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)."

Comments

Well, now...

[Anonymous Coward]

...that's just fucking retarded.

Can't really say more than that, unfortunately.

Or, instead of feeding the patent troll

[FireballX301]

They can cashier the USPTO Commissioner, appoint a new one, and order a comprehensive review.

A billion dollars. Talk about misuse of taxpayer funds.

Heh...

[TheSpengo]

Our legal system reminds me of when you write a huge undocumented, uncommented program in C and have other people do additions and debugging.

Re:Heh...

[dgatwood]

You're kidding, right? No, our legal code is almost entirely like an entire operating system written in undocumented Perl.

• There are no hints as to what any part of it is supposed to do and it is written in a language that to most people looks like line noise.
• Every significant patch is applied by adding an additional Perl module that overrides an existing method in an existing module, replacing all of the code in that method with a complete new copy of the method that is almost identical to the old one but adds or removes a backslash in a single regular expression.
• The entire core logic was written in a crunch session by a bunch of geeks locked in a room together and forced to design it by committee.
• The application was a rewrite of another application that never really worked well in the first place.
• Every function name is chosen explicitly to provoke an emotional response in the developer, e.g. thisFunctionSucks() or callMeNow().

You've got to be kidding

[nine-times]

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.

I Dont Get It...

[vajrabum]

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.

Re:Well can't say I blame em.

[TubeSteak]

FTFA:

The banks allege that DataTreasury bought up patents for the system that underlies electronic transfers and is trying to shake down companies for licensing fees. But DataTreasury asserts that Ballard is the inventor of the system and built a company to sell it before being squashed by banks that stole his idea. Court battles have raged between the two sides for six years.
...
He said he talked to some bank officials at an early stage of the check system's development and, despite having signed nondisclosure agreements with them, soon lost control over his invention. It sounds like maybe the banks got themselves into this mess and perhaps deserve what is coming to them.

Not to mention that Senator Session's explanation sounds a bit dishonest:
"in the wake of the grounding of aircraft laden with billions of dollars in checks after the Sept. 11, 2001, attacks -- federal law was changed to allow electronic transfers as well."

"Stephen Boyd, a spokesman for Sessions, said the provision "is designed to protect banking institutions complying with post-9/11 security requirements from the abusive practices of patent trolling trial lawyers"

Which is it?
Were electronic transfers allowed by the Feds or required by post 9/11 security requirements?
This whole thing reeks of corporate asshattery.

If you RTFA you would see

[WillRobinson]

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.

Re:Bank Patent #3

[Copid]

So, if i understand correctly, they haven't LOST a trillion dollars, so much as they won't be PAID a trillion dollars-- but the reciprocal part of the loan (the "money" they loan) was invented. Someone with an econ degree plz explain to me haha..

Not exactly. Let's take a look at this and pretend that there's only one big bank to keep things simple: you. You get $10. Some nice guy comes out and borrows $10 from you. He spends it at 10 different retailers, each of whom deposits a dollar with one of your branches. You've traded $10 in money for $10 in assets (the debt the first guy owes you), and now you have an "additional" $10 that has been put back in your bank. Absent any regulation, you can loan that $10 out again. The problem, of course, is that you won't have that money to give to your depositors if they come and ask for it, and additionally, it also has the minor side effect of allowing you to create an infinite amount of money. Not good.

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.

Re:Is anyone really surprised by this?

[Copid]

You'll see stock prices are random. Study after study proves it. It's not a mystery but there isn't a formula either.

On the whole, there are a lot of meaningful patterns that we would do well to note. Shiller's graph of P/E ratios vs long term yield in Irrational Exuberance is pretty illustrative that there are fundamental rules governing trends and that the efficient market hypothesis is wishful thinking. Short term prices may be a random walk, but that's about as far as I'd go.

You'll see that cutting tax rates leads to increased Gov't revenues by growing the economy. (Don't give me the crap about Reagan, he spent it and then some but it busted the Soviet Union..not a bad use of the money).

Let's see the data. Seriously. I've seen a lot of people attempt to see the Laffer curve in the data (my favorite being this train wreck of reasoning, but as far as I can tell, they're not doing much better than the people who are attempting to see Jesus in their toast.

You can't blame long term problems on groups who haven't been in control of the process.

I don't remember seeing a lot of vetoes of profligate spending under Republican presidencies when Democrats ran congress, and for the brief period when they ran both, I can't say that they were an example of fiscal restraint. Face it: Politicians have strong incentives to borrow and spend.

You'll see a failure to increase a program budget by the proposed X% is called a "cut". If your boss didn't give you that 10% raise did your salary go down?

If inflation is greater than 10%, yes it did.