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.'"

Comments

All talk...

[religious freak]

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...

Re:All talk...

[scamper_22]

The order of importance:

Government workers > Lawyers > corporations > citizens

Re:All talk...

[Anonymous Coward]

Maybe if you backed up your contrarian attitude with an argument, people would listen to you.

Re:All talk...

[russotto]

Never, because all the "discussion" is being done in a gigantic echo chamber that makes it get louder and louder, with no dissenting voices

Plenty of dissenting voices. But since they've either got to defend ridiculous patents by claiming they're not ridiculous (often by insulting anyone who claims the patents are obvious extensions of existing technology), or claim the ridiculous ones are an aberration (which flies in the face of the evidence), they don't have much credibility.

Patents were never meant to cover the raw output of brainstorming sessions. Just about any patent obtained that way is going to be non-novel, obvious, non-disclosive, or some combination of the three. But since the patent office approves them anyway, they form a barrier to getting things accomplished.

This is exactly the sort of thing Justice Bradley was referring to when he wrote:

"It creates a class of speculative schemers who make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax upon the industry of the country, without contributing anything to the real advancement of the arts. It embarrasses the honest pursuit of business with fears and apprehensions of concealed liens and unknown
liabilities lawsuits and vexatious accountings for profits made in good faith." (Atlantic Works v. Brady, 1017 U.S. 192, 200 (1882)).

Please leave sarcasm out of summaries

[noidentity]

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.'

Please, summarize without injecting your childish sarcasm; save those for a comment reply. For example:

In order to avoid blatant patent trolling, Nathan Myhrvold's Intellectual Ventures doesn't sue people over patents; they instead threaten to sell the patent to a known litigious patent troll. 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.'

I much prefer the latter summary to the former, and I doubt I'm alone.

Re:Please leave sarcasm out of summaries

[haruchai]

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.'

Please, summarize without injecting your childish sarcasm; save those for a comment reply. For example:

In order to avoid blatant patent trolling, Nathan Myhrvold's Intellectual Ventures doesn't sue people over patents; they instead threaten to sell the patent to a known litigious patent troll. 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.'

I much prefer the latter summary to the former, and I doubt I'm alone.

And, I don't really care, so long as the linked article is interesting and informative, and I doubt I'm alone.

Re:Please leave sarcasm out of summaries

[Trikki Nikki!]

And, I don't really care, so long as the linked article is interesting and informative, and I doubt I'm alone.

Yes, ever since I was old enough to make up my own mind all I need is a link to the source and I'm golden. I do sometimes need people to tell me if my dress makes me look fat, but I think that is a different story entirely.

Re:Please leave sarcasm out of summaries

[Trepidity]

I'm pretty sure, "ignored the summary and read TFA" is actually the reverse of standard Slashdot practice!

Re:Please leave sarcasm out of summaries

[mckinnsb]

Exactly. We are all pretty steamed about this and I would not qualify this behavior as childish sarcasm; I would qualify it as sarcasm generally held by a community reflected through the medium delivered to the community. I think it is pretty safe to say that 80-90% of people here on ./ would like to see some serious Software patent reform and we are pretty exasperated about that reform not happening. I am willing to submit that certainly, that is not every ./ reader. However, the fact that new businesses are being established which further exploit the broken system could easily anger the ./ reader whom is exasperated(I would like to clarify that I don't think that is the intent here). While sarcasm in journalism is generally not called for or necessarily professional (there has been far too much of it lately, I will agree with you there), sometimes it is admissible because it reflects the elevation of tension in the community, and that is really what the reporter's job is - to tell everybody else whats going on on the ground.

It is important to realize that /. is not a pure news site, being in the transient twilit realm of new media. It mostly links 'real' (old media) news, and the rest of its independently generated content mostly consist of reviews, journal entries, and interviews. However, I am not surprised that people expect ./ to follow some journalistic standards.

kdawson does lay it on a little thick sometimes, and I wish he would have more discretion in using that particular journalistic device, but I will give him a personal 'pass' on this one.

Re:Please leave sarcasm out of summaries

[David Gerard]

I wrote that text and it was passed unaltered, so blame me for the pissed-off tone.

Re:Please leave sarcasm out of summaries

[corbettw]

You're both Slashdotters, so of course you're alone. So very alone.

Re:Please leave sarcasm out of summaries

[Zordak]

And, I don't really care, so long as the linked article is interesting and informative, and I doubt I'm alone.

If you click on the link and read the article, you are alone.

Nathan's Myhrvold's a waste of space

[haruchai]

  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.

Re:Nathan's Myhrvold's a waste of space

[NoYob]

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.

I call arriving as a poor slob and leaving with several hundred million dollars quite an accomplishment. If that's sinking low, gimme a lead weight baby!

Re:Nathan's Myhrvold's a waste of space

[dfetter]

Acquiring a fortune isn't the same thing as actually accomplishing something. Frequently, it's a matter of being at the right place at the right time. Come to think of it, I know of no fortune that would be possible without that essential bit of luck.

Re:Nathan's Myhrvold's a waste of space

[JaredOfEuropa]

Acquiring a fortune isn't the same thing as actually accomplishing something. Frequently, it's a matter of being at the right place at the right time. Come to think of it, I know of no fortune that would be possible without that essential bit of luck.

True... but when the moment is there, you have to seize it. Bill Gates and MS did that, a couple of times. And I know of a few good but failed ideas that might have been great had they been launched 5 years earlier or later. I knew a guy, not rich but a regular Joe, who had a knack to always position himself to allow him to reap praise for projects already on the track to success, and get out of failing projects in time. He got plenty of promotions without really accomplishing something, but his success did require that special knack.

Of course, sometimes just being there is enough. Joining a startup that grows into a success despite your best efforts, and suddenly that crappy stock you got in lieu of a decent salary is worth 8 figures...

Shorter lifetime?

[BigJClark]

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?

Re:Shorter lifetime?

[Lehk228]

make it the lesser of three, 20 years. or 5 years from the first licensed product containing the patent being available for sale, or 7 years from the first infringing product being available for sale.

Re:Shorter lifetime?

[Ragingguppy]

For any of you who know patent lawyers that think that software patents and patents on business processes are a good idea show them this patent. Here is the link.

http://www.google.com/patents?id=ZUUNAAAAEBAJ&printsec=abstract&zoom=4#v=onepage&q=&f=false

Re:Shorter lifetime?

[NoYob]

make it the lesser of three, 20 years. or 5 years from the first licensed product containing the patent being available for sale, or 7 years from the first infringing product being available for sale.

The only thing I can see there it wouldn't worth it for the inventor is if he invented something that can't be priced to recoup the investment in R&D , let alone make a profit, in that time frame.

Then there are inventions that are ahead of their time and there aren't too many profitable applications for a while - the LASER comes to mind. The Laser was invented in 1958 at Bell Labs, bit it didn't see widespread use until what, the 1980s? So, what will happen in a time from of 7 years or less would be that the inventor has spent all that time and money on R&D and would be unable to reap the benefits.

Re:Shorter lifetime?

[Anonymous Coward]

Many (like myself) will point out that the difference between the time of invention and the expiration of the patent correspond with the time it took for the invention to become popular.

Re:Shorter lifetime?

[larry bagina]

AT&T had more than enough monopoly money, so Bell Labs didn't patent their research. And we (everyone other than AT&T) are collectively better off for it.

Re:Shorter lifetime?

[deblau]

Big pharma would cry bloody murder, since it costs about a billion dollars to bring a single drug to market through theoretical research, synthesis, isolation, pharmacology, clinical trials, more clinical trials, and final FDA marketing approval.

Also, we signed an international agreement saying we wouldn't.

Re:Shorter lifetime?

[sjames]

Considering that corporations today are seriously allergic to anything long term and often barely manage to see beyond the next quarter, it's doubtful that anything that couldn't fully recoup development costs and turn a nice profit in 5 years TOTAL would be pursued at all. Even Bell Labs has turned away from the sort of basic research that gained it it's reputation these days to focus on shorter term profit.

Re:Shorter lifetime?

[sjames]

We need a metric that doesn't involve a court trying to determine if some fuzzy thing is true. Part of the damage from patents now is the extreme cost of patent litigation.

Re:Shorter lifetime?

[RingDev]

Which is still a poor point, as per your own example, 22+ years expired between the creation and the popularization of the invention. Even under modern patent law with a 20 year monopoly, the patent STILL would have expired before the could recoup the R&D costs.

The purpose of IP isn't to secure the long term viability of corporations, it is to give a short term market advantage to invetors in exchange for the knowledge to become part of the public domain. The goal at the end of the day is to increase the size of the public domain, not the pocket book.

-Rick

Re:Shorter lifetime?

[orkysoft]

give me one GOOD reason why copyright should extend BEYOND the author's death.

To discourage big media companies from ordering hits ON, rather than FOR their stars.

Re:Shorter lifetime?

[drsmithy]

The creator's family is actually a pretty decent reason. (And, I suspect, the reason that the law was put in place.)

Only if you think companies should be legally required to continue to pay their employee's salaries after they die.

Consider two people, one who creates tangible goods, such as gas stations, and one who creates intellectual property, such as novels. If both of them died today, what would they leave behind in their estate? Of course, both would leave behind any financial earnings from their business as well as things that they had purchased. But what about each person's 'legacy.'

This is simply a matter of timing. If the gas station owner dies while he's still owing a large proportion of the initial expenses endured acquiring it, then his family will get squat. On the other hand, if the author dies after releasing his first blockbuster (but while finishing the second), then his family are going to get a lot of money.

Malcom Gladwell thinks it's swell

[DaveInAustin]

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

Re:Malcom Gladwell thinks it's swell

[speedtux]

Good ideas are a dime a dozen. The hard part is making a business out of them.

Apple, for example, has hardly ever come up with any original ideas, but they have done an excellent job turning other people's good ideas into successful products.

Fractional pools

[IamTheRealMike]

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:

• Pro - there is no exclusivity. Thus companies cannot blackmail other companies or cause widespread economic disruption by suspending the distribution of a popular product. Nor can a company sit on an invention for decades without using it.
• Pro - the size of the pool is determined by the audited cost of development. Thus you cannot make millions off something trivial or obvious.
• Pro - there is no arbitrary time limit on an invention, which will never be right for every industry.

Of course there are some disadvantages too:

• Con - It can be difficult to judge exactly how much a particular invention cost - where do you draw the line between costs specific to that invention and general shared costs?
• Con - The "innovation incentive" is a fixed constant under political control. I used 1.2x in my example but perhaps a more realistic value is a lot higher, like 20x. Thus governments of the day can adjust it up or down - up likely means more inventions but higher costs to the eventual consumer, lower means cheaper toys but less R&D. Whilst the value could be adjusted per industry or even per invention, it will never be quite right for everything.
• Con - The second entrant to the pool has the advantage of not needing to do the R&D yet can immediately benefit from the invention. First mover advantage might not be enough to offset this. Perhaps could be solved by throttling the entry rate to the pool.

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.

Re:Fractional pools

[Lloyd_Bryant]

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.

I question whether using the actual cost of development is viable. In the case of drugs, a company may have to pay to develop 20 drugs before they get one that actually works and is profitable - that area research has a very high failure rate (drugs that don't work, have too many undesirable side effects, etc). Using actual cost of development could kill areas of research where it's expected that a small number of successes will offset the expenses of the large number of failures.

Pro - the size of the pool is determined by the audited cost of development. Thus you cannot make millions off something trivial or obvious.

I would consider this on a Con, rather than a Pro. You're basically setting up a system which will only benefit "big" inventions (meaning those funded by wealthy individuals or corporations). Consider the following scenario - working in my garage, I come up with some invention for a trivial amount, but which has massive utility (let's use the "better mousetrap" as an example). I only spend a few hundred dollars working on it, so the pool would be very small. MegaSuperEverything Corporation then jumps in, and for a trivial amount of money obtains the rights, and proceeds to sell many millions of them thanks to their existing marketing/distribution channels, while I can only sell a handful because of the competition. Knowing that this is likely to happen, what incentive do I have to patent the invention?

Con - The second entrant to the pool has the advantage of not needing to do the R&D yet can immediately benefit from the invention. First mover advantage might not be enough to offset this. Perhaps could be solved by throttling the entry rate to the pool.

Just have a decaying rate. For instance, in year one, the pool would be cost of development times 100 (or higher). In year 2, it drops to 75x. Year three down to 50x. Have a floor, so that after 10 years, it's at 1.5x, and remains there until the patent expires. This would tend to preserve the first mover advantage, without compromising the concept (provided the decay rate is reasonable).

Intrinsic failure of the system

[girlintraining]

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.

Myhrvold is evil

[the_povinator]

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.

Myhrvold, sigh

[TheModelEskimo]

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.

Re:USE IT OR LOSE IT

[CannonballHead]

Which means that only rich inventors are able to accomplish something. Great!

The supreme court is reviewing swpats October 2nd!

[H4x0r Jim Duggan]

    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:

• Studies
• Arguments
• âZTimothy B. Lee on software patents

This is our big chance to fix the problem!