14 ms·

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

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.

rayiner 14y 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 14y 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.
  - tptacek 14y ago
    Because it's a waste. Pfizer has the comparative advantage in marketing drugs, and NWU in researching them. Econ 101: both parties are better off trading.
    - betterunix 14y ago
      ...and how does the patent help this? It sounds you had researchers paid on a grant, and a drug company that sold the fruits of that research. I am not seeing the case for a patent here at all.
      - tptacek 14y ago
        Your dislike of patents does not make NWU a better venue for drug marketing.
      - RestlessMind 14y ago
        Here is a case for patent: a third company snoops in, replicates drugs and sells for higher profit / lower cost since they haven't invested in R&D. Sounds unfair to me and such behavior should be prevented. Patents is one solution. Do you have a better one?
        betterunix 14y ago
        So let me see if I understand you correctly: grant money pays for the research, one company swoops in and markets the drug, then a third company swoops in and markets it, and you think that is a problem?
dhaivatpandya 14y 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.
- rayiner 14y 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.
  - hcarvalhoalves 14y ago
    The problem is, if you don't know where the fence should be, how can you judge if the patent office is doing a good job?
    - rayiner 14y ago
      We don't need a closed-form solution for where the fence should be. It's an entirely empirical process. Are we happy with the outcomes? If not, move the fence further up until we are.
      - hcarvalhoalves 14y ago
        ... and how you judge if the patent office is doing it's job, again? If you're not "happy with the outcomes", which direction do you push the fence? Without a goal set we get nowhere. What patent law should achieve is purposefully vague - it's the ultimate subversion of the legal system for capitalistic purposes. The state is supposed to give exclusive rights over "ideas", in effect granting the monopoly of anything to anyone. Then the patent office is handed over the hair ball of defining what are "ideas", which ideas are worth a patent (aka "trivial inventions", as if such thing exists), or even which ideas are original (a joke in itself). In my mind, we're asking the patent office to solve a philosophical problem, in the hopes they will sort out a logical conundrum caused by a vague law.
monochromatic 14y 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 14y 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.)
InclinedPlane 14y 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.
- fnordfnordfnord 14y 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.
  - jonpeda 14y ago
    > deserve their own patent. What does this mean? If A is patented, A+B is covered by A's patent AND B's patent. The only way to avoid A is to use a non-patented yet critical invention. The inventor of A should have included any such thing as one of their patent claims.
tcbawo 14y 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 14y 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.

rayiner 14y 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 14y 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.
- tptacek 14y ago
  Because it's a waste. Pfizer has the comparative advantage in marketing drugs, and NWU in researching them. Econ 101: both parties are better off trading.
  - betterunix 14y ago
    ...and how does the patent help this? It sounds you had researchers paid on a grant, and a drug company that sold the fruits of that research. I am not seeing the case for a patent here at all.
    - tptacek 14y ago
      Your dislike of patents does not make NWU a better venue for drug marketing.
    - RestlessMind 14y ago
      Here is a case for patent: a third company snoops in, replicates drugs and sells for higher profit / lower cost since they haven't invested in R&D. Sounds unfair to me and such behavior should be prevented. Patents is one solution. Do you have a better one?
      - betterunix 14y ago
        So let me see if I understand you correctly: grant money pays for the research, one company swoops in and markets the drug, then a third company swoops in and markets it, and you think that is a problem?

dhaivatpandya 14y 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.

rayiner 14y 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.
- hcarvalhoalves 14y ago
  The problem is, if you don't know where the fence should be, how can you judge if the patent office is doing a good job?
  - rayiner 14y ago
    We don't need a closed-form solution for where the fence should be. It's an entirely empirical process. Are we happy with the outcomes? If not, move the fence further up until we are.
    - hcarvalhoalves 14y ago
      ... and how you judge if the patent office is doing it's job, again? If you're not "happy with the outcomes", which direction do you push the fence? Without a goal set we get nowhere. What patent law should achieve is purposefully vague - it's the ultimate subversion of the legal system for capitalistic purposes. The state is supposed to give exclusive rights over "ideas", in effect granting the monopoly of anything to anyone. Then the patent office is handed over the hair ball of defining what are "ideas", which ideas are worth a patent (aka "trivial inventions", as if such thing exists), or even which ideas are original (a joke in itself). In my mind, we're asking the patent office to solve a philosophical problem, in the hopes they will sort out a logical conundrum caused by a vague law.

monochromatic 14y 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 14y 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.)

InclinedPlane 14y 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.

fnordfnordfnord 14y 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.
- jonpeda 14y ago
  > deserve their own patent. What does this mean? If A is patented, A+B is covered by A's patent AND B's patent. The only way to avoid A is to use a non-patented yet critical invention. The inventor of A should have included any such thing as one of their patent claims.

tcbawo 14y 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 14y 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.