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Matt, whereas arbitrage is a lucrative activity that's worthless to everybody else, this is a lucrative activity that's worthless and damaging. It hurts product

by asda55 18y ago

Matt, whereas arbitrage is a lucrative activity that's worthless to everybody else, this is a lucrative activity that's worthless and damaging. It hurts productive companies who are helping other people, at a 1:1 ratio. Each dollar Intellectual Ventures earns comes out of someone else's pocket, against their will, and in exchange for nothing. Even if you look at it from your own self-interested perspective: wouldn't you rather they were making a useful internet service, something that might provide benefit to you? These are smart guys from Microsoft, why don't they make a company that produces a product? This isn't a typical case of intellectual property providing a return. They're worse than the RIAA. It's an investment vehicle that provides revenue for the owners, with the added barbs that it 1.) Drains productive companies 2.) In the case of court cases, is subsidized by taxpayers. Do you think that with $4 billion under management they only stop and enforce the legitimate and fair patents? There's only one moral judgement to make. What they are doing is legal and unethical (hence morally wrong), and it should be made illegal, or rather, impossible under patent law. Arbitrageurs make a lot of money. They don't go to heaven.

mattmaroon 18y ago
Yeah, I'm not buying it. They're a natural byproduct of a functioning patent system. Part of the incentive to invent and produce new things is the ability to sell the IP itself. A lot of people are brilliant at building new things, but not so great at producing them and getting them into stores. They're two very different skills. It's a very useful middleman. They don't just get these patents from nowhere. They pay inventors and investors in bankrupt companies for them. It's no different than real estate investors buying up strip malls in areas they think will be big in a few years and then raising the rent. It isn't extortion, and it doesn't slow progress down. It incentivizes it. It creates a larger market for intellectual property. I won't say that our patent system is perfect, it clearly needs a lot of work, especially in the software era. But overall, it's pretty good, as evidenced by the resulting economy. It's easy to pass these people off as valueless middlemen, but they're not.
- cia_plant 18y ago
  They're certainly a middleman in the patent system. The question is whether they're a middleman for positive exchanges (good) or a middleman for extortionate exchanges (bad). Most people seem to be assuming the latter; you seem to be assuming the former. To clarify, the two business plans I'm thinking of are A) Find overlooked innovations; buy the patents; sell or license the patents to firms interested in developing products based on the innovations. B) Find overlooked overly broad patents; buy the patents; find companies who rely on systems which likely infringe these patents; threaten to sue these companies unless they pay large licensing fees. I would say that the evidence is on the side of model B. First of all, middlemen for extortion abound - the so called "patent trolls" - it is a proven market. Have you heard of any middlemen for genuine innovation? Secondly, we can look at the company's client list. Cisco, Verizon, Sony, Nokia, Microsoft, Intel, Google, eBay, SAP, and Nvidia are named in the linked article. Lots of software and electronics companies. The nature of software companies probably makes business plan (A) impossible (the conventional wisdom, at least, is that no one cares about a bright idea in software; they care about implementation). If they were following business plan (A), I'd expect to see industries where ideas are worth a great deal of money more represented - biotechnology maybe. I don't know if patents are worth anything, except for litigation purposes, in any industry really though. Finally, the actual article spells things out, although we can't be sure how accurate it is. "It works like this: Technology companies agree to pay patent-licensing fees to inoculate themselves against potential lawsuits by Intellectual Ventures." This kind of business plan is strictly destructive to the economy. Under this business plan, the patent gives nothing of value to the company licensing it (they are already infringing the patent, having "discovered" it in the normal course of business). It is the prevalence of these sorts of deals, and the rarity of the sort typified by model (A), that have put many of us against the patent system. By the way, a strong economy is no evidence that the patent system is pretty good. The economy could be strong even if we had an absolutely miserable, almost purely destructive patent system. The patent system may have simply too small an effect to make the difference singlehandedly between a strong economy and a weak one. Or maybe it has a large effect, and our economy would be far stronger with a non-broken patent system. It's impossible to know, when all we have is this tangled-up complex system called the economy which somehow works pretty well.

by asda55 18y ago

mattmaroon 18y ago

Yeah, I'm not buying it. They're a natural byproduct of a functioning patent system. Part of the incentive to invent and produce new things is the ability to sell the IP itself. A lot of people are brilliant at building new things, but not so great at producing them and getting them into stores. They're two very different skills. It's a very useful middleman. They don't just get these patents from nowhere. They pay inventors and investors in bankrupt companies for them. It's no different than real estate investors buying up strip malls in areas they think will be big in a few years and then raising the rent. It isn't extortion, and it doesn't slow progress down. It incentivizes it. It creates a larger market for intellectual property. I won't say that our patent system is perfect, it clearly needs a lot of work, especially in the software era. But overall, it's pretty good, as evidenced by the resulting economy. It's easy to pass these people off as valueless middlemen, but they're not.

cia_plant 18y ago
They're certainly a middleman in the patent system. The question is whether they're a middleman for positive exchanges (good) or a middleman for extortionate exchanges (bad). Most people seem to be assuming the latter; you seem to be assuming the former. To clarify, the two business plans I'm thinking of are A) Find overlooked innovations; buy the patents; sell or license the patents to firms interested in developing products based on the innovations. B) Find overlooked overly broad patents; buy the patents; find companies who rely on systems which likely infringe these patents; threaten to sue these companies unless they pay large licensing fees. I would say that the evidence is on the side of model B. First of all, middlemen for extortion abound - the so called "patent trolls" - it is a proven market. Have you heard of any middlemen for genuine innovation? Secondly, we can look at the company's client list. Cisco, Verizon, Sony, Nokia, Microsoft, Intel, Google, eBay, SAP, and Nvidia are named in the linked article. Lots of software and electronics companies. The nature of software companies probably makes business plan (A) impossible (the conventional wisdom, at least, is that no one cares about a bright idea in software; they care about implementation). If they were following business plan (A), I'd expect to see industries where ideas are worth a great deal of money more represented - biotechnology maybe. I don't know if patents are worth anything, except for litigation purposes, in any industry really though. Finally, the actual article spells things out, although we can't be sure how accurate it is. "It works like this: Technology companies agree to pay patent-licensing fees to inoculate themselves against potential lawsuits by Intellectual Ventures." This kind of business plan is strictly destructive to the economy. Under this business plan, the patent gives nothing of value to the company licensing it (they are already infringing the patent, having "discovered" it in the normal course of business). It is the prevalence of these sorts of deals, and the rarity of the sort typified by model (A), that have put many of us against the patent system. By the way, a strong economy is no evidence that the patent system is pretty good. The economy could be strong even if we had an absolutely miserable, almost purely destructive patent system. The patent system may have simply too small an effect to make the difference singlehandedly between a strong economy and a weak one. Or maybe it has a large effect, and our economy would be far stronger with a non-broken patent system. It's impossible to know, when all we have is this tangled-up complex system called the economy which somehow works pretty well.