Tech Giants Pooling Cash To Buy Patents

theodp writes with a link to a Reuters report, based on a WSJ story, that "Verizon, Google, Cisco, and HP are among the companies that have joined a secretive group called the Allied Security Trust. Each of the companies will reportedly put $5 million in escrow to allow AST to snap up intellectual property on their behalf before it falls into the hands of parties that could use it against them. Patents will be resold after AST member companies have granted themselves a nonexclusive license to the underlying technology. According to AST CEO Brian Hinman, a former VP of IP and Licensing at IBM, the arrangement will keep member companies out of antitrust trouble." (The WSJ's story itself is more detailed, but it's subscriber-only.)

Comments

Offensive or defensive?

[adpsimpson]

If this is to be used for defensive measures, it's another sign of how badly broken the US patent system is - and how expensive that brokenness is to big businesses.

If it's to be used for offensive measures, then it's another sign of how badly broken the US patent system is - and how expensive that brokenness is to small businesses.

Re:Offensive or defensive?

[Anonymous Coward]

It looks pretty defensive. Since they are selling the patent after granting themselves a license, it looks like they are just trying to avoid patent lawsuits on the cheap.

Re:Offensive or defensive?

[dintech]

Offensiveness and defensiveness both fall in to the 'interests' catagory so expect it to be used for both of these as necessary.

Where it gets interesting is what happens if two members are in despute about a single patent. Could this trust be used to arbitrate between them or come to some solution outside of the courtroom? Are the patents open to everybody with the organisation then?

I think it could be a very interesting deal, for those on the inside that is.

Re:Offensive or defensive?

[Ngarrang]

The patents owners won't HAVE to sell, but if someone came to your door with a wheelbarrow full of money, you might be tempted to say "Sure, here it is." But, now that the 'secretive' group has been exposed, they are no longer, um, a secret. Yes? No?

Re:Offensive or defensive?

[Devout_IPUite]

Either way, there's a serious need for patent reform. Unfortunately, that's a standard democrat white bread (lawyers, yum) and the republicans veered off of of their small government market freedom in favor of big business pandering years ago... So I can't imagine either party trying to fix this right now.

Re:Offensive or defensive?

[Yvanhoe]

You still do business in US ? I thought there were only law and military firms there anymore ? And HQ of companies who make their business abroad.

Re:Offensive or defensive?

[BlackCobra43]

Does it even matter? I personnally wouldn't care if the dumptruck-full-of-cash has a logo on it or not.

Re:Offensive or defensive?

[sumdumass]

I don't understand why either party would want to fix it. On the surface, a free market doesn't preclude companies from holding patents or unlimited licenses. It doesn't really even preclude them from creating a company to give that to the before reselling the patents. Outside the fact that a patent will be used, were is the problem in a "free" market?

Re:Offensive or defensive?

[stjobe]

That's because you, like so many others today, have no principles.

Re:Offensive or defensive?

[xigxag]

It may be meant as a defensive measure, but its result is offensive, and anticompetitive.

The problem isn't that big businesses have to pay to keep themselves out of trouble. The problem is, what if this works as intended? Then ultimately, it will lower the relative risks of the member tech giants. So relatively speaking, every other small and medium business will have to pay a risk tax that does not exist for these large companies. Basically, AST will drive your mom & pop shop out of business, not through better products, but by unleveling the playing field, making it too risky for you to compete. Which will hobble the engine of American competitiveness, and in the long run, damage its place in the world economy. Not that Verizon et al. will care because they can always relocate to Europe or China if need be.

Re:Offensive or defensive?

[fictionpuss]

Because if you file for a patent, the absolute last thing you care about is money?

Re:Offensive or defensive?

[billcopc]

On the surface, a free market doesn't preclude companies from dropping missiles on their competitors' buildings.

Sure, you get sued. Sure, a bunch of your staff is going to rot in court for a few years, maybe even in jail, but HEY! you destroyed the competition, the spoils of war are yours!

The concept of the free market is, quite possibly, the most damaging device to the U.S. economy - worse than the wars on drugs/terror, worse than pulling half of your leaders from the smallest gene pool in the northern hemisphere. The free market, in its purest, philosophical form, means money conquers all, and by extension, corporations conquer all, since they have way more money than all the people in your town put together.

If nobody cares to fix that soon enough, there won't be any presidents or senators anymore, there will be CEOs and board members explicitly deciding your fate, based on profitability projections.

Re:Offensive or defensive?

[Attila Dimedici]

The problem is that between the courts and the patent office it has become possible to patent things like "a system to move large numbers of people between two places" when you invent the passenger train and then sue an airline for infringement. (I know that this particular patent isn't possible, but there exist patents that have been enforced that are similarly general).
The problem with the patent system as it now exists is the ability to patent "business processes" and software.

Re:Offensive or defensive?

[stjobe]

No, of course not. But a principled person might take exception with where the money comes from ("has a logo on it or not") or what accepting the money might entail for the future development of both you, your company, your market, the economy and your society as a whole.

Re:Offensive or defensive?

[jimmydevice]

That bares repeating.

Re:Offensive or defensive?

[JesseMcDonald]

On the surface, a free market doesn't preclude companies from holding patents or unlimited licenses.

Sure it does. There are no patents -- or copyrights -- in a free market. In a free market anyone can do whatever they wish with their own property, insofar as such use is compatible with the same freedom for others. Patent and copyright infringement do not impact the ability of others to use their property as they wish, and as such are meaningless concepts in a free market.

Re:Offensive or defensive?

[Migraineman]

Unfortunately, the "principled man" often doesn't stay in business, because the "principled" decisions don't jive with First Sale Doctrine. You listening to me, Dad?

Yes, The Dad went out of business because he refused to sell his products to people who might use them in ways he didn't like. There was always this uncomfortable pause between where he'd ask what the end use was and the customer declining to answer. That usually was immediately followed by the customer saying "no thanks" because they wouldn't enter into a sale contract that had strings attached. Funny, I wouldn't buy a car that could only be started if I justified the trip to someone else.

You can stand on your political soapbox all you like. Expect your customers to find a way around the obstruction you present. You are motivating them to do so. At the end of the day, all you've done is devalue your patent to the point of worthlessness.

Re:Offensive or defensive?

[kabocox]

The patents owners won't HAVE to sell, but if someone came to your door with a wheelbarrow full of money, you might be tempted to say "Sure, here it is." But, now that the 'secretive' group has been exposed, they are no longer, um, a secret. Yes? No?

Um, that's sort of like saying the publishers clearing house prize van and the Price is Right have been exposed for giving out money/prizes. Actually having inventors know that this is a group of not one company, but most of the heavy hitters in the industry may convince most to try selling their idea there instead of to on of those purely offensive patent companies. At least if you sold your patent here, you'd know that your idea is more likely to be used by the big boys.

Re:Offensive or defensive?

[BlackCobra43]

Principles rarely translate to profits. Besides, nobody is forcing these companies to relinquish their patents. I'm merely stating that the buyer will rarely, if ever, have an impact on the transaction. The amount paid will likely be the deciding factor - hence why this tactical pooling of ressources is a shrewd business move.

Re:Offensive or defensive?

[Miamicanes]

> The problem isn't that big businesses have to pay to keep themselves out of trouble.
> The problem is, what if this works as intended? Then ultimately, it will lower the relative risks
> of the member tech giants. So relatively speaking, every other small and medium business will have
> to pay a risk tax that does not exist for these large companies.

In other words, they're re-inventing ASCAP in a different industry. They'll offer to let those small companies join, for an extortionate annual fee, then eventually start suing everyone IT/Telcom-related who's not a member on the presumption that they couldn't possibly be doing business without infringing on SOMETHING the group owns. Then AT&T, Microsoft, Dell, and Sony will start another company with similar, but non-overlapping, patent portfolio, and metaphorically become BMG... and hit those same small companies up for a SECOND, equally-extortionate, annual fee.

Re:Offensive or defensive?

[stjobe]

I'm not talking about first-sale doctrine. I agree that when I've sold I've nothing to do with what happens with the product/patent/whatever.

I'm talking about maybe not selling to whomever just because they have the money ("We reserve the right to refuse service") on account of that I believe selling to that person/company/entity would be detrimental to my best interests (and not only to my bottom-line).

Now, the buyer might get the same thing ("find a way around the obstruction") somewhere else, but at least I've stuck to my principles and acted according to my beliefs.

I guess it's hard to agree with this if you don't have any principles though. Or if they're worth less than a "dumptruck-full-of-cash".

That is what worries me. That Dad was forced out of business by competitors with no principles, no scruples and a couldn't-care-less attitude about anything else than the bottom line. That is what's driving this country down the road of corporatism. That is why you get corporate-sponsored laws and politicians, and that is why the rights of the individual is eroding in favor of the right of the corporate owners to make a profit.

Oh. Sorry for the rant. I'll step off the soapbox now.

Re:Offensive or defensive?

[gregbot9000]

The same thing could be said about mass production and buying in bulk. Big business can do a lot of things cheaper than smaller business.
Price is a value, some of the biggest fortunes have been made by people who discovered how to make things cheaper. Sam Walden and Henry Ford come to mind. Reducing price is a legitimate tactic.
Besides, any price reduction is not only a gain to consumers which vastly out weighs any damage to M&P stores, but also forces M&P stores to change production or close adding more to the economy by removing dead weight.
Of course it would still be best if they just fixed the patent system.

Re:Offensive or defensive?

[Migraineman]

First-sale is relevant. As a business owner, I'm not obligated to sell anything to anyone ... but that's not much of a business. When I do sell something, the purchaser may take his item out into the parking lot and smash it to bits if he likes. I may not like it, but it's his prerogative to do so. If he returns to my shop and asks to purchase another item, fully intending to smash it to bits, I can:
. a) refuse to sell, as I don't like his behavior
. b) sell in spite of my personal dislike

There has to be a certain amount of disassociation between seller and buyer for transactions to occur. It'd be a nightmare otherwise. How would you handle restrictive oversight in the case of resale? loss? gift giving? I view it very much like freedom of speech - I may vehemently object to what you're saying, but I respect your right to say it. And the above is the "small business" example. In larger businesses, officers of the company have a fiduciary obligation to act in the best interest of the company. That means putting your personal opinion aside during the evaluation of contracts, sales, and acquisitions. If you're a publicly traded company, the personal disassociation is even more important. Declining an acquisition offer on the basis of "it's bad for our core values" is perfectly valid. Declining because "I can't stand Company X" will get you in a heap of trouble.

As for The Dad, he didn't get forced out of business by competitors with no scruples. I'll try to give the executive summary -
. The Dad flew to Foreign Country (FC) to demo some hi-tech equipment.
. After the demo, FC refused to let him leave unless he abandoned the demo equipment
. He abandoned the equipment after being threatened with improsonment
. FC reverse engineered the demo equipment
. The State Department got involved, ultimately telling The Dad to "drop it," as FC is a favored nation

Many years later, The Dad was offered an acquisition deal. It was good money with a reputable firm. The Dad tried to slide in a clause that would prohibit the company from doing business with FC. Directly or indirectly. Ever. That was the deal breaker.

The Dad stood by his principles. He sleeps fine at night. The business is gone. It could have been a tremendous thing had the acquisition gone through. Another company stepped up and filled the void. To my knowledge, the acquiring company doesn't do much business internationally, to this day. FC still got what it wanted, in spite of The Dad's principled stand. His actions were completely irrelevant, except to us. The only damage he inflicted was to his own family. FC didn't bat an eye.

Re:Offensive or defensive?

[stjobe]

Yeah, I understand what you're saying. I just don't like it.

Jokes aside, in my book Dad did the right thing. His actions were completely relevant in that he tried to do the right thing, not just simply the thing that made most financial sense. I applaud the Dad and wish more were like him.

Anyway, I guess I'm objecting more on a philosophical and/or ethical level than on a practical level. I've owned a small company and been an officer of a couple of others, so I know the drill - and you're right of course in your description of how it works.

I do think that if people stood up more for their principles (such as they might be) we'd have a healthier society as a whole, and perhaps even a healthier economy.

But on the other hand that might require a revolution.

Re:Offensive or defensive?

[sumdumass]

I think maybe you are a little confused. You don't have property without a patent or copyright when it deals with something that is considered property because of a patent or copyright. In other words, it wouldn't be their property.

But a free market is expected to follow a the laws regardless, it doesn't matter if the property is some tangible object that you can hold in your hand or a patent or copyright protecting an idea. You can and do often have a free market even though aspects of the market aren't free. A classic example of this is raw materials were only one person or entitle has control over the distribution of one raw material. In the case of patents, the patent becomes a raw material and is no different then if all the silicon suitable for making computer chips was found in California and California silica was the only company selling it.

Re:Offensive or defensive?

[sumdumass]

On the surface, a free market doesn't preclude companies from dropping missiles on their competitors' buildings.

Sure, you get sued. Sure, a bunch of your staff is going to rot in court for a few years, maybe even in jail, but HEY! you destroyed the competition, the spoils of war are yours!

On the surface, a close or controlled market doesn't preclude that either. Nothing would be different without a free market. A free market doesn't preempt a company from obaying an existing law or even the concept of a law. And nothing change when going from no free market to a free market. I'm not really sure why you would have even brought that up.

The misconcept of the free market is, quite possibly, the most damaging device to the U.S. economy - worse than the wars on drugs/terror, worse than pulling half of your leaders from the smallest gene pool in the northern hemisphere.

There, I fixed that for you. There is nothing wrong with the free market. In fact, you can't claim it has done damage because for the most part, we have enjoyed a free market since the beginning of the country.

The free market, in its purest, philosophical form, means money conquers all, and by extension, corporations conquer all, since they have way more money than all the people in your town put together.

When has anything dreamed about on paper made it to reality in it's purest form on the real world? And to that note, I'm not entirely sure that you understand the concept of free markets. In a free market, you and I could go into business and compete with the evil corporation. All regulations do is raise the barrier to doing so because now you and I have to join together in order to get over the hurdles imposed by regulation. In fact, regulation prevents competition which is a key benefit to the people and in essence protects the corporations in that they no longer have to provide products at competitive prices.

If nobody cares to fix that soon enough, there won't be any presidents or senators anymore, there will be CEOs and board members explicitly deciding your fate, based on profitability projections.

There is nothing they can produce that will preclude your government. All you have to do is simply not purchase their products. When people have done that in mass, any power you think companies will have will simply vanish altogether. The problem for you is that more people have their head screwed on in different directions then you do and it isn't near as bad to them as you might think.

Re:Offensive or defensive?

[JesseMcDonald]

I think it is you who are a bit confused. You are describing the general concept of a "market economy", not a free market. In particular:

But a free market is expected to follow a [sic] the laws regardless

If that were true even a pure command economy could be considered a free market, subject to laws which dictate the time, place, and form of every transaction, rendering the term "free market" completely meaningless. The existance of a free market implies a very specific system of laws, which are part of the definition. These laws are all specific cases of the Non-Aggression Principle: an action is permitted if and only if everyone whose use of their property, including themselves, is impacted by the action consents to it voluntarily. Any law which redefines what property is, or bestows additional "property rights", or imposes conditions or limitations on the enforcement of property rights -- any law which is not a subset of the N.A.P. -- is incompatible with a free market.

Re:Offensive or defensive?

[Reziac]

You have to wonder what percent of the cost of consumer goods is due to patents. With newer medicines, it can be 99% of the cost (tho one could argue that at least there it usually has something to do with recouping research costs). What about other stuff?? How much money do patent trolls and squatters cost us in our everyday lives??

I think I'd rather have big business buying them up and exempting themselves (thus NOT incurring ongoing licensing costs that we consumers would eventually pay for) than have them in the hands of numerous small patent trolls all itching for a lawsuit.

Still, as someone above says, that this scheme is necessary at all speaks to how broken the system has become.

Re:Offensive or defensive?

[sumdumass]

I think your attempting to confuse unrelated laws with market laws and rules. Laws like not killing someone, rules like possession baring any formal contract is proof of ownership and so on. You have laws and rules created by necessity and so on that regulate dispute outside a market which could in fact effect a market. These rules aren't considered detrimental to free markets. Why, because they are dispute resolution and formal limits to everyone's actions. When something is a limitation artificially imposed or not, if it effects everyone equally and offerers no advantage inside or outside the market, it can still be a free market.

Now the idea of property implies an ownership of something. A patent is an official recognition of that ownership. With out them, you won't have property in the same sense of with them which is what I was responding to. I could simply not agree that it is your property and use your technology else wise. If you implement a different system of controlling or determining ownership, you are not removing a patent, you are simply calling it something else. Therefore, there is no hindrance.

I can agree that changes should be made, but the system effects everyone equally as it is now.

Re:Offensive or defensive?

[harlows_monkeys]

If it is used for defensive measures, it is a sign of the patent system working as intended. Someone invents something and gets a patent. Others who are interested in practicing that invention obtain permission from the inventor. In this case, they do so by acquiring the patent for money.

Re:Offensive or defensive?

[Migraineman]

Honestly, I don't like it either. The Dad is an upstanding guy, though his personal prejudices will occasionally color his decisions. I've watched him walk away from a number of questionable deals involving a briefcase full of cash. That takes guts. I respect him because he's earned my respect. And I agree that we'd have a better society if people would stand behind their principles and put ethical behavior before the fast cash-grab.

Re:Offensive or defensive?

[Devout_IPUite]

Free markets are about competition and rewards. Rewarding someone for making up stupid patents and trolling on them isn't really what free markets are about, that's supposed to be the dark side of regulation (a la democrat lawyers). Free market says that you can compete, (software) patents block competition. Or at least that's how I've interpreted the philosophy of free markets and the reality of (software) patents. So republicans in the interest in unfettered markets should be against (software) patents IMO.

Re:Offensive or defensive?

[JesseMcDonald]

Where are you getting this bizarre definition of "free market"? It's certainly not one of the standard meanings, e.g. "A free market is a market in which prices of goods and services are arranged completely by the mutual consent of sellers and buyers. By definition, in a free market environment buyers and sellers do not coerce or mislead each other nor are they coerced by a third party" (Source). Perhaps you should invent your own term to describe this concept you've invented rather than co-opting an existing phrase.

Now the idea of property implies an ownership of something. A patent is an official recognition of that ownership.... If you implement a different system of controlling or determining ownership, you are not removing a patent, you are simply calling it something else.

We are obviously not talking about the same things here. When I say "patent" I mean the kind issued by the USPO, a time-limited monopoly over the use of a particular process, method or design, not official recognition of property ownership in general. The traditional free-market definition of property does not include monopolies over processes, methods, or designs, and is thus not simply a patent by another name.

Re:Offensive or defensive?

[Xtravar]

Ah, but you've overlooked one vital detail. Google does no evil.

Re:Offensive or defensive?

[Anonymous Coward]

Argh. You're missing that a free market in physical property is undermined by patents. It would technically be possible to have a free market of patent monopolies themselves, sure, but NOT at the same time as a free market in physical goods. For the vast, vast majority of humanity, the latter is almost infinitely preferable. Patent monopolies destroy the free market in everything but patent monoplies themselves.

Imaginary property and physical property are INCOMPATIBLE, as shown by e.g. Stephan Kinsella.
 

Re:Offensive or defensive?

[Machtyn]

Somewhat joking... "mental note: always build in a kill switch on demo products that can be activated remotely... preferably from another country."

Re:Offensive or defensive?

[sumdumass]

Where are you getting this bizarre definition of "free market"? It's certainly not one of the standard meanings, e.g. "A free market is a market in which prices of goods and services are arranged completely by the mutual consent of sellers and buyers. By definition, in a free market environment buyers and sellers do not coerce or mislead each other nor are they coerced by a third party" (Source). Perhaps you should invent your own term to describe this concept you've invented rather than co-opting an existing phrase.

Open your mind and close your typeing finger for a minute. There are natural laws like gravity. Free markets cannot ignore that. Just the same there are other laws like ownership of property as well as not killing people. Free markets cannot ignore that either. Now, when a market is free, it isn't totally unrestricted, it has to play by the same rules that you an I will have to play with. Now when you or I can thing of a device, and own not only the device we created but the concept of creating it, and this applies to anyone in a market or not, then my definition plays full well withing the free market. What you don't seem to like is the fact that a concept can become property under certain circumstances. It is no different then having one mine pulling one type of ore out of the ground. The free market has to freely decide to use that ore or not. Similarly, if something becoming property for a limited amount of time is availible, it has no effect on a free market.

We are obviously not talking about the same things here. When I say "patent" I mean the kind issued by the USPO, a time-limited monopoly over the use of a particular process, method or design, not official recognition of property ownership in general. The traditional free-market definition of property does not include monopolies over processes, methods, or designs, and is thus not simply a patent by another name.

Wrong, the traditional free market doesn't care about ownership or a patent which is a recognition of ownership. The patent holder owns the rights to the patent. The free market isn't just between companies and citizens which I think is where you point of confusion might be. When a raw material or process is owned by someone other then the manufacturer, then that manufacturer becomes a consumer and so on. If they can't agree on a price, the consumer goes without meaning you as the consumer will have to go somewhere else. But don't get held up on the definition of a consumer. Any company will become a consumer when they need to find something they can't already product. There might actually be 20 or more in a chain before a final product gets to you. The free market is actually 100's or 1000's or more smaller free markets lumped together. When a manufacturer wants to use a specific process or specific raw material, it has to agree on a price or walk away. Not coming to an agreement doesn't make the market not free, other might be interested in the product at higher prices.

Re:Offensive or defensive?

[sumdumass]

Free markets are about competition and rewards. Rewarding someone for making up stupid patents and trolling on them isn't really what free markets are about, that's supposed to be the dark side of regulation (a la democrat lawyers). Free market says that you can compete, (software) patents block competition. Or at least that's how I've interpreted the philosophy of free markets and the reality of (software) patents. So republicans in the interest in unfettered markets should be against (software) patents IMO.

Are you suggesting that in a free market, I can take your product, clone it to be as identical as possible and then sell it to others under my name? And if that product happens to be software, I can just copy it and resell it?

There are natural limits to someone competing in a market. Knowhow is one of them. It might be very well that I don't have one programmer who could have made your product without looking at your code. That would limit my participation into a market. It doesn't make that market less free though. In fact, if someone wanting to use a patented item in their product, they negotiate the price with them. The lawyers are only there for when someone refuses to participate and takes the patent without a right to it. That isn't as bad as your attempting to make it out to be.

So tell me, what would you do to change patents and copyright?

Re:Offensive or defensive?

[Kwesadilo]

Although one of its secrets (its existence) has been exposed, it will still tend toward secrecy by keeping its other secrets secret. Or maybe the only secret it's keeping is that it isn't very good at being secretive.

Re:Offensive or defensive?

[Lost Race]

Not that Verizon et al. will care because they can always relocate to Europe or China if need be.

???

How the heck can Verizon relocate to Europe or China? They have immense investment in immobile physical infrastructure. Moving headquarters out of the country doesn't protect the parts of the business still operating in the US.

Re:Offensive or defensive?

[Red Flayer]

It's correct to say that patents and copyrights do not exist in a free market.

True. But who says that a purely free market is the best market?

Trade secrets would replace patents... great. So now we either waste resources reverse-engineering, or we lose knowledge when people die unexpectedly. And we have fewer resources allocated to design and devlopment. Wonderful.

Patents are useful things, it's a shame they have been so royally screwed up.

Re:Offensive or defensive?

[Anonymous Coward]

In other words, they're re-inventing ASCAP in a different industry. They'll offer to let those small companies join, for an extortionate annual fee, then eventually start suing everyone IT/Telcom-related who's not a member on the presumption that they couldn't possibly be doing business without infringing on SOMETHING the group owns.

Are you saying that it is possible to sue for patent infringement (as opposed to merely publicly claiming infringements as Microsoft did with Linux) without identifying any allegedly infringed patent? Surely even a corporation-friendly judge would dismiss that at once.

Re:Offensive or defensive?

[rootooftheworld]

ascap!=asshat

cartel

[Anonymous Coward]

yeah not antitrust but an industry cartel, just as unethical and just as damaging to the consumer

still while the Americans are in court bickering about who invented X the Chinese and the rest of the world will move forward unencumbered by the ever decreasing business climate in USA

Chief Executive Officer

[MRe_nl]

Brian Hinman is currently CEO of AST. Previously he was Vice President, Intellectual Property and Licensing for IBM Corporation. While at IBM, he held various positions including Business Development Executive for IBM Research at the Thomas J Watson Research Laboratory. Prior to IBM, he was Corporate Director of Business Development and Licensing at Westinghouse Corporation.

1, 2, 3, 4, Profit?

[Frosty Piss]

If ever this was a great boon to the IP Squatters! I see a bundle of the folks setting up "business models" based wholly on selling IP to this single group.

Re:1, 2, 3, 4, Profit?

[apathy maybe]

OK, so first you have to acquire a patent that would be relevant for them (either "invent" or buy or whatever). Then you have to attract the attention of this mob and persuade them that it would be cheaper to buy your patent, rather then just sue you for infringing one of their patents.

Then you have to repeat.

Good luck with that.

Personally, I don't see what the problem with this group is, in the current system. (Of course, there are heaps of problems with the current system, but this isn't the place to go into them.)

Re:1, 2, 3, 4, Profit?

[Frosty Piss]

Then you have to attract the attention of this mob and persuade them that it would be cheaper to buy your patent, rather then just sue you for infringing one of their patents.

Except in the rare occasion where the patent is *VERY* valuable, it is almost NEVER cheaper to allow a law suit rather than settle. In the case that The IP Cartel wins, what assets do the IP Squatters really have beyond the IP itself? In all, a net financial loss for The Cartel. This is why although both sides will "posture" and "strut", eventually there will be a settlement for some sum of cash-ola for the IP Squatter.

Re:1, 2, 3, 4, Profit?

[morgan_greywolf]

1. Apply for patent on a basic technology of the Internet
2. The clueless and fumbling USPTO grants the patent.
2. Attracting attention of mob, no longer a problem.
3. File lawsuit for $1,000,000,000 *pinky extended*
4. ???
5. Profit!!!!

Re:1, 2, 3, 4, Profit?

[FooAtWFU]

Then you have to attract the attention of this mob and persuade them that it would be cheaper to buy your patent, rather then just sue you for infringing one of their patents.

Haha! You've made the mistake of assuming I'm actually doing some sort of business! As if I'd stoop that low.

Re:1, 2, 3, 4, Profit?

[saleenS281]

If the only thing your company does is sell/sue over IP, odds are pretty good you aren't violating any of their IP. You don't buy/sell/make any tangible good... kind of hard to violate patents under that business model.

Re:1, 2, 3, 4, Profit?

[Idiomatick]

I patented the business model of IP squatting and am suing you for 1.46 million US for thought-infringing on my patent.

Broken!

[squoozer]

If this doesn't send a clear signal regarding how totally broken the current patent system is what will?

I actually like the basic idea behind the patent system. I think it fosters innovation and provides reasonable reward but it's completely lost its way in the area of computing.

Unlike some I don't actually think we need a complete re-think of the patent system. What we need to do is think long and hard about the hurdle a patent in computing needs to jump over to be accepted because it appears the current hurdle is too low.

RICO?

[dreamchaser]

Sounds like racketerring in a sense. IANAL, but I wonder if an ambitious prosecutor somewhere could use the RICO statues instead of anti-trust statutes.

Any lawyers familiar with RICO want to chime in?

Re:RICO?

[sumdumass]

Spell this out to me. How does it sound like racketeering?

From what I can see, some companies have banded together to purchase patents related to stuff they might want to do in oder to give themselves a perpetual license, and then resell the patent. Unless they are going to hide the license in order to claim the patent is more valuable, I'm not sure where the evil is. If the Telecoms are the only companies that the patents are useful too, then it is no different then joe small selling them a license anyways, Most of the value of the patent will be gone once the license to the people most likely to use it is done. It is no different then you leasing a car for your family (wife and two teen age drivers) to drive. You'll get killed on the miles and it is a stupid idea but that doesn't make it illegal.

Re:RICO?

[Anonymous Coward]

It is a bunch of companies banding together in an anti-competitive manner. They are just going to buy up any patents that they feel would disrupt their current business, and isn't in the consumers interest.

I'm in the market for an electric car battery, but since Texaco-Chevron bought the patent on it from GM, who bought it from a small business, I can't buy it because it isn't in Chevron's interest to sell me a large NiMH car battery. They are making too much money on gas right now. Now, if the electric cars did take off in the 200-2004 time frame, Chevron would still win, and that is the other part that isn't good. The small inventors and people who founded the small business should be the ones making out well. But for now I will just have to wait until 2014 until the patent runs out to switch my next battery pack to NiMH.

Re:RICO?

[twiddlingbits]

More like a cartel (think OPEC but with patents instead of oil). It's probably against the law as it really is anti-competitive and an attempt to control the market via collusion of several firms. IIRC, RICO applies to a criminal enterprise and anti-trust is a civil charge. However, the creative evil geniuses in their employ (aka lawyers) may have found a way around the legal issues by setting this up as a seperate company that has "investors" and for thier investments the "investors" get first and cheap rights to any intellectual property the firm owns. Now that WSJ has outed them we may see some interesting blowback, and it wouldn't surprise me if there are other attempts made to implment this idea in other industries. For example what if GM +Ford + Chyrsler bought all the new patents for things automotive and held other car makers "hostage", would that be OK?

Re:RICO?

[kabocox]

Sounds like racketerring in a sense. IANAL, but I wonder if an ambitious prosecutor somewhere could use the RICO statues instead of anti-trust statutes.
Any lawyers familiar with RICO want to chime in?

This is actually what this group is trying to get away from. They hate lawyers as much as the next guy. They'd love to kill every lawyer in the country every generation. (You'd still need lawyers and just killing them off wouldn't stop people from going into law anyway.) Their damn problem is people like you! Yes piss ants like you that want to sue their ass. Why? They have resources, and you want them! Thief.

There are days I'd actually want some corporate feudalism except that'd require two way loyalty. Trust me I can live with IBM, HP, MS and Google doing this. I'm not worried about them. I'm worried about the dreamchasers that want to sue their companies into the ground because they have billions and make toys that my company and I buy to run our business.

Re:RICO?

[bws111]

Except that has nothing to do with what these companies are doing. These companies are buying the patent, giving themselves a license, and reselling the patent. Nothing anti-competitive there at all unless you are a patent troll.

In today's environment, Joe Inventor gets a patent for something. A patent troll comes along and gives him (for instance) $10K for the patent. The troll then sits on the patent and waits for some legitimate company to invent the same thing, and for it to become successful. Then they sue the company for $1B. Who benefits from this?

What these companies want to do is give Joe Inventor more money, to prevent the troll from getting it. They give themselves a license. Now the value of that patent to a troll has effectively gone down to $0. Then they resell the patent. One of several things can happen: another company buys it (no change), a troll buys it anyway, in which case nothing changes for you (but the companies are protected), or maybe a group like OIN gets control of it, and it is better for you.

How is any of this anti-competitive?

Queue Pat Benatar's "IP's a battlefield"

[erroneus]

To the tune of "Love is a Battlefield"

They should know better than this...

[WiglyWorm]

Don't feed the trolls!

The irony!

[Anonymous Coward]

You could read a story about patents... were you only a subscriber!

Extranationalism for the loss.

[sethstorm]

Some people are proud of their nation, and not of some businesses who try to evade it. This time around, one thing will be clear:

Businesses will no longer be able to penalize a citizen.

Egads.

[somecanuckchick]

Truly, no good can come of this.

using patents as protection

[frietbsd]

is so pre-internet.
patents are harming innovation in stead of protecting them. Copyright is enough.

So, any potential, new competitor...

[Enleth]

...is now shit out of luck, because there are 6+ companies that will smash them into the ground for trying to use every single practical approach to whatever they're trying to do, instead of a single one?

Re:So, any potential, new competitor...

[sumdumass]

How is any potential new competitor any worse off then they were in the first place? They would have had to get a patent license from the original patent holders to begin with.

I think you are assuming that the potential competitors would be able to ignore the patents in some way. The only difference would be either 6 companies working as one or 6 companies working independently or 6 other patent companies working independently. The same costs and requirements for a license would be there with the same potential threats of lawsuits. They couldn't ignore them without fear of retribution from the patent holders whether it is a mega corp or Joe's Patent Extortion llc.

Re:So, any potential, new competitor...

[Enleth]

OK, my wording was at fault. They're worse off, because they could face x lawsuits from a single source backed by a shedload of money and a band of the most fierce hellho^W^W^W^W lawyers ever employed by a corporation (read: IBM legal team), instead of several, but less significant companies, maybe some of them even at a similar level in the foodchain.

antitrust trouble

[speedtux]

According to AST CEO Brian Hinman, a former VP of IP and Licensing at IBM, the arrangement will keep member companies out of antitrust trouble.

This arrangement sounds like a blatant violation of the intent of anti-trust law, and there's a good chance it also violates the letter of antitrust law.

But I suppose as long as these companies keep paying lots of money to Washington, nothing is going to change.

Patents==new oil/dotcom/housing bubble

[greyhueofdoubt]

So here we are at the base camp to another bubble in speculation and hyperinflation, this time in the market of IDEAS.

The way things used to work, advertisers tried to convince you of the utility and attractiveness of their products. Speculators predicted how much a product or resource would sell for. Now we will have ads and speculators working in the field of ideas, which are thoughts, which is a little disturbing to me.

It will happen soon that ads will be for brand names (not products); campaigns will be waged with one trademark against another; mascots engaging in mudflinging; ads proclaiming that some product has the most patents...

I see mutual-fund-like holding groups for IP that will begin paying big dividends. I see the market changing from product- and service-driven to trademark-driven.

Dammit I told myself no more posting before coffee.

The point I'm trying to make is that I foresee a huge bubble in patents and trademarks, and speculation thereof, and I'm worried that it could be the last straw for our poor economy. OK.

-b

Re:big corporations

[Anonymous Coward]

I think -1 Redundant would be better.

Allied Security Trust == SCO II

[sethstorm]

The first time this practice went around, the company got bludgeoned. This time, they try not to get noticed, and form nearly the same thing. No software, just a larger patent troll.

Perhaps it's time this IP "social club" gets the same treatment as SCO.

Oh, come on

[Anonymous Coward]

Can this really be /that/ much more efficient and cheaper than actually, you know, trying to push for some IP reform to fix the current broken system?

"Secretive"? Fail!

[IBBoard]

They've joined a "secretive" group called the Allied Security Trust? Not all that secret now, is it?

the real problem...fix the USPO!

[mwilliamson]

What we need is to fix the problem, which is a broken patent system and an unqualified oversight mechanism. Courts aren't much help to settle issues because an (un|de)qualified jury simply listening to testimony of experts just isn't effective or fair.

What's going to end up happening with all these companies spending billions is that they will come to embrace the current screwed-up system and probably defend it because of their investment. They even may end up lobbying to maintain the status quo.

The small developer is screwed in the butt as usual.

Re:the real problem...fix the USPO!

[JasterBobaMereel]

The small developer will move to Europe (or anywhere outside the USA) and carry on as if the US software patent system did not exist ...

It will be more and more difficult to sell software in the USA without infringing someone's patent so people will stop bothering, or charge much more for the same software, software companies will move outside the USA, watch the death spiral of the US economy follow ....

Re:the real problem...fix the USPO!

[kabocox]

What's going to end up happening with all these companies spending billions is that they will come to embrace the current screwed-up system and probably defend it because of their investment. They even may end up lobbying to maintain the status quo.

Let's face it. The status quo works. Those that have built "successful" companies in the US in say the last 100 years can attest to it working. Now they also know how to game the system for their best advantage. I'd have to say there isn't anything morally wrong about it just because you and I can't afford to do it on the same scale. If you or I built the next MS, Google, Wal-Mart, or heck Ford, then we'd have learned the existing system and have gamed it to our best use over the last generation or two. This is morally right that everyone with resources has an attempt to game the system. Those with more resources can game the system better than those with no resources or those that try to beg resources.

Changing the status quo requires effort from people that have more to gain if the current system where radically changed than those running a successful business. I have no interest in the patent system debate other than as an observer. I cheer on those that have won with the current rules rather than those that want to alter the rules for their own gain.

Re:the real problem...fix the USPO!

[Brain Damaged Bogan]

"What we need is to fix the problem"
...by posting on slashdot and not getting off of our lazy arses

Re:Patents==new oil/dotcom/housing bubble

[mpeskett]

I've already seen adverts boasting about how many patents company X have.

I forget who it was (some car manufacturer... might have been Audi) but the advert went along the lines of "we filed more patents than NASA while inventing this car" to make it sound like some amazing, god-sent new technology

Open Invention Network

[hasbeard]

Well, if they do sell the patents, it would be nice if the Open Invention Network people were standing first in line to buy them. http://www.openinventionnetwork.com/index.php/

Why not spend that money...

[$1uck]

Lobbying congress to fix the patent system, instead of buying patents?

The Question Is,

[FurtiveGlancer]

will they try to patent this new approach to patent troll avoidance (or is it a patent self-trolling joint venture)?

Hey...

[strabes]

Hey, as long as Microsoft isn't part of the "Allied Security Trust" it's fine with me. The only company in there I don't like is Verizon.

Imaginery property

[cliffski]

What dork on here keeps slinging around this infantile put down of IP as 'imaginary property'? I'll make a deal with you, You respect the Intellectual property of others, and the banks will respect your imaginary wealth stored as a string of numbers on a bank computer. deal?
After all, your bank balance is imaginary property too.
*sigh*

Re:Imaginery property

[Anonymous Coward]

That's idiotic. The numbers on a bank computer matter because they're on the bank's physical computer. If you had a COPY of my bank balance, you could increment it and decrement it and copy it again all you wanted, and it really wouldn't matter, because your copy is not my copy or the bank's copy. And to change the bank's copy you'd effectively have to violate the bank's _physical_ property rights or commit fraud.

Totally different situation to imaginary property, which lays claim to all copies of some information (and therefore all physical property capable of representing that information - imaginary property quietly steals from everyone's physical property rights) based on similarity to some copy.

ONLY THE PHYSICAL EXISTS. Only copies exist. Imaginary property is just that, imaginary. Its attempts to restrict all copies of information based on "ownership" of some platonic ideal of intangible, nonexistent "information in itself" leads to vastly illogical, unjust and dumb results.

Freedom For The Rich

[Bob9113]

Nice to see that we're developing another system whereby giant corporations are free to operate, and smaller enterprises are barred from entry. I'm sure that is exactly what Adam Smith had in mind for free market competition.

Re:Freedom For The Rich

[Duketape]

In Europe we would send Neely Kroes to those companies. When she is finished with them, they have payed more than those small companies and everybody will know that it is forbidden.

Re:Freedom For The Rich

[Anonymous Coward]

NOT AT ALL...
      Small inventors will probably be benefited by this system. Some considerations...
        1. Small inventors pay substantially less in fees than large corporations... something like $435 to file a patent application (does not include attorneys fees which are the whopper).
        2. The licensing/sale of patent rights are more likely to occur with the alleged system in place. Patent companies that sue on acquired patents (pejoratively referred to as Patent Trolls) are less likely to acquire certain "smoking gun patents" because they are more likely to already have been acquired. Plus the "Trolls" only exist to sue on patents where negotiations have completely failed. This new alleged system would create another outlet for negotiation.

Additionally, if you have a friend of a friend I am sure they would be willing to help you with patent advice...

While attorneys fees are pretty high... there are many firms out there that will cut market prices and write a patent application for a small inventor at a fraction of what it would cost a larger firm... and it would be written by an attorney that has once worked at a larger firm. Its worth looking into those for the huge reward of acquiring a MONOPOLY for possibly more than 17 years.

The basic strategy is that larger company look to patent everything under the sun when they first come out with a new invention. They DO NOT NEED TO CREATE THE INVENTION. Its a companies method to allow themselves to protect themselves A) just in case they actually create the invention B) just in case someone else also happens to use the invention it the same space. If another company has a patent... cross licensing will often prevent any lawsuit that may occur between the two companies because its likely they are using part of each others invention.

Its important that the small inventor keep all this in mind because the small inventor can adapt the same strategy as some of these other companies...

Re:Freedom For The Rich

[CodeBuster]

I'm sure that is exactly what Adam Smith had in mind for free market competition.

Do not be so quick to pin this one on Adam Smith and the free market. The secret organization exists solely to mitigate the effects (at additional cost so it is still inefficient) of a patent system enforced by the power of government. In a purely free market neither the patent system nor this organization would exist. That is the problem with government incursions into the free market, they tend to create more problems than they solve which then require additional incursions and so on until the market itself is so hobbled by regulations that very little if any useful economic activity is actually occurring.

Since this is Slashdot I will indulge myself with reference to a Star Trek episode to illustrate my point. In the two-part Voyager episode Year of Hell the protagonist, Annorax of the Krenim Imperium, constructs a temporal weapons ship which allows him to erase anything from individual molecules to entire civilizations from history in a "temporal incursion". He subsequently spends two centuries with incursion after incursion and ever more complex calculations attempting to make good the effects of his previous incursions in a never ending quest to restore everything that he had lost when he began meddling with the timeline.

Government interference in the marketplace is analogous in that if we could only calculate exactly how much to tax and which policy to enact then everything would work out perfectly except that it never seems to work out that way here in reality. Each incursion into the marketplace requires additional incursions in a never ending game of whack-a-mole. It has always been tempting, for both the government and investors, to believe that they can calculate and predict every event and variable in an extremely complicated market system full of millions and even billions of individuals all acting differently and simultaneously in both rational and irrational ways. IMHO, it is best to let the chips fall where the may and limit government responses to reactive rather than proactive remedies.

Re:Freedom For The Rich

[Bob9113]

>> I'm sure that is exactly what Adam Smith had in mind for free market competition.

> Do not be so quick to pin this one on Adam Smith and the free market.

My apologies - I was being sarcastic. I'm a very big fan of capitalism and of Adam Smith, and only a foe of the perversion of it that we have built in The States.

I doubt that very much.

[Jane Q. Public]

All their high-paid lawyers aside, I doubt very much that this arrangement will effectively shield them from anti-trust laws.

We have a word for this

[IGnatius T Foobar]

It's called a "cartel."

Ok, maybe not exactly, but it could certainly turn into one, especially if some of the more, shall we say, "evil" industry players begin to join.

Re:Patents==new oil/dotcom/housing bubble

[joe 155]

You're right, I think it was the A4 or A5 or something... I remember it making me really annoyed at the time - there just shouldn't be over 20,000 patentable things in or on a car. It really is insane that anyone could ever conceive that there could be.

My current ad of hate is the Gillete Fusion which advertises that they have 20 patents pending on it, over and above their standard razor. Really, what in the hell is unique or inventive about it. It's a standard razor which offers very little over and above other standard razors, but this time with a blade on the back to act like a cut-throat razor... all of which have existed for well over 20 years. Indeed, using a strait blade for shaving is at very least 2500 years old, but almost certainly far more than that...

Surpise!

[Duncan3]

These guys are going to be SOOOOOO pissed when they find out over 95% of the world isn't even under US IP laws, and those that are pay no attention ;)

Re:Surpise!

[Anonymous Coward]

Absolutely. These tech giants have NO IDEA of what the different IP laws are around the world. Good thing they have you to inform them.

Why would a company (or group), who is buying a US patent to give itself a license to protect itself against US patent trolls in US courts give a shit about IP in the rest of the world? Please enlighten us oh wise one.

BMG?

[eliphalet]

I think you mean BMI, not BMG.

Re:BMG?

[Khyber]

Umm, no, he means BMG, as in Sony/BMG. You must be new here.

Re:BMG?

[atraintocry]

No, he meant BMI.

Re:BMG?

[eliphalet]

Broadcast Music, Inc., a competitor of ASCAP.

Axis of Evil!!

[TheCybernator]

they are building Patents of Mass Destruction. Let the (Flame) war begin. Ok. A flamebait. May be.

Re:Patents==new oil/dotcom/housing bubble

[Anonymous Coward]

Just a little side note, ads are already for brand names. See Nike, Apple, General Electric. All have commercials specifically for their brand, where they don't mention a specific commercial item. Nike is probably the most prevalent for doing this.

I have different principles than you

[Brain-Fu]

How would you feel if you were a woman shopping for a shirt, and the vendor asks, "do you intend to wear this shirt in public, in which case you must buy the version that comes with a hood, since it is wrong for women to expose their faces in public?"

Would you buy the shirt anyway, and sign a contract promising that you will also buy a detached hood and always wear that hood with the shirt?

Or would you just go find a vendor who won't impose her conservative Islamic principles on someone who doesn't share them?

In a culturally diverse society, imposing one's principles upon others is not always a recipe for harmony.

Re:I have different principles than you

[stjobe]

Well, turnabout's fair play, right? How would you feel as the vendor whose religion forbids you to sell clothes without hoods to women, and still this foreign woman insists on buying a shirt without a hood? Would you throw your (religous) principles out the door to make that sale or would you refuse the sale?

If your answer is that you'd sell the shirt, I was right in my first comment; the problem with you is that you have no principles.

Now, I think that I and Migraineman above agreed that the rules of the free market most of the time requires one to let ones principles take the backseat to capitalistic concerns, but that does not mean that we cannot see that it is not always the most humane or even the right thing to do.

I stand by my point that society as a whole probably would benefit from people standing up more for their principles.

They should offer licenses to OS projects too

[paratiritis]

As the open source model has already beein proven as a viable business model, they will create antitrust issues if they do not offer an automatic non exclusive license to open source projects (say those using licences from opensource.org)

This goes particularly for Google, whose business model does depend on open source licenses. If, for example Android v2 is covered by dozens of patents, what good is its Apache licence? (Note: If you want to link to Android your application is not a derivative under the Apache licence. So you get no patent licences)

Also let's say Google owns a patent licence, but has not used it yet. Would it block all other OS projects from using it? What happened to "Do no evil?"

For all these reasons, granting automatic licenses to OS projects is probably the best way to avoid bad press, not to mention legal challenges.