8 ms·

Patent Trolls: Make Them Pay

230 points by melsmo 14y ago

mnutt 14y ago
The SHIELD Act is a great step, but I wonder how this will fare against the patent troll practice of setting up separate legal entities specifically for litigating individual patents? If they lose, they declare bankruptcy and move on to the next shell corporation.
- tedivm 14y ago
  If they file bankruptcy they have to sell off their assets to raise money for their creditors- assets which include the patents themselves.
  - mnutt 14y ago
    True, but doesn't losing mean having the patent declared invalid anyway? Which renders it worthless whether or not loser pays.
    - tedivm 14y ago
      No, it's just one way they could lose. The other side can be found to be non-infringing, or it could be found that a very very specific clause of the patent is invalid as opposed to the whole thing.
grimey27 14y ago
Call 'em out and take action. Well done. Now if Congress can tighten patent regs and eliminate the ability to troll altogether.
gitlock 14y ago
So what exactly can we do to make them pay?
- meritt 14y ago
  > This bill would require plaintiffs to pay defendants’ legal costs if the suit is unsuccessful. Under current law, the patent trolls don’t have any meaningful risk in bringing litigation. The defendants, on the other hand, are subjected to enormous legal expenses and discovery costs. The SHIELD Act is designed to level the playing field and take away the trolls’ unfair advantage. We encourage all of our customers, partners, open source collaborators and friends to support Reps. DeFazio and Chaffetz in their effort to discourage these abusive patent troll lawsuits. Contact your elected officials and make them understand why it's critical they support SHIELD.
  - rayiner 14y ago
    There's no perfect answer to this particular situation. If you make losing plaintiffs pay, you basically give large companies free license to misuse the intellectual property of small companies. "Loser pays" is proposed in many different contexts (e.g. tort litigation) and has been rejected for the same reasons. In the US, we perceive it to be more fair for defendants to have to deal with litigation costs than to stifle meritorious litigation against deep-pocketed defendants. It's a trade-off.
  - astrodust 14y ago
    That America does not have a "Loser Pays" legal system is completely terrifying. British law, which is followed in various forms by many countries, imposes severe penalties on those that lose cases. The risk for a plaintiff is significant and the damages done to a victim of wrongful prosecution while not negligible are at least off-set by the fees paid by the loser instead of the losing party being able to walk away without obligation.
    - rayiner 14y ago
      The American system isn't "terrifying" it's just different. You can't look at the European system without understanding that a lawsuit means a lot more in Europe than it does here. Many of the things that Europe does through administrative processes, the US does through litigation. It's easy to fixate on the costs of litigation, but realize that other systems don't necessarily eliminate those costs, but move them around by organizing things differently. If a suit is truly meritless, it will be dismissed very early in the litigation process (summary judgment) before costs have piled up. The American legal system tries very hard to be "lazy" (in the CS sense), backloading costs as much as possible. Yes, it can cost millions of dollars to defend a suit at trial, but if a suit has made it that far it means that it was not a meritless suit. Why should the loser pay if he brings a meritorious case in good faith? Remember, in the US a lawsuit is usually the process through which the facts underlying a dispute are discovered. It often happens that someone legitimately thinks he has been wronged, but the process of litigation uncovers facts that show otherwise. Loser pays systems chill litigation against big corporations. People focus on the situations in which they perceive there to be too much litigation, but in many areas there is not enough litigation. Litigation is the process through which citizens force corporations to fix unsafe products or clean up polluted land and water. Individuals are already at a huge disadvantage in these situations, and the threat of a corporation running up the bill in a loser pays system would do great injustice. Europe gets away with it because it has far more active government oversight and prosecution of such things.
wheels 14y ago
I was curious where Rackspace stands with their own portfolio, and it seems they have actually avoided patents, which surprised me somewhat for a large, public company: https://www.google.com/search?tbm=pts&hl=en&q=inassignee%3Arackspace&btnG= https://www.google.com/search?tbm=pts&hl=en&q=inassi... The tone of the article -- specifically focusing on patent trolls being problematic, but less focus on the other systemic problems with the patent system -- made me wonder if they were just going after the cases that annoy them.
- kika 14y ago
  > going after the cases that annoy them. Perfect definition of "focus". One of the key components of success.
- dredmorbius 14y ago
  One of the entities RS acquired was SGI. Whom I suspect may have had a patent portfolio. Not sure who got that though. Oh ... crap. Looks like they were retained by Graphics Properties Holdings, who is, you guessed it, a patent troll themselves: http://www.techdirt.com/articles/20120419/02113518553/sgi-back-dead-again-suing-tons-companies-patent-infringement.shtml http://www.techdirt.com/articles/20120419/02113518553/sgi-ba...
  - toddmorey 14y ago
    Oops, Rackspace never acquired SGI. That acquisition was done by a company called Rackable Systems.
    - dredmorbius 14y ago
      Doh! Thanks, I've been making that error for quite some time now. It never really did make sense to me that Rackspace == SGI, especially since they weren't using the mark at all.
  - jamesmcn 14y ago
    Microsoft bought out a large part of SGI's patent portfolio in the early XBox days. Then they sold the company to Rackable.
mtgx 14y ago
I wonder if Microsoft or Apple will oppose this bill. They haven't won all their patent lawsuits.
- danilocampos 14y ago
  When did those two organizations become non-practicing entities? How are they relevant to a discussion on non-practicing entities who sue startups for protection money?
atomical 14y ago
It seems like PersonalWeb is trying to develop software... http://www.personalweb.com/ http://www.personalweb.com/ Interesting that their CEO was involved early on in P2P.
- amitparikh 14y ago
  Does it, though? First red flag for me is that they are based in "East Texas": http://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas#Patent_litigation http://en.wikipedia.org/wiki/United_States_District_Court_fo... On their "How we do it" page, they mention some Natural Language Processing software that they're developing, but primarily highlight their "valuable" patent portfolio.
  - learc83 14y ago
    Any company that lists that they own "some really amazing patents" in bold on their home page can't possibly be real.
- udpheaders 14y ago
  But the inventors don't work for them and they didn't file these patents nor were they assignees. They acquired the patents from someone else for a price.
robomartin 14y ago
I've posted this a few times on HN. The solution to this problem is, in my humble opinion, very simple. Rather than presenting a divided community to trolls, we have to present a united front. This would come in the form of a legal support organization that would be 100% dedicated to fighting trolls on behalf of it's members. Call it insurance, if you will. Member companies would pay a monthly or yearly membership fee. In exchange for this the organization would evaluate any and all patent lawsuits and consider them for representation. It's stated mission would be to defend members from trolls. How? Well, for starters, imagine a legal organization with hundreds of millions of dollars in the bank. How many trolls would dare risk going up against them? Second, I am not a lawyer, but I imagine that there would be a way for this organization to also create a cross-licensing ecosystem for member companies. Maybe this is ridiculous. I don't know. Imagine that every patent of every member company becomes an automatic IP license --only for the purpose of patent defense-- for all members. This means that for my annual fee I could have a virtual shield consisting of tens of thousands, if not hundreds of thousands of patents protecting me. How much is that worth? Any company doing anything at all that is not trivial should easily be able to afford a $10K per year fee. larger companies could do a lot more. Smaller ones less. It is not hard to imagine raising tens of millions of dollars per year and even reaching a hundred million. With careful management this organization could easily amass a billion dollars in the bank over a number of years. This would effectively destroy the troll business without legislation and it would probably do wonders towards decimating bullshit software patents (or bullshit patents in general).
- neya 14y ago
  While this is certainly a good idea, what happens when one member from the organization tries to sue another? Back to square one?? I'm just curious, I'm no patent lawyer either.
  - robryan 14y ago
    Just needs to precise definition of patent troll to be right and only have the cross licensing in place when specifically defending against one.
  - 14y ago
steve8918 14y ago
What's to stop patent trolls from forming a corporation with no assets, suing people, and then declaring bankruptcy if they lose their case? They could forfeit their patents, but it would be worthless anyway if they lost the case.
- JoshTriplett 14y ago
  I think you've summed up one of the major problems precisely, yes. Ideally, such a transparent attempt at patent trolling ought to result in a pierced corporate veil and personal liability on behalf of the owners, but in practice that seems unlikely to happen.
- rogerbinns 14y ago
  Hollywood has precisely this model, setting up a corporation for each film made that somehow always ends up making a big loss, all the while paying massive fees to studios setting it up in the first place. One thing we can be sure of is that patent trolls will adjust their business models and practise far quicker than Congress does anything. The correct fix is to stop granting so many patents. Each one granted should answer yes to "would this have taken about 20 years or more to happen otherwise". They could also have special patent courts which could ensure consistency in the actual "justice" that is happening.
larrys 14y ago
Notice that there is nothing in this blog post that indicates how vigorously they will fight the lawsuit and certainly no bravodo type language. Only essentially a call to action "We encourage all of our customers, partners, open source collaborators and friends to support Reps. DeFazio and Chaffetz in their effort to discourage these abusive patent troll lawsuits." I takes this as potentially meaning that they might very well settle this out of court w/o paying -or- they are planning some other atypical legal action and don't want to telegraph anything. Even if they get this dismissed because of the github assumption that doesn't prevent it from being refiled correctly I believe.
ahi 14y ago
>They are just another patent troll attempting to take advantage of bad law. It is their nature. They look for opportunity, and patent litigation can be very profitable. The real problem is the law. Disagree. Assholes will always be able to abuse the law. We should name and shame the trolls responsible. The lawyers and investors behind patent trolls should have severe social consequences.
rz2k 14y ago
The SHIELD Act does not strike me as the most effective way to attack this problem. Presumably there are legitimate innovators who will not be as quick at execution as incumbent competitors. They may leverage themselves highly in order to try to scale up production, and afterwards will have scarce resources to hire legal representation. Depending how open and shut the case looks, representation may take them on as clients anyway. This act would marginally decrease the likelihood that they would, whether it decreases it too little or too much is a legitimate concern. Other industries than software are far more capital intensive. For instance most new drugs are not developed at the same companies that are the best at synthesizing compounds at scale and have the best distribution networks. However, investors assume the risk of funding expensive research, specifically because they know that in the rare case that it is successful, the large companies will buy the property rather than simply make it themselves. The SHIELD Act could very well create a different model where all drug research had to take place under the umbrella of larger corporations that could fund expensive legal fights on short notice. There is an overwhelming presumption that intellectual property is a sham in the software industry. Perhaps, software patents (and patents of business practices) generally slow progress more than they reward innovation. However, I don't understand how skepticism about the role of intellectual property protections has turned into uncritical acceptance that it only causes harm.
- luriel 14y ago
  > However, I don't understand how skepticism about the role of intellectual property protections has turned into uncritical acceptance that it only causes harm. Is not uncritical acceptance, there has been plenty of research and evidence that shows intellectual property harms innovation: http://levine.sscnet.ucla.edu/general/intellectual/against.htm http://levine.sscnet.ucla.edu/general/intellectual/against.h...
tzs 14y ago
What about legitimate inventors, rather than patent trolls? There is a large element of uncertainty in any patent suit that has a trial by jury, and it is not at all uncommon for clearly legitimate patents to be found invalid by the jury. The SHIELD Act sounds like it would make it effectively impossible for any small inventor who is not wealthy to sue a large infringer, because the risk of total ruin would be too high. The way to address the patent troll problem is to address the ACTUAL cause of the problem (standards for issuing patents are too lax).
- genwin 14y ago
  > The SHIELD Act sounds like it would make it effectively impossible for any small inventor who is not wealthy to sue a large infringer, because the risk of total ruin would be too high. Worse. It would make it effectively impossible for anyone who isn't wealthy to sue anyone or any company that is. At a minimum, those pesky environmental laws would no longer be a concern.
- ScottBurson 14y ago
  I refer you to a recent post of mine on the obviousness test: https://news.ycombinator.com/item?id=4523706 https://news.ycombinator.com/item?id=4523706
dreamdu5t 14y ago
Patents ARE the problem... not some vague notion of a poor implementation of them. It will still be profitable to troll for patents even with the SHEILD act. The problem is the very idea of owning information/process.
jakejake 14y ago
It would seem like there could be legislation that says if you are not actively developing a product from a patent then you can't sue. I'm sure there's too much legal BS involving what "active" means, but it would seem like there must be some way to have a law that limits lawsuits to those people who are actually using their patent to create something. Having the loser pay I think would also be a good step, however it probably would affect honest innovators when they're victims of patent infringement. Because it would be a huge risk to protect your patent. I know the argument against that is just get rid of patents, but I don't think that's realistically going to happen. I can see why it's a tricky issue to legislate but it's so frustrating that seemingly nothing is being done.
DenisM 14y ago
PG had a modest proposal to deal with the problem - name and shame lawyers who work for trolls, create a blacklist and refuse to deal with those lawyers. Trolls don't care about their reputation, but lawyers do. If we as an industry come together on this one the trolls will have no one to do the dirty work for them.
- CamperBob2 14y ago
  That's a dangerous place to go. Next there will be a call to name and shame lawyers who defend accused corporate polluters. After that, lawyers who defend alleged child molesters. Then, alleged murderers. Lather, rinse, repeat until we end up with a hopelessly-politicized legal profession. Plus, it's not clear why a patent lawyer might stay up at night worrying about his reputation with someone like myself who is almost violently opposed to patents. It's not as if I was thinking of hiring him to sue somebody.
- praptak 14y ago
  Name and shame never works. There is no shortage of people who already have no reputation to speak of and who are happy to grab some (more) money.
maeon3 14y ago
The key is making congressmen pay attention to this is to translate it into words they can understand. Money. All the techno babble about who own's what and morality and fairness is like telling a dog to eat vegetables. When patent trolls sue organizations for infringing on their patents with no intention of innovating, it creates less GDP which means less revenues for the big corporations which pay the most taxes, less taxes means less happy bottom feeder voters, which means you don't get re elected. When they get that through their heads, legislation will happen to fix the "injustice".
hermanhermitage 14y ago
I'm wondering if you can analyse the problem of Patents from a game theoretic point of view. The problem is this, those that don't Patent or were unable or disincentivized to Patent (different country, or different time period) cannot compete on a level playing field. They do not gain sufficient arsenal to defend against Patents. Patent law is fundamentally incompatible with the past. In a different era or different arena some ideas were not considered suitable for patenting (lack of utility, novelty, and nonobviousness). An example is software patents or business process. As money pours in to create changes to the rules those not playing the same game are at a disadvantage. That is their past IP unprotected by Patent law is now differentially disadvantaged in the marketplace. The only way to rectify this is to reduce the power of Patents over time until they are eliminated.
BryanB55 14y ago
Solution: If a court finds you to be a patent troll you get the death penalty. That should solve things. :)
atomical 14y ago
Just curious, how much do vague patents like this cost? Are they cheap? Expensive?
- udpheaders 14y ago
  Think about it. What would happen if they were cheap? Anyone could amass a large portfolio. We could all block each other's every move. No one would have any leverage. But the second question you have to ask is what does it cost to sue? What if that were cheap?
  - atomical 14y ago
    I'm trying to determine the difference between vague and worthless. I assume a lot of vague patents are worthless. But where is the line?
    - udpheaders 14y ago
      Here's how it's done, in simple terms. This is not some new thing. IBM was doing this before there was a Microsoft and before there was a WWW. If you amass enough vague patents, any one of which on its own isn't worth the paper it's printed on, then automagically they no longer remain worthless. Suddenly you have something valuable: a patent portfolio! This is because it costs a significant sum to pay someone (e.g. a patent attorney) to go through your wonderful portfolio of junk and determine which ones are worthless. And that is in turn because patent law firms charge very high fees to do that work. And that is in turn because not every lawyer is permitted to become a patent lawyer - so there's only a limited number of patent lawyers - hence they have less competition to drive prices down. The uncertain validity of a bundle of patent claims that I can allege others are infringing is the value. Threat == value. Therefore if I have several hundred vague patents of which a definitely large proportion are worthless and I sue you alleging you have infringed a significant number of them, you are screwed. Because it is going to cost you a lot of time and money to have someone go through each and every claim and convince me you are not infringing. So you just concede it's not worth it to fight me and my deep portfolio of junk software patents. And we start negotiations. Needless to say everyone at the negotiating table is not going to be in a happy mood going into this given that we had to start the whole process off with threatened or actual litigation. This is "business", American-style. A model for the world to follow.
gallipoli 14y ago
There is no need for elaborate laws to address the issue of patents for software and business methods. Nor a lawyer witch hunt. Nor some giant protection scheme like those mentioned in other comments. The Constitution grants Congress the power to regulate patents. Everybody interested in solving this problem should ignore the half measures and demand the elimination of software and business method patents entirely. Other solutions will undoubtedly be gamed and the problem will persist.
krichman 14y ago
This isn't going to work, the majority of trolls are NPE's and can simply declare bankruptcy. How many defaults on payments are we going to have before lawyers simply refuse to act as defence? I think we should require half of the money spent on legal teams for lawsuits to go to paying for the other party's legal expenses. I think this would reduce frivolous lawsuits because, whereas now the wealthiest party always wins, if the defendant/plaintiff has equal support the legally correct party might win.
AlanSchoenbaum 14y ago
A big thank you to all of you who are thinking about this issue and posting your ideas. There is no one right way to fix the patent troll problem, but hopefully Congress will figure out that this is a serious problem for tech companies and will do something. There is a long history here. These terrible software patents have been around a good while now, and they have been a curse on Internet companies for over a decade. The "America Invents Act" which passed about a year ago was the culmination of a lengthy process which started with the proposed Patent Reform Act of 2005. It went nowhere, nor did the later iterations in 2007, 2009 etc. These earlier bills definitely targeted patent trolls, but did not pass because of significant opposition by a coalition of interests that did not (and do not) want to accept the changes necessary to hammer the patent trolls. Take a look at the organizations against and for at the wikepedia entry for the Patent Reform Act of 2009 and you will see what I mean. Now, those opponents are still powerful; therefore to pass any legislation a bill will need to be acceptable to most of them. That means any bill that passes will not be ideal. My goal is to try to get a bill that at least levels the playing field and puts plaintiffs in a position where they have economic risk. The status quo is simply untenable and it is getting worse. Many of the comments here correctly point out flaws in the SHIELD Act. We will try hard to convince the sponsors to correct these flaws to ensure the bill has teeth. However we must not lose sight of the real issue, namely whether the bill can get out of committee and receive a majority of the House and 60 Senators. It will be hard, and it will take a lot of public support. Please write Congressmen DeFazio and Chaffetz, as well as your own Members of Congress and give them your point view. They will pay attention. If they do not hear from thousands of people, nothing will change.
jakozaur 14y ago
How about ending software patents in USA? I have never heard from serious european company which argue that it need software patents to protect its IP.
khet 14y ago
Patent troll's about page -> http://www.personalweb.com/About.html http://www.personalweb.com/About.html
AlisdairO 14y ago
Patent trolls aren't the problem. The problem is that it's a profitable business model to have an idea, patent it, and then sit on it waiting for somebody to accidentally recreate it. The reason this is a profitable business model is because too many obvious patents are granted. If granted patents were truly non-obvious, the likelihood of accidental infringement should be exceedingly low. Patent trolls are merely a symptom of this issue. Hurting trolls does little to attack the wider problem.
TerraHertz 14y ago
Perhaps someone could patent the business method of patent trolling. Then sue the trolls for patent infringement. I suppose this is wishful thinking. No doubt some patent troll company has already patented the idea of suing patent troll companies, and will sue you for infringing their patent if you try to sue them. Personally I think it would be best to just abolish the entire patent (and copyright) system. But I know how impossibly unlikely that is.

230 points by melsmo 14y ago

mnutt 14y ago

The SHIELD Act is a great step, but I wonder how this will fare against the patent troll practice of setting up separate legal entities specifically for litigating individual patents? If they lose, they declare bankruptcy and move on to the next shell corporation.

tedivm 14y ago
If they file bankruptcy they have to sell off their assets to raise money for their creditors- assets which include the patents themselves.
- mnutt 14y ago
  True, but doesn't losing mean having the patent declared invalid anyway? Which renders it worthless whether or not loser pays.
  - tedivm 14y ago
    No, it's just one way they could lose. The other side can be found to be non-infringing, or it could be found that a very very specific clause of the patent is invalid as opposed to the whole thing.

grimey27 14y ago

Call 'em out and take action. Well done. Now if Congress can tighten patent regs and eliminate the ability to troll altogether.

gitlock 14y ago

So what exactly can we do to make them pay?

meritt 14y ago
> This bill would require plaintiffs to pay defendants’ legal costs if the suit is unsuccessful. Under current law, the patent trolls don’t have any meaningful risk in bringing litigation. The defendants, on the other hand, are subjected to enormous legal expenses and discovery costs. The SHIELD Act is designed to level the playing field and take away the trolls’ unfair advantage. We encourage all of our customers, partners, open source collaborators and friends to support Reps. DeFazio and Chaffetz in their effort to discourage these abusive patent troll lawsuits. Contact your elected officials and make them understand why it's critical they support SHIELD.
- rayiner 14y ago
  There's no perfect answer to this particular situation. If you make losing plaintiffs pay, you basically give large companies free license to misuse the intellectual property of small companies. "Loser pays" is proposed in many different contexts (e.g. tort litigation) and has been rejected for the same reasons. In the US, we perceive it to be more fair for defendants to have to deal with litigation costs than to stifle meritorious litigation against deep-pocketed defendants. It's a trade-off.
- astrodust 14y ago
  That America does not have a "Loser Pays" legal system is completely terrifying. British law, which is followed in various forms by many countries, imposes severe penalties on those that lose cases. The risk for a plaintiff is significant and the damages done to a victim of wrongful prosecution while not negligible are at least off-set by the fees paid by the loser instead of the losing party being able to walk away without obligation.
  - rayiner 14y ago
    The American system isn't "terrifying" it's just different. You can't look at the European system without understanding that a lawsuit means a lot more in Europe than it does here. Many of the things that Europe does through administrative processes, the US does through litigation. It's easy to fixate on the costs of litigation, but realize that other systems don't necessarily eliminate those costs, but move them around by organizing things differently. If a suit is truly meritless, it will be dismissed very early in the litigation process (summary judgment) before costs have piled up. The American legal system tries very hard to be "lazy" (in the CS sense), backloading costs as much as possible. Yes, it can cost millions of dollars to defend a suit at trial, but if a suit has made it that far it means that it was not a meritless suit. Why should the loser pay if he brings a meritorious case in good faith? Remember, in the US a lawsuit is usually the process through which the facts underlying a dispute are discovered. It often happens that someone legitimately thinks he has been wronged, but the process of litigation uncovers facts that show otherwise. Loser pays systems chill litigation against big corporations. People focus on the situations in which they perceive there to be too much litigation, but in many areas there is not enough litigation. Litigation is the process through which citizens force corporations to fix unsafe products or clean up polluted land and water. Individuals are already at a huge disadvantage in these situations, and the threat of a corporation running up the bill in a loser pays system would do great injustice. Europe gets away with it because it has far more active government oversight and prosecution of such things.

wheels 14y ago

I was curious where Rackspace stands with their own portfolio, and it seems they have actually avoided patents, which surprised me somewhat for a large, public company: https://www.google.com/search?tbm=pts&hl=en&q=inassignee%3Arackspace&btnG= https://www.google.com/search?tbm=pts&hl=en&q=inassi... The tone of the article -- specifically focusing on patent trolls being problematic, but less focus on the other systemic problems with the patent system -- made me wonder if they were just going after the cases that annoy them.

kika 14y ago
> going after the cases that annoy them. Perfect definition of "focus". One of the key components of success.
dredmorbius 14y ago
One of the entities RS acquired was SGI. Whom I suspect may have had a patent portfolio. Not sure who got that though. Oh ... crap. Looks like they were retained by Graphics Properties Holdings, who is, you guessed it, a patent troll themselves: http://www.techdirt.com/articles/20120419/02113518553/sgi-back-dead-again-suing-tons-companies-patent-infringement.shtml http://www.techdirt.com/articles/20120419/02113518553/sgi-ba...
- toddmorey 14y ago
  Oops, Rackspace never acquired SGI. That acquisition was done by a company called Rackable Systems.
  - dredmorbius 14y ago
    Doh! Thanks, I've been making that error for quite some time now. It never really did make sense to me that Rackspace == SGI, especially since they weren't using the mark at all.
- jamesmcn 14y ago
  Microsoft bought out a large part of SGI's patent portfolio in the early XBox days. Then they sold the company to Rackable.

mtgx 14y ago

I wonder if Microsoft or Apple will oppose this bill. They haven't won all their patent lawsuits.

danilocampos 14y ago
When did those two organizations become non-practicing entities? How are they relevant to a discussion on non-practicing entities who sue startups for protection money?

atomical 14y ago

It seems like PersonalWeb is trying to develop software... http://www.personalweb.com/ http://www.personalweb.com/ Interesting that their CEO was involved early on in P2P.

amitparikh 14y ago
Does it, though? First red flag for me is that they are based in "East Texas": http://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas#Patent_litigation http://en.wikipedia.org/wiki/United_States_District_Court_fo... On their "How we do it" page, they mention some Natural Language Processing software that they're developing, but primarily highlight their "valuable" patent portfolio.
- learc83 14y ago
  Any company that lists that they own "some really amazing patents" in bold on their home page can't possibly be real.
udpheaders 14y ago
But the inventors don't work for them and they didn't file these patents nor were they assignees. They acquired the patents from someone else for a price.

robomartin 14y ago

I've posted this a few times on HN. The solution to this problem is, in my humble opinion, very simple. Rather than presenting a divided community to trolls, we have to present a united front. This would come in the form of a legal support organization that would be 100% dedicated to fighting trolls on behalf of it's members. Call it insurance, if you will. Member companies would pay a monthly or yearly membership fee. In exchange for this the organization would evaluate any and all patent lawsuits and consider them for representation. It's stated mission would be to defend members from trolls. How? Well, for starters, imagine a legal organization with hundreds of millions of dollars in the bank. How many trolls would dare risk going up against them? Second, I am not a lawyer, but I imagine that there would be a way for this organization to also create a cross-licensing ecosystem for member companies. Maybe this is ridiculous. I don't know. Imagine that every patent of every member company becomes an automatic IP license --only for the purpose of patent defense-- for all members. This means that for my annual fee I could have a virtual shield consisting of tens of thousands, if not hundreds of thousands of patents protecting me. How much is that worth? Any company doing anything at all that is not trivial should easily be able to afford a $10K per year fee. larger companies could do a lot more. Smaller ones less. It is not hard to imagine raising tens of millions of dollars per year and even reaching a hundred million. With careful management this organization could easily amass a billion dollars in the bank over a number of years. This would effectively destroy the troll business without legislation and it would probably do wonders towards decimating bullshit software patents (or bullshit patents in general).

neya 14y ago
While this is certainly a good idea, what happens when one member from the organization tries to sue another? Back to square one?? I'm just curious, I'm no patent lawyer either.
- robryan 14y ago
  Just needs to precise definition of patent troll to be right and only have the cross licensing in place when specifically defending against one.
- 14y ago

steve8918 14y ago

What's to stop patent trolls from forming a corporation with no assets, suing people, and then declaring bankruptcy if they lose their case? They could forfeit their patents, but it would be worthless anyway if they lost the case.

JoshTriplett 14y ago
I think you've summed up one of the major problems precisely, yes. Ideally, such a transparent attempt at patent trolling ought to result in a pierced corporate veil and personal liability on behalf of the owners, but in practice that seems unlikely to happen.
rogerbinns 14y ago
Hollywood has precisely this model, setting up a corporation for each film made that somehow always ends up making a big loss, all the while paying massive fees to studios setting it up in the first place. One thing we can be sure of is that patent trolls will adjust their business models and practise far quicker than Congress does anything. The correct fix is to stop granting so many patents. Each one granted should answer yes to "would this have taken about 20 years or more to happen otherwise". They could also have special patent courts which could ensure consistency in the actual "justice" that is happening.

larrys 14y ago

Notice that there is nothing in this blog post that indicates how vigorously they will fight the lawsuit and certainly no bravodo type language. Only essentially a call to action "We encourage all of our customers, partners, open source collaborators and friends to support Reps. DeFazio and Chaffetz in their effort to discourage these abusive patent troll lawsuits." I takes this as potentially meaning that they might very well settle this out of court w/o paying -or- they are planning some other atypical legal action and don't want to telegraph anything. Even if they get this dismissed because of the github assumption that doesn't prevent it from being refiled correctly I believe.

ahi 14y ago

>They are just another patent troll attempting to take advantage of bad law. It is their nature. They look for opportunity, and patent litigation can be very profitable. The real problem is the law. Disagree. Assholes will always be able to abuse the law. We should name and shame the trolls responsible. The lawyers and investors behind patent trolls should have severe social consequences.

rz2k 14y ago

The SHIELD Act does not strike me as the most effective way to attack this problem. Presumably there are legitimate innovators who will not be as quick at execution as incumbent competitors. They may leverage themselves highly in order to try to scale up production, and afterwards will have scarce resources to hire legal representation. Depending how open and shut the case looks, representation may take them on as clients anyway. This act would marginally decrease the likelihood that they would, whether it decreases it too little or too much is a legitimate concern. Other industries than software are far more capital intensive. For instance most new drugs are not developed at the same companies that are the best at synthesizing compounds at scale and have the best distribution networks. However, investors assume the risk of funding expensive research, specifically because they know that in the rare case that it is successful, the large companies will buy the property rather than simply make it themselves. The SHIELD Act could very well create a different model where all drug research had to take place under the umbrella of larger corporations that could fund expensive legal fights on short notice. There is an overwhelming presumption that intellectual property is a sham in the software industry. Perhaps, software patents (and patents of business practices) generally slow progress more than they reward innovation. However, I don't understand how skepticism about the role of intellectual property protections has turned into uncritical acceptance that it only causes harm.

luriel 14y ago
> However, I don't understand how skepticism about the role of intellectual property protections has turned into uncritical acceptance that it only causes harm. Is not uncritical acceptance, there has been plenty of research and evidence that shows intellectual property harms innovation: http://levine.sscnet.ucla.edu/general/intellectual/against.htm http://levine.sscnet.ucla.edu/general/intellectual/against.h...

tzs 14y ago

What about legitimate inventors, rather than patent trolls? There is a large element of uncertainty in any patent suit that has a trial by jury, and it is not at all uncommon for clearly legitimate patents to be found invalid by the jury. The SHIELD Act sounds like it would make it effectively impossible for any small inventor who is not wealthy to sue a large infringer, because the risk of total ruin would be too high. The way to address the patent troll problem is to address the ACTUAL cause of the problem (standards for issuing patents are too lax).

genwin 14y ago
> The SHIELD Act sounds like it would make it effectively impossible for any small inventor who is not wealthy to sue a large infringer, because the risk of total ruin would be too high. Worse. It would make it effectively impossible for anyone who isn't wealthy to sue anyone or any company that is. At a minimum, those pesky environmental laws would no longer be a concern.
ScottBurson 14y ago
I refer you to a recent post of mine on the obviousness test: https://news.ycombinator.com/item?id=4523706 https://news.ycombinator.com/item?id=4523706

dreamdu5t 14y ago

Patents ARE the problem... not some vague notion of a poor implementation of them. It will still be profitable to troll for patents even with the SHEILD act. The problem is the very idea of owning information/process.

jakejake 14y ago

It would seem like there could be legislation that says if you are not actively developing a product from a patent then you can't sue. I'm sure there's too much legal BS involving what "active" means, but it would seem like there must be some way to have a law that limits lawsuits to those people who are actually using their patent to create something. Having the loser pay I think would also be a good step, however it probably would affect honest innovators when they're victims of patent infringement. Because it would be a huge risk to protect your patent. I know the argument against that is just get rid of patents, but I don't think that's realistically going to happen. I can see why it's a tricky issue to legislate but it's so frustrating that seemingly nothing is being done.

DenisM 14y ago

PG had a modest proposal to deal with the problem - name and shame lawyers who work for trolls, create a blacklist and refuse to deal with those lawyers. Trolls don't care about their reputation, but lawyers do. If we as an industry come together on this one the trolls will have no one to do the dirty work for them.

CamperBob2 14y ago
That's a dangerous place to go. Next there will be a call to name and shame lawyers who defend accused corporate polluters. After that, lawyers who defend alleged child molesters. Then, alleged murderers. Lather, rinse, repeat until we end up with a hopelessly-politicized legal profession. Plus, it's not clear why a patent lawyer might stay up at night worrying about his reputation with someone like myself who is almost violently opposed to patents. It's not as if I was thinking of hiring him to sue somebody.
praptak 14y ago
Name and shame never works. There is no shortage of people who already have no reputation to speak of and who are happy to grab some (more) money.

maeon3 14y ago

The key is making congressmen pay attention to this is to translate it into words they can understand. Money. All the techno babble about who own's what and morality and fairness is like telling a dog to eat vegetables. When patent trolls sue organizations for infringing on their patents with no intention of innovating, it creates less GDP which means less revenues for the big corporations which pay the most taxes, less taxes means less happy bottom feeder voters, which means you don't get re elected. When they get that through their heads, legislation will happen to fix the "injustice".

hermanhermitage 14y ago

I'm wondering if you can analyse the problem of Patents from a game theoretic point of view. The problem is this, those that don't Patent or were unable or disincentivized to Patent (different country, or different time period) cannot compete on a level playing field. They do not gain sufficient arsenal to defend against Patents. Patent law is fundamentally incompatible with the past. In a different era or different arena some ideas were not considered suitable for patenting (lack of utility, novelty, and nonobviousness). An example is software patents or business process. As money pours in to create changes to the rules those not playing the same game are at a disadvantage. That is their past IP unprotected by Patent law is now differentially disadvantaged in the marketplace. The only way to rectify this is to reduce the power of Patents over time until they are eliminated.

BryanB55 14y ago

Solution: If a court finds you to be a patent troll you get the death penalty. That should solve things. :)

atomical 14y ago

Just curious, how much do vague patents like this cost? Are they cheap? Expensive?

udpheaders 14y ago
Think about it. What would happen if they were cheap? Anyone could amass a large portfolio. We could all block each other's every move. No one would have any leverage. But the second question you have to ask is what does it cost to sue? What if that were cheap?
- atomical 14y ago
  I'm trying to determine the difference between vague and worthless. I assume a lot of vague patents are worthless. But where is the line?
  - udpheaders 14y ago
    Here's how it's done, in simple terms. This is not some new thing. IBM was doing this before there was a Microsoft and before there was a WWW. If you amass enough vague patents, any one of which on its own isn't worth the paper it's printed on, then automagically they no longer remain worthless. Suddenly you have something valuable: a patent portfolio! This is because it costs a significant sum to pay someone (e.g. a patent attorney) to go through your wonderful portfolio of junk and determine which ones are worthless. And that is in turn because patent law firms charge very high fees to do that work. And that is in turn because not every lawyer is permitted to become a patent lawyer - so there's only a limited number of patent lawyers - hence they have less competition to drive prices down. The uncertain validity of a bundle of patent claims that I can allege others are infringing is the value. Threat == value. Therefore if I have several hundred vague patents of which a definitely large proportion are worthless and I sue you alleging you have infringed a significant number of them, you are screwed. Because it is going to cost you a lot of time and money to have someone go through each and every claim and convince me you are not infringing. So you just concede it's not worth it to fight me and my deep portfolio of junk software patents. And we start negotiations. Needless to say everyone at the negotiating table is not going to be in a happy mood going into this given that we had to start the whole process off with threatened or actual litigation. This is "business", American-style. A model for the world to follow.

gallipoli 14y ago

There is no need for elaborate laws to address the issue of patents for software and business methods. Nor a lawyer witch hunt. Nor some giant protection scheme like those mentioned in other comments. The Constitution grants Congress the power to regulate patents. Everybody interested in solving this problem should ignore the half measures and demand the elimination of software and business method patents entirely. Other solutions will undoubtedly be gamed and the problem will persist.

krichman 14y ago

This isn't going to work, the majority of trolls are NPE's and can simply declare bankruptcy. How many defaults on payments are we going to have before lawyers simply refuse to act as defence? I think we should require half of the money spent on legal teams for lawsuits to go to paying for the other party's legal expenses. I think this would reduce frivolous lawsuits because, whereas now the wealthiest party always wins, if the defendant/plaintiff has equal support the legally correct party might win.

AlanSchoenbaum 14y ago

A big thank you to all of you who are thinking about this issue and posting your ideas. There is no one right way to fix the patent troll problem, but hopefully Congress will figure out that this is a serious problem for tech companies and will do something. There is a long history here. These terrible software patents have been around a good while now, and they have been a curse on Internet companies for over a decade. The "America Invents Act" which passed about a year ago was the culmination of a lengthy process which started with the proposed Patent Reform Act of 2005. It went nowhere, nor did the later iterations in 2007, 2009 etc. These earlier bills definitely targeted patent trolls, but did not pass because of significant opposition by a coalition of interests that did not (and do not) want to accept the changes necessary to hammer the patent trolls. Take a look at the organizations against and for at the wikepedia entry for the Patent Reform Act of 2009 and you will see what I mean. Now, those opponents are still powerful; therefore to pass any legislation a bill will need to be acceptable to most of them. That means any bill that passes will not be ideal. My goal is to try to get a bill that at least levels the playing field and puts plaintiffs in a position where they have economic risk. The status quo is simply untenable and it is getting worse. Many of the comments here correctly point out flaws in the SHIELD Act. We will try hard to convince the sponsors to correct these flaws to ensure the bill has teeth. However we must not lose sight of the real issue, namely whether the bill can get out of committee and receive a majority of the House and 60 Senators. It will be hard, and it will take a lot of public support. Please write Congressmen DeFazio and Chaffetz, as well as your own Members of Congress and give them your point view. They will pay attention. If they do not hear from thousands of people, nothing will change.

jakozaur 14y ago

How about ending software patents in USA? I have never heard from serious european company which argue that it need software patents to protect its IP.

khet 14y ago

Patent troll's about page -> http://www.personalweb.com/About.html http://www.personalweb.com/About.html

AlisdairO 14y ago

Patent trolls aren't the problem. The problem is that it's a profitable business model to have an idea, patent it, and then sit on it waiting for somebody to accidentally recreate it. The reason this is a profitable business model is because too many obvious patents are granted. If granted patents were truly non-obvious, the likelihood of accidental infringement should be exceedingly low. Patent trolls are merely a symptom of this issue. Hurting trolls does little to attack the wider problem.

TerraHertz 14y ago

Perhaps someone could patent the business method of patent trolling. Then sue the trolls for patent infringement. I suppose this is wishful thinking. No doubt some patent troll company has already patented the idea of suing patent troll companies, and will sue you for infringing their patent if you try to sue them. Personally I think it would be best to just abolish the entire patent (and copyright) system. But I know how impossibly unlikely that is.