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Intellectual Ventures' Patent Protection Racket
David Gerard writes "Nathan Myhrvold's Intellectual Ventures doesn't sue people over patents, because that would be patent trolling! No, instead they just threaten to sell the patent to a known litigious patent troll. So that's all right then. Timothy Lee details how using patents to crush profitable innovation works in practice, and concludes: 'In thinking about how to reform the patent system, a good yardstick would be to look for policy changes that would tend to put Myhrvold and his firm out of business.'"
When is something going to actually be done about this??? It's been a topic of discussion for years, it impacts major companies in a net negative way and still nothing gets done. I don't understand it...
If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
He sure made money off MS, but he couldn't cut it as a researcher in particle physics. And he knows it.
Please, summarize without injecting your childish sarcasm; save those for a comment reply. For example:
I much prefer the latter summary to the former, and I doubt I'm alone.
Despite his considerable intellect, he didn't accomplish much of note at M$ and now has sunk even lower. He should stick to cooking
and taking photos.
Pain is merely failure leaving the body
Why not shorten the standard lifetime of patents from 20 years(I think its 20, anyways), to say, for example 5?
In this way, the owner of the patent will have motivation not to sit on it, maximize profit and then move on to the next innovation.
Seems like this wouldn't be a bad idea, although, I will be the first to admit, I only understand the very basics of the patent problem.
Thoughts?
Hi, I Boris. Hear fix bear, yes?
In this gushing article Malcom Gladwell implies that this sort of patent trollism is some great innovation on it's own.
Bill Gates, whose company, Microsoft, is one of the major investors in Intellectual Ventures, says, âoeI can give you fifty examples of ideas theyâ(TM)ve had where, if you take just one of them, youâ(TM)d have a startup company right there.â
--- http://davidnehme.blogspot.com
Consider the following replacement patent system, let's call it the fractional pool system.
Let's say ACME Inc invents a new wonder drug at an approximate cost of $1 million. Let's also state that I is the "innovation incentive", a quasi-fixed constant specified by the government - sort of like the central banks base rate. I is expressed as a multiplier. For simplicity let's say I is 1.2
Multiply the cost of development by I to arrive at $1.2 million. ACME Inc applies for a patent on their wonder drug, and it is deemed novel thus granted. A new pool is created with a value of $1.2 million. Anybody who wishes to license this patent (and anybody can - there is no exclusivity in the fractional pools system) must enter the pool by paying enough into it to split it evenly.
For example, if MegaCorp wishes to compete with ACME Inc, they'd need to pay $600,000 into the pool, which is transferred to ACME Incs bank account. Now both companies are down $600k each. ZCorp sees that the wonder drug is popular and wants to enter the market too, so ZCorp pays $400k into the pool, which is split evenly between ACME Inc and MegaCorp. Thus all three participants in the pool are now down $400k.
This continues until the cost of entering the pool reaches some minimal floor at which point the pool is cancelled and the invention becomes public property. There is no particular time limit on this. It happens whenever it happens. You can see that ACME Inc will eventually make back their $1 million plus an additional profit of nearly (but not quite) $200k.
This scheme has some big advantages:
Of course there are some disadvantages too:
Despite these problems I think fractional pools are a more robust and flexible way to promote R&D than the existing patent system, which not only has arbitrary fixed constants but also gaping loopholes of the type we witness in this article. Discuss.
The problem isn't that businesses litigate over patent disputes. The problem isn't even so-called "patent trolls". It's the legal framework that creates it; The deeper judicial and legal principles. Patents were meant to cover an applied technological advancement; Not a theoretical one, or to intangibles like a process. But the patent system has been expanded to cover these, and it was done in a haphazard fashion by people who didn't fully understand the implications of doing so.
The net result is that the patent system is being used to protect intangibles -- markets, processes, and "intellectual property". This was never the intend of the patent system. Even worse, the time limit of 7 to 14 years was needed due to slow business processes of the pre-computer era when it would take years to develop something and bring it to market. Now, development to market time can be weeks or months. While this was originally designed so that the inventor (an individual) could profit from his invention while safely making available details of how it worked to the public (thus advancing the state of the art), it nowadays functions as an impetiment to invention because of the long life of the patent and the nearly endless variations that are possible to keep basic inventions protected in perpetuity.
What's needed is a radical rethink of business process and economics, and the removal of the extreme reliance upon the legal system to protect it.
#fuckbeta #iamslashdot #dicemustdie
Why not just shorten the patent trolls lifetime?
Holding back progress for all of human civilization. That's gotta be worth the death penalty.
If that isnt. What is?
just make the patent "prior art" if after 5 years they haven't used it to make money, put it in the public domain.
Some time ago I was having a conversation with some people about whether extrajudicial killing can ever be justified, and Nathan Myhrvold was the one person who we agreed there was really no good argument against it.
The
So like I was telling Mr. Lee, the extraordinarily not-Caucasian Chinese man who runs the Chinese Laundromat that's only open one or two days a month, my company has been threatened by Intellectual Ventures' Patent Protection Racket - but I guess Mr. Lee didn't know what he was talking about. I was looking for the A-Team, but all I found was this guy in a fake beard, overacting a ridiculous stereotype...
Bow-ties are cool.
All patent reform needs to do is the following:
1) Ban software patents, use copyrights to protect software.
2) Ban business patents, most are silly anyways.
3) Just moving something from the real world to the on-line world is not patentable.
4) A company or individual cannot just sit on a patent and wait until it is in wide spread use. If a company or individual sues after a patent is in widespread use, then said company's patent is transferred to company or companies that developed a product using the patent in question without paying the original patent holder.
5) An individual or company cannot threaten companies or individuals with a patent lawsuit without telling what the patent is, and giving those companies or individuals time to rectify the situation. You also cannot just sue, you must allow any patent violator some time to work around said patent.
That should eliminate most patent problems we have
Myhrvold's enterprise stunk to high heaven since the day it was conceived. Especially the part about paying scientists to come over to an exciting "tell us what's on your mind" conference and start brainstorming together, which was obviously done so that Myhrvold could collect, patent, and monetize those ideas.
Reminds me of reading Dick Feynman's book about the U.S. government doing the same thing, asking scientists to come up with all sorts of uses for atomic energy that they could patent. Except, that's the government, and presumably they're accountable to someone. At least they ended up giving Feynman a dollar per patent so he could go buy some cookies. I've worked with companies who abuse scientists in similar ways, and to be honest I think our system trains scientists to be scientifically smart and realistically dumb - if you could explain to these guys that they don't have to sell out in order to make money, maybe we'd have MUCH better products and services today.
I suppose to my mind, a patent troll is a person/company that acquires broad or general patents with the intent to extort money from companies, or who creates patents to sit on them in case they become applicable to something widespread and popular. Seems to fit the summary nicely.
The obvious solution (imho)
kinda like trademarks, --with trademarks you have to defend them or lose them.
Patents- you get say one year- if you can't show it is in use-- it's released.....
every day http://en.wikipedia.org/wiki/Special:Random
I am the only one who read "intellectual vultures"??
Last year I wrote that Intellectual Ventures is a kind of reductio ad absurdum of our flawed patent system. Itâ(TM)s a firm that literally does nothing useful, its only business is the acquisition and licensing of patents. Not only does it have no intention of commercializing the technologies it âoeinvents,â its business model is based on minimizing the amount of research performed per patent obtained. In Malcolm Gladwellâ(TM)s brilliant (if inadvertent) exposé of IV, he describes how IV hires smart people to participate in brainstorming sessions and then has patent lawyers immediately file patent applications for every idea that comes up during the discussion, without bothering to actually implement any of them, or even devoting much effort to verifying that they actually work. IV then approaches firms that are doing the hard work of implementing âoetheirâ ideas and demands a cut of their profits.
Myhrvoldâ(TM)s firm illustrates in a way that no law review article could the extent to which the patent system punishes firms that actually produce useful products. Firms whose business models involve actual innovation have to show restraint in exploiting their patent portfolios. If they donâ(TM)t, thereâ(TM)s a high probability that some of their adversaries will countersue and both firms will be dragged into a legal quagmire. But if litigation is your only business, then youâ(TM)re not vulnerable to retaliatory infringement lawsuits, so you can exploit your patent portfolio much more aggressively. Many small âoepatent trollâ firms have exploited this flaw in the past, but Myhrvold is the first person to recognize that it can be exploited in a systematic, large-scale fashion.
Until recently, one of the few points Myhrvold could make in his own favor is that he hadnâ(TM)t started suing firms that declined to license his patent portfolio. I say âoeuntil recentlyâ because weâ(TM)re now learning that the lawsuits have started. IV has begun selling off chunks of its patent portfolio to people like Raymond Niro with well-deserved reputations for being âoepatent trolls.â Threatening to sell patents to a third party who will sue you is more subtle than threatening to sue you directly, but the threat is just as potent. Myhrvoldâ(TM)s âoesales pitchâ to prospective licensees just got a lot more convincing.
The fundamental question we should be asking about this business strategy is how it benefits anyone other than Myhrvold and the patent bar. Remember that the standard policy argument for patents is that they incentivize beneficial research and development. Yet IVâ(TM)s business model is based on the opposite premise: produce no innovative products, spend minimal amounts on research and development, and make a profit by compelling firms that are producing products and investing in R&D to pay up. Not only does this enrich Myhrvold at everyone elseâ(TM)s expense, but it also reduces the incentive to innovate, because anyone who produces an innovative product is forced to share his profits with Intellectual Ventures. Patents are supposed to make innovation more profitable. Myhrvold is using the patent system in a way that does just the opposite. In thinking about how to reform the patent system, a good yardstick would be to look for policy changes that would tend to put Myhrvold and his firm out of business.
Three major reforms are needed:
* Use it or lose it. Sitting on a patent, hoping that an actual entrepreneur will use it, so that you can squeeze them is wrong, and should be outlawed.
* Reasonable limits. Fifteen years is too long. Five is more than generous. The world moves too fast for the state to spend fifteen years protecting someone's artificial monopoly.
* No software patents. Patenting software is like patenting math. Innovation is greatly harmed when software engineers have to worry about patent infringement while they weave together all of the various algorithms that constitute an application.
I'll worry about the Berne Convention when they start enforcing everything in the Geneva Convention, all they way to the top.
What part of "A well regulated militia" do you not understand?
Holy crap, that's brilliant. Seriously. You guys are just pissed off you didn't think of it first.
The problem with really short patent times, is many products, especially higher tech ones, can take years to develop to the point they are ready for wide spread sale. Well it'd suck to get a patent on your new expensive R&D and then have it run out before the product is on sale.
A better idea would be a "use it or lose it" clause. Basically what it would amount to is that you'd have a limited amount of time, like 6-12 months maybe, from when a product that uses your patent is introduced to contact them about licensing. If you don't, the patent goes away since you failed to use it. So if you have a patent and you are serious about it, then when someone rolls out a product that uses it you contact them and say "Hey, we want royalties for that." However you have to do it while the product is new to the market. You can't wait 10 years until it is a very successful widely used technology, and then try to hold them ransom.
In this way, it is fair to all parties. The patent holders get compensated for their work if people use it. People bringing a product to market learn about patent issues early and can decide if the cost is worth it.
Also part of that would probably be a clause like yours, in that someone, you or anyone else, has to bring it to market within 5 years or the patent goes away.
So something like: When you get a patent, it is valid for 20 years, however if no product is brought to market within 5 using it, the patent goes away. If a product is brought to market using it, you have 6 months to contact the company about royalties, or the patent goes away.
I think such a system would be pretty fair to all parties and work to ensure that people actually make use of their patents, rather than trying to hoard them and extort others.
In âoeAgainst Intellectual Property,â author Brian Martin does a good job of demolishing the whole idea that ideas even should be owned, much as Tom Paine, in âoeCommon Sense,â once demolished the idea that heredity was a good way to choose leaders:
http://deoxy.org/aip.htm
How about a system where patents acquired by companies are given a lifetime based on company size or net profits.
For example, split companies into three sizes:
1. 0 - 1 million dollars yearly profit
2. 1 million - 10 million dollars yearly profit
3. 10 million dollars or more yearly profit
Then respectively give them patents that last:
1. 20 years
2. 10 years
3. 5 years
This gives the little guys a bit of an advantage with their innovations,
and could help stop large patent trolls.
Plus, due to the fact that a large company should be able to mobilize a project and turn a profit fairly quickly,
even a small time frame should give them more than enough advantage to grab the monopoly their all after.
Obviously there would be other problems with this, like companies "splitting" themselves into multiple
smaller companies so they can get longer patents and troll more. But hey, it's an idea...
The Supreme Court's review of Bilski is the first time since 1981 that they've decided to look at the patentability of software. The Supreme Court needs facts, studies, and opinions (but only if they're
from very respected people, which includes Timothy B. Lee). You can help gather and document these things on the public swpat.org wiki:
This is our big chance to fix the problem!
Please help publicise swpat.org - the software patents wiki
Why not 5 years?
Because the USPTO can't work that fast.
To move to a 5 year term, you'll either have to go to an approved on filing system, or start the 5 year term upon issue.
The 5 year term on issue was the old system and what you'd do then is keep the application in the PTO as the technology develops and then let it issue, collect your money on an existing industry that can't backout of your patents.
AT&T did, in fact patent _ALL_ of their research. The difference was in another area...
The grant of monopoly to AT&T, which funded Bell Labs, basically _forbade_ them from selling _anything_ (and so on). So AT&T made telephones and rented them as part of the service, and they licensed their Bell Labs patents for trivial amounts and so on. In particular the reciprocal in-perpetuity licensing that let Unix grow from nothing via return contributions from Berkley and Apple and everybody else would never have been, in any form, were it not for the fact that AT&T was legally prevented from being "business like" about making their developments secret. The deal was "cushy monopoly money, but everything it gets you as a company is more-or-less public because we paid for you to exist rather dearly."
The license fee for the transistor patent was, if memory serves, one dollar ($1.00) U.S. and so on.
And life was good until the breakup.
See, with absolutely nobody at AT&T knowing how to _sell_ anything at all to anybody, once AT&T was no longer a state sanctioned monopoly, they had all this stuff (like UNIX) and no idea how to actually perform a "sale" via this "marketing" thingy that all the kids were so up about. Hence things like "the Unix PC" and really bizarre buy-your-phone offers and the disappearance of the _indestructible_ telephone handset. Time was, you could beat a person to death the receiver of your phone, and use the body to break their bones into neat little pieces, and not damage the thing so much that you couldn't still call someone to get together for a nice alibi party. (AT&T leased those things, so they were build to outlive the customers 8-). What we got next was cheap plastic crap that broke when you dropped it. etc.
The only thing that the breakup did to _help_ AT&T was it let them fire a whole bunch of _useless_ and _incompetent_ union labor that had collected in their ranks. The Lilly Tomlin line "we don't care, we don't have to, we're the phone company" was very, very true and it plagued operations. Its amazing how many do-nothings got unloaded on the "baby bells" or lost their jobs outright.
Still, it would have been better for us all if the breakup never happened, were there then some way to have the internet revolution while still having a monopoly phone company. But that would have been a fine hair to split and not have the whole thing stall.
Innocent people shouldn't be forced to pay for inferior software development.
--"Code Complete" Microsoft Press
I work at the Intellectual Ventures Lab where we work on inventions. While the patent system isn't ideal, we're certainly not the paragon of evil Timothy Lee makes us out to be. The invention we've invested the most in is a reactor powered by nuclear waste. We have over 30 scientists working on that now. We are developing many inventions to help eradicate malaria and have a team devoted to epidemiological modeling for that.
Intellectual Ventures has already paid over $330MM to inventors from its licensing work. We're inventors & we love invention. We're trying to create more ways for inventors to succeed at what they're good at. - Pablos.
Nice try. However, I think any decent corporate lawyer would be able to get round something like that pretty easily. For example, set up a new subsidiary company that has no revenue (so falls into the 20 year category) get it to apply for the patent. It could even be some evil CDO like thing that owns itself but has given an exclusive license back to the parent company.
"patent trolls"
Call it what you will...patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: âoeweâ(TM)re using your invention and weâ(TM)re not going to payâ.
For the truth about trolls, please see http://truereform.piausa.org.
Here is why I think I was approached by IV to work for them:
I have a large number of patents in my name, among the largest number at my company
I have a high success with my patent applications
I have patents in several fields, including those outside my current field of employment
I work in a large industry that generates lots of cash
I work for a company that is a leader in the industry
My employer has lots of cash on hand
My employer has a weak patent portfolio
One would likely assume that given several demographic/professional facts (title, age, likely income, etc) that I would be ripe for poaching
There is probably no one formerly from my company with patents at this company who is on the job market (null pool to choose from)
I live where their offices are located
While their recruiter was determined, it is all speculation as I did decline to discuss employment with them