Obama Calls for Patent Reform to Topple Trolls

https://www.eff.org/deeplinks/2013/02/obama-calls-patent-reform-topple-trolls

by PhearTheCeal • 13 years ago

249 73 13 years ago

rednukleus• 13 years ago

The primary problem is not NPEs, it's trivial "inventions" such as one-click purchasing and slide-to-unlock. If the bar were much higher for patents, then NPEs would not be a problem.

Having companies that licence out technology is a perfectly reasonable system, if the company has done significant research or purchased patents from people who have. A secondary market for significant inventions is probably a good thing; a secondary market for borderline obvious inventions is not.

rayiner7• 13 years ago

I agree. The focus on NPE's is misguided. A secondary market in patents is a good thing. E.g. Northwestern invented the drug that became Lyrica. As a university, they have no business being in the medical products business. So they sold it to Pfizer. What if, instead, they had sold it to a holding company that licensed out the technology to drug companies? That holding company would be an NPE, but it's a perfectly valid one and serves an important market purpose.

It's clear that the patent office can't tell an obvious invention apart from a non-obvious one, so I'm not sure if there is much to be gained in that direction either. I think there are a lot of collateral ways to attack the problem, though:

1) Reforms on how damages are calculated. If you neither sell a product nor license IP to third parties, there is no way you're losing any revenue from an infringement. You should not be awarded even "reasonable royalty" damages if you wouldn't have received any royalties in any case.

2) Reforms involving intent and copying. The economic heart of the patent system is unfair competition: I invent something and you copy it and undercut me in the market because you have no R&D costs. As you get further from this core justification, the less justifiable the regime becomes. A lot of troll litigation could be shut down quickly if patent infringement functioned similarly to copyright infringement in requiring direct copying. This, unlike the above reform, would be a fundamental change in the system, from "monopoly" to a more "unfair competition" grounds, but the fact of the matter is that independent invention is strongly probative of something that probably doesn't deserve patent protection, either for being obvious generally or for being obvious in the context of other advancements in technology.

jmj42• 13 years ago

> As a university, they have no business being in the medical products business.

Why? While this line of reasoning might carry some weight if Northwestern were a public university (though I'd still require some convincing), Northwestern is a private non-profit institution, with a highly ranked medical school and clinic.

Supplementing their income with drug sales instead of higher tuition seem like a perfectly logical thing to do.

eurleif2• 13 years ago

>Reforms on how damages are calculated. If you neither sell a product nor license IP to third parties, there is no way you're losing any revenue from an infringement. You should not be awarded even "reasonable royalty" damages if you wouldn't have received any royalties in any case.

So threaten to sue a small company that doesn't want to pay for lawyers, and settle for a royalty agreement. Now you've licensed your IP to a third party, and you can sue someone else for greater damages.

jholman• 13 years ago

I absolutely agree that NPEs are not the problem, but I do think that obvious vs non-obvious is the problem, and we'd BETTER make some traction in that direction.

Okay, here's my wild idea of the hour:

AIUI (IANAL, and I've never been involved in a patent application), a patent contains claims and specification. I'm not sure how much this is like C declaration vs definition, but in all the patents I've seen, the claims contain no implementation details. What if, as part of a patent application, the USPTO published the claims in a public forum, and allowed the public to put forward suggested implementations. If any are filed, obviously the patent is obvious. Interested amateurs could amuse themselves by contending, but also competing businesses could protect themselves from trivial patents from their competitors, by allocating paid employee time to monitor patent claims in areas of interest. Admittedly, future market entrants wouldn't yet know they should monitor the area, so it's not perfect.

As for your specific suggestions, rayiner, I think these are similarly not-quite-the-point as the focus on NPEs. I agree that #1 is a "collateral way to attack the problem", but then again so is focussing on NPEs. (After all, how many useful NPEs are there? If the cost of eliminating the parasitic NPEs is the loss of the legitimate drug patent holding company that you describe, I could live with that.)

And as for #2, it's not at all clear to me that it'd be an improvement. Companies would double down on requiring engineers to not read patents, as some companies already do to avoid triple damages. In my ideal world, we continue to stand on the shoulders of giants.

jberryman• 13 years ago

Re. your Lyrica example, is it probably true that the research that lead to the discovery of that drug would never have been done if not for the carrot/stick of a potential sale of the IP?

Perhaps the discovery would have been made regardless and the laws are set up for a few to make a buck to the detriment of society at large (playing devil's advocate here, not convinced this is the case).

mjn• 13 years ago

Another example of what to me seems like a "good" case for NPEs: Stanford's CCRMA invented a bunch of early synthesizer techniques, and licensed them to Yamaha, who brought them to market. A reasonable division of labor: CCRMA is not well equipped to manufacture and market synthesizers to the general public, but Yamaha is and was interested in their research. In turn, the licensing revenue was fed back into more research in the field. Patents provided the legal mechanism for that all to happen.

A focus on NPEs also doesn't get at the abuse perpetrated by practicing entities. For example, Intel uses its stable of patents (many of them quite questionable) to prevent startups from breaking into its markets: you can only go up against Intel if you're someone like IBM who has their own patent stable to form a credible MAD threat. The aggressive use of patents by practicing entities with strong market positions (in order to stifle competition) is imo at least as big a problem as NPEs are.

AnthonyMouse2• 13 years ago

>1) Reforms on how damages are calculated. If you neither sell a product nor license IP to third parties, there is no way you're losing any revenue from an infringement. You should not be awarded even "reasonable royalty" damages if you wouldn't have received any royalties in any case.

What stops them just publishing a sham product whose sole purpose is to be for sale while infringing the patent and then show a few licenses to a couple of fishing buddies?

The real trouble with how damages are calculated for software patents is that there is no good way to determine the degree to which the patent was integral to the success of the product, and juries have had a tendency to grossly overestimate their value. Witness Apple v. Samsung.

I imagine your typical smart phone infringes probably twenty or thirty thousand software patents. Even if you assume that every penny of the device's price is attributable solely to patents (and nothing for, say, manufacturing, shipping or advertising), and the device "only" infringes 10,000 patents, the average value of one of those patents against the sale of ten million $500 devices would be $500,000. Which would hardly be even worth litigating over, given that the lawyers cost more than that. But there is no real way to prove that any given patent subscribes to the averages, and plaintiffs will naturally argue that their patent is worth more than all the other patents, and the jury who finds for them on infringement is predisposed to agree on damages as well. So we get billion dollar awards that should be sub-million dollar awards and the trolls get fully funded to buy more radiological weapons and lobby hard for their own continued existence.

>A lot of troll litigation could be shut down quickly if patent infringement functioned similarly to copyright infringement in requiring direct copying.

What standard could you use to prove that? Correct me if I'm wrong, but if I recall copyright is "similarity and access" and for published works "access" is kind of a formality (because everybody has access), which is why the degree of similarity requires a significant amount of specificity. I don't imagine you could find anyone to argue that Chrome infringes the copyright on Firefox as a result of their similarity.

But that's not going to cut it with patents. The intent of drafting a patent claim is to make it as broad as possible while still getting it through the patent office. Any non-mandatory specificity is the enemy. The only way you could give defendants any hope of actually proving that they didn't copy a patent under a standard like that would be to crank the level of specificity required in patent claims up to the point where you'll just have reinvented copyright and called it a patent.

Which is kind of the issue. Copyright works really well for software. The implementation is the hard part, and that is the part that copyright covers. Patents just don't work at all -- because there are so many ways to implement something in software that the only way a third party would ever actually infringe a software patent is to allow it to be so broad that it covers the problem itself rather than any specific solution to it (e.g. shopping cart patents), or covers any implementation that applies the mathematical formula that describes the optimized result for a specific problem dictated by information theory (e.g. encoding or encryption patents).

brownbat• 13 years ago

> If you neither sell a product nor license IP to third parties, there is no way you're losing any revenue from an infringement.

Well, maybe you're shopping for licensees.

A better solution would be to oblige you to license your inventions at a public auction if you can't find a licensee after a reasonable period of time (six months to a year?)

Licensee collusion at auction should be prosecuted under anti-competitive behavior acts, but probably wouldn't need to be if the auctions were fairly open.

The owner could participate with a shell company and put in an incredibly high bid to block the process... you could discourage this by putting a significant portion of the bid in escrow until the product is actually monetized. If it's never monetized, let other bidders sue for a new auction.

dhaivatpandya• 13 years ago

But, defining the different between trivial and nontrivial inventions is something that is incredibly difficult, if not impossible.

In fact, I would argue that trying to set in place a system to decide between trivial and nontrivial inventions is more or less a waste of time because there will always be inventions that sit on the fence.

rayiner7• 13 years ago

That's true of everything in law (and life, in general). That's not an insurmountable problem--just move the fence until things are mostly on the side you want them.

monochromatic6• 13 years ago

That's the USPTO's main job. The problem is that they don't always do it as well as one would hope.

InclinedPlane3• 13 years ago

So what? You just need to come up with a policy that biases in one way or the other and does so in a way that is the most beneficial.

Look at the criminal justice system. You can't always prove guilt or innocence in many trials, many times there are cases that sit on the fence but our system is set up with the assumption of innocence.

monochromatic6• 13 years ago

This point is so important, and so rarely mentioned. Trolls are a good thing to the extent they create liquidity in the patent market. They are only a bad thing to the extent that the USPTO issues overbroad and/or obvious claims.

j-g-faustus• 13 years ago

NPEs [1] are not the problem as such, they are simply the ones most clearly illustrating the implications of the current patent system.

PEs are encumbered by a number of other restrictions - their "cold war" type standoff against competitors, their need to maintain a mostly positive brand in the public eye, their need to minimize the risk of a catastrophic loss in a lawsuit. So they utilize only a fraction of the latent power of their patents.

NPEs have no such restrictions. They have no competitors, no brand to maintain, no economic risk beyond what it costs to register a new shell company.

So what we see from NPEs is what the patent system actually means. It's "pure patent system". By implication, the fix is to change the patent system. Preferably by abolishing software patents, at least. (I can't speak for other fields.)

In the history of computing, I think Babbage's difference engine, von Neuman and some of the stuff from Xerox Parc in the 1970s probably deserved a patent or two. Apart from those, no.

[1] Non-practicing entities, for those who don't know. (I had to look it up.)

InclinedPlane3• 13 years ago

Trivial is perhaps the wrong word for them. A more accurate term might be "inevitable" (in the short-term). The reason why patents exist is to protect inventions which are difficult to come up with and which may not exist without patent protection. Pharmaceuticals are a good example, it takes a lot of research to design a new potential drug and even more painstaking research to prove that it works and is safe, if you can't guarantee some sort of market protection that gives the developer a chance to recoup their R&D costs then it's questionable whether or not you'd have as many new drugs.

But on the other hand, if a patented invention is something that several other folks in the industry would have invented within the next 5 years regardless then patents start to become a drag on progress. It's telling when you see a burst of progress happen after a patent runs out, and that sort of thing happens all the time. The question is how do we strike the right balance. Unfortunately right now there are some very strong forces intent on keeping things very much off balance.

fnordfnordfnord2• 13 years ago

>Pharmaceuticals are a good example

The pharmaceutical industry also provides us with plenty of opportunities to pick on them. Take a drug that's about to go off-patent, make a trivial change to their process, get a fast-track approval from FDA (because it's essentially the same), and a new patent (because it's new and improved!). Competitors play this game too, making copycat drugs which are very similar enough for marketing, but just different enough to deserve their own patent. I'm having a hard time sympathizing with any pharmaceutical company. Disclaimer, I'm almost done reading Goldacre's new book.

tcbawo• 13 years ago

Imagine a tax system for IP modeled on real estate property taxes. To retain a patent, you would pay a tax based on assessed value. You could sell the patent, or enter it into the public domain. Failure to pay would result in forfeiture of the patent (ie. sold at auction, or entering into the public domain).

This could create a self-funding process for patent regulation and monitoring, and a check against unhealthy patent proliferation. It would discourage patent trolls from sitting on patents, large companies from accumulating a "war chest" of patents, and encourage FRAND licensing.

slurgfest• 13 years ago

If you want USPTO to very thoroughly vet all incoming patents, then you will have to fund them a great deal more to employ a lot of skilled people to handle all that footwork.

te_platt• 13 years ago

The list of reforms linked to in the article is here https://defendinnovation.org/ Note - not Obama's list.

I think #4 (no liability for independent invention) would effectively eliminate software patents by itself. I like what's there even if it seems unlikely to ever be implemented.

JoshTriplett• 13 years ago

> I think #4 (no liability for independent invention) would effectively eliminate software patents by itself.

As long as it starts with a presumption of independent invention until proven otherwise by the patent holder, yes.

monochromatic6• 13 years ago

Yeah, if independent invention is a defense, we're basically into something that looks a lot like copyright.

comicjk• 13 years ago

Which allows interesting strategies. If you put a smart person in the right scenario with the right hints, he will reinvent whatever you want. You just have to keep him in the dark until the flash of brilliance, and you have a patented-idea farm. It might make a good movie.

dade_• 13 years ago

Just wait for it, the Obama administration is going to be sued for infringing a patent for a process that protects people from patent trolls.

russell• 13 years ago

#1 Software patents should be for no more than 5 years.

Perhaps that should be true of all trivial inventions. Drug companies, for example, tweak best sellers coming off patent protection by adding another compatible compound and getting another 20 years, although the original compound looses protection.

monochromatic6• 13 years ago

There's a rule that'd be tough to administer if I've ever seen one.

danielweber• 13 years ago

Software patents that expire in 5 years could be very agreeable if the time it takes for them to be granted dropped from 3 years to around 6 months.

homosaur• 13 years ago

Software patents should not exist. Implementation is everything, ideas are easy.

bborud• 13 years ago

Patents cannot be reformed. The idea itself is dead. Let it go.

zmmmmm• 13 years ago

I think dropping the default length of software patents to 5 years would be a really good first start. As a concession, I would suggest even slightly lowering the barrier to entry for getting such a patent, and then retaining a tier at 20 years with a MUCH higher threshold for inventiveness. There would still be bad software patents, but I think this would greatly limit the damage from them. The incentive for trolls would be enormously reduced if they can only extort license fees for a few years, while the lower barrier to entry would make it much easier for small entrepreneurs to actually get patents without going through 20 rounds with the patent office.

There needs to be a recognition that in software entire segments are born and die within 20 years (even within 10 years). 20 years protection on a simple idea is way too long, even if it is truly novel. This is not like drugs where it may take 10 years of trials before you can even get it on the market.

jandrewrogers• 13 years ago

Algorithms live much longer than 20 years and often require more than 5 years to bring to market. As a practical matter it takes about a decade for a new computer science concept to be fully integrated into software practice.

I've been involved in quite a bit of hardcore algorithm R&D. In no case where material advancements were made was it possible to really bring it to market in five years from inception. Computer science has the same inertia for how things are done as any other industry. Altering the way things are done and getting uptake requires a surprising amount of time no matter how good the advancement. Which roughly matches most other patentable subject matters.

I'm not saying algorithm patents need to be 20 years but most software engineers have no idea how long it actually takes to commercialize material algorithm advancements. It looks a lot more like industrial patents than most programmers seem to assume. And many algorithm patents have millions of dollars in R&D invested in them; I have been involved in several such examples.

jonpeda7• 13 years ago

If an invention is useless (ahead of its time) for 10 years, then you may as well keep it secret until the market is ready, and then publish.

ilaksh• 13 years ago

To me its obvious that software patents should actually be abolished entirely.

If I am going to build a system and try to sell it, I sell it as a service with add-on support and make it open source. If I am buying a software system I usually expect the same thing. Or hope that I can sell it for a small fee or close source it and add copyright protection for a totally unique work.

But generally I feel that if someone invents a software concept or set of concepts that works well enough, then everyone should adopt it. Patents are just going to make that impractical. The idea of everyone licensing whatever useful system gets invented isn't practical and doesn't work with open source.

dakimov• 13 years ago

Trolls? Like Apple Corp. that patented bounce back scrolling? The problem is not trolls, the problem is the deep mental retardation of the current US patent system.

And it's not just a reform. All the issued patents must be revised and a lot of them must be revoked.

The solution seems to be simple, isn't it: don't patent trivial things, and only patent the actual methods, not just ideas of them.

fnordfnordfnord2• 13 years ago

There are so many problems with the patent system, it's hard to identify a primary problem. I'd say the worst thing about it is that it is simply non-functional for any individual or small business.

Got a patent? Someone infringing? Sue them! Cost? Astronomical.

Selling something? Patent Trolls trying to make a grab? Defend yourself in court! Cost? Astronomical.

Those scenarios merely address outright abuse; but, the way patents are granted guarantees that those situations will also arise between parties who aren't trolls.

npsimons• 13 years ago

Good! Let's start with Intellectual Ventures.

datz5• 13 years ago

Unfortunately, "Troll" has turned into a political term to prevent "undesirables" the government or society does not want to fund from starting businesses from the "Trolls" intellectual property which the "Troll" spent years of his or her life developing.

datz5• 13 years ago

By classifying people we do not like (mannerisms, personality, misfits) as trolls, we can practice socialism and transfer their ideas and intellectual property to people we like better, people who have nicer smiles.

datz5• 13 years ago

The socialists insist that everyone has a label, a "place in life" and will transfer the "Troll's" ideas and intellectual property to people who are better politically and socially well positioned. This is a ploy that will ruin our society.

Obama Calls for Patent Reform to Topple Trolls

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