28 More Companies Sued Over Grouped Toolbars Patent

from the patent-hawk-greed dept

You may recall last summer that we wrote about Gary Odom (as known as Patent Hawk) who has been known to stop by our site here to throw around an insult or two (nice guy!). It seems that Odom, who had previously worked with Microsoft, doing prior art research for its patents, had decided to turn around and sue Microsoft for having software toolbars that take different toolbar items and group the items together (stunning innovation, there). It later turned out that he may have violated his contracts in suing Microsoft.

That case is still ongoing, but why stop with just suing one company? Especially when that company is big and has lots of lawyers. Why not sue 28 other companies over the same patent. Amusingly, when Joe Mullin from IP Law & Business called Odom to comment, Odom refused, saying: "You're a hack job, man." Always a pleasant guy, that Odom. However, Odom had no problem discussing at length the lawsuit on his own blog -- amusingly referring to himself in the third person, and (this is great) offering his own "expert" opinion on the validity of his own patents and lawsuit. Very credible.

While it seems quite likely that the patent in question (Tool group manipulations) is invalid following the Bilski decision, Odom brushes aside those concerns saying anyone suggesting that "[doesn't] know what they are talking about" and then offers his own interpretation of the Bilski ruling, which doesn't seem to mesh with what the ruling actually said, or how the courts and the USPTO have been interpreting the ruling. Still, let's give him the benefit of the doubt and assume he's right, and that the patent is still valid. So what does he want?

Well, from his post, it appears he wants these companies to shut up and hand over 25% of their profits, based on a rule of thumb from half a century ago. Think about this back here in reality for a second. He's asking for 25% of all profits on nearly 30 different software products, because those software products happen to have toolbar menus where the buttons are in editable groups. This is an obvious minor feature on a minor feature of a minor feature. And he thinks it's fair and equitable to get 25% of all profits. Update: In the comments, Odom clarifies, saying that he does't want 25% of the profits (though, his original post is woefully unclear on this subject), ut 25% of the value of the feature. Considering the additional value to these products of having groupable toolbars seems minimal, I'm guessing about $5 towards Odom should about cover it. Odom, in the way only he can, also leaves another insult for us. Nice guy!

People like to point out these days that pretty much any high tech product in some way or another violates tens to hundreds of patents, thanks to the happy rapidity with which the USPTO approves any old obvious idea. Imagine if each one got to demand 25% of all profits as a license? It doesn't take a math major to recognize how the assertion makes no sense.

Filed Under: gary odom, patents, software, toolbar
Companies: microsoft

Software Development Is A Scarce Good

from the development-costs... dept

Whenever we talk about business models and understanding the difference between infinite and scarce goods, someone almost always complains that things like music or software aren't infinite goods, because they "take resources to develop." But, of course, we've pointed out that's exactly the point. The development is a scarce good, and you can come up with plenty of business models to get paid for creating content. But getting paid to create content is different than getting paid over and over again for copies of that content. This seems a little tricky for some to understand, but: creating new content is a scarce good -- that content, once created, becomes an infinite good.

So, if you're looking at business models, there are plenty that recognize this and help get people paid for the creation of content, rather than for trying to distribute copies of that content. We've talked, for example, about programs like Jill Sobule's and Marillion's, where they basically get fans to agree to fund the creation of new albums, with additional benefits offered to those who do so. Now, Chris Gruel points us to an example where a community bands together to put up a bounty to get a certain software application developed, with the first person who does receiving the bounty. In many ways, this is similar to our own business model with the Insight Community, where we pay people to develop insightful content. It's great to see more examples of this business model in practice.

Filed Under: development, scarce goods, software

More Heavy Handed Actions By Microsoft Driving Companies To Open Source Software

from the piracy-is-the-least-of-their-problems dept

Some of the big proprietary software companies keep insisting that "piracy" is a big threat to their business (even if they quietly will admit that they actually benefit from piracy). After all, would a proprietary software company prefer that someone uses a competing product over using an unauthorized version of their software? In almost all cases, they'll prefer the unauthorized version, recognizing that it's much more likely to lead to future sales. So why do they keep taking actions that lead people to go to alternatives -- usually of the open source variety? The latest examples comes to us via Slashdot, which points out that in the spectacularly bankrupt country of Iceland, Microsoft has been pushing hard to get Microsoft resellers to pay up for licenses they sold to companies. The problem is that thousands of those underlying companies have gone bankrupt -- but Microsoft insists the resellers still need to pay. Their response has been to stop selling Microsoft products all together, and focus on open source alternatives instead. Perhaps it doesn't matter so much in a small, bankrupt country -- but these sorts of things have been happening elsewhere as well, and will quickly drive Microsoft customers right into the hands of competing products.

Filed Under: competition, iceland, piracy, software
Companies: microsoft

When You Treat Your Customers Like Criminals, Don't Be Surprised When They Go To Different Suppliers

from the a-simple-warning dept

An anonymous reader sent in the following story about how some large software companies are suddenly increasing the number of "software audits" they're doing of enterprise buyers. Most enterprise software contracts include license terms that allow the software provider to "audit" the buyer, to make sure they're not abusing the license. As the article notes, however, such audits usually only come at one of two times: (1) when a company threatens to switch to another vendor or (2) when the company has received info from a reliable source that the license was being abused.

However, it looks like with the economy in freefall -- and IT spending being cut back, some enterprise software companies might be thinking that another way to squeeze some money out of customers is to audit them and force a larger bill on them. Of course, this seems like a plan that could backfire in a big, big way. As noted in the article, being audited is not a pleasant experience at all. It's basically a vendor claiming that it thinks you're breaking your agreement. It's not the best way to build up a strong relationship of trust. Because of that, a sudden increase in totally unexpected and uncalled for audits may seriously damage a company's reputation and drive them to proactively look for alternatives from companies who trust them. Treating your customers like criminals is never a good idea...

Filed Under: audits, criminals, customers, software
Companies: emc

Valve Exec Explains How To Compete With Piracy

from the service,-value,-pricing dept

Last month, an exec at Valve Software noted that "Pirates are underserved customers" and said when someone realizes that, they also discover: "I can do some interesting things and make some interesting money off of it." It looks like the company is sharing some data to back that up now as well. A whole bunch of you have been sending in reports from Gabe Newell's keynote speech at DICE. Newell is the founder and managing director of Valve, and he provided plenty of reasons that show that "piracy" is not the issue at all: service, value and pricing can easily trump piracy.

He started out by pointing out something that we've discussed in the past: digital content is best viewed as a service, not a product. As a service, you focus on providing continual value -- and people are paying for that future value (which is a scarce good prior to delivery), rather than an infinite good already created. There's value in paying for that future (scarce) service, and it trumps paying for an abundantly available good.

From there, he noted that the reason "piracy" is doing so well is that the "pirates are ahead not just on price, but on service." In fact, he noted that since DRM decreases the service value for customers, it also tends to increase piracy, rather than decrease it.

Then, he showed how that combination of service and smarter pricing allowed the company to run experiments and make a lot more money -- competing quite successfully against piracy. The most stunning example: last weekend, the company ran an experiment with the game Left 4 Dead. It heavily discounted the price, and sales shot up 3,000%. And this wasn't just a case of building off a small base. The sales over the weekend were more than when the game launched.

In fact, it looks like a big part of the problem facing the industry is that they charge way too much for their products. Here are the numbers Newell shared from Valve's experiments with "sale" pricing:

• 10% off = 35% increase in sales (real dollars, not units shipped)
• 25% off = 245% increase in sales
• 50% off = 320% increase in sales
• 75% off = 1470% increase in sales

Newell then says when they decrease the price by 75%, they are making 15% more than when they were charging at full price -- though, I'm not sure how that math works out from what's stated above (I've been playing around with the numbers, and something is missing...).

Between all of this, it's pretty clear, yet again, that "piracy" is hardly the issue. If you provide a valuable ongoing service at a much more reasonable price, there's no problem at all. Once again proving that the issue is a business model issue, rather than a legal issue. It's too bad so few old school content providers are willing to recognize this, and quite troubling that some folks in our government are still missing this as well. It's going to lead to bad laws and even worse enforcement of the law.

Filed Under: gabe newell, games, left 4 dead, pc games, piracy, pricing, service, software, video games
Companies: valve

Software Industry Slams Digital Britain Report For Protecting Music Industry Interests

from the and-not-software-industry-interests-as-well dept

At first, this sounded like a good thing: a software industry group slammed the Digital Britain report that came out recently for basically caving to recording industry interests, noting that it was just that industry using its lobbying power to try to prop up a failed business model. Indeed! Except... then you look at the details and it's not as impressive. The software group is the Federation Against Software Theft and Investors in Software (FAST IiS), which should already have you scratching your head... and then the details show that basically they're not upset about propping up a failed business model, they just wish it also propped up their own failed business model:

"All digital content is equal before the law and so too should be all digital industries. A piecemeal approach will confuse digital consumers, both the public and businesses, will muddy the legal framework and will therefore ultimately impede Britain's success in the new digital economy of the twenty-first century."

Yes, it's awful that the plan basically tries to prop up one industry -- but why should it need to prop up two industries with failed business models?

Filed Under: digital britain, music, protectionism, software, uk

Techdirt Still Doesn't Have To Pay Out Up To $1 Million Since The BSA Hasn't Paid Out Either

from the up-to-trickery dept

The BSA sure does love to use bogus numbers. Usually, it's with its stats on "piracy" that are so ridiculously misleading it's amazing that the press reports them as fact so often. However, it also gets away with a silly gimmick where it promises to pay out "up to $1 million" for snitching on your employer for using pirated software. Except, of course, the fine print reveals that the "up to" part is really important. Basically, the BSA gets to decide how much it pays out -- and you can bet that it's not anywhere close to $1 million. In fact, in response to the BSA's program, we promised to pay out up to $1 million to anyone who could prove the BSA paid any individual $1 million. It looks like we're safe again. In 2008, the BSA paid out -- in total -- $136,000 to 42 different people, making an average of $3,200. The BSA is now pitching that as a way to make some extra money in a down economy -- though, I would imagine that losing your job after tipping off the BSA might create a bit more hardship than $3k covers.

Filed Under: bogus numbers, piracy, software

Anti-Driving-While-Yakking Tech Made Even Better By Adding Big Brother Insurance

from the two-for-one-special-on-things-you-don't-need-or-want dept

Researchers from the University of Utah -- home of our favorite ban-yakking-while-driving research center -- have come up with a new device they say can stop teens from using their phones while driving (via Phone Scoop). The device envelops a car key, and releasing the key to operate the car activates a radio in the device, which the researchers say forces the driver's phone into "driving mode," which only allows calls to 911 and pre-approved numbers, such as the driver's parents. Like earlier, similar ideas, there are a few bugbears: we're unaware of any phone that features such a mode, and it's unclear exactly why it's okay to be distracted by a phone call to one's parents while driving, but not by calls to other people. Singling out teens, when plenty of adults talk on their phones while driving, doesn't seem totally right, but never fear: the company commercializing the technology wants to hook up with insurance companies to use the device as a tool for Big Brother-style surveillance insurance that collects all sorts of data about drivers' behavior, then using the data to calculate insurance rates. While some insurance companies have shown interest in the anti-chatting technology, consumers have shown zero interest in Big Brother insurance, likely relegating this latest idea to the dustbin.

Filed Under: driving while yakking, insurance, software

Can You Guilt Someone Into Not Pirating Software?

from the probably-worth-a-shot dept

A bunch of folks have been submitting this story about USB Overdrive X's response to anyone who uses a pirated key to use their software. Basically, the company allows you to go ahead, but tells you (in a very human voice) that it knows it's a pirated code, and you should be ashamed of yourself: It's definitely a much better strategy than annoying plenty of users (even legit ones) or threatening to sue or anything. And, I have no doubt that it's probably even effective on the margins among a few folks who appreciate being treated at least somewhat as a human, rather than a criminal. But, the company is still going to face this issue long term, and it seems like a better solution is to figure out business models that don't view such sharing as piracy, but a way to further extend a business.

Filed Under: guilty, piracy, shame, software

Chinese Developer Gets Three Years In Jail For Making IM Software Better

from the improvements-not-allowed dept

Almost exactly a year ago, we wrote about the case of a developer in China who had created an add-on for the super popular QQ instant messaging software used in China. The add-on, called Coral QQ, made the software work better, by getting rid of some of the annoying features of QQ and adding some additional features as well. For making the software better, the guy got charged with copyright infringement. This didn't make much sense. The guy wasn't copying anything. You still needed the original program in order to use Coral QQ. Coral QQ was just an add on that worked on top of regular QQ. Yet, now a court has sentenced the guy to three years in jail, all for making a software product better. It's difficult to see how this encourages anyone to ever make products better. If anything, it guarantees that bad products get less competition.

Filed Under: china, copyright, coral qq, jail time, qq, software