Prominent Pro-Patent Judge Issues Opinion Declaring All Software Patents Bad

from the and-over-an-intellectual-ventures-lawsuit dept

Well here's an unexpected surprise. A lawsuit brought by the world's largest patent troll, Intellectual Ventures, and handled on appeal (as are all patent cases), by the notoriously awful Court of Appeals for the Federal Circuit (CAFC) may have actually killed off software patents. Really. Notably, the Supreme Court deserves a big assist here, for a series of rulings on patent-eligible subject matter, culminating in the Alice ruling. At the time, we noted that you could read the ruling to kill off software patents, even as the Supreme Court insisted that it did not. In short, the Supreme Court said that any patent that "does no more than require a generic computer to perform generic computer functions" is not patent eligible. But then it insisted that there was plenty of software that this wouldn't apply to. But it's actually pretty difficult to think of any examples -- which is why we were pretty sure at the time that Alice should represent the end for software patents, but bemoaned the Supreme Court not directly saying so, noting it would lead to lots of litigation. Still, the impact has been pretty widespread, with the Alice ruling being used both by the courts and the US Patent Office to reject lots and lots of software and business method patent claims.

But this latest ruling, from the very court that upended things nearly two decades ago in declaring software much more broadly patentable than anyone believed, may now be the nail in the coffin on software patents in the US. The headline, of course, is that the patents that Intellectual Ventures used against anti-virus firms Symantec and Trend Micro, were bunk, because they did not cover patent eligible subject matter. But the part that has everyone chattering is the concurring opinion by Judge Haldane Mayer, that says it's time to face facts: Alice killed software patents. And Mayer is not some newcomer. He's been at the Federal Circuit since the 1980s and was actually the chief judge in the late 90s/early 2000s when CAFC was at its worst in terms of expanding patent law. And it appears he's been born again into the anti-software patent world. It's... quite a conversion.

Even better, Judge Mayer pointed out that the First Amendment says that such patents should not be allowed. The whole concurrence is worth reading, but we'll highlight some key points, starting with the First Amendment argument -- which is kind of fascinating in that it goes well beyond what most people had talked about in the past concerning software patents.

“[T]he Constitution protects the right to receive information and ideas. . . . This right to receive information and ideas, regardless of their social worth, is fundamental to our free society.” Stanley v. Georgia, 394 U.S. 557, 564 (1969) (citations omitted). Patents, which function as government-sanctioned monopolies, invade core First Amendment rights when they are allowed to obstruct the essential channels of scientific, economic, and political discourse.

Wow! That's actually great to see -- and the kind of argument that we'd hoped to see around copyright. But we'll take it on patents. Here, Judge Mayer notes, the real issue is that this patent would basically harm free expression on the internet, making it ineligible to be patented.

Just as the idea/expression dichotomy and the fair use defense serve to keep copyright protection from abridging free speech rights, restrictions on subject matter eligibility can be used to keep patent protection within constitutional bounds. Section 101 creates a “patent-free zone” and places within it the indispensable instruments of social, economic, and scientific endeavor.... Section 101, if properly applied, can preserve the Internet’s open architecture and weed out those patents that chill political expression and impermissibly obstruct the marketplace of ideas.

From there, Judge Mayer notes that if everyone just recognized that the Supreme Court outlawed patents with Alice, the First Amendment questions wouldn't even come up at all.

Most of the First Amendment concerns associated with patent protection could be avoided if this court were willing to acknowledge that Alice sounded the death knell for software patents. The claims at issue in Alice were directed to a computer-implemented system for mitigating settlement risk.... Although the petitioners argued that their claims were patent eligible because they were tied to a computer and a computer is a tangible object, the Supreme Court unanimously and emphatically rejected this argument.... The Court explained that the “mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”... Accordingly, “[t]he fact that a computer necessarily exist[s] in the physical, rather than purely conceptual, realm is beside the point” in the section 101 calculus.

From there, Judge Mayer makes the point (that some of us tried to make post-Alice), which the Supreme Court refused to say outright, and which many patent lawyers refused to admit: under the test in Alice, basically all software is unpatentable. And that's fine because software is "a form of language" and we don't patent language.

Software is a form of language—in essence, a set of instructions.... It is inherently abstract because it is merely “an idea without physical embodiment,”... Given that an “idea” is not patentable... and a generic computer is “beside the point” in the eligibility analysis ... all software implemented on a standard computer should be deemed categorically outside the bounds of section 101.

Boom.

And, finally, it appears that a CAFC judge recognizes (citing a bunch of great amicus briefs and papers about how patents have little to do with incentivizing software development) what many in the software field have been saying for decades: software succeeds in spite of patents, not because of it:

Software development has flourished despite—not because of—the availability of expansive patent protection. See Brief of Amicus Curiae Elec. Frontier Found. in Support of Respondents, Alice, 134 S. Ct. 2347 (No. 13- 298), 2014 WL 828047, at *6–7 (“EFF Brief”) (“The software market began its rapid increase in the early 1980s . . . more than a decade before the Federal Circuit concocted widespread software patents in 1994. . . . Obviously, no patents were needed for software to become a $60 billion/year industry by 1994.”); Mark A. Lemley, Software Patents and the Return of Functional Claiming, 2013 Wis. L. Rev. 905, 935 (2013) (“Software patents . . . have created a large number of problems for the industry, particularly for the most innovative and productive companies. . . . [T]he existence of a vibrant open source community suggests that innovation can flourish in software absent patent protection.” (footnote omitted)); Wendy Seltzer, Software Patents and/or Software Development, 78 Brook. L. Rev. 929, 930 (2013) (“Seltzer”) (“Present knowledge and experience now offer sufficient evidence that patents disserve software innovation.”); Arti K. Rai, John R. Allison, & Bhaven N. Sampat, University Software Ownership and Litigation: A First Examination, 87 N.C. L. Rev. 1519, 1555–56 (2009) (“While most small biotechnology firms that receive venture financing have patents, the available empirical evidence indicates that most software start-ups that receive venture financing, particularly in the first round, do not have patents.”).

But Mayer goes even further in this discussing four separate problems with the whole concept of software patents, including the fact that the scope of the patents greatly exceeds the importance of what they disclose. Second, he notes that "they provide incentives at the wrong time" -- recognizing a key point we've made for years: that an idea is basically worthless when compared to the actual execution (to me this applies to more than just software patents):

Because they are typically obtained at the “idea” stage, before any real inventive work has been done, such patents are incapable of effectively incentivizing meaningful advances in science and technology. “A player focused on patenting can obtain numerous patents without developing any of the technologies to useful levels of deployment or disclosure, leaving a minefield of abstract patent claims for others who actually deploy software.” Seltzer, 78 Brook. L. Rev. at 931. Here, for example, it took no significant inventive effort to recognize that communications should be screened for harmful content before delivery. The hard work came later, when software developers created screening systems capable of preventing our email boxes from being overrun with spam or disabled by viruses. Granting patents on software “ideas”—before they have been actually reduced to practice—has created a perverse incentive scheme. Under our current regime, those who scamper to the PTO early, often equipped with little more than vague notions about using computers to automate well-known business and social practices, can reap hefty financial dividends. By contrast, those who actually create and deploy useful computer-centric products are “rewarded” with mammoth potential infringement liability.

The third problem he discusses is the fact that the system is overwhelmed with software patents, "most of which are replete with broad, functional claims" which makes it "virtually impossible to innovate in any technological field without being ensnared by the patent thicket." Nicely put. And because of that:

Software patents impose a deadweight loss on the nation’s economy, erecting often insurmountable barriers to innovation and forcing companies to expend exorbitant sums defending against meritless infringement suits.

Finally, he notes that software doesn't deserve patent protection because "generically implemented software invariably lacks the concrete borders the patent law demands." As he notes, a patent system only functions when it's clear what the boundaries are of what's covered. But that's not the case at all with software patents.

Software, however, is akin to a work of literature or a piece of music, undeniably important, but too unbounded, i.e., too “abstract,” to qualify as a patent-eligible invention.

From there, he suggests that the courts (and I guess the Supreme Court) should just stop punting on the issue and declare software patents dead:

Declaring that software implemented on a generic computer falls outside of section 101 would provide muchneeded clarity and consistency in our approach to patent eligibility. It would end the semantic gymnastics of trying to bootstrap software into the patent system by alleging it offers a “specific method of filtering Internet content,”....

The opinion is a great read overall -- and it's the kind of arguments that plenty of folks in and around tech and software patents have been making for years. But to see it come out of a judge's pen, in a patent case, and from CAFC, is what's really incredible. Of course, as a concurring opinion, rather than the majority opinion, by itself the opinion holds no precedential value. That's too bad. But it does suggest that even CAFC judges are recognizing how ridiculous software patents are these days. It will be interesting to see if Intellectual Ventures tries to kick this up a level to the Supreme Court, where it might risk SCOTUS actually agreeing with Judge Mayer.

Filed Under: cafc, first amendment, haldane mayer, innovation, patents, software patents
Companies: intellectual ventures, symantec, trend micro

Former Patent Troll Admits That Patent Trolls Are Bad For Business And Innovation

from the speak-up dept

I've spoken to a few patent attorneys who have fought against patent trolls who have admitted to me that, at times, it's quite tempting to give up and join the other side, since patent trolling is fairly easy and incredibly lucrative. You just have to sell your soul and give up the idea that you're doing anything productive or good in the world, and instead become a pure bottom feeder. Someone who did exactly that is apparently Ira Blumberg, who is now speaking out about his experiences working on "the dark side" of patent trolling. Blumberg didn't end up going to one of those tiny patent trolls, but rather left a job at Intel to go work for Rambus, a company not everyone considers to be a patent troll, but which certainly has a history of being an aggressive patent litigant. From Rambus, Blumberg then joined the world's largest patent troll, Intellectual Ventures. He eventually left IV and is now at Lenovo. So he's been actively on both sides of the patent troll situation -- as an active participant in suing operating companies while working for companies that did nothing but license, and at companies that are relentlessly pursued by patent trolls.

And he's now willing to speak out and say that patent trolling is just bad. He mostly uses the more politically correct "PAE" or "patent assertion entity" rather than patent troll throughout the article.

It is now abundantly clear to me that PAEs are, in net, detrimental to business and innovation. Despite what they say, trolls are not making the world a better place for anyone. It is time they lay down their arms and allow companies to use the patent system in the way in which it was intended.

He also has no problem admitting the reality of most patent trolling: that it's not about quality patents. In fact, crappy patents are pretty good for trolling:

The sad reality is that the patents used by trolls do not need to be good for IV, or any PAE, to make money. Quality is not an issue when it costs $2-$3 million to find out whether a patent claim has merit, whereas settling costs “just” $500,000-$1 million. Trolls often aggressively push for extortionate settlements that far surpass the value of the IP because they know many companies will choose to settle rather than get embroiled in an expensive and drawn-out lawsuit. Their actions can wreak havoc on tech companies of all sizes.

Blumberg does note that patent trolls and their supporters claim that such companies are the only way to get independent inventors paid, but notes that this is not what's happening in reality:

In theory, there is some validity to this argument. It is true that individual inventors and smaller companies are not always well-compensated for their inventions. But in reality, the harm businesses suffer on this front is significantly outweighed by the harm caused by the exorbitant costs of patent litigation lawsuits. The settlements IV gains from tens of thousands of patents is vastly out of proportion with the value of the innovation being licensed.

Of course, he could go much further than that. First off, there are lots of ways for inventors to make money other than selling out to trolls. If their invention is really good, they can work with a company (or build one) to produce it. Some respond that some people don't want to do that, and to some extent the response is "too bad." There are lots of people who don't want to work for a living, and we don't necessarily say that companies have an obligation to pay them anyway. But, even if someone just wants to invent, they could easily team up with another entity to pass off their ideas and let that other company build them with a contractual agreement for royalties or some similar arrangement. The idea that you need patent trolls to provide liquidity is greatly exaggerated.

And this doesn't even get into the issue of how valuable patents are, really. It's quite rare that patents are actually disclosing true inventions in the tech space. Almost all patent disuptes are ones involving totally independent invention, where it's not the invention that's important, but the execution. And yet, patent holders and patent trolls like to pretend the idea is much more valuable than the execution.

Either way, it's good to see people like Blumberg recognize how dangerous his former employers have been to the world of innovation and to speak out about it. He's asking more people to speak out as well.

As someone who has spent time on both sides, I feel a call to speak out against frivolous and overpriced patent litigation. The work I did for both PAEs and corporations was certainly legal, but not the same: While I was always on the right side of the law, I prefer being on the right side of innovation.

Companies want to create technologies that matter five years from now and beyond, so patents continue to matter. Frivolous lawsuits and those demanding damages far in excess of the value of the allegedly infringed patent detract from our ability to push innovation and better products forward. I hope that many more voices in tech will join mine in decrying the harmful effects of needless patent litigation — our future depends on it.

Filed Under: harm, innovation, ira blumberg, patent troll, patents
Companies: intellectual ventures, lenovo, rambus

Stupid Patent Of The Month: Mega-Troll Intellectual Ventures Hits Florist With Do-It-On-A-Computer Scheduling Patent

from the promoting-the-progress-of-stupid-patents dept

When it comes to patent trolls, no one is bigger than Intellectual Ventures. The Washington State-based behemoth is at the center of both patent trolling and the debate around patent reform. Though it claims to promote innovation, Intellectual Ventures is behind some of the most outrageous troll campaigns in recent years. Famous for hiding behind thousands of shell companies, it spawned Lodsys, the troll that harassed small app developers, and the Oasis Research litigation featured in This American Life.

This month, Intellectual Ventures filed some fresh lawsuits against targets including JCPenney, Sally Beauty, and flower delivery service Florists' Transworld Delivery. We checked out the asserted patents to see if any deserved our Stupid Patent of the Month award. All were worthy candidates, but one in particular stood out.

Before we get to the patent, here's a short script:

DISPATCHER: Hey, is your crew available?

ROSIE: Yep.

DISPATCHER: We need you to head over to Jimmie's place and fix his problem.

ROSIE: Okay.

DISPATCHER: This is Rosie, right?

ROSIE: Yep.

DISPATCHER: Great. The job has been assigned to you.

This script will probably not win an Academy Award for screenwriting. But how about a patent? As silly as this question may sound, by suggesting implementing this kind of basic crew management using an "enterprise computing system," a company called ABB, Inc. was able to get a patent. In 2003, the Patent Office issued U.S. Patent 6,633,900 titled "Mobile Crew Management System For Distributing Work Order Assignments To Mobile Field Crew Units" (the '900 Patent). Intellectual Ventures acquired it in mid-2015.

Claim 1 and Figure 5 of the '900 Patent best illustrate the banal idea at the center of the patent: crew assignments, but with a computer. The claims outline mundane steps (like the script above) and applies them to a computer environment. For example, one step is "notifying the field crew of the assignment." Another step is "retrieving and presenting a list of assignments to the field crew."

Patent claims like these are almost surely invalid under the Supreme Court's Alice v. CLS Bank decision. But that does not appear to have deterred Intellectual Ventures. Indeed, with such a huge portfolio at its disposal (Intellectual Ventures claims to own more than 40,000 patents), it is astonishing that it would chose to litigate with such a weak patent. This choice raises awkward questions about the overall quality of Intellectual Ventures' portfolio.

Intellectual Ventures is headquartered in Bellevue, Washington. Florists' Transworld Delivery (FTD Companies, Inc.) has its headquarters in the Chicago suburbs. But Intellectual Ventures' lawsuit [link to complaint] was filed about as far from these places as possible in the Eastern District of Texas. As we have noted many times before, the Eastern District of Texas is a hotbed of abusive patent litigation. Having chosen to litigate with a plainly invalid patent, it makes sense that Intellectual Ventures would chose a forum where the local rules favor patent plaintiffs.

Venue reform legislation currently before Congress would put an end to this kind of forum shopping. That would help reduce abusive patent trolling. But we need broader patent reform to ensure that patents like this one don't issue in the first place so that they can never become litigation weapons for trolls like Intellectual Ventures.

Reposted from the EFF's Stupid Patent of the Month series

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Filed Under: patents, scheduling, stupid patent of the month
Companies: intellectual ventures

532,900,000 Reasons Why We Need Patent Reform Now

from the what-a-joke dept

Over the last year, there's been plenty of good news in the fight against the abuse of patents to stifle innovation. A bunch of court rulings have gone the right way, with the biggest being the Supreme Court's ruling in the Alice v. CLS Bank case, that has resulted in many courts invalidating patents, the US Patent Office suddenly rejecting more patents and a rapid decline in patent lawsuits.

Based on that, you might think that we no longer need patent reform. But you'd be wrong. Patent trolls are regrouping and fighting back. Despite the big drop in patent lawsuits following the Alice ruling, patent trolls have come up with some new ideas, and have recently ramped up the filing of new trolling lawsuits at a rapid pace. And there have even been a few victories. While the dollar amounts were relatively low (especially compared to what was asked for), a troll who claimed to have a patent over Bluetooth 2.0 (despite "inventing" it years after Bluetooth 2.0 was on the market) was awarded $15.7 million, and the world's biggest patent troll, Intellectual Ventures actually won a case against Symantec (but got "only" $17 million).

But, earlier this week, there was the big one. A pure patent troll, Smartflash, with a collection of vague and broad patents (US 7,334,720, US 8,118,221 and 8,336,772 -- all for "data storage and access systems") has been awarded $532,900,000 from Apple, despite everyone happily admitting that Apple came up with the idea on its own. Here's the East Texas (of course) court jury form: And, yes, Apple could probably pay that off with the spare change falling off the edge of Tim Cook's desk, but that's not really the point. Rulings like this don't seem to create any value towards actual innovation. Smartflash once had a product, but it failed in the marketplace over a decade ago. Apple built a product that people actually wanted. Shouldn't we be rewarding the people who actually make the things people want, rather than subsidizing failure by the successful?

Smartflash's lawyer told Ars Technica's Joe Mullin that this ruling is actually a "great example of why the patent system exists." Actually, it's a great example of how screwed up the patent system is. The lawyer also spewed this load of bullshit:

The thing about a patent is—let's say you have a university professor who spent two years researching something. It's irrelevant the effort that [an infringing company] spent to build it. It's the person who came up with it first. That's the way the Constitution, and the patent laws, are written. It's designed to cause people to spend money and time innovating. The patent office publishes it, so that advances the state of the art. In exchange for that, you get a property right.

That's also not how the Constitution is written, though it is (unfortunately) how patent laws are written. But that's not a way to get people to spend "money and time innovating" because the actual innovators here -- Apple -- had to pay out to the guy who failed in innovating. Being "first" isn't innovating. Building the product someone wants is.

Either way, Apple will appeal this ruling (and those other rulings are likely to be appealed as well). And in the last few months, CAFC has actually been shown to have gotten the message about problems with its previous interpretation of patent law. But, in the meantime, we still need serious patent reform.

Filed Under: patent reform, patent trolls, patents
Companies: alice, apple, cls bank, intellectual ventures, samsung, smartflash, symantec

Intellectual Ventures Tries To Rewrite The Script, Pretends The Plan Was Always About Making Stuff, Not Trolling

from the that's-complete-bullshit dept

And, here we go again. Intellectual Ventures, the world's largest patent troll and a general tax on innovation, diverting over $6 billion away from actual innovators, has always been really stunningly good at getting the tech press to repeat questionable claims about its "real intentions" and how it's helping to "drive innovation." Every time the negative press catches up to IV's really nefarious practices, it comes up with a way to try to spin the story around again, like that time it tried to claim its real goal was to help everyone sort through good and bad patents.

But the true story has never changed. IV bought up tens of thousands of crappy patents from University tech transfer offices that were desperate to get those patents off their hands to show some kind of justification for having a tech transfer office in the first place (many universities set up tech transfer offices thinking they would make those universities rich off of licensing patents -- and the reality is that the vast majority of them have lost tons of money). We've even heard accusations that IV helped pioneer a really cheap tax scam, getting companies to "donate" patents to universities, claiming they were worth lots of money for the tax writeoff, and then IV would buy them up on the cheap.

But the only thing IV has really done is to bully lots of companies, getting some to pay hundreds of millions of dollars to avoid lawsuits, and then suing many more. The fact that it's lost a bunch of those lawsuits recently, and rulings like CLS Bank v. Alice, mean that the actual value of IV's patent portfolio is rapidly dwindling. And its power to force companies to pay up is dwindling as well. That's why it was recently desperate for new cash (hey, where did that $6 billion go?) and even had to lay off 20% of its staff. No one believes the spin IV gave for those layoffs: that they had learned how to be "more efficient" in evaluating patent quality.

But now IV appears to be testing out its new spin, claiming that it's really now going to focus on making things rather than suing and shaking down companies. The company claims that was always the plan, but it wasn't. I've spoken to people who got the early IV pitch. That was never a real part of the plan. But, IV now realizes that the trolling label has stuck to it, so it desperately wants to create some product (any product!) that it can point to, in order to drop the troll claim. Nathan Myhrvold's ridiculous story about stopping Malaria with lasers isn't fooling anyone anymore.

Here's Business Week on IV's "transformation":

Having earned billions in payouts from powerful technology companies, IV is setting out to build things on its own. Rather than keeping its IP under lock and key, the company is looking to see if its ideas can be turned into products and the basis for new companies. The first wave of products includes an ultra-efficient nuclear reactor, a waterless washing machine, self-healing concrete, and a giant squeegee for sucking up oil spills. One country has asked IV to help lower its temperature, and another wants it to create robots that can replace migrant workers.

As part of its transformation, IV fired 20 percent of its employees, about 140 people, most of whom were tied to its patent business, on Aug. 19. A new team busy turning ideas into products has raised millions of dollars to fund a flood of IV-backed startups. A network of 25,000 independent inventors submits ideas for review by IV and earns royalties when products based on their ideas reach market. Says Edward Jung, IV’s chief technology officer and co-founder, “We have built an engine that can solve big problems.”

And yet, there's no evidence that any "big problems" have been solved. None. IV has always had its labs, but those were basically just for show to convince gullible journalists that something was happening there. But the difference between an idea and a viable product is a huge gulf, and IV seems to pretend it's the same thing.

But, IV is pretending this has always been the plan. It's just spent the last decade plus not building products so that it could take the time to build an engine that could build products -- even if it hasn't yet.

As far as Jung is concerned, it’s Silicon Valley, not IV, that has lost the plot. A former child prodigy and chief architect at Microsoft, Jung argues that venture capitalists have become obsessed with trifles such as social and mobile apps, while large corporations have pared back their research and development budgets. “Everything has moved toward the short term,” he says. “The public markets have gotten so efficient, and they’re not pleased when a CEO says, ‘Hold on. Give me 10 years, and I’ll figure this out.’ ” IV, he says, has been taking the long-term view all along. First it had to amass a patent portfolio. Then it needed to learn how to mine it for great ideas. Now it’s time to put those ideas to the test. Critics who only saw IV as a giant IP collector misjudged the company, he says. It will soon be pumping out dozens of revolutionary products.

Except note, again, the overvaluation of ideas to execution. People who execute and build successful companies know that execution is the difficult part. The idea is important, but execution almost always changes the idea anyway. Ideas morph quite a bit when touched by reality. And the whole "long-term/short-term" story is a popular one. We hear people claim it every few months, but it's also bullshit. Anyone who's spent any time in Silicon Valley knows that there are tons of companies making huge long-term bets. Yes, there are short-term things as well, but the big world changing things quite frequently come out of those "trifles". And that's because real innovation comes from taking ideas and learning from the market and continuing to innovate.

It's only the myth of the "big idea changing the world" that leads to thinking like this. But that's not how innovation actually works.

Either way, Business Week seems to have been suckered in by the same "laboratory" that IV loves to show every visiting journalist:

It’s impossible to tell the story of Intellectual Ventures without a visit to its laboratory in Bellevue. Spread across five buildings in an industrial part of the Seattle suburb, the campus is the workplace for 170 scientists, 40 of them Ph.D.s. They have access to more than 8,000 pieces of scientific equipment, including mass spectrometers, lasers, particle sizers, and a hydraulic airplane wing bender. If the engineers need to weld metal or saw wood, they can do that in a giant machine shop. Scientists who work in the IV labs must come up with ideas, test them, and then either patent them or move on to the next thing. Soon the lab will relocate from this 50,000-square-foot setup to an 80,000-square-foot one.

Right, but what product have they made that is actually on the market? We'll wait. And wait.

Filed Under: nathan myhrvold, patent trolling, pr
Companies: intellectual ventures, iv

Patent Troll Intellectual Ventures Claims Its Layoffs Are Because It's Invented A New Way To Buy Patents

from the a-patent-in-spinning-the-press dept

Times are tough for a patent troll, apparently. A year ago, we noted that Intellectual Ventures -- the world's largest patent troll, who brought in billions of dollars by getting companies to pay up a shakedown fee to avoid lawsuits over its giant portfolio of patents (mostly cast off from universities who couldn't find any other buyers) -- was running out of cash. While IV did convince Microsoft and Sony to dump in some more cash, IV's litigation strategy is in shambles. Various lawsuits are dropping like flies without any of the big wins that IV promised.

Meanwhile, while its heavy lobbying may have helped to kill the latest attempts at patent reform, the Supreme Court's big ruling about software patents in Alice v. CLS Bank suggests that many of IV's patents just became worthless.

So it's little surprise at all that the company has just announced that it's laying off 20% of its staff -- likely about 140 employees. But, of course, IV's only real skill has been spinning the tech press into believing whatever bullshit story it's come up with to justify its innovation taxing operations. And thus, with these layoffs, it's right back into spin mode, presenting the most spectacularly ridiculous justification for the layoffs.

Does IV point to its litigation losses? Nope. Does it mention the Alice ruling? Hell no. How about the fact that many of its early backers have now turned into vicious opponents? Not at all. The fact that its in-house inventions have yet to lead to a single viable product on the market? Nope. The reason given? Apparently IV would like you to believe that it needed all those people to invent a new way to buy "ideas" in bulk and now that that's done, they're no longer needed. I'm honestly curious if IV's co-founder Edward Jung said the following out loud without laughing, or if it was just delivered to Bloomberg reporter Ashlee Vance in written form to avoid the risk of guffawing at the pure ridiculousness of it all:

Edward Jung, IV’s co-founder and chief technology officer, insists that the business is doing fine. It’s true, he says, that not as many companies bought into the patent funds as IV expected, but he says the company is happy with its returns.

The layoffs, according to Jung, represent part of the company’s evolution. IV was the first company to try to amass so many patents, and it had to hire hundreds of people to invent the processes for buying ideas in bulk. People were needed to sort through patents, acquire them covertly, think up complementary ideas, and deal with the associated paperwork. “We have more data than anybody and have analyzed it over the years,” Jung says. “Our analysis has allowed us to save a lot of needless paperwork and become more efficient. We don’t need as many people to sift through and sort information now.” Much of the work has been simplified and automated.

Nice story, but... it's rewriting history. As we've noted, IV just bought up giant patent portfolios in bulk from universities who had rushed to set up tech transfer offices in the wake of the Bayh-Dole Act in the 80s, expecting to get rich from "commercializing" all of the "inventions" that their faculty produced. The reality was that the vast majority of tech transfer offices lost money because none of the patents were worth anything by themselves, and no one wanted to buy them. IV stepped in at the perfect time, allowing tech transfer offices to save themselves the embarrassment of failing to make any money (and actually costing universities tons of money) by selling a boatload of useless patents in bulk, just so IV could run around claiming it held tens of thousands of patents, and demanding big tech companies pay up so that IV didn't have to sift through all those patents to find something (anything!) to sue over.

Filed Under: buying ideas, inventions, layoffs, patent troll
Companies: intellectual ventures

Intellectual Ventures Aims To Tax Wind Power Producers With New Batch Of Patents

from the because-patent-trollery-is-designed-to-tax-innovation dept

Wind Power Monthly (I had no idea such a thing existed) has an article about how Intellectual Ventures is apparently targeting its patent trollery towards wind power, having filed a bunch of patents on very broad and basic concepts related to wind power. Of course, IV is trying to hide its involvement here by using one of its many shell companies. For reasons that are beyond me, Wind Power Monthly declines to name the shell companies. It's not clear why it does this -- even withholding the name after it got IV to confirm that it's an IV shell. There seems to be no journalistic reason for withholding the name, but Wind Power Monthly still does it.

Asked about the IV holding company, a spokesperson confirmed its relationship and added: "Intellectual Ventures does file some patents invented during sessions held by its in-house invention group... under the holding company [name withheld] to help maintain its patent portfolio."

The report further warns that patent trolls appear to be on the lookout to buy up other broad, wind power-related patents on the cheap as this particular market is expanding.

Second or third-tier wind manufacturers may be most exposed to trolls, especially as wind patents are currently relatively cheap, as they are during any downturn. Such manufacturers are a worthwhile target financially, may not have a robust IP strategy, and are far more likely to settle rather than fight in court.

Of course, right now we should be helping to speed up the adoption of alternative energy sources like wind power, but these patent trolling activities do the exact opposite, they make it more expensive. Notice that the article doesn't talk about any of these methods actually advancing the pace of innovation in the field, mostly because they don't. These aren't companies with experience building or managing wind power systems. These aren't experiences learned in the field. They appear to be pure trolling techniques designed to put a toll on the companies actually innovating in the field.

Filed Under: innovation, patent trolls, patents, shell companies, toll booths, wind power
Companies: intellectual ventures

Looks Like Patent Trolls Have Won This Round As Even Weakened Patent Reform Likely To Die

from the history-repeats-itself dept

We suggested this was likely last month, but after two months of the Senate Judiciary Committee promising to move forward with its (increasingly weakened) patent reform bill, reports are that the bill is set to die thanks to patent trolls and patent lawyers ramping up their lobbying efforts. There has been some talk that Leahy may still bring forward a manager's amendment that has completely watered down the bill into being totally useless, but even that might not happen:

According to a tech industry source, Leahy has changed his position in part as a result of pressure from the Coalition for 21st Century Patent Reform, a lobbying group whose law firm Akin Gump recently hired Leahy’s long time chief-of-staff. The source added that Leahy is prepared to let the reform bill founder, and then draw political cover by casting blame for the failure on committee members’ inability to produce a suitable compromise. Meanwhile, the bill’s momentum has also been sputtering as a result of the trial lawyer bar pressuring other Senate Democrats to slow the bill.

This account of the Senate patent bill’s slow death is consistent with a source cited by Reuters, who said “It’s somewhere between sinking like a rock and air going out of it, like a balloon,” 

Oh, that revolving door. Helping patent trolls. Also, note that everything fell apart just as... Intellectual Ventures ramped up its political contributions. I'm sure that's just a coincidence, right?

And, of course, even if something does get squeezed out, much of the important stuff has already been wiped out of the bill. Late last year and earlier this year, most of our focus was on making sure that the covered business method provisions stayed in the bill, but we've been told they're long gone. This was the part of the bill that would allow the Patent Office to more quickly review business method and software patents to make sure they were legit. This already exists for certain financial patents, and it's been shown to be effective in tossing out bad patents. There is no reason to oppose this unless you have a bunch of bad patents... so of course, bad patent hoarders like Microsoft, IBM and Apple freaked out about it.

But even more basic ideas for stopping patent trolls are being stripped from the bill as well, according to Jeff Roberts over at GigaOm:

Staff members of the Senate Judiciary Committee, who did not want to be named, said by phone that the hold up is due to disagreements over two new points of contention: a provision that would require patent plaintiffs to provide detailed descriptions of alleged infringement in the pleadings they file, and one that would alter the legal process known as discovery (in which each side has to produce documents and witnesses). The latter reform is important because patent trolls rely on the economic asymmetries of patent litigation — especially the threat of discovery, which is extremely time-consuming and expensive — to force their victims into settlements.

These proposed pleading and discovery reforms have until now been uncontroversial.

If you've been following the patent reform space for more than a decade, you'd recognize this pattern. Back in 2004, Senator Leahy had introduced a semi-decent (not great, but not horrible) patent reform bill... and the trolls (and pharmaceutical companies) went apeshit over it, killing it. Every new session of Congress, a new version would be introduced that would be watered down to appease the pharmaceutical companies. Seven years later, the America Invents Act was finally passed... once it had been stripped of basically all useful provisions. It did absolutely nothing to deal with the problems of the patent system (and actually may have created a few new ones).

Unfortunately, it looks like we may have a few more years of this kind of crap, and no actual end in sight to patent trolling. It's pretty clear that companies that abuse the patent system are now abusing the political process to make sure they can extract more cash from those who are actually innovating. It's profitable to destroy our innovation economy, apparently, so why not spend it on buying politicians who won't stand up for what's right?

Filed Under: discovery, lobbying, patent reform, patent trolls, patents, patrick leahy, politics
Companies: intellectual ventures

Intellectual Ventures Big Case Shut Down By Judge Over Completely Bogus Patents

from the but-of-course dept

Late last fall, we highlighted some very questionable practices by Intellectual Ventures in suing a bunch of big banks for patent infringement. Our focus was on a particular patent, 6,182,894, which was initially assigned to American Express, and which claimed to cover the concept of CID or CVV codes (those little extra three numbers on the back of your credit card you're supposed to type in as an added security measure). American Express, perhaps realizing how ridiculous it would be to sue over such a patent "donated" it to a non-profit, the Consumer and Merchant Awareness Foundation ("CMAF"), who explicitly promised that it would only be used to encourage better credit card security, and that it would never use the patent "against issuers, acquirers, merchants or consumers related to activity in the retail financial services and payment areas." Of course, it took all of about two years before CMAF effectively sold the patent to Intellectual Ventures, and then disappeared as an entity. IV, apparently, felt that it was not bound by the original promises, and started suing basically everyone. Soon after our story appeared exposing this questionable activity, Intellectual Ventures suddenly decided to drop that particular patent from its lawsuit. Shocking.

However, it continued with a few other patents... but that all ended last week when a judge rejected the remaining patents as completely bogus:

... the Court concludes as a matter of law, based on a clear and convincing evidence, that neither the '137 nor the '382 patent contains patentable subject matter under Section 101.... Nothing in the Court's Claim Construction establishes patentability, since however the claim terms may be construed each patent consists of nothing more [than] the entry of data into a computer database, the breakdown and organization of that entered data according to some criteria, disclosed in the '137 patent, but not the '382 patent, and the transmission of information derived from that entered data to a computer user, all through the use of conventional computer components, such as a database and processors, operating in a conventional manner. There is no inventive technology or other inventive concept that authorizes the protections of a patent, such as an improvement in the workings of the computer or the transmissibility of data or some other transformation of data into something qualitatively beyond the informational content of the data entered, even though the data might be organized and manipulated to disclose useful correlations. Rather, these patents are "drawn to a mental process -- i.e., an abstract idea."...

The two patents in question, 8,083,137 and 7,603,382, describe some rather basic and obvious ideas that a couple of patent lawyers twisted around to make it appear like they were patentable. The '382 patent claims to patent offering up a custom webpage to a user based on their personal preferences. The '137 patent is about "administering financial accounts." In both cases, Joe Mullin in the link above notes that they appear to have really originated with patent lawyers. The '137 patent did come from an engineer, but it wasn't because of anything she invented. She was doing some retirement planning, and her patent lawyer husband thought that her ideas for tracking budgets could be patented. The '382 patent just came straight from a patent lawyer.

And, of course, what the judge was noting above, is that neither should have been granted as patents in the first place, because both just involved basic data processing that any software could do. Neither did anything even remotely inventive. And, of course, the fact that both originated with patent lawyers highlights just how bogus IV's constant refrain is about how it's protecting individual inventors. It's never been about individual inventors at all.

It's been about the lawsuits and the money.

Which is why it should be no surprise to read about IV's response to this complete loss:

[Our] patent portfolio is deep and we have another action pending against Capital One in Maryland. We remain committed to defending our intellectual property rights, as well as those of our customers and investors.

In other words, okay, if we didn't get you with the first batch of bogus patents, we have tens of thousands of other bogus patents, and sooner or later, some judge will either let us win, or these banks will fork over lots of cash to make us go away.

Filed Under: patent lawyers, patents
Companies: capitol one, intellectual ventures

Microsoft And Sony Double Down On Patent Trolling; Dump More Cash Into Intellectual Ventures

from the because-innovation-is-for-suckers dept

Last fall, we noted that the world's largest patent troll, Intellectual Ventures, was running out of cash, which is somewhat incredible, given that it had previously claimed to have raised $6 billion in investments (though many of its earliest deals with tech companies were categorized as "investments" when they were really promises not to sue, combined with access to the patent bank) and a further $3 billion in licenses. It should take a long time to spend $9 billion when your company produces nothing that has ever been brought to market, but that's IV for you. As we noted in that story last fall, many of the tech companies that initially "invested" in Intellectual Ventures had no interest at all in re-upping, as they felt that the whole thing had been a bait-and-switch. They were initially told it was a "patent defense fund," not a giant patent troll itself.

However, while many of the companies have indeed avoided giving IV any more money, it appears that Microsoft and Sony were quite happy to dump a lot more cash into IV, which has now ramped up its patent buying efforts again (as well as its lobbying and political contributions in an effort to kill off patent reform). Microsoft, of course, has always been close to IV, seeing as it was started by the company's former CTO, Nathan Myhrvold, who is also a close friend of Bill Gates (who has directly helped IV get some patents). Similarly, Microsoft has become one of the most aggressive patent abusers over the last decade, increasingly relying on its stock of patents to make money from other people's innovations, rather than innovating on its own.

It is similarly no wonder that the company somewhat famous for having nearly all of its major success based on copying the work of others, is now trying to stop anyone else from doing the same without paying a massive tax. There was a time when Bill Gates said:

"If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today... A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose."

And, now, via Intellectual Ventures and its own patent holdings, Microsoft seems to be trying to make sure Gates' prediction is a reality. It all fits in to the same paradigm we've observed for years. When you're young, you innovate. When you're old, you litigate. Microsoft appears to have given up on innovation, but is ramping up on litigation, and re-investing in patent trolling via Intellectual Ventures is merely the latest step.

Filed Under: innovation, patent trolling, patents
Companies: intellectual ventures, microsoft, sony