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Microsoft Hit With Another Multimillion Patent Loss in Texas

23 points by grellas 17y ago

jpcx01 17y ago
The plaintiff is "a 12-man operation that gets most of its revenue from licensing its intellectual property". So they sue people who use stuff they've patented but don't actually use themselves. Patent law badly needs to change.
- barnaby 17y ago
  Yeah, VirnetX look like a "non-practicing entity". Their website talks about "products" but it's clear their whole business relies on "intellectual property", whatever that is.
  - rbanffy 17y ago
    NPEs are not bad per se. Imagine I have invented (as in done the physics and made sure it's correct) energy generation process that requires a billion dollar device to be built. NPEs can invent things they can't really build. The problem is not in NPEs. It's in bad patents. Ideas and processes should not be patentable. Period.
    - phaedrus 17y ago
      The flaw in your argument defending NPEs is that even if the physics is correct there will be countless engineering challenges to overcome between the theoretical invention and the actual working billion dollar device. I put forth that the form of the invention after it has gone through that process of building a real protype will be qualitatively different than the theoretical one the NPE designed. So, the patent for the theoretical device will be next to worthless to society because it doesn't represent the form of something that will actually work. Yet, under current patent law the NPE would be able to extort money from the company that did build the actual working form. One problem IS that NPEs should not be allowed. There should be several requirements for a patent: 1. You must produce an actual, working prototype. 2. If some period of time (say, 2 years) elapses during which you're not physically producing copies of the device for sale, you should lose the patent right and it becomes public domain. Trademarks have to be defended to be kept; patents should have to be backed with production to be kept. 3. Patents should be non-transferable. Companies should not be allowed to own patents, only inventors; the inventor can give license to a company to make his invention.
      - rbanffy 17y ago
        > 1. You must produce an actual, working prototype Unless it's impossible to have such a prototype without a substantial capital investment that's incompatible with a small entity > 2. If some period of time (say, 2 years) elapses during which you're not physically producing copies of the device for sale, you should lose the patent right and it becomes public domain Maybe two years is too short if the invention needs more time to be put into production. Imagine you invent a deep space-propulsion device that only works in deep space - you may need a long time to test it in working conditions. All in all, it's a sensible idea. > 3. Patents should be non-transferable. Companies should not be allowed to own patents, only inventors; the inventor can give license to a company to make his invention That could make it difficult to sponsor research. Say I have a couple billion dollars in my budget and I would like to help you invent that deep-space propulsion system. Do you seriously expect me to allow you to own the invention after making it possible for you to test and build it?
      - RK 17y ago
        So an R&D firm shouldn't be able to get patents, only someone who does R&D plus manufacturing? I ask that because the startup where I work part-time does R&D for scientific equipment and we then license the technology to companies that are interested in possible manufacturing. Many companies would rather license a patent, and be the exclusive manufacturer than have to invest in the R&D themselves. And by the way, many (hardware) technologies require a significant amount of time to bring from the conceptual stage to manufacturing stage, especially when you have limited, such as a startup might.
robryan 17y ago
It's interesting though because Microsoft would have to lose probably hundreds of these cases before they would be in support of removing software patents given the amount that they have.
- deleted 17y ago
  [deleted]
- dminor 17y ago
  I think Microsoft would abolish the patent system in a heartbeat if they could. What part of their operation depends on the successful prosecution of their patents?
  - ZeroGravitas 17y ago
    There's a lot of speculation that patents are Microsoft's next big money earner. They hired the guy responsible for generating 2 Billion a year in patent fees for IBM. He's written a book, called Burning the Ships: Intellectual Property and the Transformation of Microsoft which makes for interesting reading: http://news.cnet.com/8301-13505_3-10215905-16.html http://news.cnet.com/8301-13505_3-10215905-16.html
    - deleted 17y ago
      [deleted]
      - rbanffy 17y ago
        Then you'll need patent reform. A sane patent system is a requirement for a flourishing economy.
  - decode 17y ago
    I think that's unlikely. Microsoft filed an amicus brief in the Bilski case last year that made it clear they fully support software patents: http://www.patentlyo.com/am-brief.pdf http://www.patentlyo.com/am-brief.pdf
barrkel 17y ago
From the sounds of this report, cases hinge on how personable the main lawyer seems to be.
- rbanffy 17y ago
  That could be a geo-social problem.
pxlpshr 17y ago
I don't disagree with burning patent trolls at the stake... but why does it always seem that if something happens in Texas, it has to be called out specifically as if we don't have enough misinformed stigmas hanging over our head? Maybe it's my own personal bias taking offense but it just seems way to common considering the size and diversity of the state. Sorry to sidetrack, just annoys me. Living in Austin I'm seeing a flight of out-of-state workers looking for economic refuge from so many of the other bankrupt and poorly managed states. Texas has pretty sound economic policies and infrastructure if I don't say so myself.
- akeefer 17y ago
  The Eastern District of Texas is particularly notorious for being very favorable to plaintiffs in patent lawsuits (it's even specifically called out in the Wikipedia article on patent trolls), so it's notable that this happened in Texas both because a disproportionately large number of such cases happen there and because Microsoft had previously lost a patent suit in this exact same courtroom. Perhaps Texas gets unfairly attacked in other areas, but when it comes to patent lawsuits there really is a pretty serious problem there.
  - tzs 17y ago
    EDT is not particularly favorable to plaintiffs. Defendants, especially in the last couple of years, have been doing quite well. The main reason plaintiffs choose EDT is that its a "rocket docket". A rocket docket is a district where civil trials are speedy. There are a couple reasons for EDT currently being a patent rocket docket. First, it has handled many patent cases, so it has judges who know how to handle patent cases. That came about because one particular judge, I believe Judge Ward, worked on a big patent case just before becoming a judge. He enjoyed the intellectual challenge (patent cases are among the most complicated), and so after becoming a judge, he jumped on any patent cases that showed up in his district, which in turn started attracting patent cases. Some of those would get assigned to the other judges, and so they developed expertise at handling patent cases. Hello, feedback loop. Second, EDT doesn't have much crime. Criminal cases have higher priority than civil cases (because of the right to a speedy trial in criminal cases). In districts where there is a lot of crime, the courts are so backlogged with criminal cases (thanks, stupid "War on Drugs") that a civil case can take years to even get to preliminary hearings. Whether you are a plaintiff or a defendant in a patent case, one thing you want is for it to be over as fast as possible. I've been involved in such a case, and even though I loath traveling, given the choice between going 2000 miles to Texas and having the thing over in a year, versus having it in the local district, and having it take five years, I'd pick Texas. From a programmer's point of view, here's what its like when your employer is involved in a patent suit (on either side). First, you have to be careful in all recorded communications, because those are subject to discovery requests--so if you want to talk to another programmer about something even remotely related to the patented technology, you need to go actually talk in person, or over the phone--no email. Second, there are discovery requests. You'll be required to produce everything relevant you have, and the lawyers expect you to be thorough. You have no idea how many places old code can hide until you've had to respond to a discovery request. (And its not just code--they want all documents relevant to the patented technology). As your lawyers prepare their case, they will have questions. You'll get calls at 9 PM (in the timezone of the court that the suit is filed in, not your time zone) asking questions about source code. The lawyers need the answer to file a motion that is due in three hours. The code is 10 year old code that you haven't looked at in 9 years, and you weren't even the main developer. But you'd better be able to answer the question, 'cause a lot of money is riding on it. Oh, and there are depositions. That's where the other side gets to have a couple days to ask you questions about that 10 year old source code, and also ask you about all kinds of emails and other things they received in discovery. Try this, check all your email for a week about your current projects, and ask yourself "is there any way a hostile lawyer could use this email to make me look bad?". For most, the answer is "yes". Some joking reference to a competitor that was funny at the time, say, is not at all funny when you are sitting in a room full of lawyers, being video taped as they ask you questions about it. This is all very disruptive. It's barely tolerable for a year. Five years...ugh!
tomh- 17y ago
I wonder why all those tech companies don't team up and hire a bunch of lobbyist to get rid of this system as soon as possible. Is this because they lose the ability to sue their own competitors when things get though? Thank god we don't have these lawsuits in Europe.
- Glide 17y ago
  The tech sector is only one sector of the economy. Even if they did want to change there may be other industries that would push against it.
zaphar 17y ago
Patent trolls are such a problem because the usual economics that protect a company from suit (eg. being countersued) don't apply since the patent troll doesn't actually produce anything that could infringe. This is a great example of exactly that.
WildUtah 17y ago
Microsoft must love these cases. Sure, they lose some money each time. Much more important is that ambitious small competitors will be discouraged from entering the software industry at all. What could be better for the monopolist? Aren't Microsoft lobbyists working hard to support bad software patents and patent trolling in Washington? The best thing for our industry would be that M'soft lose billions every year on these cases and shape up to support reform.
dkline 17y ago
>> NPEs should not be allowed. If so, then the industrial revolution of the 19th century and much of our nown technological progress more recently would never have happened. Research conducted by B. Zorina Khan and Kenneth Sokoloff found that 2/3 of the 400 "Great Inventors" of the 19th century (including Thomas Blanchard and Thomas Edison) were NPEs. In fact, what was hisorically unique about the American patent systemn was that it was the first in the world aimed agt encouraging ordinary workers, farmers and artisans to participate in inventive activity. So even though most such inventors didn't have the capital to manufacture their products and inventions themselves, they licensed their discoveries to large firms who could. The trend continues today. In fact, that's why people like Roger Hoffman, perhaps the most prolific patentee of new environmental and anti-pollution technologies, are able to keep inventing -- i.e., by licensing their discoveries to larger firms.

23 points by grellas 17y ago

The plaintiff is "a 12-man operation that gets most of its revenue from licensing its intellectual property". So they sue people who use stuff they've patented but don't actually use themselves. Patent law badly needs to change.

barnaby 17y ago
Yeah, VirnetX look like a "non-practicing entity". Their website talks about "products" but it's clear their whole business relies on "intellectual property", whatever that is.
- rbanffy 17y ago
  NPEs are not bad per se. Imagine I have invented (as in done the physics and made sure it's correct) energy generation process that requires a billion dollar device to be built. NPEs can invent things they can't really build. The problem is not in NPEs. It's in bad patents. Ideas and processes should not be patentable. Period.
  - phaedrus 17y ago
    The flaw in your argument defending NPEs is that even if the physics is correct there will be countless engineering challenges to overcome between the theoretical invention and the actual working billion dollar device. I put forth that the form of the invention after it has gone through that process of building a real protype will be qualitatively different than the theoretical one the NPE designed. So, the patent for the theoretical device will be next to worthless to society because it doesn't represent the form of something that will actually work. Yet, under current patent law the NPE would be able to extort money from the company that did build the actual working form. One problem IS that NPEs should not be allowed. There should be several requirements for a patent: 1. You must produce an actual, working prototype. 2. If some period of time (say, 2 years) elapses during which you're not physically producing copies of the device for sale, you should lose the patent right and it becomes public domain. Trademarks have to be defended to be kept; patents should have to be backed with production to be kept. 3. Patents should be non-transferable. Companies should not be allowed to own patents, only inventors; the inventor can give license to a company to make his invention.
    - rbanffy 17y ago
      > 1. You must produce an actual, working prototype Unless it's impossible to have such a prototype without a substantial capital investment that's incompatible with a small entity > 2. If some period of time (say, 2 years) elapses during which you're not physically producing copies of the device for sale, you should lose the patent right and it becomes public domain Maybe two years is too short if the invention needs more time to be put into production. Imagine you invent a deep space-propulsion device that only works in deep space - you may need a long time to test it in working conditions. All in all, it's a sensible idea. > 3. Patents should be non-transferable. Companies should not be allowed to own patents, only inventors; the inventor can give license to a company to make his invention That could make it difficult to sponsor research. Say I have a couple billion dollars in my budget and I would like to help you invent that deep-space propulsion system. Do you seriously expect me to allow you to own the invention after making it possible for you to test and build it?
    - RK 17y ago
      So an R&D firm shouldn't be able to get patents, only someone who does R&D plus manufacturing? I ask that because the startup where I work part-time does R&D for scientific equipment and we then license the technology to companies that are interested in possible manufacturing. Many companies would rather license a patent, and be the exclusive manufacturer than have to invest in the R&D themselves. And by the way, many (hardware) technologies require a significant amount of time to bring from the conceptual stage to manufacturing stage, especially when you have limited, such as a startup might.

robryan 17y ago

It's interesting though because Microsoft would have to lose probably hundreds of these cases before they would be in support of removing software patents given the amount that they have.

deleted 17y ago
[deleted]
dminor 17y ago
I think Microsoft would abolish the patent system in a heartbeat if they could. What part of their operation depends on the successful prosecution of their patents?
- ZeroGravitas 17y ago
  There's a lot of speculation that patents are Microsoft's next big money earner. They hired the guy responsible for generating 2 Billion a year in patent fees for IBM. He's written a book, called Burning the Ships: Intellectual Property and the Transformation of Microsoft which makes for interesting reading: http://news.cnet.com/8301-13505_3-10215905-16.html http://news.cnet.com/8301-13505_3-10215905-16.html
  - deleted 17y ago
    [deleted]
    - rbanffy 17y ago
      Then you'll need patent reform. A sane patent system is a requirement for a flourishing economy.
- decode 17y ago
  I think that's unlikely. Microsoft filed an amicus brief in the Bilski case last year that made it clear they fully support software patents: http://www.patentlyo.com/am-brief.pdf http://www.patentlyo.com/am-brief.pdf

barrkel 17y ago

From the sounds of this report, cases hinge on how personable the main lawyer seems to be.

rbanffy 17y ago
That could be a geo-social problem.

pxlpshr 17y ago

I don't disagree with burning patent trolls at the stake... but why does it always seem that if something happens in Texas, it has to be called out specifically as if we don't have enough misinformed stigmas hanging over our head? Maybe it's my own personal bias taking offense but it just seems way to common considering the size and diversity of the state. Sorry to sidetrack, just annoys me. Living in Austin I'm seeing a flight of out-of-state workers looking for economic refuge from so many of the other bankrupt and poorly managed states. Texas has pretty sound economic policies and infrastructure if I don't say so myself.

akeefer 17y ago
The Eastern District of Texas is particularly notorious for being very favorable to plaintiffs in patent lawsuits (it's even specifically called out in the Wikipedia article on patent trolls), so it's notable that this happened in Texas both because a disproportionately large number of such cases happen there and because Microsoft had previously lost a patent suit in this exact same courtroom. Perhaps Texas gets unfairly attacked in other areas, but when it comes to patent lawsuits there really is a pretty serious problem there.
- tzs 17y ago
  EDT is not particularly favorable to plaintiffs. Defendants, especially in the last couple of years, have been doing quite well. The main reason plaintiffs choose EDT is that its a "rocket docket". A rocket docket is a district where civil trials are speedy. There are a couple reasons for EDT currently being a patent rocket docket. First, it has handled many patent cases, so it has judges who know how to handle patent cases. That came about because one particular judge, I believe Judge Ward, worked on a big patent case just before becoming a judge. He enjoyed the intellectual challenge (patent cases are among the most complicated), and so after becoming a judge, he jumped on any patent cases that showed up in his district, which in turn started attracting patent cases. Some of those would get assigned to the other judges, and so they developed expertise at handling patent cases. Hello, feedback loop. Second, EDT doesn't have much crime. Criminal cases have higher priority than civil cases (because of the right to a speedy trial in criminal cases). In districts where there is a lot of crime, the courts are so backlogged with criminal cases (thanks, stupid "War on Drugs") that a civil case can take years to even get to preliminary hearings. Whether you are a plaintiff or a defendant in a patent case, one thing you want is for it to be over as fast as possible. I've been involved in such a case, and even though I loath traveling, given the choice between going 2000 miles to Texas and having the thing over in a year, versus having it in the local district, and having it take five years, I'd pick Texas. From a programmer's point of view, here's what its like when your employer is involved in a patent suit (on either side). First, you have to be careful in all recorded communications, because those are subject to discovery requests--so if you want to talk to another programmer about something even remotely related to the patented technology, you need to go actually talk in person, or over the phone--no email. Second, there are discovery requests. You'll be required to produce everything relevant you have, and the lawyers expect you to be thorough. You have no idea how many places old code can hide until you've had to respond to a discovery request. (And its not just code--they want all documents relevant to the patented technology). As your lawyers prepare their case, they will have questions. You'll get calls at 9 PM (in the timezone of the court that the suit is filed in, not your time zone) asking questions about source code. The lawyers need the answer to file a motion that is due in three hours. The code is 10 year old code that you haven't looked at in 9 years, and you weren't even the main developer. But you'd better be able to answer the question, 'cause a lot of money is riding on it. Oh, and there are depositions. That's where the other side gets to have a couple days to ask you questions about that 10 year old source code, and also ask you about all kinds of emails and other things they received in discovery. Try this, check all your email for a week about your current projects, and ask yourself "is there any way a hostile lawyer could use this email to make me look bad?". For most, the answer is "yes". Some joking reference to a competitor that was funny at the time, say, is not at all funny when you are sitting in a room full of lawyers, being video taped as they ask you questions about it. This is all very disruptive. It's barely tolerable for a year. Five years...ugh!

tomh- 17y ago

I wonder why all those tech companies don't team up and hire a bunch of lobbyist to get rid of this system as soon as possible. Is this because they lose the ability to sue their own competitors when things get though? Thank god we don't have these lawsuits in Europe.

Glide 17y ago
The tech sector is only one sector of the economy. Even if they did want to change there may be other industries that would push against it.

zaphar 17y ago

Patent trolls are such a problem because the usual economics that protect a company from suit (eg. being countersued) don't apply since the patent troll doesn't actually produce anything that could infringe. This is a great example of exactly that.

WildUtah 17y ago

Microsoft must love these cases. Sure, they lose some money each time. Much more important is that ambitious small competitors will be discouraged from entering the software industry at all. What could be better for the monopolist? Aren't Microsoft lobbyists working hard to support bad software patents and patent trolling in Washington? The best thing for our industry would be that M'soft lose billions every year on these cases and shape up to support reform.

dkline 17y ago

>> NPEs should not be allowed. If so, then the industrial revolution of the 19th century and much of our nown technological progress more recently would never have happened. Research conducted by B. Zorina Khan and Kenneth Sokoloff found that 2/3 of the 400 "Great Inventors" of the 19th century (including Thomas Blanchard and Thomas Edison) were NPEs. In fact, what was hisorically unique about the American patent systemn was that it was the first in the world aimed agt encouraging ordinary workers, farmers and artisans to participate in inventive activity. So even though most such inventors didn't have the capital to manufacture their products and inventions themselves, they licensed their discoveries to large firms who could. The trend continues today. In fact, that's why people like Roger Hoffman, perhaps the most prolific patentee of new environmental and anti-pollution technologies, are able to keep inventing -- i.e., by licensing their discoveries to larger firms.