7 ms·

"Patent Trolls" Threaten to Drain Silicon Valley Startups [video]

70 points by RougeFemme 13y ago

mlinksva 13y ago
Startups should be http://www.defensivepatentlicense.com/content/frequently-asked-questions#how-can-I-start http://www.defensivepatentlicense.com/content/frequently-ask... upon formation. Won't help immediately, probably won't help much anytime soon. But the network effect has to start somewhere, and at least joining now commits startup to doing right thing.
- lxmorj 13y ago
  They might want to get commit@defensivepatentlicense.com rather than @gmail.com...
tehabe 13y ago
I wonder, is there still someone who believes that patents are protecting the small inventors and companies? At least in the software and IT business it seems (it is clear to me) the other way around. Patents are protecting the incumbents and big companies, who can afford legal experts to defend themselves.
- PythonicAlpha 13y ago
  It does nearly never protect small inventors and small companies. In the current time of big lawsuits and big money for lawyers, big is what succeeds. Small companies either: - can not afford to patent everything they do - can not afford to find potential infringing companies - can not afford patent lawsuits Even when they patent, and even when they know, that some other company infringes their patent, they just are not able to take the risk of patent lawsuits. In the case of a big other company it also can be the same as suicide. There is an anecdote, that one big company (everybody knows) send their patent lawyers to a small company, saying, they are infringing their patent X. The small company proved to the lawyers, they did not. But those hard-boiled lawyers just said: Look, we have X-thousand patents. We will find many others, you infringe and sue you, unless you pay us now for this patent! They paid, of course! The patent system has become like highwaymen -- many see the big money without effort -- and it is. Those that are robbed, oftentimes are the real creative persons. And so, the patent system just has become the opposite to what it pretends to be. And of course, patent-attorneys, lawyers and even politicians defend a corrupted system, because they benefit from it. Best example is Bill Gates: In his early time he stated, that patents on software would harm the software industry. Today he is one of the biggest proponent of the system, since his company today is big and he things it would profit from it. But in the end, even for M$, I doubt.
  - perlpimp 13y ago
    Couldn't RICO be used in such cases? It is racketeering at best if this is worded like that.
- nova 13y ago
  > I wonder, is there still someone who believes that patents are protecting the small inventors and companies? If that were true we wouldn't have any patent system at all.
- RogerL 13y ago
  Yes. I do. I do not speak for the (small) company I work for in any official capacity, so I will not go into the details. But we have quite a few patents, and they have been useful. There is considerable risk in coming up with a new idea and launching it in the market; a risk that a small company cannot afford to get wrong too many times. There is the risk of failure, and then just the opportunity cost of having your small team work on project A vs project B. If our work was unprotected then larger companies could just sit and watch the small companies try, and then swoop in and take over the market if the idea is valid and the market is there. Recall that Microsoft received the "evil" moniker (which I don't really agree with, btw) in part because how often they did exactly this. Sure, there are all kinds of injustices and inequalities in the system; I do not argue the system is perfect, nor do I suggest that I have any idea how to improve the system. There is value, however, in rewarding a company that takes risks and generates new ideas. Perhaps that value is overshadowed by the value destruction by patent trolls, I don't know (would have to see the numbers). But it is a value.
  - nova 13y ago
    > If our work was unprotected then larger companies could just sit and watch the small companies try, and then swoop in and take over the market if the idea is valid and the market is there. But could you actually take on a large company and win? Or is it just a theoretical possibility? Do you have the means, or it's only luck? In fact there is a much worse fate that having your precious idea "stolen": when you are the one sued, because someone (small troll or big Sauron company) has a patent on doing square roots on the internets.
- gillianseed 13y ago
  I certainly don't. Worse, I don't think that what is currently labeled as 'patent trolls' is the worst aspect of software patents. It's the huge tech companies which have amassed and keeps on amassing broad software patents which is the real problem. The only reason we are actually seeing some legal action being taken against 'patent trolls' (i.e non-practicing entities) is because they are a nuisance to said huge tech companies. Meanwhile these tech giants will use software patents to stifle / destroy competition instead of competing in the open market, you don't need to look any further than Microsoft and Apple's patent suit against Google which they are doing through third-party patents they bought specifically for that purpose, to stifle a competitor with which they can't compete on the open market through the value of their products. Now Google is a massive company themselves and has the funds to atleast mount a proper defence (not that it will matter in the first instance as Microsoft and Apple chose East Texas as it's venue), but if you are a startup you have zero chance against these tech giants when they come knocking. They can afford to drag this through court for ages, you most likely can't, and even if you could and if you won, they could most likely simply choose another patent from their arsenal and go after you again.
  - PythonicAlpha 13y ago
    I agree. Patent trolls are not the biggest problem at all. Sometimes I think, they are a good distraction from the real problem. Instead thinking about what to do about patent trolls, the governments should think, if they really can afford an out-of-hands patent system. There where times, when getting a patent was really difficult, also for bigger companies. But today, every little nuisance can be patented (e.g. 1-click), just formulate it right and bring old things into new contexts to convince patent-officers (e.g. round edges). Of course patent-officers have their own advantages today, when more patents are granted ... what a mess!
SheepSlapper 13y ago
The irony of paying a well known patent troll to get rid of other patent trolls can't be lost on the people at Ditto, right? ...Right?
- PythonicAlpha 13y ago
  I think, that was the only chance, they saw. But that's what a patent-troll is for: Being paid. They are like highwaymen, they want to be paid, for what, is not important. If the money is OK, they will even go on their own kind.
wissler 13y ago
Fallout from the recently enacted and ironically titled "America Invents Act": http://en.wikipedia.org/wiki/First_to_file_and_first_to_invent http://en.wikipedia.org/wiki/First_to_file_and_first_to_inve...
- Pxtl 13y ago
  The global move to "first to file" seems basically an admission that the patent system is completely ideologically bankrupt and is nothing more than regulatory capture for cutting-edge industries and a jobs program for lawyers. The paper matters more than the invention. What a world.
  - wissler 13y ago
    Of course it is completely ideologically bankrupt, but so is virtually everything else about our political and cultural institutions. Not a whole lot has changed on this front since Galileo was thrown into prison, at least not in terms of ideological fundamentals.
- drderidder 13y ago
  Yeah, I keep wondering why I didn't see more press blasting the "America Invents Act" as a fake reform that made things even worse.
  - nickff 13y ago
    Few people understand or take an interest in patent law, and the press is no better than the populace.
Cort3z 13y ago
The patent system is broken. There should be some restrictions where a company cannot make money from suing based on a patent without them actually producing the product themselves. That way you know that the people owning the patent at least are capable of making what they have a patent for. If that is not the case then they should expedite the expiration of the patent where they would loose it in a certain amount of years if they were not able to produce that product in that time. The patent is meant to be a legal monopoly for outstanding innovations for a set amount of time, not as a revenue models for lawyers.
- nimble 13y ago
  > outstanding innovations Which proposal from your first paragraph is going to ensure outstanding-ness of inventions? I recall company lawyers making the rounds asking us to write down any possible inventions among the things we'd already built. I don't remember the lawyers ever asking whether those possible inventions were outstanding.
- alok-g 13y ago
  What happens if a claimed outstanding innovation is not seen as outstanding by the majority, leading to the innovating entity running out of money and closing down, and then someone realizing the true value of the invention five years later (and reaping monetary benefits of it)?
sergiotapia 13y ago
Stop building things within the US, it's patent system is broken.
- dave_sullivan 13y ago
  Well, that's an interesting question... Would a company be any better off incorporating in hong kong or something when it comes to patent disputes? I've been looking into this for various reasons already... How about a foreign corp that owns the IP (which a patent troll may at some point arbitrarily claim was infringing) licensing that IP to a US-based corp. Is the US-based corp exposed to any liability? Probably? Maybe?
  - kintamanimatt 13y ago
    Probably not. I'm under the impression it's where you do business that counts, not where you're incorporated. If you're incorporated in HK but have offices in SF you're likely exposed. The best bet is to start your company in Europe or some other sane business-friendly jurisdiction without offices in the US at all. Patent trolls have no power there. For Americans, the Dutch-American Friendship Treaty[0] might be just what you're looking for. [0] http://en.wikipedia.org/wiki/DAFT_%28treaty%29 http://en.wikipedia.org/wiki/DAFT_%28treaty%29
- kintamanimatt 13y ago
  It's for this reason I'm abstaining from opening up any company in the US and sticking to Europe until the patent trolls are reined in. I can imagine many foreign-born entrepreneurs are now taking the same approach, especially as the number of lawsuits appears to be increasing (800 vs. 2,900 small firms sued in 2005 [0]) with a further ~100,000 receiving letters from patent trolls demanding payment in a single year.[0] [0] http://arstechnica.com/tech-policy/2013/09/op-ed-how-patent-trolls-doomed-themselves-by-targeting-main-street/ http://arstechnica.com/tech-policy/2013/09/op-ed-how-patent-...
- us0r 13y ago
  If you sell to the US it does not matter.
chaostheory 13y ago
Reminds me of old school mafias and their protection rackets. I'm surprised patent trolls didn't start doing this sooner.
yetanotherphd 13y ago
I think we should simply abolish software patents. Software engineering simply isn't a deep field, and most interesting ideas are not really inventions in the same way that a new hardware device might be. Sure there are some interesting and cool patents like SURF and SIFT, but they are a tiny minority.
cheesylard 13y ago
Anyone have a mirror for the video?
deleted 13y ago
[deleted]
phalina 13y ago
Just out of curiosity, are start ups in other countries like Canada and Europe subject to patent trolling as well or do patent trolls avoid suing outside of America?
altrego99 13y ago
Hate sites which start playing audio without prompting.
bsg75 13y ago
Perhaps an oversimplification, but what would be the ramifications if patent law was altered to cover the inventor (or inventing body) _only_. "Prior art" becomes unpatentable, and the only legal argument occurs when there is a dispute about shared IP. Would this effectively eliminate patents-as-a-business model, and still protect inventors who create _new_ ides, be they physical or digital?

70 points by RougeFemme 13y ago

Startups should be http://www.defensivepatentlicense.com/content/frequently-asked-questions#how-can-I-start http://www.defensivepatentlicense.com/content/frequently-ask... upon formation. Won't help immediately, probably won't help much anytime soon. But the network effect has to start somewhere, and at least joining now commits startup to doing right thing.

lxmorj 13y ago
They might want to get commit@defensivepatentlicense.com rather than @gmail.com...

tehabe 13y ago

I wonder, is there still someone who believes that patents are protecting the small inventors and companies? At least in the software and IT business it seems (it is clear to me) the other way around. Patents are protecting the incumbents and big companies, who can afford legal experts to defend themselves.

PythonicAlpha 13y ago
It does nearly never protect small inventors and small companies. In the current time of big lawsuits and big money for lawyers, big is what succeeds. Small companies either: - can not afford to patent everything they do - can not afford to find potential infringing companies - can not afford patent lawsuits Even when they patent, and even when they know, that some other company infringes their patent, they just are not able to take the risk of patent lawsuits. In the case of a big other company it also can be the same as suicide. There is an anecdote, that one big company (everybody knows) send their patent lawyers to a small company, saying, they are infringing their patent X. The small company proved to the lawyers, they did not. But those hard-boiled lawyers just said: Look, we have X-thousand patents. We will find many others, you infringe and sue you, unless you pay us now for this patent! They paid, of course! The patent system has become like highwaymen -- many see the big money without effort -- and it is. Those that are robbed, oftentimes are the real creative persons. And so, the patent system just has become the opposite to what it pretends to be. And of course, patent-attorneys, lawyers and even politicians defend a corrupted system, because they benefit from it. Best example is Bill Gates: In his early time he stated, that patents on software would harm the software industry. Today he is one of the biggest proponent of the system, since his company today is big and he things it would profit from it. But in the end, even for M$, I doubt.
- perlpimp 13y ago
  Couldn't RICO be used in such cases? It is racketeering at best if this is worded like that.
nova 13y ago
> I wonder, is there still someone who believes that patents are protecting the small inventors and companies? If that were true we wouldn't have any patent system at all.
RogerL 13y ago
Yes. I do. I do not speak for the (small) company I work for in any official capacity, so I will not go into the details. But we have quite a few patents, and they have been useful. There is considerable risk in coming up with a new idea and launching it in the market; a risk that a small company cannot afford to get wrong too many times. There is the risk of failure, and then just the opportunity cost of having your small team work on project A vs project B. If our work was unprotected then larger companies could just sit and watch the small companies try, and then swoop in and take over the market if the idea is valid and the market is there. Recall that Microsoft received the "evil" moniker (which I don't really agree with, btw) in part because how often they did exactly this. Sure, there are all kinds of injustices and inequalities in the system; I do not argue the system is perfect, nor do I suggest that I have any idea how to improve the system. There is value, however, in rewarding a company that takes risks and generates new ideas. Perhaps that value is overshadowed by the value destruction by patent trolls, I don't know (would have to see the numbers). But it is a value.
- nova 13y ago
  > If our work was unprotected then larger companies could just sit and watch the small companies try, and then swoop in and take over the market if the idea is valid and the market is there. But could you actually take on a large company and win? Or is it just a theoretical possibility? Do you have the means, or it's only luck? In fact there is a much worse fate that having your precious idea "stolen": when you are the one sued, because someone (small troll or big Sauron company) has a patent on doing square roots on the internets.
gillianseed 13y ago
I certainly don't. Worse, I don't think that what is currently labeled as 'patent trolls' is the worst aspect of software patents. It's the huge tech companies which have amassed and keeps on amassing broad software patents which is the real problem. The only reason we are actually seeing some legal action being taken against 'patent trolls' (i.e non-practicing entities) is because they are a nuisance to said huge tech companies. Meanwhile these tech giants will use software patents to stifle / destroy competition instead of competing in the open market, you don't need to look any further than Microsoft and Apple's patent suit against Google which they are doing through third-party patents they bought specifically for that purpose, to stifle a competitor with which they can't compete on the open market through the value of their products. Now Google is a massive company themselves and has the funds to atleast mount a proper defence (not that it will matter in the first instance as Microsoft and Apple chose East Texas as it's venue), but if you are a startup you have zero chance against these tech giants when they come knocking. They can afford to drag this through court for ages, you most likely can't, and even if you could and if you won, they could most likely simply choose another patent from their arsenal and go after you again.
- PythonicAlpha 13y ago
  I agree. Patent trolls are not the biggest problem at all. Sometimes I think, they are a good distraction from the real problem. Instead thinking about what to do about patent trolls, the governments should think, if they really can afford an out-of-hands patent system. There where times, when getting a patent was really difficult, also for bigger companies. But today, every little nuisance can be patented (e.g. 1-click), just formulate it right and bring old things into new contexts to convince patent-officers (e.g. round edges). Of course patent-officers have their own advantages today, when more patents are granted ... what a mess!

SheepSlapper 13y ago

The irony of paying a well known patent troll to get rid of other patent trolls can't be lost on the people at Ditto, right? ...Right?

PythonicAlpha 13y ago
I think, that was the only chance, they saw. But that's what a patent-troll is for: Being paid. They are like highwaymen, they want to be paid, for what, is not important. If the money is OK, they will even go on their own kind.

wissler 13y ago

Fallout from the recently enacted and ironically titled "America Invents Act": http://en.wikipedia.org/wiki/First_to_file_and_first_to_invent http://en.wikipedia.org/wiki/First_to_file_and_first_to_inve...

Pxtl 13y ago
The global move to "first to file" seems basically an admission that the patent system is completely ideologically bankrupt and is nothing more than regulatory capture for cutting-edge industries and a jobs program for lawyers. The paper matters more than the invention. What a world.
- wissler 13y ago
  Of course it is completely ideologically bankrupt, but so is virtually everything else about our political and cultural institutions. Not a whole lot has changed on this front since Galileo was thrown into prison, at least not in terms of ideological fundamentals.
drderidder 13y ago
Yeah, I keep wondering why I didn't see more press blasting the "America Invents Act" as a fake reform that made things even worse.
- nickff 13y ago
  Few people understand or take an interest in patent law, and the press is no better than the populace.

Cort3z 13y ago

The patent system is broken. There should be some restrictions where a company cannot make money from suing based on a patent without them actually producing the product themselves. That way you know that the people owning the patent at least are capable of making what they have a patent for. If that is not the case then they should expedite the expiration of the patent where they would loose it in a certain amount of years if they were not able to produce that product in that time. The patent is meant to be a legal monopoly for outstanding innovations for a set amount of time, not as a revenue models for lawyers.

nimble 13y ago
> outstanding innovations Which proposal from your first paragraph is going to ensure outstanding-ness of inventions? I recall company lawyers making the rounds asking us to write down any possible inventions among the things we'd already built. I don't remember the lawyers ever asking whether those possible inventions were outstanding.
alok-g 13y ago
What happens if a claimed outstanding innovation is not seen as outstanding by the majority, leading to the innovating entity running out of money and closing down, and then someone realizing the true value of the invention five years later (and reaping monetary benefits of it)?

sergiotapia 13y ago

Stop building things within the US, it's patent system is broken.

dave_sullivan 13y ago
Well, that's an interesting question... Would a company be any better off incorporating in hong kong or something when it comes to patent disputes? I've been looking into this for various reasons already... How about a foreign corp that owns the IP (which a patent troll may at some point arbitrarily claim was infringing) licensing that IP to a US-based corp. Is the US-based corp exposed to any liability? Probably? Maybe?
- kintamanimatt 13y ago
  Probably not. I'm under the impression it's where you do business that counts, not where you're incorporated. If you're incorporated in HK but have offices in SF you're likely exposed. The best bet is to start your company in Europe or some other sane business-friendly jurisdiction without offices in the US at all. Patent trolls have no power there. For Americans, the Dutch-American Friendship Treaty[0] might be just what you're looking for. [0] http://en.wikipedia.org/wiki/DAFT_%28treaty%29 http://en.wikipedia.org/wiki/DAFT_%28treaty%29
kintamanimatt 13y ago
It's for this reason I'm abstaining from opening up any company in the US and sticking to Europe until the patent trolls are reined in. I can imagine many foreign-born entrepreneurs are now taking the same approach, especially as the number of lawsuits appears to be increasing (800 vs. 2,900 small firms sued in 2005 [0]) with a further ~100,000 receiving letters from patent trolls demanding payment in a single year.[0] [0] http://arstechnica.com/tech-policy/2013/09/op-ed-how-patent-trolls-doomed-themselves-by-targeting-main-street/ http://arstechnica.com/tech-policy/2013/09/op-ed-how-patent-...
us0r 13y ago
If you sell to the US it does not matter.

chaostheory 13y ago

Reminds me of old school mafias and their protection rackets. I'm surprised patent trolls didn't start doing this sooner.

yetanotherphd 13y ago

I think we should simply abolish software patents. Software engineering simply isn't a deep field, and most interesting ideas are not really inventions in the same way that a new hardware device might be. Sure there are some interesting and cool patents like SURF and SIFT, but they are a tiny minority.

cheesylard 13y ago

Anyone have a mirror for the video?

deleted 13y ago

[deleted]

phalina 13y ago

Just out of curiosity, are start ups in other countries like Canada and Europe subject to patent trolling as well or do patent trolls avoid suing outside of America?

altrego99 13y ago

Hate sites which start playing audio without prompting.

bsg75 13y ago

Perhaps an oversimplification, but what would be the ramifications if patent law was altered to cover the inventor (or inventing body) _only_. "Prior art" becomes unpatentable, and the only legal argument occurs when there is a dispute about shared IP. Would this effectively eliminate patents-as-a-business model, and still protect inventors who create _new_ ides, be they physical or digital?