Clear & Concise Explanation Of The Problem With Patents

from the more-voices dept

More and more people are adding their voices to the growing consensus around the massive harm that the patent system is doing to innovation within the tech industry. PC World's Katherine Noyes has a great article that lays out a clear argument for why the patent system is making things worse for consumers. Here's just a snippet, though the whole thing is worth reading:

5. Innovation Is Being Squelched

Software innovation depends heavily on the exchange and iterative development of new ideas, but such exchange is precisely what software patents are designed to prevent. Numerous patents have been granted that are excessively broad, too, making it virtually impossible to develop original software without fear of infringing.

6. Small Companies Are Being Shut Out

For all of the above reasons, you could be the most brilliant and creative software developer ever, but if you don't have pockets deep enough to pay hefty licensing fees and start a patent war chest of your own the way Google is being forced to do, you are simply out of luck. End of story.

7. Consumers Pay the Price

Small businesses suffer as a result, but ultimately the even bigger loser--as always--is the consumer. Under this system, control of ideas is falling into the hands of the companies that are big, fat and unable to innovate, simply because they have the money and no other easy way to earn more. That, in turn, means the little guys--the innovative ones--can't bring to market the next big thing that could change consumers' lives, at least not without a heavily inflated price.

It's nice to see that more and more people are making it clear that this isn't just some "fringe" opinion, but such feelings are extremely common among folks throughout the tech industry -- supposedly the people patents are supposed to protect most. When those people hate and/or fear the patent system, clearly something's wrong. So why is Congress' only move to make the system worse?

Filed Under: patent reform, patents

Google, Microsoft, Patents... And How To Dupe The Press With Out Of Context Statements

from the context-matters dept

We already wrote about Google's more aggressive statements on the problems of the patent system. Unfortunately, in the last day or so, it appears that Microsoft was able to hijack the conversation, using what appear to be out of context statements, which the press and some bloggers are lapping up and repeating. After the initial blog post, Microsoft's General Counsel Brad Smith tweeted:

Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no.

Soon after this, Microsoft's communications chief mockingly tweeted:

Free advice for David Drummond – next time check with Kent Walker before you blog. :)

Drummond, Google's chief legal officer wrote the blog post. Kent Walker is Google's General Counsel. Shaw also posted a photo of an email, which read as follows:

Brad –

Sorry for the delay in getting back to you — I came down with a 24-hour bug on the way back from San Antonio. After talking with people here, it sounds as though for various reasons a joint bid wouldn’t be advisable for us on this one. But I appreciate your flagging it, and we’re open to discussing other similar opportunities in the future.

I hope the rest of your travels go well, and I look forward to seeing you again soon.

– Kent

This was from October 28, 2010, and was in regards to the Novell patent purchase (not the recent Nortel patent purchase, though some seem to be missing that).

Not surprisingly, when presented in this fashion, some bloggers and the press are claiming that this is tremendously embarrassing for Google. TechCrunch had a post that, which, according to the URL, may have originally been titled "Microsoft Just Kicked Google in The Nuts," but whose final title was only slightly more tame: Google Threw A Punch, Microsoft Fires Back With A Missile. PC World said Google Shows How Not to Complain. Plenty of others talked about just how "embarrassing" this was for Google.

I will agree that those who only looked at the points Microsoft tossed out, without looking at the larger context, might say that this is embarrassing -- and Google potentially should have preempted such a response. But, come on. Anyone who's paying attention knows that Google could not team up with Microsoft to buy patents. Think of how quickly the Justice Department would be all over that. They'd never let it happen, and the top lawyers at both firms know this -- as should any reporters writing about this story.

Google has now updated its blog post in response, noting how this is a cheap attempt at playing false "gotcha!" games, and also pointing out why (beyond the antitrust issue) Microsoft's "offer" was disingenuous:

If you think about it, it's obvious why we turned down Microsoft’s offer. Microsoft's objective has been to keep from Google and Android device-makers any patents that might be used to defend against their attacks. A joint acquisition of the Novell patents that gave all parties a license would have eliminated any protection these patents could offer to Android against attacks from Microsoft and its bidding partners. Making sure that we would be unable to assert these patents to defend Android — and having us pay for the privilege — must have seemed like an ingenious strategy to them. We didn't fall for it.

Tragically, Microsoft's response is now distracting from the key important point: just how damaging patents have become to the entire industry... including to Microsoft. The decision by Smith and Shaw to score cheap quick points with the press, at the expense of improving the patent system, may have felt good at the time, but it's going to come back and bite them. There is a real opportunity to fix the patent system in the near future, and Microsoft, which used to be interested in such things, appears to be backing away from it, while also ramping up its own patent threats and lawsuits. Once again, I'm reminded of the old saying that "those who can, innovate; those who can't, litigate." Microsoft is getting closer and closer to moving entirely into the latter category. And for a company that just spent a lot of time and money losing a major patent lawsuit, you would think it would know better than to derail one of the few opportunities to push for real fixes to the system.

Filed Under: journalism, patent reform, patents, software patents
Companies: google, microsoft

The Story Of Patent Reform: How Lobbyists & Congress Works... And How The Public & Innovation Get Screwed

from the sad dept

We've noted how there's suddenly been a lot of mainstream interest in the massive problems of the patent system, thanks in part to mainstream media operations like This American Life doing stories that expose just how damaging the patent system is today. And yet, despite all of this, we've been pointing out for a while that the patent reform bill making its way through Congress is useless. It does nothing to address the problems of the system and has a few things that will make matters worse. And it bizarrely includes clear favors to Wall St., protecting them from a few bad patents, while leaving everyone else -- including Silicon Valley -- to fend for themselves.

So why isn't Congress actually fixing the patent system?

Zach Carter over at the Huffington Post has an absolutely fantastic detailed look at the politics and corruption behind the patent reform bill. It's long, but worth reading. However, the tl;dr version is: patent reform is entirely about lobbyists and special interests. No one -- and I do mean no one -- appears to have any concern whatsoever for the actual impact of the patent system or patent reform on actual innovation. The story is about as depressing as you would imagine, but is a great primer on the nature of regulatory capture and how certain industries influence regulations, while the actual public and the people most impacted by the legislation is left out. Here's just a snippet:

DataTreasury's lawsuits are handled by Texas trial-law kingpins Nix, Patterson & Roach. In the 2010 elections, the firm was the third-largest contributor to the Democratic National Committee, pouring in $179,000, behind only Google and the Law Offices of Peter G. Angelos, according to the Center for Responsive Politics. When Republican lawmakers bemoan "Democrats and trial lawyers," they're talking about Nix Patterson and a handful of other big law firms.

Nix Patterson brought in an even bigger fundraising champion to lobby Democrats for DataTreasury: Ben Barnes. He and his wife Melanie have dumped $379,000 of their own money into politics over the years, according to Center for Responsive Politics data, with every penny going to Democrats. Barnes is also one of the most influential fundraising bundlers in politics. In the first half of 2009 alone, he pulled together $630,450 for the Democratic Congressional Campaign Committee -- more than anyone else, according to the Sunlight Foundation.

Barnes is not a man congressional Democrats keep waiting. And he's previously worked directly with Pelosi, who attended a fundraiser at Barnes' Austin home in 2009. Pelosi's office did not respond to inquiries on her meetings with the fundraising giant, but when asked by HuffPost whether he had won over Pelosi on Section 18, Barnes said that he had.

"Oh, yeah," Barnes told HuffPost. "For some time I've worked with DataTreasury that has the patent all the banks are worked up about."

By revolting on the patent bill, Pelosi was throwing in her lot with Reps. Maxine Waters (D-Calif.), Dan Boren (D-Okla.), Aaron Schock (R-Ill.) and Jim Sensenbrenner (R-Wis.), who circulated a letter on June 15 urging their colleagues to oppose Section 18, saying the language "carves out a special niche" for Wall Street that would "stifle innovation."

This odd bipartisan coalition was going up against the entire New York delegation, led by Rep. Joseph Crowley (D-N.Y.), chairman of the corporate-friendly New Democrat caucus, who declined to comment for this story. As the behind-the-scenes struggle intensified, DataTreasury promoted the idea that Section 18 was a covert bailout for the banks. If courts ruled that the new law amounted to an unconstitutional taking of property -- a very big 'if' -- then taxpayers would ultimately have to pay back the bank winnings resulting from the bill.

Nobody comes out of this story looking good. Everyone comes out of it looking corrupt. And all of us suffer. Though a few lawyers are making out like bandits.

Filed Under: congress, corruption, lobbyists, patent reform, patents

Did Congressional Debate Over Patent Reform Bill Open Up A Backdoor For An Independent Inventor Defense?

from the follow-me dept

I have to admit that I had almost entirely checked out on the House debate this week on patent reform. I've been writing about Congressional attempts at patent reform for nearly a decade now and, from the very first attempt onward, the proposals had serious problems -- and each year the bill would get more and more watered down, removing what few good pieces were in there, until we got the bill this year, which had little of substance. As we noted when the Senate approved it, the bill was pretty useless in that it didn't address any of the actual problems with the patent system. There was a flurry of activity this week as various Reps sought to make changes to the bill (and I've never been contacted by so many press reps or Congressional staffers wishing to get publicity for their boss's amendment than this week), but nearly all of those proposals failed.

The House has now approved its version of the bill and I can only imagine that it will be signed into law pretty quickly -- leading to all sorts of talk about how this is the first "overhaul" to patent law in almost sixty years, and blah blah blah. The truth is that there's very little in this bill that does much of anything. The people complaining about how it will destroy small businesses are being hyperbolic. The most controversial bit of the bill was the debate over switching from a "first to invent" system, as we have now, to a "first to file" system -- which most of the rest of the world has. I explained my opposition to this switch more than seven years ago, and my reasoning still stands: a first to file system encourages filing more patents faster with less effort to make sure the patents are good and accurate, which isn't good for an already overwhelmed patent system. That said, the actual impact of the change might not really be that big, as so many firms already file pretty quickly and given how rare it has been to have someone challenge a patent by claiming they had invented it first and deserved the patent. There are much bigger problems with the patent system (and this bill addresses pretty much none of them).

That said, there was one element of the Congressional debate on this clause that caught my eye. In order to avoid angry ranting about a "first to file" system, supporters of the bill conveniently changed the language to make it a "first inventor to file," rather than strictly a "first to file." They claimed that this helps avoid the "Constitutional" question. You see, supporters of keeping the system as "first to invent" have claimed that a "first to file" system is unconstitutional, because the Constitution's clause that allows a patent system to exist, famously reads:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries

Those who are claiming "first to file" is unconstitutional point out that the clause specifically says that you can only secure such rights to inventors, so if a non-inventor files first, then that violates this part of the constitution. Frankly, that seems like a stretch (and if taken literally, might call into question whether anyone but authors and inventors could hold copyrights or patents. That said, those in support of the "first inventor to file" setup made some interesting statements:

Rep. Jerrold Nadler (D-NY) said the bill still requires patent seekers to be inventors, and argued that the Constitution is not explicit on how Congress must ensure patent rights. Rep. Bob Goodlatte (R-Va.) agreed.

"This is first inventor to file," Goodlatte said. "You must be a bona fide inventor to qualify for this." Both Nadler and Goodlatte are on the Judiciary Committee.

Now that gets pretty interesting. Because, in the past, we've suggested that what the patent system really needs is an independent invention defense -- such that those who come up with things entirely independently of the patent in question are not guilty of infringement. One of the main arguments against that idea, when we've brought it up, is that there's "no such thing" as an independent invention, since once something's invented, anyone else coming up with the same thing is no longer the inventor. That is, they were defining inventor by being only the very first person to come up with it.

Now, I don't believe this is true. I think many people can invent the same things entirely independently, and history seems to support that conjecture. One of my major problems with the patent system is that, despite the claim that it's supposed to help inventors, it actually harms every single other inventor, except the one who gets the patent. That seems incredibly anti-inventor to me. If, as is common, you have a bunch of different folks working on a particular innovation, and all of them come up with more or less the same solution, why should only one get the monopoly? That directly harms everyone else by taking away their right to use their own invention!

So, now, however, we have Congress pretty clearly stating that multiple people can invent the same thing entirely independently. While not in the law, it is in the Congressional record. If we then look at the plain text of the Constitution, it makes me wonder if someone could craft a legal argument that the patent system, as is, now violates the rights of those independent inventors by excluding them from the right to make use of their own discoveries...

Filed Under: independent invention, patent reform, patents

Congress Happy To Knock Out Patents That Impact Financial Institutions... But Everyone Else?

from the funny-how-that-works dept

For about five years now, we've been discussing the ridiculous rise of "tax strategy" patents. There have been a bunch of them. Three years ago, an attempt was made by Congress to effectively dump such patents. It didn't go anywhere. What I hadn't realized is that this particular provision has made its way back into Congress in the current patent bill, and it seems likely that such tax strategy patents will effectively be killed off as well as one famous patent on digitally scanning checks that the big banks have been trying to get Congress to dump for years.

Make no mistake about it: these are ridiculous patents that have no business existing. So I'm happy that they'd be ditched, but I'm troubled by the fact that Congress seems to see no problem carving out such patents when they hurt financial institutions, but doesn't do it in other cases. Senator Schumer, who is a major backer of this, highlighted the check scanning situation specifically in supporting the bill: "This is a case where one company has made a cottage industry out of extracting legal settlements by exploiting a fuzzy part of the law on patents." But couldn't this be said about pretty much all patent trolling? So why isn't Congress dealing with that?

Again, it's a good thing that Congress recognizes that there are bad patents, but it seems to only cherry pick the bad patents that harm the financial sector. In fact, when people bring up all the bad software and business method patents, all you hear is how it would be "impossible" to reasonably carve those out of the patent system. Yet, for some reason, they seem to have no problem doing that when it comes to Wall Street and other financial institutions?

Separately, highlighting just how ridiculous this is, it appears that this carve out of tax prep patents has a separate negative carve out that says it won't apply to tax prep software patents. Think of it as the Intuit exception. Basically, you can't patent tax preparation strategies anymore, because that hurts big financial institutions... but you can patent tax prep software, because that helps Intuit.

Instead of creating special carve outs in the patent system for big special interests with massive lobbying budgets, how about if Congress actually did its job and fixed a broken patent system to get rid of all bad patents?

Filed Under: check scanning, chuck schumer, financial institutions, patent reform, patents, tax preparation strategies
Companies: datatreasury

Contract Dispute Reveals That Intellectual Ventures Paid Consultant To Get Unions To Fight Patent Reform

from the well-look-at-that dept

It's often interesting what turns up in lawsuits. A few years ago, in the middle of yet another political fight over patent reform, lots of people were surprised when all the major unions suddenly stepped up as being against patent reform. As we pointed out at the time, their arguments made no sense at all. Of course, also notable at the time was the fact that frequent Techdirt commenter and "all patents are perfect" supporter Ronald J. Riley claimed credit for getting the unions to come out against patent reform. This left us scratching our heads a bit, but perhaps it was true.

Turns out there was a lot more going on behind the scenes, and it wasn't Riley's tortured logic after all, but giant patent hoarder Intellectual Ventures throwing its weight (and cash) around. Joe Mullin points us to a blog post from the "Gametime IP" blog, which discusses a lawsuit filed against Intellectual Ventures by Pat Choate, who worked for Intellectual Ventures on a contractual basis -- and who also was on the "advisory board" of one of Riley's many "organizations." The full filing is embedded below.

Choate had written a book all about how lovely and wonderful the patent system is, and so Intellectual Ventures started chatting with him. Eventually, they asked him to head a project to stop patent reform, with part of the strategy being: get unions to oppose patent reform. As part of this, Choate was to be paid $30,000 a month. They also asked him to try to keep Intellectual Venture's involvement in derailing patent reform quiet, since top investors in IV, such as Bill Gates, supported patent reform.

The filing reveals that Choate took part in Congressional briefings organized by Intellectual Ventures, though it's unclear if those he met with knew whose payroll he was on. However, a big part of the strategy, dubbed "Plan B," was for Choate to use his influence with unions to have them oppose patent reform, even though the current patent system hurts the American economy and makes us less competitive (thereby hurting unions):

As agreed by Choate and Harter, Choate's role was to devise strategy and tactics, perform analysis, serve as an expert witness, and educate opponents of the legislation about its nuances. Because of Choate's long-standing relationship with organized labor, Harter and Choate agreed that a primary focus of Choate's efforts on behalf of Plan B was to work with organized labor to educate union leadership about the legislation and its harmful impact on job creation, and to facilitate union opposition against it.

That was in May of 2007. The union announcement was in August of 2007. So, basically, IV paid this consultant $30,000 a month to get unions (who really should know better) to oppose patent reform, and he succeeded. The dispute, by the way, is because Choate claims that IV promised to pay him for two more years at one point, and after Congress watered down the Patent Reform Act to make it less than worthless, IV changed its position and began supporting the current bill (as if you needed any more evidence that the Patent Reform Act won't improve the system...). Choate wants all the money he believes is owed to him. I'm indifferent on the actual dispute, but interesting to see a bit of the cigar chomping backroom dealings come out in the sunlight.

Filed Under: patent reform, unions
Companies: intellectual ventures

No Surprise: Senate Approves Useless Patent Reform

from the moving-on dept

This is hardly a surprise, but the Senate has overwhelmingly approved Senator Leahy's "patent reform" bill. It's no surprise, because after many years of attempts to approve patent reform, the bill has been so watered down (from an already weak start) to be not just meaningless, but likely to do more harm than good. Basically, one by one, each aspect of patent reform that might actually help were removed from the bill. What's left is not patent reform. It's a minor patent adjustment, designed to serve the best interests of those who abuse the system. Of course, there's still no House patent reform bill, though it'll be coming soon. There are some indications that there will be some differences between the House and Senate versions, but there are no indications that the House bill will actually have anything useful in it. If this law does pass, it won't actually be patent reform. It'll just be a minor change to the patent system, including a switch to a "first to file" system, rather than a "first to invent." While it's true that most of the world uses first to file, all that really does is encourage people to file faster, rather than to actually innovate. This is not the patent reform we need. This is a joke.

Filed Under: first to file, first to invent, patent reform, patents, senate

Could Patent Reform Actually Pass This Year?

from the doubtful,-but... dept

Every year for nearly a decade, we hear the same thing each January about how this is the year that "patent reform" will finally pass. And every year it goes nowhere. Then the following January, it comes back, and the proposal is slightly worse than it was the year before (and it was never that good to begin with). The problem, of course, is that we're dealing with a huge number of professions and industries who have grown up around the idea that they absolutely need and/or deserve government monopoly protectionism, even if the actual evidence suggest the system does a lot more harm than good. But, no politician is willing to actually step up and make the changes that are actually necessary to encourage greater rates of innovation. So, instead we get useless proposals that won't actually make the system better at all. For years, the proposals were such that the tech industry were okay with them, but the pharma industry was against them. More recently, the bill's been watered down so much that things have flip-flopped, with the tech industry no longer liking the proposal, and pharma being more open to it.

The latest is that the Senate Judiciary committee has approved some amendments to try to make everyone happy -- including Senator Schumer's surprise amendment that would allow for a pilot program to look at eliminating business method patents. It's nice to see that at least has a chance of moving forward, but the entire bill just seems to have so many bad or just watered-down ideas in it, that it's unlikely to matter much one way or the other. It's certainly not patent reform that fixes any of the real problems with the patent system.

Filed Under: patent reform, patents

Leahy Brings Back Patent Reform Act That Doesn't Actually Fix Any Of The Patent System's Problems

from the here-we-go-again dept

As was expected, Patrick Leahy has announced plans to reintroduce patent reform legislation next week. You can read the full text of the bill (pdf), but it looks pretty similar to what was attempted last year. More or less every year for a while now, Congress has tried to pass patent reform legislation. It comes out in January, with claims from those supporting it that this will be the year where it finally gets approved, and every year it dies. It's also worth noting that every year it's watered down more and more in that attempt to get it approved. It was a bad bill to begin with years back, and gets worse each year. It will do almost nothing to mitigate the actual problems of the patent system, and could do a few things to make them worse. It seems like a waste of time to even go through the motions on this again, knowing that it's likely to end up with the same fate as each failed attempt before.

Filed Under: patent reform, patents, patrick leahy

Senators Make One Last Push For Bad Patent Reform That Will Make Problems Even Worse

from the let-it-die dept

It looks like the same fate may be facing the latest attempt at patent reform that has befallen each and every previous attempt this decade: it will die out without ever being voted on. We had noted that this bill appeared to be stalled out earlier this year, and now the Senators behind it have been reduced to begging for a floor vote on the bill, which seems unlikely at this point. Of course, each year that patent reform gets introduced, it gets more and more watered down, making it worse and worse. Every patent reform bill introduced this decade has been bad -- and would likely make the system worse -- but at least there were a few good ideas included in some of them. Tragically, in the latest bill, even the few good ideas were removed. This is definitely a case where having the bill die out would be a good thing, though I'm sure the next round of reform proposals will probably be even worse (of course). At this point, there are just too many entrenched interests who have been exploiting the system (and, no, we're not talking about the standard "trolls" here -- as their political pull isn't that strong) for too long to get any serious reform going. Instead, we'll just watch as the problems of the existing system get worse and worse, hindering innovation, and ceding the US's ability to compete on a global stage. It's pretty sad to see this in action, but that's what you get in a world where regulatory capture is the norm, and government granted monopolies are not seen as economically dangerous.

Filed Under: patent reform, patents