Top Venture Capitalists Demand Real Patent Reform, Put To Rest Myth That VCs Love Patents
from the stupid-myth dept
First up, the App Developer's Alliance, EFF and Engine Advocacy have teamed up to send a letter to Congress from many of the most well-respected, successful venture capitalists out there, urging significant patent reform to stop patent trolls and patent abuse. Included in the list of signatories (among many others) are investors like Fred Wilson, Brad Burnham, Mark Cuban, Reid Hoffman, John Lilly, Bijan Sabet, Brad Feld, Ron Conway, Bill Gurley, Jeff Clavier and Paul Graham. The list is like a who's who of the investors that startups these days put on their wishlists. The idea that patents are what drive investments definitely does not appear to be the case.
The related bit of information is a new research study, done by Robin Feldman, looking at the view of patents from the venture capital perspective, surveying around 200 venture capitalists and their portfolio companies about their views on patents -- which are decidedly negative:
Both the companies and the venture capitalists overwhelming believe that patent demands have a negative impact on the venture-backed community, with all or most of those assertions coming from entities whose core activity involves licensing or litigating patents. These impacts are described in terms of the specific costs expended by the companies and by the distraction to management, engineers, and other employees. Most important, participants described the human toll that patent demands have had on entrepreneurs. In addition, when making funding decisions, the vast majority of venture capitalists do not consider the potential for selling to assertion entities if the company fails. On the flip side, 100% of venture capitalists indicated that if a company had an existing patent demand against it, it could potentially be a major deterrent in deciding whether to invest.In other words: having patents does not significantly impact the decision to invest, but being the target of patent trolls has significant consequences for entrepreneurs, and makes investors less willing to invest in important innovations.
So, can we put to rest this myth that the major funders of innovation require patents?
This post is sponsored by the Application Developers Alliance. Find more info on patents and other issues that affect developers at DevsBuild.It
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: patent reform, patents, venture capitalists
Reader Comments
Subscribe: RSS
View by: Time | Thread
[ link to this | view in chronology ]
Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
I'm for 1) means-testing patents 2) forbiddding transfer 3) forbidding to corporations 4) must have a working physical model (thereby automatically ruling out software patents).
FOUR SPECIFIC DO-ABLE POINTS in contrast to MIke's NONE, ever.
Now you fanboy-trolls have a flail at it. Try to state something positive, not just yet more ad hom, drivel, and phony questions.
The solution for most societal ills is HIGH INCOME TAX RATES. -- WAGES should not be taxed at all! Income originally meant unearned income. -- Special note to "Gwiz": do you understand what "unearned" means? That's why to TAX THE HELL OUT OF THE RICH. We can't have a civil society when some are entitled to live without labor.
10:37:28[l-370-1]
[ link to this | view in chronology ]
Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Other than all of these, you mean?
http://www.techdirt.com/articles/20110819/14021115603/so-how-do-we-fix-patent-system.shtml
http: //www.techdirt.com/articles/20121127/11245721156/some-thoughts-fixing-problems-patent-system.shtml
ht tp://www.techdirt.com/articles/20120712/18322919680/judge-posner-mission-to-fix-patents-we-have-some -suggestions.shtml
Every time blue says that Mike never suggests anything for patent reform, I post those very specific suggestions and blue disappears. Watch and see...
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
[ link to this | view in chronology ]
Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Where the fanboys troll the site with vulgar ad hom, and call anyone disagreeing "trolls"!
03:33:33[d-090-6]
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Here's his four bullet points from first link:
) Create an independent invention defense: -- Properly done (in my view) through jury system. Mike doesn't seem to trust juries as I do. Mike is an academic weenie and lawyer groupie who mistrusts The People and doesn't believe them capable of weighing technical matters. Mike doesn't even trust judges to be capable either, except when they agree with his corporatist notions. But patents are merely to establish a premise for suing in court. A jury should weigh everything that a defendant wishes to present, NOT be limited by lawyerly "in limine" that restricts to wrangling over legalities where lawyers / corporations always win. Juries can and should weigh benefits to society and basic fairness. That's why they exist.
) Recognize that independent invention is a sign of lack of patentability: -- ALSO a point to bring up during jury trial. It'd play heavily with any reasonable jury. -- By the way, those phony offices in East Texas that concentrate "trials" there should be outlawed. That'd be indidentally eliminated in my system by forbidding corporations from owning patents in first place.
) Patent examiners should seek out input from those actually skilled in the art: -- NO, gives examiners too much power. They're just clerks checking i's dotted and t's crossed. This just fertilizes the field for corporate players to make it RIPE for hidden abuse: just get their "expert" picked. There'd soon be swarms of such in DC in the usual cozy relations.
) Drop the assumption of validity and allow for greater post grant review: -- NO, just ensures endless wrangling in bureaucratic lairs, out of sight of public. A small inventor up against corporation will have NO chance in such venue.
Summary: academic weenie-ing, mis-trust of jury system, and actually large but subtle benefits to corporations by moving from jury trials to mere (star chamber) hearings.
More to follow...
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
And I already commented sufficiently:
http://www.techdirt.com/articles/20121127/11245721156/some-thoughts-fixing-problems-pat ent-system.shtml#c1
Were YOU one of those who helped censor me there? Don't berate me for NOT engaging in endless back and forth crap-fest when I get censored.
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
But I pick this out first: Umm, no. People invent for the hell of it, out of necessity, or by utterly unpredictable inspiration. "Natural persons" come up with a neat idea and then (largely) want to share it with others for mutual benefit, and only need a practical way to do so, which is to grant them monopoly for a limited time. The People are traders. But corporations set out specifically to invent and ruthlessly monetize with monopoly. Corporations are engines to funnel money to the few already Rich.
It's basic difference in philosopy: I'm for The People; Mike is an academic 1-percenter who favors corporations and only sees society from the corporate view. I'm not just ragging on Mike, as that's SO BASIC to why I disagree with him. -- So again, my forbidding corporations from owning patents would automatically -- and sweepingly in way that academic weenies and lawyers will NEVER even contemplate -- get rid of most of the "bad" motives for the patent mess.
There. I'm done, as likely few or none will ever read this: it'll be effectively hidden when this Featured Post is removed.
[ link to this | view in chronology ]
Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
They're just clerks checking i's dotted and t's crossed.
You want examiners to just approve every patent that crosses their desk as long as the paperwork is in order? Wouldn't it be better for everyone (but patent trolls) if they made sure it's a valid patent?
A small inventor up against corporation will have NO chance in such venue.
If the rules could be set up fairly, no. I admit the big corps would probably have undue influence on setting up the rules, but that's a problem now too, so I don't see how this would make it worse.
academic weenie-ing
Why do you always have to throw in ad hominems? You're actually making sense here, just stick with that.
for patents to make sense, you have to have a situation where the invention wouldn't otherwise be created.
Perhaps a slight rephrase - wouldn't otherwise be created and shared. I'm not sure there's much evidence that the patent system is really promoting sharing of inventions in a useful fashion. Patents are designed to obscure the invention, and be used as a legal tool. They are generally not useful to someone in trying to duplicate the invention after the patent expires. Particularly now with technology evolving as quickly as it does, most patents are completely obsolete long before they expire.
But corporations set out specifically to invent and ruthlessly monetize with monopoly.
Not sure what your point is here. Are you saying this is an argument in favor of the patent system? Because it sounds like the exact opposite to me. Given that powerful corporations corrupt our political system in their favor, why would you want another system that they can bend to give them more power through force of law? Wouldn't removing patent power entirely benefit the public on the whole, by removing more power from big corporations than from everyone else?
There. I'm done, as likely few or none will ever read this: it'll be effectively hidden when this Featured Post is removed.
I hope you notice that when you make cogent arguments rather than just spewing bile, you don't get reported.
[ link to this | view in chronology ]
Re: Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Oh, thank you, "nasch", for granting me the privilege of NOT being censored!
First, I can't tell ANY pattern to it. Sometimes censored for absolutely mild, other times not for when really bearing down -- with ACTUAL disagreement not "questionable" trolling such as yours, ha, ha. But "report" is definitely used here to suppress opinions. -- If were properly used, then vulgar off-topic trolling such as Rikuo and Timothy Geigner would be suppressed often. But they're NOT because are fanboys.
We don't know how many clicks are required let alone who; could at times be just Mike by hisself! You don't know and can only go on trust. So, baloney on your baseless assertion that the system is fair and I'm the problem! I even have to protect my screen name from FALSE comments made under it! Dissent is NOT welcome here, even if you think so.
Hey kids: if you don't want to be seen as censoring opinion, it's real simple: don't click "report" when comments are within common law!
04:49:31[f-402-4]
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Dissent is NOT welcome here, even if you think so.
Not as much as would be ideal perhaps, but there are dissenting comments that don't get reported. I still believe that you didn't earn your reputation by dissenting, but by writing baseless nonsense and useless ad hominems over and over and over again. If you had been writing meaningful commentary that is relevant to the issues this whole time, you wouldn't be stuck whining about "censorship".
So... no response to the actual discussion at hand?
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Your posts being reported and collapsed is NOT censorship, even if you like to complain about it and act the martyr. To be completely honest I'm probably just as likely if not more likely to read collapsed posts because I am usually curious why people reported it.
Censorship would be Mike or another moderator removing your posts from the site, which he has never done (as far as I know).
Finally, it is entirely possible to have good points and fail to convince anybody of it. If you don't think this applies to you, or you don't care, just keep doing what you are doing.
[ link to this | view in chronology ]
Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Dang, really? I'll have to tell my parents, who created a corporation to protect their automotive business, about that. They must not have realized that the debt and finance that they juggle while providing service for the better part of twenty years made them into Ultra-Rich Capitalist Elite.
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
BUT if you wish me to specifically concede that Mike does have some bullet points (I count 5: 4 one article, 1 in another), then except as above, I CONCEDE!
[ link to this | view in chronology ]
Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
I am aware of a few differing definitions for that phrase. I would like to know YOUR definition though as you seem to have different definitions for a lot of things.
Are you referring to the Lockean definition? Are you referring to the Social Securities Administration definition? Are you referring to the US tax code definition? Or are you referring to some definition you made up on your own?
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Sheesh. Use any dictionary. I've specifically stated that the applicable definition is how Internal Revenue used it at first. "Unearned" is basically all that's NOT wages.
But listen, sonny. I'm not falling for the endless questions trick. Learned my lesson here with "nasch".
YOU MUST STATE SOMETHING THAT I CAN DISAGREE WITH, OR STATE WHERE YOU DISAGREE WITH ME. You don't get to just take pot-shots at me, wasting my time with answers you intend to only quote-and-contradict, while hoping for me to expose more target area. You are ONLY trying to put on the appearance of discussion. You are NOT trying to elicit my comments to peruse. JUST WRITE YOUR OWN THOUGHTS AS I DO.
Visitor beware! Fanboy-trolls may ask you questions! But only to wear you down.
04:01:08[f-2-8]
[ link to this | view in chronology ]
Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Ok. At least you've finally given me something to go off of. I'm not sure I can get on board with your notion if that is your definition. Wouldn't that mean that the owner of the small business I work for would have to pay higher taxes and therefore less wages to me? How would this be beneficial to anyone, especially with such a wide scope that you are implying?
YOU MUST STATE SOMETHING THAT I CAN DISAGREE WITH, OR STATE WHERE YOU DISAGREE WITH ME.
Right back at you, Blue. Stating some general concept without providing the all important details is exactly the same as stating nothing at all. How would one know if they agree or disagree without ALL of the information and background that you are basing these ideas on?
You are ONLY trying to put on the appearance of discussion.
Bullshit, Blue. I have been nothing less than civil with you one these threads. You are the one resorting to name calling and evasive answers.
[ link to this | view in chronology ]
Re: Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Ok. At least you've finally given me something to go off of. I'm not sure I can get on board with your notion if that is your definition. Wouldn't that mean that the owner of the small business I work for would have to pay higher taxes and therefore less wages to me? How would this be beneficial to anyone, especially with such a wide scope that you are implying?
WHERE DO YOU STATE ANYTHING? WHERE DO YOU "GO OFF" WITH ANYTHING POSITIVE? JUST QUESTIONS!
And then you complain YET AGAIN that I'm evading discussion!
I'm definitely NOW evading questions "Gwiz"! Not a bit more unless you STATE some point you believe in. But I'm definitely NOT avoiding discussion. YOU'RE A VACUUM. A fount of endless questions like "nasch".
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
*sigh*
It's become very apparent that all you wish to do is post outlandish statements that you think everyone should just buy into just because you delusionally think you're smarter than everyone else in the world. You take anyone asking for clarification of your stated views as an attack as opposed to using that as way to actually garner support for your ideas. That's pretty close to crazy in my book.
I'm done trying to have a civil debate about the notions you keep bringing up because it's painfully obvious by your defensive nature that you really haven't thought these notions all the way through. If you had, it would be easy to answer a few simple questions regarding them. You have failed repeatedly, over many weeks, in that regard.
[ link to this | view in chronology ]
Re: Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Also, this seems to indicate that you believe the point of a discussion is to disagree with each other. Well, I disagree with that. :-)
[ link to this | view in chronology ]
Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
YOU MUST STATE SOMETHING THAT I CAN DISAGREE WITH, OR STATE WHERE YOU DISAGREE WITH ME.
OK, that's where I disagree with you. There is more than one way to have a discussion. One possibility is:
"I think A because X"
"I disagree; I think B because Y"
Another is:
"I think A because X"
"What about Y and Z? A is partly true, but have you considered B?"
I'm not coming at this from a position of "I know everything there is to know and I have all the answers, so I'm going to tell you where you're wrong and all about how I'm right." Rather than telling you that you're wrong (which I don't think is usually received very well in general - not by you particularly but by anyone), I'm pointing out issues you may not have considered and inviting you to respond.
I'm also asking you questions in hopes of getting some clarification of your position, because there's no point in stating why I disagree with you until I actually understand what you're saying.
My objective is not to prove someone wrong or to prove myself right. Perhaps that is what's throwing you off. My objective is to explore the issue with people who are interested in thinking about it and debating it on the merits.
If there's a point where you want to know where I stand or something about what I said is not clear, just ask me about it. Despite what you seem to think, that's allowed - your options are not limited to stating what you believe and stating what you disagree with.
[ link to this | view in chronology ]
Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
So if a person who is more wealthy than an arbitrary cap you intend to set on wealth or income invents an item that he needs time to develop so no one can just swipe his research and start making money from it before he's even run the first test, that's okay with you? What happened to, "I made it, I own it?" Does that only apply to people within an income limit set by you? If not you, who sets the income limit? Contradicting yourself, much?
2) forbiddding transfer
How can you make money from your patent if you can't pass on the right to develop and make money from it to someone else? The only way to guarantee exclusivity of the right to develop it is to sell it or licence it. Many inventors have an idea, but not the means to develop them or bring them to market.
3) forbidding to corporations
Million dollar movies require technology: that's what costs the money. If not movies, other everyday items. Besides, not all corporations are rich and powerful. So if an inventor who just happens to own a corporation invents something, whether he made it or not, he doesn't own it, right?
4) must have a working physical model (thereby automatically ruling out software patents).
Not all patents require a working physical model. Software patents can be ruled out as obvious because ones and zeroes are obvious.
Actually, Mike has suggested making it harder to get patents in the first place by forbidding broadly-written patents, banning software patents or limiting them to those that can be proven to be truly innovative or worthy of being monopolized for a term of ten years, and banning them from being held by non practising entities for the purpose of shaking people down. He has also stated many times that patents should only be granted within the terms of the Constitutional limits.
There you go, Blue, debunkage. Now get back under your bridge and go back to bellyaching about teh googlez.
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Well, it's disagreement. Just because was brief in this crappy pro-corporate pro-rich-VC item doesn't mean I can't enlarge. But I'll just take the first as rest follow naturally:
1) means-testing patents: Mega-corporations simply don't need gov't to defend them. Corporations are NOT persons, no matter how many lawyers and courts insist so. You can debate where to draw the line at rich enough to develop a patent, but you go simply wrong in two ways in your contrived example: 1) no invention is real until it's developed up to a practical working model; you are saying that speculative patents should be granted 2) doesn't actually take much money to patent something: under $20,000 in the US about now, and that's actually generous: believe is still $1500 for preliminary, and 6000 for actual, but of course everyone is tricked into using a patent-LAWYER, which is a species of grifter simply raking off money for the i's and t's.
Whole process could be simplified with just requiring a STATEMENT FILED once have actual working device, and then some complications of time frame / sources could be resolved by a jury.
But my MAJOR point is get The Rich and corporations out of the monopoly business, and it's clear that Mike has ZERO interest in that. We all know who is Rich, and corporations are legal fictions. Note how often lawyer notions are in play here.
There. UN-debunked. ... Don't see any applicable taglines, so you get shorted.
[ link to this | view in chronology ]
Re: Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
So... bunked?
[ link to this | view in chronology ]
Re: Re: Yeah, patents protecting poor inventors WOULD hinder Rich VCs...
Actually he's stated that he's not in favor of banning software patents or any other special exception to patent law, but favors fixing the patent system generally in ways such as better enforcing the obviousness standard, such that software patents would naturally become less of a problem. IIRC.
[ link to this | view in chronology ]
Some hope?
[ link to this | view in chronology ]
Re: Some hope?
[ link to this | view in chronology ]
"Top Venture Capitalists"
I wonder if you actually read the EFF article, THEY EVEN SAY THEY ARE NOT THE TOP VC's. Right there in the linked article, if you care to read it.
SMALL COMPANIES that do VC ARE NOT THE TOP COMPANIES.
Also "DEMAND" is that the same as "URGE", I did not think they meant the same things, do you ?
"In turn, our digital economy will continue to grow and so will our national economy."
So they all agree with the present legislation, there is continuous growth, so they want that changed again why ??
" In fact, the majority of companies targeted by patent trolls have less than $10 million in revenue."
Oh dear, less that $10 Million in revenue, that's nearly below the poverty line !!!
"Our Founders did not intend to incentivize patent trolling in the Constitution; nor did Congress intend the Patent Act to promote this industry. "
The constitution is quite clear on its intensions, and the patent act no doubt reflects that fact.
Its always funny when you have to resort to what you think the "founding fathers' intensions were as opposed to their intensions as set out in the constitution.
If you need the laws changed so you are able to conduct your business, you have major problems with your 'business model', business either works within the current laws, or they don't work at all.
[ link to this | view in chronology ]
Re: "Top Venture Capitalists"
[ link to this | view in chronology ]
Mike, problem is grifters, NOT patents as such.
Now, it might be argued that they must have patents to protect them from larger grifters, but you seem unable to grasp that the underlying problem then is the rampant greed and monopoly, NOT patents as such.
Therefore, all your attention should be directed toward suppressing the grifters, thieves, and BIG players who infest current "free" markets, to instead use gov't to make FAIR MARKETS. ... But you never do, you just go after patents as such. (I've yet to read the AC's links, but will: don't expect to have to even slightly retract that, but it'd be FINE if so!)
Libertarians never grasp that civilization isn't about market efficiency; it's keeping the few from controlling all.
02:36:46[c-297-1]
[ link to this | view in chronology ]
Re: Mike, problem is grifters, NOT patents as such.
Wouldn't reducing artificial monopolies (and particularly abuses of monopolies) be a step toward fairer markets?
[ link to this | view in chronology ]
Re: Re: Mike, problem is grifters, NOT patents as such.
Re: Mike, problem is grifters, NOT patents as such.
use gov't to make FAIR MARKETS.
Wouldn't reducing artificial monopolies (and particularly abuses of monopolies) be a step toward fairer markets?
It's "nasch" with his highly imitable method of re-phrasing what one wrote into question form!
Listen. Up there is STATED to GREATLY REDUCE "artificial monopolies" by forbidding to Rich and corporations, and the VERY definition of "fairness" can only be to bring down The Rich and their corporations so that the poor actually have a chance in the market, so you're just remarkably obtuse and circular in asking this question! It's a gem SO typical of you.
Now, I'm done with this topic because creating too much of a draw! Takes ME to gin up this item from yesterday: Thu, Nov 14th 2013 2:02pm -- The fanboys have basically nothing to write except to attack and question me! (Yeah, even the AC with Mike's links has nothing to say, only demands an answer from me.)
[ link to this | view in chronology ]
lies and damned lies
If you're tired of nonsensical dissembling by invention thieves and their paid puppets (some say Masnick is one of many), you can find some levity and sanity from those who have actually invented something and have personal experience in these matters at...
http://truereform.piausa.org/default.html#pt.
https://www.facebook.com/pi.ausa.5
http://piausa.wordpress.com/
[ link to this | view in chronology ]
Re: lies and damned lies
[ link to this | view in chronology ]
Re: Re: lies and damned lies
On another note, this guy thinks that if you don't have any patents you should just shut up and have no opinion. Always uses the handle 'staff,' as if we might think he actually should be respected for having a job or something.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Don't need a patent
Patent trolls threaten our innovation, and in essence, our economy. The effects are totally negative.
However, especially with small startups, the threat of theft of an idea is substantial.
FORMERLY patents didn't protect much - companies could "show" that they "had the idea"; and even "published", to defeat a patent. NOW we have "first to file", and the protection for a startup is SUBSTANTIAL!
[ link to this | view in chronology ]
Re: Don't need a patent
What is the assumption you're referring to?
[ link to this | view in chronology ]
odd argument, a bit of a strawman?
So the whole argument sort of is meaningless.
[ link to this | view in chronology ]
Re: odd argument, a bit of a strawman?
[ link to this | view in chronology ]
Suprised, at first, to see VCs behind this.
The "war on patent trolls" has turned into a war on inventors. Universities just realized that they're now considered patent trolls - they don't manufacture or run businesses, they just create intellectual property. So the Association of American Universities has come out against HR 3309. Other opposition is from big companies including 3M and Caterpillar.
Where's the push from this bill coming from? Advertising. The American Association of Advertising Agencies, the Direct Marketing Association (the junk mail lobby), and the trade groups for travel agencies and hotel booking services. They're running into some business method patents related to ways to get people to buy online. There are four specific patents that bother the advertising agencies. This isn't a huge problem. That's also why the PR for HR 3309 is so good - it's being pushed by the PR industry. HR 3309 was being railroaded through Congress with a heavy PR and lobbying push. Full committee hearings were held within two weeks after the bill was introduced. Usually that takes months.
The opposition is getting organized, but is playing catch-up. (Visit their slow-loading Save the Inventor web site. I've been bugging them about this.)
The US has had patents for over 200 years, and there have been "patent trolls" in the past. But there more of them since 2006. Why? Three court decisions and one law made it much harder for inventors:
(2006) "eBay v. MercExchange " The patent holder can't get an injunction against infringement any more, except in extreme cases. This destroyed the concept of a patent as property that only the patent holder could use.
(2007) "In re Seagate" The patent holder can't get triple damages unless there is "reckless infringement", which means the worst that can happen to an infringer is that they have to pay a royalty, the same royalty they might have negotiated. So infringement by a big company is risk-free.
(2007) MedImmune, Inc. v. Genentech, Inc. If a patent holder writes to an infringer asking them to pay royalties, they can be sued for a judgement that the patent is invalid, in a court of the infringer's choosing. So, as a patent holder, you have to file suit before you can negotiate. This is why "patent trolling" became necessary.
(2011) The "America Invents Act" The "America Invents Act" added "post-grant opposition" proceedings, so now infringers can harass patent owners and stall infringement claims in multiple forums. Note that one of the "features" of HR 3309 is to limit estoppel so that similar issues can be raised once in a post-grant opposition and then re-raised in an infringement case. This makes it clear it's all about raising the cost of enforcing a patent by wearing down the patent holder.)
That's why we have companies which enforce patents in bulk - it's now too expensive and too risky for the inventor to do it.
HR 3309 makes it worse. With "fee shifting", you can get stuck paying the bills of the other side, and there is no limit on how much they can run up their bills. In patent infringement suits, the plaintiff only wins about 40% of the time. There are lots of little mistakes a plaintiff can make. Most losses are not on the merits of the claim.
We do need some changes to patent law, but they're minor:
- A patent small claims court. The USPTO was pushing this until last summer, but since Kappos, the USPTO director, and Knight, the USPTO general counsel, left, the ball has been dropped. This would provide a cheap way to settle little patent claims like the ones the ad agency lobby is complaining about.
- Congress needs to override Medimmune, so you can talk before suing. We're seeing more lawsuits because you can't talk to someone about patent infringement without risking a counter-suit. You have to sue first. That sucks.
- There's an argument for raising the "obviousness" bar. This is tough to define. There's much criticism of some software patents being "obvious". But often, it's because they're obvious in retrospect. They weren't obvious until someone invented them. The Amazon one-click patent is a classic example. Once you know about it, it's obvious. But it wasn't obvious until someone thought of it. That's invention.
Most of the trouble with obvious patents came from weak patent examination back in the 1990s. The USPTO has toughened up since then, and the acceptance rate is way down. That problem got solved.
(There's a side problem with obviousness. Big Pharma would like to lower the obviousness bar to allow more "me too" drugs and minor variations on existing drugs to be patented. You can see their wish list in the IP provisions of the Trans-Pacific Trade Agreement.)
Some problems are already being solved:
- Business method patents are on the way out already. The America Invents Act two years ago put a damper on new ones. The ones still causing trouble are old, and will time out. Broadening the definition of "business method" may be desirable, but the definition is tough.
- There's trouble where patents, standards, and antitrust meet. MPEG-LA, which controls video compression patents, is the big offender there. But the last of their key patents runs out in Q1 2014. The ones that remain are mostly for features you don't really need in an MP4 decoder, like interlacing (died with analog TV.) We should see patent-free MP4 decoders soon.
So that's an overview of the situation. It's more complex than "patent trolls are bad", but not all that complex.
John Nagle
Animats
[ link to this | view in chronology ]
Re: Suprised, at first, to see VCs behind this.
If they're taking out patents and then suing over them without attempting to bring anything to market or license them to someone who will, yes, that's patent trolling. It doesn't become not trolling just because it's a university doing it. However, from what I've heard most universities are more into licensing than suing.
[ link to this | view in chronology ]
[ link to this | view in chronology ]