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Lawmakers Debate Patent Immunity For Banks
I Don't Believe in Imaginary Property writes "Now that a small Texas company has a patent on scanning and archiving checks — something every bank does — that has survived a USPTO challenge, lawmakers feel they have to do something about it. Rather than reform patent law, they seem to think it wiser to protect the banks from having to pay billions in royalties by using eminent domain to buy the patent for an estimated $1 billion in taxpayer money, immunizing the banks. The bill is sponsored by Sen. Jeff Sessions (R-AL)."
Can't really say more than that, unfortunately.
Problem is, in this case it might be required as such a distinction in law might not exist.
They can cashier the USPTO Commissioner, appoint a new one, and order a comprehensive review.
A billion dollars. Talk about misuse of taxpayer funds.
I mean, it's not like substantive patent reform -- in particular reform that as a side effect fixes this specific case -- is something they can exactly toss together before the term is up. And now that pretty much everyone realizes our economy is treading water before a recession, keeping the banks up seems like a good idea. I mean if we're going to be spending billions in tax payer money to keep banks afloat after the subprime mortgage fiasco, this doesn't seem like that big a deal.
Sometimes a band aid is better than a hastily planned and thus ill-conceived surgery.
The enemies of Democracy are
If you consider that pretty much all money in existence today is backed solely by debt, is anyone really surprised?
Why does anyone entertain the idea that the banks need to be bailed out? I would be inclined to let the economy finally crumble, and rebuild it. Sure, it'll suck, but we'll be better off because of it, if we fix it the right way.
Our legal system reminds me of when you write a huge undocumented, uncommented program in C and have other people do additions and debugging.
Weaksauce as they say...
WTF?
Patents are supposed to benefit the common good. That's their only purpose. Now that they recognize one case (in many) where patents are crippling productivity, harming the economy, and working against the common good, they do nothing to address the problem of people abusing the patent system. Instead, they take more money from the people, harming the common good further, in order to bail out banks.
That is completely absurd.
The US government has consistently demonstrated innovation in this area. I think the ideal course of action would be to bomb the headquarters of the patent troll company. End of bank cheque problem. End of patent troll problem. Zero litigation.
-1 not first post
I saw equipment at Recognition Equipment Inc. in 1982 or 1983 ago that did exactly that--scan checks and store the images. How can they have issued a patent on this.
So in effect, the banks are stealing technology, asking Congress to litigate their loses, and now this Senator is front-man for a huge expenditure of _our_ money to bail them out?
Something is amiss here, because I'm still paying for my checks. Let the banks and their huge reservoir of money pay for their technologies. With interest.
I don't care one bit if the banks invested so much of their capital into inflated mortgage loans. That's their problem for not making _sound_ investments. They freaking have _economists_ working in those high-rise offices.
If I understand correctly, Ballard claims to have developed these techniques and methods in the mid-90's, at a time when physical transfer of checks was required - federal law would not have allowed those methods at that time.
Then, the world turned upside-down - and his invention became a necessity.
DataTreasury has negotiated licencing with some financial institutions, but there are others that seem to feel that they shouldn't have to pay and aren't afraid to try to make the US taxpayer pay instead.
While it may be possible to characterise DataTreasury as a "patent troll" by some readings of the term, Ballard appears to be the first to have come up with and documented those methods and techniques and that's been upheld by the USPTO. DataTreasury claims to have attempted to sell the patent-protected system to the banks, who went ahead and ran with their own implementations. Isn't the patent system supposed to be about providing a limited-term monopoly for those who come up with ideas, whether it's an idea for a better mousetrap or a method of performing financial transfers? Isn't it possible that the banks are trying to use their sheer size and influence to avoid paying for something that they really ought to?
Charge people for depositing their money.
it is only after a long journey that you know the strength of the horse.
... and it's not pretty.
Giving a patent holder a billion dollars to buy their patent will encourage patent trolls to come out in force. The government's giving away billions here, why not give it a go? You can patent something obvious, sue the banks and donate to the political parties. Soon enough someone will buy you out, and you get to retire a very wealthy person!
Sure, it may not work out so easily, but what's to stop anyone from trying?
While I despise patent trolls, if you read the article this guy had a business with 150 people developing and selling this technology. SOME not all banks ripped him off, several of the large banks did license the technology. Others just ripped him off. To stay in business in 2001 he had to lay most of his people off, and sell most of the company.
Now after a proper legal vetting the banks that just ripped him off are crying and asking the government to save them. Piss on them. They knew exactly what they were doing. This is not a submarine patent. What about the companies that did play the license fee?
What will the guy who actually developed this get? 2% of the money, less all the legal fees. Just remember, it could have been yhou that developed this.
Great. Whatever happened to the party of the free market?
When Democrats spend tax dollars propping up "unsuccessful" citizens its called welfare-state communism.
When Republicans spend tax dollars propping up "unsuccessful" corporations its called...what exactly?
The patent system may be knackered but the answer isn't this absurd gesture of government largesse.
IBM owns the bank check processing business (I did check payment programming for four years and have a 3lb MICR reader decorating my metallic file cabinet to prove it). I'm pretty sure IBM has a patent that covers this. If an IBM patent won't cover it then check with NCR (Bought by AT&T then released into the wild again as NCR).
That being said,
I believe what has been patented here is the method to process checks directly just like a debit card (Those little merchant machines that scan and process your check directly and/or the debit payment inserted into the network from a check by phone payment). Unlike a check which travels through the FED/ACH system, this transaction goes through the debit network (STAR, PULSE, HONOR) etc. There is no FLOAT time for the purchaser.
This claim isn't exactly a software patent, and its sort of unique. Its not revolutionary (more like evolutionary) the banking industry shouldn't pay a dime for it (neither should congress).
If I could find my notebook from 1995/1996 I could show prior art from designing a system to accept payments via users check routing/account info directly into the debit network via a web browser. And no, my design wasn't secure. Note that with this claim (I have no proof without the notebook) and a dime will still equal a dime.
My two cents,
Enjoy.
It's just the normal noises in here.
And that includes 1-click, etc. BofA has a patent on "Keep the Change," an admittedly clever idea,
and so Wachovia has to opt for the less user-friendly: take a dollar on every transaction. (Actually,
they could presumably go for the "X% of the transaction value")
Were that I say, pancakes?
and looked at the re-exam history, and looked to see if there is any obvious payola going into the good senator's pockets, I have to support the earlier conclusion.
That is just fucking retarded.
Seriously retarded. A billion taxpayer dollars on the line after the banks have spent, by my estimate, around 30k. I guess it's cheaper to send a teenage male hooker to the senate chambers than to fight this thing. More seriously, there are good reasons to fight this thing in court. Write your senator. Here's a few points:
KSR v. Teleflex modified the definition of obvious. Making the banks fight will pull in that case law.
eBay v. MercExchange will make it harder for the patent holder to enjoin the banks from scanning and transmitting check data. so, there's no real danger of banking being shut down as the case is tried.
It's doubtful that this technology saves the banks a billion dollars. They can always turn to low tech fax machines if they don't want to ship pallets of checks. You can fax an awful lot of checks for a billion dollars.
If the senate wants to pass a law, pass one that legalizes something else that the banks can do without infringement.
The banks can easily afford a billion dollars. Bankers award themselves more than that each year as annual bonuses. Furthermore, it gives the banks a legitimate excuse (for a change) to raise fees. The reason will only last a year or two and after that they can use the money to fund reelection campaigns.
I am a lawyer, but not yours. Anything I tell you might be a total lie intended to benefit my clients at your expense.
But patents are not property. The patent holders have no natural law right to their patents as they have to their land, their personal effects, their machines, etc. A patent is a limited monopoly granted by the state for the public good. In this sense, there literally is no such thing as intellectual property.
In come the regulators. They say, "You can loan the money back out, but you have to keep 10% of it on hand." So you get your $10 in deposits and loan out $9 to another person. He spends the $9 and it trickles back to you. Of that $9, you can loan out another $8.10. Eventually, you asymptotically approach zero dollars loaned out (and you've loaned out $100 for your original 10). At the end of it all, you have a balance sheet that looks like this:
Assets: $100 (Loans: People owe you $100, so that's an asset.)
Liabilities: $90 (Savings accounts: *You* owe your depositors $100, which they could choose to withdraw at any time.)
Equity: $10 (You're holding $10 in a drawer somewhere.)
Here's where your thought experiment goes wrong: Let's say people decide not to pay $50 worth of loans back to you. Where are you now?
Assets: $50 (Loans: People owe you $100, but you'll only ever see $50 of it.)
Liabilities: $90 (Savings accounts: *You* owe your depositors $100, which they could choose to withdraw at any time.)
Equity: $-40 (You're in some serious shit if people decide to pull their money out. Your business is worthless now.)
In the real world, odds are good that your depositors aren't going to eat it because the government will bail them out, but you can bet that you're going to get shut down. You see, the banks didn't "create" the money so much as they borrowed it. Even if borrowers don't pay back their debt to the banks, you can bet that demand deposit account holders are going to want the banks to pay them back. This is why the banking industry is regulated. It's a huge leverage machine. There's nothing wrong with that in general, but it's inherently risky. That's why there's all manner of risk pooling and rules about what banks can and can't do with the money they control.
The real world, obviously, is more complicated, but this is a rough illustration of the money multiplier effect. In the US, normal banks don't "create" money as much as they multiply it. For every $1 that the Fed creates, banks multiply the effect in the real economy. It's not any sort of a trick. It's just how the system works.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"
I'm going to be classy and reply to myself here... I was fixated enough on the grandparent's common misunderstanding of how money multiplication works that I forgot to address a more fundamental point: My example above doesn't really illustrated what happened with the mortgage crisis accurately. It's an illustration of what happens to banks when people don't pay back the "fake" money that they loaned out.
In the case above, the bank got shut down and the FDIC member banks lost out because they had to cover the demand deposits for a failed bank. In the case of the mortgage crisis, the loans weren't paying back into savings accounts. The debt was owned by investors all over the place (check your 401k). Anybody who bought a mortgage backed security lost some value on this one, and there's no FDIC to step in to pay you back. The issue here is the same, though: Somebody paid some money to buy some debt and then the debt became worthless. In the first example, the bank and the bank's insurer got screwed. In the second case, some insurers got screwed along with anybody holding the debt. No matter how you slice it, this mortgage crisis thing is going to hurt a lot of people. It does, however, have the nice side effect of me being able to afford a house and say "I told you so" to people who advised me to buy one when the market was clearly dangerously screwed up. I just feel like a bad guy for enjoying it so much.
An interesting anagram of "BANACH TARSKI" is "BANACH TARSKI BANACH TARSKI"