If Your Business Strategy Relies On Suing Others, You're Not A Business, You're A Leech On The System

from the face-facts dept

Fri, Sep 9th 2011 6:44pm — Mike Masnick

Canadian patent troll Wi-LAN has a long history as trying to tax any and all wireless innovation with patent threats. With the news that it's suing a bunch more companies -- including Apple, HTC, HP, Dell, Sierra Wireless and others, the company is merely cementing its reputation as a taxer of innovation, rather than a builder of anything useful. The company doesn't seem shy about this. As the link above notes, the company seems to brag about this "business" strategy:

What's more, Skippen said he believes "that our past investment in litigation could generate a significant return in the future. Our record revenues and earnings in the first quarter signal the beginning of that return to WiLAN and its shareholders."

It's hard to read such a comment and not feel sickened by the pure net loss on the economy and innovation from such leeches. Any company whose business model focuses on litigation is not contributing positively to society and innovation. There are times to file a lawsuit, but when that becomes central to your business model, something is broken.

The very core of a functioning capitalist system is that companies make transactions in which there's a buyer and a seller, and both sides come away from the transaction feeling better off. The buyer values the product or service more than the money paid, and the seller values the money more. That's good business. Any time you involve a lawsuit to force someone to pay, you're doing exactly the opposite of that and you're setting up a system that is not working to benefit everyone, but is actively using the force of the courts to try to force a company to "buy" something it has no interest in buying. It's not good for the economy and it's not good for innovation.

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Filed Under: business, economics, patents, strategy
Companies: wi-lan

46 Comments

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Anonymous Coward, 9 Sep 2011 @ 7:15pm

Patents will do to tech what they did to pharma and medicine, hinder innovation to the point where there isn't any more (and sure, there is some medical innovation, but most of that is either tax funded or it's happening in other countries that aren't as strict on patents).
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Dave, 9 Sep 2011 @ 7:17pm

Title correction
If Your Business Strategy Relies On Suing Others, You're Not A Business, You're A Leech On The System and Should Be Detached and Destroyed
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Hephaestus (profile), 9 Sep 2011 @ 7:52pm

Re: Title correction
Funny thing I read that while holding a shaker of salt.
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Mike Linksvayer (profile), 9 Sep 2011 @ 7:56pm

How about a business that relies on selling protection from being sued by said business (ie sells copyright or patent licenses)?
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Hephaestus (profile), 9 Sep 2011 @ 8:08pm

Re:
The entire IP industry is a protection racket run by lawyers.
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Anonymous Coward, 9 Sep 2011 @ 8:29pm

Re:
Citation, please, that the "some medical innovation" is either tax funded or happening in other countries that are not as strict on patents.
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Anonymous Coward, 9 Sep 2011 @ 8:30pm

Re: Re:
Pure BS, and you should well know it, unless you happen to be in a total state of denial.
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Anonymous Coward, 9 Sep 2011 @ 8:59pm

If Your Business Strategy Relies On using others people's content for free, You're Not A Business, You're A Leech On The System

FTFY.
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Atkray (profile), 9 Sep 2011 @ 9:18pm

Re: Re: Re:
Actually the more objectively you examine the industry the more you realize he is correct.

I'm not saying it has always been that way, but that is the current state of IP.
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Anonymous Coward, 9 Sep 2011 @ 9:58pm

Re:
Yawn.
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Anonymous Coward, 9 Sep 2011 @ 10:00pm

Re: Re:
Anyone who reads slashdot, and reads about the medical advancements mentioned there, knows that most of them are occurring elsewhere and not the U.S., at least not by the private sector.

As far as patents are concerned, the NSF funds a ton of research (you can find that info on its website) and it's been discussed on Techdirt how private corporations wind up with the patents.

and lets not forget that most of what Pharma claims to spend is exaggerated yet pharma absolutely refuses to allow independent auditors to audit how much it spends on R&D. They essentially want an unregulated government established monopoly and they don't want to allow the public the ability to ensure that those monopolies are justified.

http://www.techdirt.com/articles/20050817/0314229.shtml

Also see

http://www.techdirt.com/articles/20100429/0214049233.shtml

Fact is, there is very little pharmaceutical advancement in the U.S. anymore, and what little there is is mostly taxpayer funded and it ends up patented by private firms. I read about medical advancements on slashdot, examples include 360 degree camera pills with higher resolution (developed in Japan, though they do have patents they aren't nearly as strict as the U.S.), among others, and most of it occurs elsewhere, not in the U.S. (or it's occurring out of a tax funded university).
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Anonymous Coward, 9 Sep 2011 @ 10:12pm

Re: Re: Re:
Also see

http://www.techdirt.com/articles/20091111/0152276888.shtml

http://www.techdirt.com/article s/20110429/03154714083/how-one-startup-used-patents-to-kill-better-competitor.shtml#c1086

http:// www.tms.org/pubs/journals/JOM/matters/matters-9004.html

http://www.vjolt.net/vol8/issue1/v8i1_a03 -Locke.pdf

http://www.techdirt.com/blog/?tag=bayh-dole

http://www.techdirt.com/blog/?tag=bayh- dole

http://en.wikipedia.org/wiki/Bayh%E2%80%93Dole_Act
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Anonymous Coward, 9 Sep 2011 @ 10:15pm

Re: Re: Re: Re:
(or universities and federal agencies will get the patents and exclusively license those patents to a few entities, which effectively gives those licensed entities a government established monopoly similar to them having the patent itself. Same difference, it's the product of government research being made exclusively available to a few select entities).
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The eejit (profile), 10 Sep 2011 @ 12:55am

Re: Re: Re:
At the moment, Hephaestus is demonstrating exactly the motivations behind current IP laws: to stop other people innovating through suicide by court.
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The eejit (profile), 10 Sep 2011 @ 12:56am

Re:
Wow. If you missed the point any more, you'd be a singularity.
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Anonymous Coward, 10 Sep 2011 @ 2:20am

Re: Re: Re:
I can't speak for others but I totally deny IP law.
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Anonymous Coward, 10 Sep 2011 @ 5:32am

Re: Re:
Eejit, with respect, the point is that those who call those who use the courts for redress "leeches", yet sing the praises of those who's business model depends on not paying for their raw materials.

It seems more than a tad two faced, don't you think?
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Josh in CharlotteNC (profile), 10 Sep 2011 @ 5:33am

Re: Re:
He's just dense like that.
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Prisoner 201, 10 Sep 2011 @ 5:40am

Re: Re: Re:
What are this "business model that depend on not paying for their raw materials"?

Are you talking about the mining industry or what?

If your post attempted to be in any way related to this discussion you went off such a wild tangent that you face a very real risk of crashing into the sun.
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Not an Electronic Rodent (profile), 10 Sep 2011 @ 6:18am

Re: Re: Re:
OK just MOST of it.....
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abc gum, 10 Sep 2011 @ 7:03am

Re: Re: Re:
"Pure BS"

You been to East Texas again?
It is you pardner, with the cow dung upon thy boots.
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abc gum, 10 Sep 2011 @ 7:17am

Re: Re: Re:
AC, with little to no respect, the point is that there is a difference between defending ones rights within the court system and abusing the court system. There is a difference between good business practice and outright criminal behavior. The problem is that many, yourself included, can not or refuse to see this difference. Even worse, there are those who will declare that the collateral damage is acceptable and those wrongly abused should not have any recourse - it is simply the cost of law enforcement. If allowed to continue, this will not end well.
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Anonymous Coward, 10 Sep 2011 @ 8:26am

Oh come in Mike, you are looking at it all wrong. These companies are not trying to get other companies to "buy" something. They are buying legal assistance. That makes it all legit.
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Anonymous Coward, 10 Sep 2011 @ 8:40am

What if your business is being a lawyer who does civil litigation cases for clients?
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Anonymous Coward, 10 Sep 2011 @ 8:56am

Re: Re: Re: Re:
Is there really any difference from a business model that is predicated on using other people's content without permission? One is legal (using the courts within the limits of the law) and one is illegal (widescale copyright violation).

Patent troll aren't good for the system but they don't excuse those who choose to actively violate a patent, or actively violate copyright. If we are going to look at leeches on the system, perhaps it would be high time to look at those who choose to ignore the law.

My initial "FTFY" is just to point out that there is equally outrageous behavior occuring at the other end of the scale, tacitly approved of by the Techdirt business models. It's a glass house issue, really.
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Prisoner 201, 10 Sep 2011 @ 9:35am

Re: Re: Re: Re: Re:
What part of "the TechDirt business models" is "predicated on using other people's content without permission" ?

Please provide a link.

Then, when you are unable to find one, maybe your confusion will clear, and you can participate in the discussion in a meaningful way.
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Franklin Pierce, 10 Sep 2011 @ 9:54am

Uh, it depends
This site has such a bias against lawsuits. But sometimes the plaintif is RIGHT. Sometimes people are just too cheap to pay for content and they deserve to be sued. The web aggregators have a business model that depends upon not paying the writers or the photographers. Sometimes people just deserve to be sued and the people who are sued are the leeches, not the plaintifs.
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abc gum, 10 Sep 2011 @ 10:02am

Re: Re: Re: Re: Re: Re:
"..... maybe your confusion will clear, and you can participate in the discussion in a meaningful way."

I doubt anyone will be holding their breath.
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abc gum, 10 Sep 2011 @ 10:20am

Re: Uh, it depends
"sometimes the plaintif is RIGHT"

- Agreed, but isn't that for a court to decide? It is a sad state of affairs when the defendant is not given their day in court.

"Sometimes people are just too cheap to pay for content "

- Agreed. In addition, the threshold of proof is too low and the award amounts are too high.

"The web aggregators have a business model that depends upon not paying the writers or the photographers"

- All of them? Really? I would like to see the data which supports your statement.

"Sometimes people just deserve to be sued"

- What warped point of view.

"the people who are sued are the leeches, not the plaintifs."

- Wow, it is that simple huh ... why do we even need a court system because the plaintiff is always right. It is this sort of thinking that has resulted in the three strikes and six strikes laws where you do not even get your day in court, you get to pay even though you didn't violate their precious copyright. WooHoo - party time!
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fb39ca4 (profile), 10 Sep 2011 @ 11:17am

My neighbor works for one of them
He works for intellectual ventures :P
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That Anonymous Coward (profile), 10 Sep 2011 @ 11:59am

Re: My neighbor works for one of them
Might you be willing to open a PO Box so we can send you mass amounts of TP to cover his home in?
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That Anonymous Coward (profile), 10 Sep 2011 @ 12:18pm

Re: Uh, it depends
The bias you see could be caused by the series of misuses of these laws.
The patents are given out to people who intend to do something with them, beyond waiting for someone else to come up with a similar idea that they feel overly broad patent gives them the rights to.

Please show us where Wi-LAN has done anything with the patents they control other than file suit.
They exist simply as a bottom feeder hanging out at the bottom waiting for a small enough fish to swim by that they can attack.
They get enough of these small fish, and then move on to larger prey. They use the awards to fund getting larger fish, rather than producing anything.

Build a better mousetrap and the world will beat a path to your door, except a group of lawyers owns the whole concept of mousetraps and will demand you give them everything you created independent of their patent.
This causes there to be no new development in mousetrap technology, because people with new ideas can't afford the massive lawsuit. This means some new idea is not seen by someone else, who could use it in a different device to make improvements there.

There is a ripple effect, money that could be used to refine the idea is used instead to run a check to make sure there is not a patent on some overly broad idea that has never been brought to market. Some money is set aside to try an prepare for the lawsuit that will be coming. And some money is spent to buy something in East Texas so they can try and sway the courts there.

The only people winning in all of this? The people of East Texas having all of these lawyer teams coming to town to argue cases.
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aikiwolfie (profile), 10 Sep 2011 @ 12:31pm

Capitalism has always been broken.
Capitalism has always been broken. Capitalism in practice doesn't operate on the premise of doing enough to survive and grow at a sustainable rate. It operates on the principle of greed. Grab as much as you can, as fast as you can, from whomever you can.

It's the same flaw that brought the Soviet Union to it's knees. The only difference in a capitalist culture is the masses are kept in the dark by filling their brains with meaningless drivel on TV and pressure to always have the next upgrade.

The majority are so distracted by trivial material concerns they can't see the majority of the worlds wealth being concentrated increasingly in the hands of a minority of very, very few individuals.

By the time the world wakes up. It will be too late.
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staff, 10 Sep 2011 @ 6:18pm

propaganda
You spend your life's savings to build a house. Someone else decides to move in without your permission and will not leave. Whose the leach?

Masnick, you are such a shill. In another era I would slap your cowardly face and challenge you to a duel.

�Patent troll�

Call it what you will...patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: �we�re using your invention and we�re not going to pay�. This is just dissembling by large infringers to kill any inventor support system. It is purely about legalizing theft.

Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Essentially, large infringers now have your gun and all the bullets. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now some of those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don�t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back in the patent system with injunctions fully enforceable on all infringers by all inventors, large and small.

For the truth about trolls, please see http://truereform.piausa.org/default.html#pt.
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abc gum, 10 Sep 2011 @ 6:45pm

Re: propaganda
"You spend your life's savings to build a house. Someone else decides to move in without your permission and will not leave"

What a bad analogy.

"Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions"

Certainly there are much worse SCOTUS rulings than eBay v Mercexchange.
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wvhillbilly (profile), 10 Sep 2011 @ 8:45pm

Re: Selling protection
Better watch out. Make sure that business has standing to license whatever it is they are licensing. And even if you have a valid license that doesn't necessarily protect you from trolls. Microsoft was sued by a troll not too long ago for using a technology (I forget exactly what) for which they already had a valid license from another firm. But they got sued anyway.

As far as I'm concerned, trolling patents is nothing less than legalized extortion, and it's time Congress passed laws to shut it down.
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wvhillbilly (profile), 10 Sep 2011 @ 8:56pm

Re: Re: Re:
If you're not the inventor, you have no need for redress. And if you're going around suing world plus dog for redress for something you didn't invent and don't produce you're the leech.

I have no quarrel with actual inventors seeking redress for infringement of actual inventions, but suing for infringement of naked patents with nothing to protect is crossing the line.
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wvhillbilly (profile), 10 Sep 2011 @ 9:11pm

Re: propaganda
@ Staff: "Masnick, you are such a shill."

Hey! Let's cut the ad hominem attacks, please.
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Anonymous Coward, 10 Sep 2011 @ 11:19pm

Re: propaganda
Why does that website look like a fifth grader wrote it? Do IP maximists lack so much merit that they can not even hire a half decently educated writer?
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Anonymous Coward, 10 Sep 2011 @ 11:52pm

Re: Re:
"The United States spent a record $264 billion on R&D in 2000"

http://content.healthaffairs.org/content/20/5/202.long

The industry on the other hand spent something like $10 billion.

You believe Cuba is strong on IP?
http://news.xinhuanet.com/english2010/health/2011-09/07/c_131111574.htm

Do you believe India and Brazil are strong on patents?

There are more than 100 pharmaceutical companies present in India including major players like Merck, Novartis, J&J and AstraZeneca. Besides these, multi-national medical giants such as Dr. Reddy�s, Ranbaxy and Glen mark have set their research bases in India to take leverage of the comprehensive healthcare facilities. Being the 4th largest drug manufacturer on earth, India boasts of 85+ FDA approved research facilities. Also, India will soon have the offices of world-renowned healthcare organizations such as FDA, DIA and CDISC.

http://www.healthtechnica.com/blogsphere/2011/01/03/medical-research-in-india/

Not to mention that India is at the forefront of telemedicine, with initiatives that already are in place in large scales.
http://www.telemedindia.org/

Anti-cancer drug discovery and development in Brazil: targeted plant collection as a rational strategy to acquire candidate anti-cancer compounds.
http://www.ncbi.nlm.nih.gov/pubmed/10884497

"Brazil's investment in transgenic animals shows how opposition to such technologies in the United States is opening opportunities elsewhere."
http://www.technologyreview.com/biomedicine/26582/

Not to mention the Chinese and Russians.

I want to find the quote of a Brazilian drug manufacture that said "Yes we copied it is not against the law in Brazil" when asked if they copyed a drug from an American manufacturer.

You think those people are incompetent?

* Brazil is the world�s largest producer of oranges, with 27% of world production
* Brazil produces 53% of all orange juice consumed in the world
* One in two of FCOJ drunk in the world comes from Brazil, and one in four comes from the Brazilian company Cutrale
* The state of S�o Paulo is responsible for 98% of Brazil�s production; there the industry employs 400,000 people and has 10 processing plants and 19,000 groves
* Brazil now has 700,000 hectares of orange groves while Florida is down to 280,000
* Brazil now exports 1.2 million tons of frozen concentrate a year. How much is that? 60,000 truck loads!
* One firm, Cutrale, controls about 40% of Basil�s orange juice processing capability and has annual revenues of around US$1 billion.
* Cutrale, because it is the largest, is the most reviled. In Brazil it is criticized because it keeps prices low for the producers. In the US, where it owns plants, it generates complaints for keeping wages low.

Keep dreaming and someone will kick your ass.
http://www.brazilmax.com/news.cfm/tborigem/fe_business/id/7
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Anonymous Coward, 10 Sep 2011 @ 11:57pm

Re: Re: propaganda
You should have seen it when it looked like the 90's last year LoL
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Anonymous Coward, 11 Sep 2011 @ 12:05am

Re: Re: Re:
When patents attack!
http://www.thisamericanlife.org/play_full.php?play=441

Unless you can explain why Intellectual Ventures that never ever launched a product and seems to keep expanding its patent portfolio through acquisitions and not research is able to make a buck and not call that a racketeering scheme with a strait face I fear you are full of shit.
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The eejit (profile), 11 Sep 2011 @ 12:32pm

Re: Re: Re:
OH, let's see, shall we? You've obviously never heard of a company called Monsanto, who have a track record of suing for patent infringement whenever some of their GM seeds fell into another local farm's crops?

Or how about the Righthaven farce, where there was shady undertakings by themselves and another company called Stephens Media.

OR what about Davenport Lyons, who were sanctioned over their "Sue and threaten" technique? Or Evan Stone, who not only sued, but then ignored a judge, not once, not twice, but THREE times, and has now been officially benchslapped?

Moreover, the recent "most important gig in modern history" was given to Queen for their LiveAid performance. Musical notes are not copyrighted, and they are raw materials.

So in other words, STFU and GTFO.
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Anonymous Coward, 11 Sep 2011 @ 6:45pm

Actually when a patent is on hands of patent trolls, you could ensure companies who don't want to "feed the trolls" will just make sure what they're researching won't overlap with those patents.

From there, with patent owner have no will to execise the idea covered in these patent, you can be sure progress of innovations around these ideas will be slowing down if not completely stalled.

======

On a somehow related note. Some provinces of China where "properties companies are just buying lands but no building anything in order to push up property price level" have made law that if the properties company bid the land and not building house and sell them within 5 years, they'll lost the right to the land and the land deed will be returned automatically to the government. Perheps we should have patent law containing similar "use or lose" statement.
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WB, 12 Sep 2011 @ 5:28am

IP is Property
A patent is someone's property -- just like a piece of land, your house, a share of stock, etc. It has value, can be bought and sold and can be defended against trespass, theft, etc. The ability for a person or company to invent something, patent it, and then sell that invention and patent to another company that then defends it in court is no different than me building a house, selling it to you and you defending it in court when a squatter tries to set up camp in your front yard. Get it?
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Anonymous Coward, 13 Sep 2011 @ 7:53pm

Re: IP is Property
Except when you bought the land, you don't build anything on it, and attempt to charge huge money when someone try to build a highway pass it, and it's on the exit of the valley that the construtors either have no way to work around it, and it'd involve huge engineering fee, and you know that pretty clearly before you bought the land because you bought it solely for the money generated when the constructor paid up.

Not illegal, but very annoying / troubling to those who build things that's to make other's life easier.
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