Also, to be perfectly blunt most of the projects you have worked on are not particularly innovative. Rather, they are just variations on existing technology coupled with rote data processing. Your current project, SenseArray, is exemplary: collect user’s historical data, analyze, predict user’s behavior based on historical pattern. It has all been done before, so I agree with you that your software system should not be patentable. This doesn’t mean that your company is not going to succeed or be commercially valuable, it just means that you are not making a meaningful contribution to the progress of the sciences or the useful arts. Nor was there anything particularly technologically innovative about Freenet, Fairshare, or Revver.

In this respect I think Gene makes a good point. You may be a commercial innovator, but from a technology perspective you are a follower, not a leader. Therefore, you are more likely to be on the receiving end of patent disputes. I can see why you would develop a distaste for the patent system.

Maybe he shouldn’t do that.

“Explain to me, how is that guy going to get compensated for his idea if he lives in a world where anybody can steal his idea?”

Make his idea into reality and sell it, without patent protection. This is the most common way of making money. This seems to work well in the software world (where I work), but I wouldn’t presume to expand the advice into other areas.

“You were looking for a clue as to how to leverage a patent, you should have looked at your article a little closer.”

I’m not very good at searching for patents, but I couldn’t find any that Lighthouse Design had when they were acquired. Am I missing something, or did you just make up the part about them leveraging patents to compete against competitors?

“Why should that inventor disclose their idea?”

Obviously, some of the incentive to disclose ideas would disappear with the removal of patent protection. However, there are other reasons that many would find compelling. Regulatory pressure creates disclosure in some industries (e.g. health care). It might be a competitive advantage for your customers to understand your products better (e.g. in cryptography). In many cases, it’s not necessary for the inventor to disclose the invention, since it can be reverse engineered. Surely there would be many cases, just as there are today, where inventors and companies would prefer to keep things secret, and society at large would not benefit from this knowledge. In any case, lack of incentive to disclose is certainly a good reason to question the wisdom of the elimination of patent protection.

All well in fine for the big boys who have hired marketing experts, distribution experts, great salesman, already have a supply chain to low-cost manufacturers in China as well as distributors. These are not readily available to the guy with the next big idea.

Why would the guy with the next big idea ever bring his idea to big business when he cannot prevent big business for stealing it on the spot?

Explain to me, how is that guy going to get compensated for his idea if he lives in a world where anybody can steal his idea?

The corollary to that question is why would that guy ever put in the effort to take that first spark of an idea and develop into something that can be implemented? In my world, people demand to be rewarded commensurate with their efforts/contribution. Except for the altruistic few — no reward = little effort. If you want proof, just look at all the failed communist states of the 20th century.

“How does an inventor (with an inventive product/service that can be easily copied) with little capital break into a market dominated by larger players when you DO have a patent? I wouldn’t have the slightest clue how to leverage a patent to compete directly against Microsoft or Sun or Apple, since I couldn’t create a competing product without infringing on their existing patents.”

First, many of the products by the likes of Microsoft, Sun, Apple, etc., are not just a single product or technology. Instead, they are bundles of hundreds, if not thousands, of different idea/technology. That being said, if you are like Jonathan Schwartz and you unveil a prototype “Linux desktop,” odds are that you and your team didn’t recreate all that technology from scratch. Instead, you built upon someone else’s ideas and added a few of your own. If so, don’t be surprised that you are infringing multiple patents.

What is interesting is that in the same article, Schwartz wrote “Concurrence was a presentation product built by Lighthouse Design, a company I’d help to found and which Sun acquired in 1996.” This was in response to him asking Steve Jobs if he owned the IP to Concurrence since “Keynote looks identical to Concurrence.” Sounds like a successful startup story in which a company with technology, gets some intellectual property, and then is able to sell the company for $22 million. You were looking for a clue as to how to leverage a patent, you should have looked at your article a little closer.

“This is begging the question” OK … let’s try a different tact, either answer the question or challenge my presumption that the “inventor will very, very likely not be compensated for that disclosure.”

“Some would say that the patent situation in software is currently so bad that they’re actually not going to be much of an advantage, so early-stage software companies can do just fine without patents in practice, should they prefer.”
When that company fails and the principles are little wiser and poorer, they’ll invest more in intellectual property and less on foosball tables.

Of course, the real reason for Schwartz’s patent angst is the following:
“Their case was eventually heard before a jury in Rochester, New York, famous for being home to… the Eastman Kodak company. Lo and behold, the local jury decided Sun should pay Kodak more than a hundred million dollars.” This goes back to when Schwartz was the CEO of Sun. FYI – Sun Microsystems has over 7,000 U.S. patents.

You have lost all credibility when you say that Dean Kamen is just wrong, without any support for that statement.

You also demonstrate you are a neophyte when you say “I obviously can’t respond to it in any meaningful way.” Your lack of knowledge and understanding, however, hasn’t prevented you from vocally presenting an absurd argument. To all who would be tempted to listen to Adam be careful, he is admitting he doesn’t know the industry and cannot respond substantively. So he is just providing his uninformed opinions. Unfortunately, he is presenting them not as opinion and as fact. That is careless indeed.

To those who really want to know the truth and are trying to figure out how to proceed responsibly, listen to Adam, Ian and others who say similar things at your own risk. If you want to succeed in business you should model yourself after those who have succeeded. Modeling yourself on Dean Kamen would be a good place to start since he is a prolific and decorated inventor, and extraordinarily successful. Modeling yourself off companies like Apple, innovates and then vigorously obtains patents, is also wise. Modeling yourself off those companies that are disproportionately likely to fail out of some philosophical hatred of patents is just plain stupid. You can do it if you like, but when you fail you will have only yourself to blame.

-Gene

I just gave numbers from this very study, to show the “most successful inventor of our time” is wrong. Why don’t you show me how my analysis is incorrect, instead of just trotting out the same “your head is in the sand” horse again? If talking about the empirical evidence that you brought up is keeping my head in the sand, then I guess I don’t even know what that metaphor means.

“How does an inventor (with an inventive product/service that can be easily copied) with little capital break into a market dominated by larger players when you don’t have patents?”

That’s (quite literally) the million dollar question, and aside from the standard business advice about branding, customer service, product quality, supply-chain management, pricing, salesmanship, and other tried-and-true competitive practices, I don’t think I have a good answer for it.

In the same vein, can you answer this question for me: How does an inventor (with an inventive product/service that can be easily copied) with little capital break into a market dominated by larger players when you DO have a patent? I wouldn’t have the slightest clue how to leverage a patent to compete directly against Microsoft or Sun or Apple, since I couldn’t create a competing product without infringing on their existing patents (as Jonathan Schwartz describes here: http://jonathanischwartz.wordpress.com/2010/03/09/good-artists-copy-great-artists-steal/ ). Do you know how I would do that?

“Why should that inventor disclose their idea when that inventor will very, very likely not be compensated for that disclosure?”

This is begging the question, so I obviously can’t respond to it in any meaningful way.

But to your main point, Just visiting, it’s true that patents are often a competitive advantage to those who hold them. Some would say that the patent situation in software is currently so bad that they’re actually not going to be much of an advantage, so early-stage software companies can do just fine without patents in practice, should they prefer. These claims seem a little shaky to me, but there are certainly people doing it, so I guess they must be at least partly right.

Do you have any interest in writing up your comments above for publication as an article on IPWatchdog.com? I think what you are saying here deserves to be read and not buried in a comment chain. If you are female we can publish under the name Sue D. Nym. If you are male we can come up with an appropriate name, perhaps something like Elmer F. Gantry.

Send me a message via this form if you are interested:

http://www.ipwatchdog.com/about/gene/#F

-Gene

This advantage, for those that hold the patent, is a business advantage. You are able to exclude others (for a limited amount of time) from coming into your space. I don’t think anyone can disagree with that. Granted, in many instances, you have to take active steps (i.e., sue infringers) to prevent that from happening, but you don’t have to do so in all instances. Regardless, having a patent provides a business with an advantage over one that doesn’t.

As a venture capitalist, my goal is to maximize the return on my investment. There are many factors to consider when investing, but all things being equal, would I invest in a company with a patent portfolio or one that does not? To me, that is an easy question to answer – I choose the company with a patent portfolio because it has an advantage that the other company does not, which increases the chances that the return on my investment will be greater than if I invested in the company that did not have this advantage.

Identifying individual companies that succeeded with patents or succeeded without patents is not particularly relevant. If you are providing a well-known service or a previously-made product where technology is not an issue in the marketplace, then patents will not be that great of a factor in deciding winners and losers (although trademarks can certainly play a role). However, where technology is a factor, then patents, IMHO, will almost certainly be important. Regardless, there are too many factors that determine success to base an analysis on a few cherry-picked examples. However, what this study appears to show is there is a positive relationship between having strong intellectual property and having a successful startup.

This positive relationship reflects my experience in the real world.

I’ve asked this (or a similar) question before, yet none of the anti-patent people want to answer it. How does an inventor (with an inventive product/service that can be easily copied) with little capital break into a market dominated by larger players when you don’t have patents? Why should that inventor disclose their idea when that inventor will very, very likely not be compensated for that disclosure?

FYI – if the best answer you can come up with altruism, then don’t bother answering

Please re-commence keeping your head in the sand.

I wish more anti-patent people had the same feelings. It would make it far more easy for responsible inventors and businesses to succeed. If you want to start behind the 8-ball and make success extremely unlikely then who am I to stop you.

Readers can decide who they believe. Ian who says software is protectable via trade secrets (which it clearly is not), this study conducted in part by MIT Sloan School of Management, plus the most successful inventor of our time, plus the thousands of successful companies who have built on strong patent portfolios. Sure, there are some rather careless and naive VC types who will put money in without patents, but those companies fail. Whether you want to believe it or not that doesn’t change the reality. On top of that, there is a big difference in VCs funding a company that has protectable assets and pursuing a patent portfolio, which is possible, and those funding companies that choose to ignore IP. Those that choose to ignore IP assets fail, period. Even open source companies and companies like Facebook apply for patents. So who is fooling who? You are kidding yourself, why I don’t know, but please feel free to continue.

-Gene

That would be silly. But don’t pretend that the sources you’re using are any less biased than e.g. Ian Clarke, when they’re clearly not. In both cases there are idealogical and practical reasons for what they do and how they evaluate the world. In fact, in the above chain of events that I listed, the livelihoods of every single person in the chain depend on the results of the study coming out a particular way. Interestingly, Ian Clarke’s livelihood does not depend on patents being good for business. He can either apply for them or not, but his business is technology, not patents.

I’ll respond to this assertion: “Dean Kamen, probably the most influential and prolific American inventor of our time, has repeatedly explained that without patents there will be no investment.”

This is simple enough to refute, even given the facts you discuss on this page. I don’t have the full article in front of me anymore, but as I recall, in the IP Ventures article itself, at least 20% of the VC-backed winners had no IP portfolio whatsoever. So, this required that they not only receive funding, but they were successful in the marketplace. Add in that the study only looked at 5 of the top VC firms, and you’ve got a situation where top VC firms are funding startups without IP, and those startups are being successful. Again, recalling from memory, about 40% of the funded startups in the study had no IP at all. It’s not clear to me how this situation can coexist with Dean Kamen’s assertion. If he were right, no startups would get VC funding without patents, but this clearly biased study reports that close to half of funded startups have no IP. How can Dean Kamen be right?