a large number of "prior knowledge" cases before the court, if it is THAT obvious as Dixon states then you would expect prior knowledge to be a primary method of fighting these patents.
BUT NO, for some reason that IS NOT THE CASE, why is that DIXON ????? Here's why !!!
Dixon, who is both an investor and a long-term entrepreneur, certainly knows these things.
You see Dixon IS NOT A COMPETENT ENGINEER, therefore he does not have a CLUE about what can or cannot be patented, he certainly does not hold the technical qualifications that the patent reviewers would have at the patent office.
an investor and a long-term entrepreneur
Like Burnie Madoff ?
Lets face facts guys, if there was prior knowledge then that would most certainly be used for the making void of these patents, it would be easy to show prior knowledge if in fact it existed. Trivial in fact to do.
Yet, it's not done and if it not done then you have to ask yourself WHY it is not done, (if it is so easy, and so obvious).
I know why its not done, because its one big, poorly build straw man.
I sorry that you are incapable of invention and innovation yourselves, but I am not sorry that you do not have the right to steal other peoples innovation by just saying "oh, that is obvious". Yea Right... so obvious that you could NEVER think of it. (until someone else did!!)..
What is obvious is this 'trick', or that there is something different or special about software in particular that means 'because its easy to steal idea's then it should be allowed'.
and "prior knowledge" bullshit, we're sick of that weak line of argument.
or the one where you say "everyone is clueless except me".
Being "an investor and a long-term entrepreneur" does not give you engineering skills, or legal skills (particularly in patents) or anything else.
Why do you think groups like Patent Offices employ people like "Albert Einstein" for example.
(not because they are inventors and long-term entrepreneur's)..
What you are an an investor and a long-term entrepreneur
Great here is a Phd in Electronics and Software engineering, after all 'you' should know !!!!..
Thank you Mr Madoff, come again, or should I now call you Dr Madoff ?
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Re: an investor and a long-term entrepreneur (he should know) --- is he Madoff ?
It's trivial to find prior art for the vast majority of software patents. It's hard and expensive to actually challenge the patents. That's why it's not done.
For the record, I am a successful software engineer of over 25 years, I have started two very successful software businesses, and I have invented a few new, useful, and non-obvious software techniques.
I've ever patented anything. This is for two reasons:
First, software patents should not exist, period -- software is a mathematical process, explicitly unpatentable. Not only that, software patents have done, and continue to do, great harm to the software industry.
Second, obtaining and owning a software patent is a distraction and expense that gives you no real market advantage if you want to be in the business of making software (rather than playing the system). Once you have the patent, you have to police it to make it pay. And once you're doing that, you're in a different business. You're spending less time doing what you really want to be doing: writing great software.
Practically speaking, the software business moves so fast that, if you're doing it right, you've already extracted most of the money you're going to within the first couple of years of the product life cycle. Then, you're on to other, better things before your competitors have gained any real advantage from your "invention" anyway. Patents bring nothing to that sort of party.
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Re: an investor and a long-term entrepreneur (he should know) --- is he Madoff ?
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prt 2
Yes, funny that, that is how patents are supposed to work, of course once a competent engineer SEE's WHAT'S FOUND on the patent he can easily (RE)create that software patent.
what he was not capable of doing is coming up with that idea in the first place.
The entire concept of patents is that once it's logded and approved then anyone 'skilled in the art' is capable of reproducing it.
That patent has to be written specifically for that purpose, it has to be a practical invention.
So of course anyone skilled can read that patent and create that technique.
But he cannot 'invent' or come up with that technique himself (anymore) because even if he did think of it independently (and in this case he did not), then he was too late to the patent office, and he loses out.
ANY competant engineer could do that, but not "Dixon, who is both an investor and a long-term entrepreneur, certainly knows these things."
Im sure an "inventor" and long term "engineer" was what you were really trying to say.
What is Dixons field of expertise ?
And 'investor and long-term entrepreneur' could be someone who sells oranges on the side of the street !
Or your Mom selling AVON !!
Or the people who ran ENRON or B Madoff, does Dixon have a degree in computer science or software engineering ?
(I didn't think so)
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I have sentences like paragraphs!!!
I use lots of punctuation when it's unnecessary!!!!!"£"!""!!
But sometimes, when all the planets align, I have a massive point.
It's just a shame that I ramble about like a deranged lunatic just escaped from an asylum.
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There are not cases before the court because the cost to settle and license is less than the cost of fighting in court, especially if you are a small company. If you are big then you get the cell phone companies suing each other.
But then you knew that didn't you.
Impressive quantity of rant BTW
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Requests for Re-Examination are becoming More Common. (response to Daryl, #18, 20)
The law of diminishing returns is operating. A high proportion of the new patents from Apple or Microsoft are self-evidently silly, things like DRM which do not create value for the buyer. Apple and Microsoft are creating-- and patenting-- features at the demand of people who cannot pay for these features, starting with the RIAA and working down to the police chief of Miami Beach. In the latter case, when the chickens come home to roost, that poor son of a bitch isn't even going to be able to pay his own legal bills.
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Let's try changing the PTO's incentives
Make the fee very high if the PTO rejects the patent for any valid reason. (Novelty, prior art, non patentable subject matter, etc)
Make the fee very low if the PTO grants a patent.
This will both speed up the process of rejecting patents, and will significantly increase the percentage of rejected patents.
This will also give the PTO incentive to crowd source the finding of prior art, etc. In fact the PTO could pay a bounty to anyone who can show grounds that lead to rejecting the patent application. (eg, it will create jobs)
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Fred Wilson on patents
Here, as I read it, Fred Wilson did NOT say patenting is bad, he said the abusive system we have NOW is bad!
He is dead right; as an IP attorney, I agree completely. To say all IP systems are bad, on the other hand, twists what he said, and is completely wrong - IP, as the founding fathers saw it, has benefits (I avoid "good" and "bad", it is a business or societal system, not a "thing").
I will say "Pegging is bad - though it is all too common!"
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Fred Wilson on patents
SOFTWARE PATENTS ARE BAD! COPYRIGHT, FOR MORE THAN, SAY, FIVE YEARS, IS BAD!
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Patents are clearly and convincingly presumed valid and good.
You Techdirt fools (Masnick's Morons) who think software patents are bad now have another nail in your Frankenstein brains.
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