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Ask Slashdot: When Is Patent License Trading Not Trolling?
LeadSongDog writes "A piece in yesterday's Forbes offers arguments on why not all 'Non-Practicing Entities' are 'Patent Trolls.' Comments here on such businesses are often critical. Is there a right way to trade in patents for profit without abusing the process?"
From the article: "The Founders’ decision to foster non-practicing entities and patent licensing proved crucial to America’s rapid technological progress and economic growth. Patent records from the nineteenth century reveal that more than two-thirds of all the great inventors of the Industrial Revolution, including Thomas Edison and Elias Howe, were non-practicing entities who focused on invention and licensed some or all of their patents to others to develop into new products."
Great example - just not for their cause.
I'm of the opinion that if you didn't create it, and your entity exists to do nothing than extort people for royalties on your patent ... you are a patent troll.
Lost at C:>. Found at C.
okay we have 3 different groups to deal with
1 inventor type that don't market anything (they invent and then sell to a Maker)
2 Makers that have on staff inventor types (they make stuff "with our patented..."
3 Leech types that just beg, borrow , steal and Buy patents (Holding Corps that only send bills around)
Trolls are type 3 not type 1
Any person using FTFY or editing my postings agrees to a US$50.00 charge
More of less the article says that NPEs encourage innovation by allowing people to sell patents. Everyone agrees that patent trolls/ NPE by being willing to buy patents help to make having a portfolio of patents a valuable asset. That's not a point in question. The point in question is whether the damage NPEs cause exceeds the benefits of their funding since the money for those buys comes from lawsuits. And Forbes doesn't even attempt to answer that question. Lots of terrible things often have some side advantages that don't come close to covering the downside of the terrible thing.
Since a patent is a government granted privilege, if you don't market your patented device, you must allow somebody to do so at a reasonable price, set by the government, if need be. If you want to consider patents as property, let's levy taxes on it and use eminent domain where necessary. (See the Wright Brothers patent on lateral control of the airplane)
“He’s not deformed, he’s just drunk!”
The problem is junk patents.
Imagine you invent a device that pulls water out of the air for free (unlike anything cold, which will do it for $$$). Anywhere. Even in a desert. This is a great innovation. I have zero problem with you selling your patent to someone else. The problem I have is that right after you invent this, a horde of lawyers will storm the patent office and patent things like drinking water that came from your device. Watering a lawn with water that came from your device. Making beer with water that came from your device.
The problem is the ridiculous deluge of patents for trivial and obvious things. They litter the business landscape and make it impossible to solve any real problem without tripping over them as you solve 100 trivial problems in obvious ways along the way. Cuz you know, who ever would have thought that the optimal number of clicks to buy something in would be 1? That must have taken a talented team of web developer (singular) literally hours to do.
... is not that patents are bought and sold (this should be perfectly valid for valid patents). The real problem is that there are so many bad patents ... things that are not innovative at all ... things that don't fulfill the need to have a patent system. Once people start to understand what patents really are supposed to be, then we can solve the problem. It's not about trolls or software patents or things like that. It's about what justifies the government taking property rights away, and how that concept has been corrupted by corporations since the middle 1800's.
Read more ...
now we need to go OSS in diesel cars
Until 1880 this was not a problem.
Up until that point, there was a requirement of production of a working model, also known as a Reduction To Practice. After 1880, you could patent whatever, and get away with never having produced anything other than the speculation that your idea might be reduced to practice using some future engineering or technical ability which did not exist at the date of filing.
One common alternative method of patent reform is to bring back this requirement, and to place the model in escrow. In the limit, this permits future study of the model, whether it be hardware, or a process patent for software. This would incidentally remove patent protection from soft processes, such as business model process patents, which people tend to find very objectionable as abuses of the patent system.
In theory what a NPE does is actually quite admirable. You're an inventor and you invented something and you have a patent and big companies rip you off. They know you can't afford to fight them so they just do what they want. So you sell your patent to someone like Intellectual Ventures who goes after the big companies for you. Now no one can make your widget bolt without paying you, as it should be.
And look what's happened - even giant companies are scared shitless to defend against patent lawsuits. In that respect, the idea worked.
In practice though what happens is minute, even trivial things get patented and NPE's go looking for people to sue, using a byzantine series of shell companies and borderline gaming of the legal system. Whereas the inventor of the widget bolt has to make the exact specifications of how his bolt works open to the public (who could also just figure it out by looking at it) software companies don't have to make the source code of their patented inventions available to anyone.
NPE's to me are like the NRA or PETA - organizations/concepts which started out with noble intentions (responsible gun ownership, don't torture animals) and just strayed way off the mark.
Schnapple
It lists Qualcomm as an NPE!?!?! WTF!?! I guess it's because they don't FAB the chips themselves.
Qualcomm sells chips THEY DESIGN using their IP, they just CONTRACT OUT the device to others to build. How is that NOT an Practicing Entity?!? They also license out their patents for worldwide standards (WCDMA) that they may not have any part in the manufacture of the devices that use that standard.
So by the Authors' definition of NPE, Apple is also an NPE because they contract the assembly of their I-devices to other companies and don't actually FAB their A7 processors?
Meh.
Layman's answer:
It's trolling when the party seeking to enforce their patent rights has no intention of selling an actual working implementation on the open market.
If the purpose of your company is to make money by licensing an idea, rather than selling a product or service that incorporates that idea, then you're a troll. The system shouldn't allow you to feed on other companies and individuals that are using that idea in their own products or services.
Nobody cares if an inventor sells a patent to a manufacturer or a service provider who will actually use it, that's how the system is supposed to work. But holding companies and the builders of defensive portfolios should have no place at the table.
Also, just because business has been conducted a certain way up till now, doesn't mean that's the best way to conduct business. Thomas Edison wasn't a saint, he ruthlessly exploited the inspiration and perspiration of everyone who worked for him and went to great lengths to crush his competitors. WE CAN DO BETTER, is the point.
Make patents non-transferrable. Then they can't be used for collateral and there is no conflict at all.
" If you wanted to remove all patent trolls, you will also make it almost impossible for a start-up company that only has intellectual property to get start-up capital."
I don't see that as necessarily a bad thing.
Is it just my observation, or are there way too many stupid people in the world?
When you have entities taking advantage of what you invented, and you have no choice but to involve the courts to force them to do the right thing.
Anything else is a troll.
---- Booth was a patriot ----
"How much would we have to pay 'the Patent Holder' for licensing of their shitty little patent?" ...
"$50 million a year, sir."
"What's contract killers going for on Silk Road?"
"$15k/head"
"How many patent holders?"
"Six are listed."
"let's save ourselves over $49 million bucks. Fire up Tor."
If you were me, you'd be good lookin'. - six string samurai
This is what some media commentators ignore when they try to tar all non-practicing entities with the same brush as abusive patent trolls.
NPEs (non-practicing entities) are people who don't manufacture products based on their patents, they just license the patents. Patent trolls are a subset of NPEs who abuse the patent system by blackmailing the public and companies with obvious, non-innovative and/or overly broad patents. The point being, not all NPEs and their patents are evil.
they just license the patents.
You make it sound like they hire a salesperson to go around and market their patent to potential customers. Or maybe you think the customers search for useful patents to license and then contact the inventor. Neither of these scenarios is common. What is common, is for the NPE to just sit on the patent, wait for someone to independently come up with the same innovation, and then demand payment. This is not contributing anything positive to the process.
And the cause of junk patents is the distorted economy of issuing patents. USPTO gets paid for every patent they issue, good or bad, yet are immune from lawsuits from the businesses they negatively impact by their bad behavior.
The term for this immunity is royal perogative.
Of course, the person who invented the LASER would never have been able to gat a patent with Reduction to Practice, and last I checked, the LASER was pretty damn useful.
You are wrong about the laser. You need to read:
The Laser Odyssey
Theodore Maiman
ISBN: 0970292704
The original inventor of the laser almost lost out on his patent because he believed that there was still a "reduction to practice" requirement. The difference in the time to invention to reduction as a period of a bout 3 years.
Patents slowing down progress by discouraging use and hindering competitors is not new, but has been going on since the beginning of the patent system. The beginning chapter of Against Intellectual Monopoly details the case of the steam engine, where progress in efficiency and adoption of the steam engine was effectively halted for the duration of Watt's patents, only to take off right after they expired.
Once Watt’s patents were secured and production started, a substantial portion of his energy was devoted to fending off rival inventors. In 1782, Watt secured an additional patent, made “necessary in consequence of ... having been so unfairly anticipated, by [Matthew] Wasborough in the crank motion.” More dramatically, in the 1790s, when the superior Hornblower engine was put into production, Boulton and Watt went after him with the full force of the legal system. During the period of Watt’s patents the U.K. added about 750 horsepower of steam engines per year. In the thirty years following Watt’s patents, additional horsepower was added at a rate of more than 4,000 per year. Moreover, the fuel efficiency of steam engines changed little during the period of Watt’s patent; while between 1810 and 1835 it is estimated to have increased by a factor of five. After the expiration of Watt’s patents, not only was there an explosion in the production and efficiency of engines, but steam power came into its own as the driving force of the industrial revolution. Over a thirty year period steam engines were modified and improved as crucial innovations such as the steam train, the steamboat and the steam jenny came into wide usage. The key innovation was the high-pressure steam engine – development of which had been blocked by Watt’s strategic use of his patent.
The above is just a short section, they go through the case very thoroughly (with references), and it is worth a read. Interestingly, the steam engine is often quoted by patent proponents as an example of patents working like they are supposed to.
The next step to turning a "licensing organization" into a legitimate business is to have it advertise its portfolio, in a market analogous to Programmer's Paradise, rather than remain silent until ambushing real businesses with threatened litigation.
Imagine if you got ads instead of C&D letters! "We hear you're working on nails for building houses in hurricane-prone areas. We can save you tons of expensive R&D and get you to market quicker if you license our patent that documents the measurements and manufacturing process for Hurriquake® nails."
Adding to this, companies like ARM provide even more than that. They research and design new equipment. That's the most important part, IMO. If there's a company that does a lot of research, and patents a lot of things, ala Bell Labs, then licenses out those patents, the company isn't trolling.
MOST patent suits are filed by one of twelve companies. There are hundreds of companies who actively try to license their IP, like Arm and Bell Labs do.
The "good" scenario is in fact the common one. The bad scenario is the one you see covered on Slashdot.
Also from time to time Slashdot covers a story of proper patent use, but in a totally misleading way so as to make it sound bad. For example, last week we had the story of Cisco wanting to come to the rescue when a big bad patent troll was suing defenseless defendants. The big bad wolf in that case is a nonprofit organization and the "defenseless victims" are AT&T, Comcast, Level3, and Time Warner.