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Patent Trolls: Innovation Vampires Suck Life Out of Economy


Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course
Posted: December 14, 2010 @ 8:45 am

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Let’s be perfectly honest, the US patent system has stopped rewarding innovation and has started rewarding those who have the finances and ability to game the system. That is a huge problem and one that needs to be addressed far more quickly than any other problem facing us. I have been saying for years that the manufacturing jobs are not coming back and that we need to focus on those areas where we can grow jobs and the economy, and that space is the innovation space. Innovation is at the core of growth because discoveries lead to inventions which lead to new technologies which lead to the creation of new industry which leads to the creation of high paying jobs. A rising tide lifts all boats and the tide that is going to lift the US economy is the innovation tide, so we need to start focusing on that and putting in place an environment that will allow innovation to thrive. This of course means a functioning patent system that recognizes worthwhile inventions, but it also requires that we put a stop to patent trolling.

I know that over the last several years I have not been one to want to jump up and down over the problems created by patent trolls, but I have to admit that things are not looking good for the patent industry these days thanks to the existence of patent trolls, and one particular super troll. What has transpired over the last few years is really quite sickening when you stop and think about it. The Patent Office during the second half of the Bush Administration became so dysfunctional that getting an examiner to look at your application in a timely manner was impossible, and now that things are changing at the Patent Office under the Kappos regime funding is being squeezed out of the Office and continually diverted, so far in fiscal year 2011 over $1 million per day is collected by the Patent Office that cannot be used. So in their infinite wisdom, or lack thereof, Congress is imposing a national innovation tax at a time when we should be doing everything in our power to encourage innovation and innovators.

In recent years the Supreme Court, with help from the Federal Circuit, has killed the doctrine of equivalents.  The Supreme Court has also made it extremely difficult to get a district court to issue an order acknowledging that a patent is an exclusive right and has returned us to the days of “flash of creative genius” thanks to the KSR decision. The Federal Circuit seems poised in the TiVo case to undercut the value of a permanent injunction, even if you can get one.   The Congress has been able to accomplish absolutely nothing time after time because rather than take on meaningful reform special interest proposals are pushed that while favored by many are not favored by most. Even if patent reform had been enacted it wouldn’t have hardly been a true reform; better to call it “patent change” rather than patent reform; and a change that would have created massive amounts of new work for the United States Patent and Trademark Office while not giving them any more money.  All the while a guy by the name of Nathan Myhrvold, a man with a Microsoft pedigree, has been amassing tens of thousands of patents that he claimed he would never use offensively. Well, that changed just the other day. What is going on!

The trials and tribulations of the US patent system have been fairly well documented, but as it gets harder and harder to obtain meaningful patent protection there are those out there who are buying up already issued patents and preparing to enforce them against those who are actually forwarding our economy. Until recently I have been criticized in many corners for taking the side of so-called patent trolls. Yes, these folks buy up patents and then seek to enforce the rights against others who are allegedly infringing. That is the nature of the right though; namely that the holder has the rights and can seek to stop infringement or collect payments for previous infringement, which is really the name of the patent troll game. What is the harm really? A troll here, a troll there and big companies going down. Up until now I have not been willing to advocate for the overthrow of patent trolls because I have always felt that by going after the person who is holding the right you are ignoring that there is someone who is infringing the right.

Things are different for me now though and I have a lot of reasons to point for my change in attitude. While I do think our economy is fundamentally strong, despite what certain politicians say, there is no doubt that our economy has experienced blow after blow for years now and if something is not done to stop the damage and reverse the trend we are going to be in a whole lot of trouble and likely not that far in the future. So for me it is time to stop worrying about whether there is an infringer and start worrying about what it is that the patent system is supposed to foster; namely innovation.  This is particularly true now with patent trolls increasingly instituting a strategy of sue everyone you can if they are engaged in an industry and plausibly reads on the TITLE of your patent.  This just shifts the burden of due diligence onto the defendant, who many times is a small business without enough resources to fight.  Oh yeah… these small businesses are typically not infringing either, so they are just being held up as if they are walking in a dark alley.  What a drag on the innovators that we need to jump start our economy!

I hate the term patent troll because it has over time become synonymous with “non-practicing entity.” Not all non-practicing entities are bad though. For example, universities are non-practicing entities but the research they do if fundamentally important to our economy. The Bayh-Dole legislation is the most successful piece of legislation over the last 50+ years because it gives incentive to universities to protect their inventions and then license them to businesses, particularly small businesses, who in exchange pay the university, which funds additional research and development. So universities cannot be considered patent trolls, they are the image of what we want to foster. Universities to pure research for the sake of science and this is not something that would or could be done in a commercial setting, so whatever we do we need to realize that universities, federal laboratories and research and development companies are NOT patent trolls and should not be stopped.

What we need to focus on are those that are taking from the patent system without returning anything to the patent system. Rather than call these groups patent trolls, I would much rather call them what they really are — innovation vampires. These innovation vampires grab hold of as many patents as they sink their teeth into a company and begin to suck the life right out by holding the company, and often times the entire industry, hostage. No tax policy could ever do as much damage to an economy. This massive redistribution of wealth without an iota of benefit to society must stop! Having an enormous treasure chest that can fund litigation ought not entitle you to reap the rewards carved out of the public domain to incentivize the creation of new technologies. The shake down of companies that are actually engaged in doing something, like creating technology and employing hundreds of thousands, must come to an end. And while we are working on figuring out the solution we all better keep our eye on the 8,000 pound gorilla located just outside of Seattle — Intellectual Ventures.

On December 10, 2010, the United States District Court for the Western District of Washington dismissed a patent infringement complaint filed by Paul Allen, of Microsoft fame.  The complaint was woefully inadequate.  It provided no facts, no theory of the case and really premised liability on the fact that the defendants, a who’s who of the tech industry, are engaged in activities that seem to overlap with the titles of several patents he owns.  It is this complaint by ambush, where no useful information is provided, that is causing the problems.  If you have a patent right then enforce it, even if you are a non-practicing entity, but for goodness sake do at least a modicum of due diligence before you file a lawsuit.  Shifting the burden onto defendants to prove they are not infringing an unspecified claim is something that cannot stand in our legal system.

Thankfully, over the past several  years the Supreme Court has started to put their foot down on complaints that uselessly provide no information.  Now it is time for patent infringement defendants to fight hard, and for district courts to cease to tolerate the ambush.  While the ambush of technology giants may be seem to provide a cute strategic advantage, when it is limited to the big corporations it is really of little consequence, despite still being against the rules and laws.  When employed against small and mid-size companies it is wholly unacceptable because it works to force a license payment where none should otherwise be owed, resulting in a tax akin to extortion.

Allowing for extortion on any level, against big or small companies, is not a strategy likely to get innovative companies hiring again.  Without hiring our economy will continue to stagnate, which is a real concern for everyone.  The time is now to stop this madness and strict adherence to rules of fairness as set forth in the Federal Rules of Civil Procedure must begin here and now.

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Posted in: Gene Quinn, IP News, IPWatchdog.com Articles, Patent Troll Basics, Patent Trolls, Patents, US Economy

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

120 comments
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  1. Gene, you have gone to the dark side. Ouch.

    What you say about Paul Allen’s complaint, if true, warrants a quick dismissal and if it is repeated, then rule 11 sanctions. That is an indictment of the litigating attorney, not the patent he seeks to enforce or his client.

    The attack on patent trolls ignores the effort of the inventor and her backers at the outset to get the patent and attempt to commercialize it. Too often they fail because the big business outfits ignore their businesslike approaches to doing a deal, so that they cannot function as businesses. Big business also ignore polite requests for licensing, so litigation is required to get their attention. Then big business villifiies them as trolls.

    And you have fallen in with them. Sad day.

  2. AC-

    Perhaps you didn’t read the article carefully. I am increasingly upset with the SMALL businesses that get sued with crap complaints and without any reasonable belief there is infringement. Why does having a reasonable complaint compliant with Rule 8 bother you so?

    This article says nothing about the little guy getting screwed suing, yet you project that into the article. Why?

  3. Seriously Gene?!? Please remember that many arguments are only as strong as the weakest link. With that in mind, you write, “”This massive redistribution of wealth without an iota of benefit to society must stop!” No iota of benefit? Didn’t the patent troll buy the patent from an inventor/innovator. Does the fact that there is this market (market to “Innovation Vampires”) not create some willingness for innovators to invent?!

  4. “These innovation vampires grab hold of as many patents as they sink their teeth into a company and begin to suck the life right out by holding the company, and often times the entire industry, hostage. No tax policy could ever do as much damage to an economy. This massive redistribution of wealth without an iota of benefit to society must stop!”

    I think this is what American Cowboy was referring to. Your statements here, Gene, have nothing to do with the pleading standard set forth in Twombly, Iqbal, and Exergen. This is pure, unabashed anti-patent rhetoric.

  5. Right; I did not catch the emphasis on small companies. But I guess that was because I did not expect you to damn all patent trolls because some of the companies they allege to infringe were small. If I am understanding you right, suing big companies is OK, but not suing small companies. Where does one draw the line between big and small? If I sell $10,000,000 a year in widgets, am I big or small?

    And my comment on little guys getting screwed so they have to sue comes from my own experience. I am sure you have had similar experiences where the garage inventor approaches megacorp to see if megacorp will license the technology that inventor has come up with and generally gets told to go pound sand. If the garage inventor does not have the capital to commercialize his invention and gets this treatment from megacorp, what is he to do with his patent? Once he realizes the frustration of the system, he sells out to a patent troll who has more wherewithal to make megacorp pay attention. But now, you say he should not even have that outlet.

    I can hear the crowd in the streets now: “Death to the garage inventor and his henchmen the patent trolls!!”

  6. A. Hand-

    Pure, unabashed anti-patent rhetoric? Please get a clue. It is 100% accurate and the fact that you and AC seem to only be able to read what I wrote as anti-patent rhetoric tells me that you are unfamiliar with what is going on in the enforcement industry.

    I have no problem with people enforcing patents, as the article makes crystal clear despite your misreading. The problem is when those who buy patents and then assert them based on the fact that the title overlaps with what the defendant is doing. How could you miss that part of the article? Did you actually read the article or just skim the article to try and support your predisposed position?

    I have no problem with enforcing patent rights, but there needs to be more than reliance on the title of the patent to bring suit, as per the Supreme Court decisions and FRCP 8.

    Perhaps you and AC don’t believe me when I say, and 100% correctly I might ad, that there are those out there buying up patents and filing lawsuits against SMALL businesses that are clearly not infringing. They force them to hire defense attorneys to fight a patent litigation where they have to prove that they are not doing anything even remotely close to the claims of the patent. Whether you want to admit it that is sinking their teeth into a company and sucking the life out of the company without ANY legal justification. That is a redistribution of the wealth from those who innovate and run small businesses to those who merely have enough money to fund an extortion based lawsuit.

    If you think my observation that crap patent complaints should be stopped is anti-patent rhetoric that is a YOU problem, not a me problem.

    -Gene

  7. “I am increasingly upset with the SMALL businesses that get sued with crap complaints..”

    It sounds like you have some experience with this. Can you point to a few examples? Has anyone looked at the size distribution of companies sued by noncompetitive entities? I suspect that the actual risk is much less than the perceived risk.

  8. TBD-

    Sure, there is a modicum of incentive for inventors to invent and sell their patents to trolls. We can certainly have that discussion if you want, because the overwhelming truth is that on the scale of society benefit the miniscule benefit to inventors to invent and sell compared with the massive damage and extortion in the patent troll industry proves my point, it does not weaken it.

    Also, can we try and discuss this rationally? Where exactly is there a benefit to invent when these patents are bought in bankruptcy or as a part of the business going under? Does the fact that they are auctioned off after a business fails REALLY in any intellectually honest way mean there was a benefit to the inventor? By the point of winding up the business any benefit has long since gone and the sale proceeds really benefit only the creditors. Given that this is who trolls acquire at least a part of their portfolios it cannot be ignored that the acquisition by trolls in some, if not many or even most cases, represents no benefit to the inventor.

    -Gene

  9. By the way, I’d love to hear those who disagree with my article defend the crappy complaints filed against small businesses where the small businesses clearly don’t infringe, the complaints clearly violate FRCP 8 and there are 50 to 100 or more defendants joined, which clearly violates the nexus requirement of the dispute (witness what goes on in the ED of TX).

    Go ahead, if you disagree with my article then defend that practice away. I can’t wait to hear the silence.

    -Gene

  10. By the point of winding up the business any benefit has long since gone and the sale proceeds really benefit only the creditors.

    You make that sound like a bad thing.

    Without creditors, a new product would never make it to market. Whether it’s an investor or a supplier, someone has to provide goods and services to an inventor before the inventor can pay so that the inventor can build a company and bring a new product to market. A strong market for patents after commercial failure, even if those patents are sold to patent trolls, means that inventors are more credit worthy to begin with and a greater proportion will succeed.

    P.S. and yes, I’m against crappy complaints as well.

  11. A PROPOSAL

    It seems that copyright law has already gone through a similar although not identical phase in the battle between right holders and content users.

    What often happens in the patent biz is that a small inventor person/company gets a patent, knocks on a few doors trying to license the patent to technology users, and the folk who answer the door say, “Go away kid, you’re small, your wares don’t interest me at the moment and I’ll do what I want when I want in the future.”

    At that point the small inventor person/company gets tired and stops knocking on doors. He/it holds onto the patent though.

    Years later, the industry finally catches up to the inventor’s vision and starts using the invention technology en mass.

    Now the small inventor person/company awakens and sues somebody whose door they never knocked on.

    “Troll ! Troll ! ” screams the recipient of the unexpected door knock.

    What to do?

    How about if we established invention review consortiums in all major industries. (This has already started to happen in some industries but needs to be expanded.) Players in each industry pay dues to the consortium and the consortium acts as a patent review “representative” for its members.

    When a small inventor person/company gets a patent he/it wants to license, the inventing person/company goes to the consortium rather than knocking on individual doors. The consortium can negotiate an exclusive or nonexclusive license on behalf of its members or it can say, “Go away kid, your patent ain’t no good”. But in either case, folk in the industry can’t cry that they personally were never approached by the inventor in the early years, that they never had fair notice and thus it is unfair that they are surprised many years later after they already locked into the technology. They had representation and therefore opportunity for lower taxation.

    If a patent trolling company buys up a patent that has been turned down by the consortium, that’s the tough luck of the consortium and its members. They should have appreciated the value of the invention earlier on. They took a gamble by turning the inventor down and now they reap their just rewards for being stingy and short sighted. It’s a system that makes it fairer for technology users and fairer for inventors too.

    Well, just a thought, just a proposal. :-)

  12. Gene, I don’t know what goes on in Texas and if you say ” the complaints clearly violate FRCP 8 and there are 50 to 100 or more defendants joined, which clearly violates the nexus requirement of the dispute (witness what goes on in the ED of TX)” I accept it as true.

    As I said in my first post, the bad guy here is the plaintiff’s lawyer for doing that — not the inventors, not their assignees and not the current assignee/troll. The remedy for the thing you complain about is rule 11 sanctions, not killing off the patent rights of small inventors.

  13. I am not too keen on Step Back’s consortium proposal. Sounds too much like a cartel and if controlled by big bidness interests will perpetuate and institutionalize what is bad about today’s situation.

  14. Gene,

    I had to laugh this morning as my schedule is relatively full and you have picked such a delightful topic.

    One tidbit I will throw out there at this point is beware the law of unintended consequences. Step Back, since your consortium has a function of a “have-seen-it”, 1) Do treble damages automatically apply to all consortia members? 2) Who pays such damages if they do apply?

  15. This has already started to happen in some industries but needs to be expanded.

    Step back. Can you give an example?

  16. AC-

    I agree that the remedy is not killing off patent rights of independent inventors or small businesses. That is not at all what I suggest. I am on record quite to the contrary in many different manifestations.

    Having said that, I do think that the rules in place in the FRCP, if actually followed, would solve the problem of the patent troll (or innovation vampires). I do not consider such a vampire to be one that has a valid patent that is asserted against an infringer. I also think the truly bad actors, who seem to be enabled by the ED of Texas, are finally allowing us to craft a meaningful definition for patent troll. Those who sue everyone based only on the title of their patent overlapping with the industry in general and without any due diligence are patent trolls. They use extortion tactics to bully around those who are not infringers and get them to pay, all because some courts refuse to enforce FRCP 8 and FRCP 11.

    By focusing like a laser beam on the bad actors who are the ones engaging in extortion tactics we can clear the nonsense and get rid of the vilification of the non-practicing entity. The NPE is not the problem. Those who misuse the right they have to collect royalties that are not properly due are the problem.

    I think patent misuse should not be just a defense, but it should be a counter-claim that comes with damages.

    -Gene

  17. Step-

    I don’t think you are describing a troll situation, although I will certainly grant you that many would indeed cry troll.

    Infringers have no right to cry troll. Those who are not infringing and are getting held up due to a burden shifting, non-informing complaint are the ones who have the right to cry troll (at least in my humble opinion).

    I’m not sure I like the consortium idea. Seems complicated and prone to free riders.

    -Gene

  18. Mark-

    I don’t mean to make it sound bad that creditors get paid on the back end. That is the system we have, unless of course the company collapsing has workers represented by the UAW, in which case the creditors are the ones taking the hair cut.

    I have no problem with the vultures picking up patents on sale and enforcing them, only when they seek to enforce patents that are clearly not being infringed.

    -Gene

  19. Can you give an example?

    Mark,

    Sorry my memory is weak at the moment, however I distinctly recall reading that some members of the Coalition for Fairness had started their own troll-preemption coalition where they buy up troublesome patents before those patents cause trouble to their members and while the price is low. However, in their system, they do not have the inventor come to them. Instead, they research the patents as they appear in the Gazette (IIRC) and then decide whether to try for a low ball anonymous-approach license early in the life of the patent, before the industry takes off in that direction.

    The question about 3x damages is a good one.
    I suppose there will have to be some pre-viewing contract language that precludes 3x damages for an agreed-to time period.

    As I said, this is just a rough idea I’m floating out there for refinement.

    In the copyright area we have the many radio stations/ other content users who can’t spend time negotiating for every individual song. So they came up with ASCAP (sp?).

    In the technology usage arena, we have a similar situation. Each bloatware software suite has thousands of tiny subroutines and the many bloatware vendors can’t afford to negotiate with every small time inventor whose invention may or may not be infringed by some obscure code buried in the bloatware. So what is the solution that is fair to both parties?

    Right now all we have is hysterical name calling (Troll ! Troll !) and a demand for destruction of the entire patent system. That solution is not good for anybody in the long run.

  20. Perhaps the problem is not so much with our patent system as with our legal system which is litigation happy with little or no consequences for those who sue w/o strong basis. I believe in the UK, the loser of a suit has to pay all of the legal fees. Anyone know if the UK has a “patent troll” problem? (not a rhetorical question – does anyone know?)

    I also have to chime in on the fact that the inventors were in fact rewarded for their innovation be having their invention purchased by the so-called patent troll, ergo innovation was in fact rewarded albiet not as handsomely as the “trolls” might be rewarded (but perhaps the value increased over time too). In the case of a real live infringement, the innovators probably have the option of filing suit themselves and contingency lawers that are ready to help if the rewards are high enough.

  21. One solution to the problem is for small and midsized companies to purchase patent infringement defense insurance and use the insurance first to discourage frivolous lawsuits in the first place and second to defend vigorously. Infringement defense insurance should be written right into the business plan and considered a necessity. Don’t go to market without it.

  22. Gene,

    There is one other species of innovation vampire you overlooked. That is the established practicing entity who deliberately shelves an improvement to their incumbent technology, or equivalently, refuses to license their incumbent technology to the inventor of such an improvement, because they have a vested economic interest in the incumbent, unimproved technology. LIke the troll, they have time on their side, because the status quo is serving their interests well. However, in some ways they are worse than the troll, because they are truly thwarting innovation, not merely delaying it. At least the troll desires to license the invention so that it may be practiced.

    I agree with you that the bar needs to be raised for patent infringement suits. But that is not all. Patent quality also needs to be improved, through programs such as tiered patents, with greater scrutiny and correspondingly stronger IP rights for higher tiers. Thirdly, the bar for antitrust suits needs to be lowered, to better address the free-market damage inflicted by both types of innovation vampires. Right now, antitrust is the “nuclear option” that is fraught with risk and the potentail for severe collateral damage to the plaintiff, defendent, and the economy as a whole. It needs to be made simultaneously more accessible as a litigation tool and less draconian in its effects For example, instead of breaking up a successful incumbent, simply require them to license their IP on reasonable and non-discriminatory terms to the innovative startup that seeks to improve upon it, or spin out the new technology that has been shelved internally. The same goes for trolls who are threatening to seriously wound or kill successful companies through injunctions against selling their products, thereby harming the free market.

    There is no easy answer to the inherent tradeoff between IP rights and antitrust. Mosty of the time the free market works as intended and innovation flourishes. But when problems do occur, then a balance that needs to be struck on a case-by-case basis, and cannot be address a priori by a one-size-fits-all legislative solution. But Congress could clean up existiing IP and antitrust law, putting them more on a par so as to enable more efficient and effective judicial intervention to maintain the health of the free market where necessary.

  23. ‘enforce them against those who are actually forwarding our economy’

    Prior to eBay v Mercexchange, small entities had a viable chance at commercializing. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. What hypocrisy! The same parties who complained about injunctions now complain that small entity inventors are not commercializing. If you don’t like it, tell your Congress member. Then maybe we can get some sense back in the patent system with injunctions fully enforceable on all infringers by all inventors, large and small.

    Call it what you will…patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: “we’re using your invention and we’re not going to pay”.

  24. Forget for a moment the IV case, and look at their primary targets, Symantec and McAffee…. Can you seriously claim that these companies haven’t behaved for the past decade in just the same manner as so many other large software companies – – ignore and infringe until caught red-handed? These big boys are just like the smartphone integrators who assemble diverse technologies from many different quarters in order to produce a product that’s (presumably) used and useful by a broad audience of non-tech consumers. As in the smartphone case there’s very little technology that either Symantec or McAffee developed by themselves; they bought, borrowed, and licensed the technology they needed to give you Norton Internet Security, editions 2001-2010, and they will only share a portion of the integration revenues if you force them to the table.

    The economic cost of being a technology free-rider is yet to be sufficiently high to require “moral” conscience by the developers, big and small, for the benefits of true innovation. So, back to IV: are they not providing a socially responsible service by using their wealth to force a level playing field in the field of technology integration? They don’t seem to be pursuing the small fry infringers (at least not until there’s sufficient cash flow to make it worthwhile), and the cost of blue-chip counsel is surely extracting a heady toll on them for their activities.

    How is that one can judge IV to be an “innovation troll” until the underlying facts of the case are discovered and the real culprits revealed?

  25. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. What hypocrisy!

    You are aware, I presume, that the entire point of eBay was that they will still grant injunctions to any patentee who is commercializing his invention, and most likely to one who has made significant preparations for commercialization.

    If the small entity has no plans to commercialize the invention, let him satisfy himself with royalties. What sort of person invents something just to make sure nobody at all can use it for 20 years?

  26. What sort of person invents something just to make sure nobody at all can use it for 20 years?

    A company that has a significant investment in commercializing the prior art that would be obsolete if they or anyone else practices the invention.

  27. “A company that has a significant investment in commercializing the prior art that would be obsolete if they or anyone else practices the invention.”

    Good description of vampire species #2.

  28. What kind of person?

    How about a law-abiding person who wants to enjoy the full protection that the law provides.

    Please show me the legal requirement that a patent holder must do more to enjoy what the law says is his right.

    Anybody. Gene. IANAE. Ron Hilton. Anybody.

    There are no such post-grant legal requirements. Name-calling just isn’t the way to go. Understanding the Quid Pro Quo and the patent right is. Until they actually change the law, let’s stop vilifying a legitimate situation.

  29. How about a law-abiding person who wants to enjoy the full protection that the law provides.

    1) Protection for what? His delicate sensibilities? He’s not selling a product embodying the invention, and he has no business interest to protect. If all he wanted was to keep it from the public, he’d have been better off not bothering to invent it in the first place.

    2) I don’t know if you’ve read eBay, but the full protection that the law provides doesn’t include an injunction for him. Which is good for everybody, because it means the technology that someone spent time, money and energy to invent will actually promote the useful arts. That’s the law, and until they actually change the law, let’s stop vilifying a legitimate solution.

  30. For an example of a legal requirement to share IP, consider the antitrust judgement against Microsoft, which requires them to disclose technical interfaces to competitors on reasonable terms. In that case, Microsoft was found to be illegally monopolizing the middleware market.

    In the context of this discussion, I have posited that to enforce a patent right for the sole purpose of excluding it’s commercialization by anyone including the holder, either through confiscatory licensing terms or refusal to license it on any terms, regardless of motive, may constitute an antitrust violation. In such a case, unlawful restraint of trade might form a basis for the legal requirement.

    I welcome any civil, informed discourse regarding my statements above.

  31. All of this “if you don’t make the patented invention, you get a second class patent” is no different than a working requirement. Historically, the United States has opposed working requirements in the laws of other countries. see http://grove.ufl.edu/~techlaw/vol8/issue1/dubowy.html Big companies were involved in the treaty negotiations this article refers to and urged the US to oppose working requirements overseas. Now, they call for them here, a la eBay.

    Can you spell hypocrisy?

  32. “I have posited that to enforce a patent right for the sole purpose of excluding it’s commercialization by anyone including the holder, either through confiscatory licensing terms or refusal to license it on any terms, regardless of motive, may constitute an antitrust violation. ”

    You know, if you think that society’s rights trump individual rights, this makes sense.

    But so does making you strip to go through TSA screening since that keeps passengers safe. And it is also consistent with allowing the police to break down your door to see what you are up to if they think you are a drug dealer, etc.

  33. “if you don’t make the patented invention, you get a second class patent”

    It’s not a second class patent, it’s a first class injunction. Namely, an injunction you get if you can show that it would be of any objective use to you at all.

    And so what if it’s a working requirement? If someone out there wants to practice that patent, the patent is self-working. If the patentee can’t be bothered to supply a market for which somebody else clearly has a business case, the least he could do is take his cut of the profits. It’s not like anybody’s invalidating his patent for failure to work it.

    What it all boils down to is that preventing the entire world (including yourself) from practicing an invention that you yourself invented and duly disclosed to the public in the interest of promoting the useful arts is not legally recognized as a legitimately protectable interest. It’s more along the lines of being a jerk about the technicalities of your rights, so it should surprise nobody that it disentitles the patentee to equitable remedies.

  34. But so does making you strip to go through TSA screening since that keeps passengers safe.

    At best it makes them feel safe, but I’m not sure that rationale even applies to a choice between getting felt up by a security guard (assuming that’s not your thing) or publicly undressed with someone’s electronic eyes.

    And it is also consistent with allowing the police to break down your door to see what you are up to if they think you are a drug dealer, etc.

    That’s a great example, because it only applies to the people who have demonstrated by their particular circumstances that they are not to be afforded the usual protections. Regular people still have the right to not have their door broken down.

    Well, same goes for patents. Regular patentees who practice their invention get the regular protection against other people horning in on their racket. It’s only the bad ones who are using their property in a socially harmful way who lose that protection.

  35. “Regular patentees who practice their invention get the regular protection against other people horning in on their racket. It’s only the bad ones who are using their property in a socially harmful way who lose that protection.”

    Socially harmful? They traded away their right to keep the thing secret in exchange for the government’s promise that it would give them the exclusive right to make, use, sell, etc. How can it be socially harmful to do what the government said it endorse? Is it not socially harmful for governments to break their statutory promises?

  36. And it is also consistent with allowing the police to break down your door to see what you are up to if they think you are a drug dealer, etc.

    That’s a great example, because it only applies to the people who have demonstrated by their particular circumstances that they are not to be afforded the usual protections. Regular people still have the right to not have their door broken down.

    I guess I should have stated my case a bit more clearly. It is consistent with allowing the police to break down your door to see what you are up to if they think you are a drug dealer, but do not have enough evidence to get a search warrant.

  37. How can it be socially harmful to do what the government said it endorse?

    The same way it can be socially harmful for the bank to kick you out of your house for the sole reason that the bank holds the legal title. Which is why there’s an equitable remedy for that.

    Is it not socially harmful for governments to break their statutory promises?

    1) The government didn’t promise anybody an automatic injunction. The government promised an injunction according to the principles of equity.

    2) The courts are the ones who “broke” the promise of an automatic injunction. If the government really wants to promise one, it can legislate accordingly and I guarantee you the courts will enforce that promise.

    It is consistent with allowing the police to break down your door to see what you are up to if they think you are a drug dealer, but do not have enough evidence to get a search warrant.

    Except that it’s not, because the courts will only kick down the door of your patent after a protracted trial with hearings on claim construction, validity/infringement and damages, and only if it turns out, based on all the evidence, that even though your patent is valid and infringed, you’re the sort of person who ought to get his door kicked down. So actually, it’s more akin to seizing the stash of a drug dealer who has been convicted by due process of law.

  38. How can it be socially harmful to do what the government said it endorse? The same way it can be socially harmful for the bank to kick you out of your house for the sole reason that the bank holds the legal title. Which is why there’s an equitable remedy for that.
    I don’t follow your argument, my friend.

    Is it not socially harmful for governments to break their statutory promises? 1) The government didn’t promise anybody an automatic injunction. The government promised in 35 USC 154 that “Every patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, of the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing
    the invention into the United States, and, if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States, or importing into the United States, products made by that process, referring to the specification for the particulars thereof.

    Denying an injunction breaks this promise.

  39. @American Cowboy
    “Socially harmful? They traded away their right to keep the thing secret in exchange for the government’s promise that it would give them the exclusive right to make, use, sell, etc. How can it be socially harmful to do what the government said it endorse? Is it not socially harmful for governments to break their statutory promises?”
    Society is harmed because there’s a good chance that someone else would have figured it out well enough to compete during that 20 year time period and utilized it. If this wasn’t the case, then using trade secrets would probably be preferable for the inventor.

  40. Bobby, I read your remarks as agreeing with me.

  41. @AC
    How so? Let’s say the inventor was 5 years ahead of the pack and wholly motivated by the patent. If they actively use the patented technology for those 20 years, then society might be getting a net benefit depending on the circumstances, but if they sit on it for 20 years, then the net result is 15 additional years without it. This is clearly a net loss for society.

  42. Denying an injunction breaks this promise.

    Only if an injunction was promised, which it wasn’t.

    The statute only promises that you’ll get an injunction if you can pass the usual test for getting an injunction. If you don’t pass the test, you get exactly what was promised – no injunction.

    You know, just like the statute only promises a patent if you meet the test for novelty. If your claim is anticipated, denying you a patent does not break any statutory promise.

  43. Gene, 12/15
    You said,
    “The Federal Circuit seems poised in the TiVo case to undercut the value of a permanent injunction, even if you can get one.”

    So I take it you now think the judges are going to let Dish continue with its never-ending
    theft of Tivo’s patents?
    We know you don’t think the judges should be allowed to do that. But now you think
    they will?

  44. Sam-

    I think the TiVo case is really going to be a close one, evenly decided however it goes. I think an appeal to the Supreme Court will happen regardless, and yes I do think it is likely that the Supremes will grant cert. on this important issue dealing with the power of a district court to enforce its own injunctions. They would only deny cert. in this case if they believe the Federal Circuit gets it 100% correct.

    I personally think TiVo has the better legal position, but I am bothered by how beaten up TiVo’s counsel was at the oral argument.

    The quote you pulled was my recognition that the case is teed up to undercut the value of a permanent injunction even if you can get one, and that a number of Judges on the CAFC seem comfortable with that, which is a pity.

    -Gene

  45. Gene, 12/15
    Thank you for your quick.. albeit foreboding.. response.
    By the time anything gets back from the Supremes…
    the “irreparable harm” will have climbed further toward
    its zenith.
    And Tivo and its investors will be the victims of our
    wonderful “justice” system… that is heavily balanced
    in the favor of whoever has the most money, power,
    AND “influence”.
    Sam
    PS
    And your soothsaying certainly is supported
    by the (lousy) stock price.

  46. Gene,

    Looks like I’m late to the party, but I wanted to quickly throw some thoughts out there. First, your previous position was that you wouldn’t blame the trolls because there were companies actually infringing. Now, you suggest that trolls are a problem because the small companies don’t infringe, but are forced to pay the cost of litigation. So, the question is – what makes you think that the rate of small companies that infringe is any different than the rate at which large companies infringe? How do you know that the small companies aren’t infringing? Or are you trying to give them a break because they are small?

    Second, you say “troll here, a troll there and big companies going down.” I hate to be the guy that asks you to back up your statement with evidence … but it seems to me that tech companies 9at least the ones that make attractive targets to trolls) are doing quite alright. I don’t see Microsoft, Google, etc, going down because of trolls.

    Next, how does your crusade against bare-bones complaints relate to trolls? I feel like you are mushing two separate issues together. What if the same complaint were filed by Microsoft, or by a small start-up company that practices the patented invention?

    I’ll give you props, because the Paul Allen dismissal is obviously something you’ve been advocating for, and you got it. But, practically speaking, do you expect it to change anything? Do you think the small companies won’t be sued? I am skeptical. I suspect it just means that they will have their $20/hour law clerk (or perhaps $3k/week summer associate) beef up the complaint a little bit. Throw in some claim language here, some accused instrumentality there (all qualified with boiler plate language, of course) and the suit will go on.

    Curious to hear your thoughts, I apologize for shooting from the hip in this post.

  47. “You know, if you think that society’s rights trump individual rights, this makes sense.”

    I think both are important and there needs to be a balance. That is another disparity between patent law and antitrust law. Patent law seeks to provide a remedy to the patent holder, even if it harms the economy (i.e. society), whereas antitrust seeks to provide an economic remedy to society, with litte direct concern for curing the harm suffered by competitor(s). So another change I would like to see in both areas of the law are remedies that take into account the interests of both the individual stakeholders as well as society as a whole, both in curing harms caused by the illegal actions and avoiding collateral harm that the remedy itself might cause.

  48. @Gene

    “Let’s be perfectly honest, the US patent system has stopped rewarding innovation and has started rewarding those who have the finances and ability to game the system.”

    Gene, I agree with you and not because of any anti-patent views. Rather, it is because you have gone to the heart of a problem that is a measure of value on both sides of an important patent-innovation equation and question, that rewards have taken on new meaning and the “game the system” is just the right tool for the right job.

    Understanding how to arrive at the right equation is key, has little or nothing to do with innovation, otherwise to “game the system” is much harder. The right equation is to drive question, question that is the force to making a path through much “real” innovation, with more success to “game the system”. Because success is a numbers game already, so the stats must have a large sample to show a result. The question provides this sample.

    The patent system has failed everyone in my opinion, those as yourself, and business, that are now paying the prize for the winners of the game.

  49. Gene, 12/16
    One more question.
    Do you think that IF the majority of judges rule in Tivo’s “favor”… that they
    will then order the enforcement (FINALLY) of the injunction… while Dish tries
    to get to the Supremes?
    PS
    Do you think it’s about time to get rid of juries… and just go straight
    to Appeals judges?

  50. Sam-

    I can’t imagine the CAFC would stay the injunction pending appeal to the Supreme Court. That could be years, and the chances that the Supreme Court will take any case are nearly zero. They take maybe 100 +/- cases a year and get asked to review maybe 6,000 or more.

    The judge/jury question is a complicated one. The jury already does very little in a patent case, being spoon fed practically everything. I am, however, in favor of interlocutory appeals to the CAFC. They overrule so much stuff that it just makes sense to have them review most important rulings before a case proceeds.

    -Gene

  51. I agree that the Fed. Cir. should take more interlocutory appeals. But it seems they prefer to second guess the District Courts only after they have done all they can for/to the parties.

  52. Gene, 12/16
    You said this in an earlier reply (#44):
    “… and yes I do think it is likely that the Supremes will grant cert. on this important issue dealing with the power of a district court to enforce its own injunctions. They would only deny cert. in this case if they believe the Federal Circuit gets it 100% correct.”
    Then you just said this:
    “… and the chances that the Supreme Court will take any case are nearly zero. They take maybe 100 +/- cases a year and get asked to review maybe 6,000 or more. ”

    They seem to contradict each other and that is critical to this case. If you are correct (and Tivo “wins”) then it should be “over”. But who knows what else Dish has up its sleeves that have been dangling for years in the middle of the cookie jar… up to its shoulders.
    Maybe bankruptcy?

    I AM HOPING THAT YOUR SECOND COMMENT IS CORRECT.
    Sam

  53. Sam-

    The Supreme Court has increasingly shown an interest in patent cases, and when they take a case over the last 10 years it has been to overrule or modify what the Federal Circuit has done. The Supreme Court is content on pretending that patent cases are no different than any other case and that a case-by-case approach should prevail. The Federal Circuit likes more predictability because, after all, this is about business. The likelihood that the Supremes couldn’t find at least some problem with a Federal Circuit decision is pretty low.

    So they like to take patent cases to pretend they know what they are doing, and the TiVo case deals with patents but is largely about injunctions and court room proceedings that have nothing to do with patents and great applicability to many other areas of law. So they could take another quasi-patent case and it would be in the area of contempt proceedings. That to me seems like too much for the Supremes to pass up, so I do expect this to be a strong candidate for one of the few cases the Supreme Court takes.

    Sadly, I think if TiVo wins that would raise the likelihood that the Supremes would want to weigh in.

    -Gene

  54. Thanks Gene, 12/16
    Then with that scenario It’s the ultimate (BAD) conundrum.

    1. If Tivo loses… the Supremes will be happy and let the decision ride.
    2. If Tivo wins… the Supremes want a chance to throw their perfidious
    .025 cents worth in.
    And I am not so naive as to think the “influencing” isn’t running rampant right now.
    I just wish the Institutions that hold about 80% of Tivo would do some “influencing”.
    But there are a lot of “influencers” who would drink to Tivo’s demise… as they
    continue to cut up what’s left of her carcass thanks to the never ending
    “irreparable harm” being perpetrated by our beloved judges.

    All I can say is BURP!
    Sam
    And the (lousy) stock price is reflecting your suspicions… and a severe
    distrust of these judges.

  55. a case-by-case approach should prevail.

    From personal discussions with one of the Justices, this is guaranteed.

    Sam, I think you need a lovely glass of Kool Aid to wash done that piece of carcass…

  56. The Supreme Court has increasingly shown an interest in patent cases, and when they take a case over the last 10 years it has been to overrule or modify what the Federal Circuit has done.
    […]
    The Federal Circuit likes more predictability because, after all, this is about business. The likelihood that the Supremes couldn’t find at least some problem with a Federal Circuit decision is pretty low.

    Am I the only one who sees the irony here? In the Federal Circuit’s quest for predictability, it has failed to notice that all of its bright-line rules are predictably shredded by the Supreme Court, resulting in protracted legal uncertainty until a case finally makes it up there on appeal, followed by the turmoil of un-settled expectations and the panic that last year’s spec won’t support this year’s hot new claim format.

    Maybe they (and Scalia, if we’re lucky) can come to accept that patent cases are inherently unique and their facts are inherently unpredictable, and we need a more flexible analysis that is open to new technologies. If this ever-changing world in which we live in is so bothersome for them that they need to impose order via OCD-like inflexible rules, perhaps they’re not the right people to be hearing patent cases.

  57. I applaud the Fed.Cir’s attempts to create bright line rules to provide predictability. The Fed Cir was created to reduce the unpredictability that was caused by the inconsistencies of the various regional circuits.

    Companies that have the wealth to spend on litigation that goes to the Fed. Cir. and Scotus also have lawyers looking at preventing getting themselves into patent scrapes. If the rules are clear, those lawyers can give their clients reliable advice and the clients can avoid litigation. If the rules are fuzzy, the advice is fuzzy and businesses that follow fuzzy advice become litigants, wasting their assets on costly patent litigation.

    Predictability should be the goal; litigation ensues when the players in the market don’t know what the rules are.

  58. If I may boldly (and presumptively) clarify American Cowboy’s remark, litigation does not ensue when the players in the market don’t know what the rules are – it is not a question of knowing “what they are”, it is a question of knowing “how do they apply”.

    By simply saying “Well, it depends”, there is no actual way of knowing “how do they apply” all the while knowing “what they are”. Even the crystal ball of knowing how certain judges view matters fails when you do not know who will make up the panel far off in the future if you decide on the litigation path.

    Yes, it is difficult taking responsibility for drawing the lines of clarity (heaven knows, you might be wrong) – but to not draw any lines defeats the very purpose of the Fed Cir.

  59. Thanks, Anon. I endorse your clarification.

    The other point I meant to make is that as to a lot of this stuff, just exactly what the rule is may not be as important as the clarity of its enunciation and fidelity of implementation. That clarity tells the parties whether it makes sense to go down a commercial path or not; the potential infringer will know not to make and sell a product that it is pretty clear infringes. Instead, if the advice he gets is “it depends,” then he may take the gamble to make the product and hope for the best. If his hope is wrong: somebody gets sued!

    Leaving too much discretion and judgment in the hands of the courts in order to acheive a “more perfect justice” enables the final judge to get all sorts of “after the fact” input before deciding what rule to apply or how to apply it. The resulting uncertainty for the businesspersons making decisions invites litigation and in the end results in something other than justice — something more like a crap shoot.

  60. What Dish has done to Tivo is pure and blatant thievery.
    And that is putting it mildly.
    And the courts facilitating these thieves…
    and driving their getaway cars.
    Even in the most basic court in America when
    a person is found guilty of rape… that court
    orders him to stop raping. No matte
    how many times he appeals.
    PS
    Just about the only thing the courts care about is how
    many Dishs can dance on a pinhead… and how much
    “influence” can be perpetrated by the big boyz.

  61. And of course, American Cowboy, let’s not forget just who can most afford indulging in the crapshoot of litigation – the established parties that view patents as a threat anyway.

    Kill off patents, or at the very least, make them the sport of Kings. – This is the philosphoy that the patent system must be on guard against.

  62. “Big business also ignore polite requests for licensing, so litigation is required to get their attention. Then big business villifiies them as trolls”

    Yeah, well said. The problem really is that big businesses have no respect for IP rights of small inventors.

  63. Sam-

    You need to get a grip. Comparing patent infringement to rape is over the top. I won’t allow this forum to devolve into the asinine.

    -Gene

  64. what if the patent system demands a willful infringer be jailed for a minimal of 3 years?

    some have suggested that there should be criminal penalties for willful patent infringement. I feel the proposals make sense…

  65. @blue

    I will hope that such criminal penalties would apply to all those, where infringement means all works. I believe respect for all works is important, but patents shouldn’t be the only, where a willful infringer is found. The patent system has a long way to go, the direction I hope will move to making all works able to work and have respect in a world, where so many create.

  66. That points out another disparity between patent infringement and antitrust. The former is purely a civil violation whereas the latter could entail criminal penalties including jail time. Making the penalty too harsh raises the stakes and reduces the likelihood of a getting to a constructive remedy. Restoring a healthy, competitive free market without doing violence to propery rights should be the goal. I think part of the problem is a political one. Patent vs. antitrust fits right in with private property vs. social welfare, busness vs. government, Republican vs. Democrat. But since both have to do with fostering economic growth and maintaining a healthy free market, one would think that the opposing factions could get together on this issue. Even Gene switched to the dark side on this one :).

  67. what puzzles me is why a theft of private property constitutes a criminal offense whereas a theft of IP is considered a civil violation.

    “Making the penalty too harsh raises the stakes and reduces the likelihood of a getting to a constructive remedy.”

    I dont understand what you mean by this. A constructive remedy is achievable whether or not the penalty is harsh. A harsher penalty would deter those who are looking to copy patented technologies and hoping that the rightful owner of those technologies would never find out or would not have sufficient resources to file a lawsuit.

  68. The difference is that the boundaries of physical property are usually quite well-defined, whereas good-faith differences can and do exist regarding the boundaries of a given piece of IP, especially given the debatable quaility of many issued patents. Criminalizing a difference of opinion is not a good idea, whether regarding the interpretation of the boundaries of a patent claim or the boundaries of a closed market for antitrust purposes. Harsh penalties and draconian remedies are likely cause the parties to resist any constructive settlement that might imply a degree of culpability on their part, lest they risk the dire consequences.

  69. “Criminalizing a difference of opinion is not a good idea, whether regarding the interpretation of the boundaries of a patent claim or the boundaries of a closed market for antitrust purposes.”

    You are providing a misleading assumption that claims cannot be defined clearly and succinctly and therefore an ‘objective’ interpretation of the claims is an impossibility. I do not deny that some of the patents i have read are poorly drafted but that does NOT mean that the meaning/scope/boundary of the claims of every patent filed can only be construed subjectively, from the standpoint of the reader.

    “Harsh penalties and draconian remedies are likely cause the parties to resist any constructive settlement that might imply a degree of culpability on their part, lest they risk the dire consequences.”

    What exactly do you mean by this? Harsh penalties could stop businesses from even thinking about stealing someone’s IP. Your reasoning is vague and offers no practical value to the real world settings.

  70. Patent drafting, examination, continuation, appeal, reexamination, and litigation, are all part of the process to make patent claims as objective and free of error misinterpretation as possible. And even then a certain amount of subjectivity remains. Intellectual property exists in the world of ideas and expression of those ideas, a world where it is much more difficult to erect a fence exactly on the “property line” than in the physical world. Let me ask you a question to put help it into perspective. At what point along the above-listed path of patent prosecution would you maintain that the IP defining line has become so pure and objective and incontestable that to cross it, even by the tiniest increment, warrants jail time for the infringer? In my opinion, having one’s business destroyed by an injunction is severe enough to be a deterent. Often, even the threat of an injunction is enough to scare away prospective customers. And I am speaking from the perspective of one whose business was destroyed in exactly that manner, by a party who is now under investigation by both the DOJ and the EU in the matter. Nevertheless, for my destroyed and now non-existent company, in which I invested a significant portion of my life savings and nearly a decade of my life, there remains no legal remedy. And according to you, that is not punishment enough. According to you, I should now be rotting in jail to boot. Please don’t lecture me about practical value in real-world settings.

  71. no dude…you dont live in the real world. your arguments still make no sense to me. you are saying that harsher penalty is not needed because of what exactly?? because the judges/jury could make erroneous judgments during a trial or what????

    “Intellectual property exists in the world of ideas and expression of those ideas, a world where it is much more difficult to erect a fence exactly on the “property line” than in the physical world.”

    its the job of the inventor to try his/her best to described the invention as clearly and succinctly as possible. Still, you are in favor of the view that ideas cannot be described clearly which in my opinion is wrong. What exactly is this physical world you are referring to? How exactly do we humans describe/perceive this physical world if not through the language/words we speak?

    Do we need to have a real horse standing in front of us every time we communicate the concept of ‘horse’ to someone? You might need to study some philosophy to understand that this so called physical/real world as we know it really doesn’t require the presence of physical things in order to make it ‘real’.

  72. my last comment was deleted by Gene boy. Anyway Ron, your arguments are too weak.

  73. what puzzles me is why a theft of private property constitutes a criminal offense whereas a theft of IP is considered a civil violation.

    I’m sure if you found some way to actually steal a patent, you’d find yourself on the business end of a criminal prosecution.

    Infringement isn’t stealing.

  74. Actually, trademark counterfeiting and copyright counterfeiting can be criminal offenses. The problem is that the entity that enforces criminal laws is the gubmint and the D/A’s have gazillions of things on their to do list, and enforcing criminal laws against IP theft falls way down on their list of priorities.

  75. @AC
    Being a criminal offense doesn’t make it theft, and it seems like most of the intent of the criminal aspects was to control street merchants and put something scary on DVDs

  76. blue-

    I didn’t delete the comment, it was caught in the spam filter for some reason, but now is posted. I’m not exactly sure why. It isn’t something I have added to the spam filter, so it must have been a trigger in the base filter. The only thing I can guess is the multiple use of the question mark. For reasons I don’t understand, many spam comments use that construct.

    Cheers.

    -Gene

  77. Bobby-

    I know I’m jumping in mid stream here, but I just want to point out that piracy and counterfeiting is not a victimless crime really. Terrorists and drug cartels are getting into the business of pirating and counterfeiting because the profit margins are so high. I was just reading this weekend how the Zetas in Mexico are moving into piracy. Bad news. The funds they achieve support terrorism.

    -Gene

  78. @Gene
    That doesn’t make it the same as theft, and the type of piracy and counterfeiting that virtually all of the terrorism and organized crime funds are coming from is the aforementioned street vendors, so not being specific on what forms of piracy and counterfeiting lead to these things (let alone what share of said type) is a bit misleading to say the least. It’s also worth noting that street vendors aren’t inherently funding terrorism, and that money from legitimate vendors sometimes funds these same kinds of organizations as well, even if indirectly.

    @blue
    You seem to be missing out on the differences between enforcing rules on tangible and intangible things. With physical property, proving the harm is pretty straightforward and the security of it lies mostly within the individual, the concern being mostly within the right to have and use your property how you wish. With patent infringement, you can be committing infringement without either party even knowing, and the enforcement risks encroaching on privacy and other rights because the legal power is about excluding others from doing something they would otherwise be allowed to do, primarily for the purposes of getting rights holders a return on the investment of their research.
    Also, virtually all of the cases for infringement that would be on a big enough scale to under any sane system warrant criminal charges are going to be done by corporations, which makes criminal charges a good bit messier.

  79. Yes, by all means let’s put AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax., Staples, Yahoo and YouTube out of business, then take Blue’s suggestion and round up all the dirty rascals (whoever they are) and throw them in jail. Property is property. Theft is theft. Cut and dried. Black and white. That’s just the way life is in the Real World.

  80. Bobby-

    I wasn’t commenting on your “same as theft” line. I have already made my point with you over and over again there, you choose to ignore the reality that piracy and counterfeiting is far more harmful than theft, which is up to you.

    I was address your point that this is just about putting somethings scary on a disk and about street merchants. I explain that it is not, and you retreat by saying what I am saying is “misleading to say the least.” Well, it is not misleading. Do your homework.

    -Gene

  81. I think it’s time to start drawing a clearer distinction between NPEs and “patent trolls.” As this post points out, universities are NPEs. So was Thomas Edison (who held over 1000 patents, but practiced none of them). Nowadays, people have started throwing around the term “patent troll” to refer to anything from legitimate patent enforcement to outright IP theft. Only vigorous patent enforcement rewards inventors for their inventions and incentivizes others to invent. That said, there is a category of “bad actors” who contribute little, but reap the benefits from patent enforcement suits. I’m not sure what the solution to this problem is, but I suspect that it will lie with the courts, which must take it upon themselves to disincentivize the bad actors. Not being a judge, I wouldn’t presume to offer specifics; but logic dictates that, with lower damage awards or more restrictions on the conditions of damage awards, abusers of the system would have less incentive to sink their resources into constant patent litigation.
    http://www.ipdigit.eu/?p=552

  82. Ron,

    well i didnt mean it that way. what i meant was that the way we perceive this ‘reality’ or the ‘physical world’ really has little to do with the physical things that can touch, smell, see.etc.

    By the way, are you a member of the famous hilton family? just curious thats all.

    and thanks Gene.

  83. ‘Infringement isn’t stealing.’

    what about willful infringement? what about the ‘intent’ to steal a patented idea without the permission of the owner/inventor of the patent?

  84. Sorry, no relation to Paris Hilton :(. Inquiring minds always want to know. Are you a member of the Blue Man Group? :) I’m sure that a metaphysical discussion of the nature of reality would be fascinating, but perhaps a bit off-topic here.

  85. Bobby,

    “You seem to be missing out on the differences between enforcing rules on tangible and intangible things.”

    No i understand where you are coming from but the debate was about whether ideas or inventive concepts could be described with sufficient clarify so that the idea would be understood ‘objectively’, or to the degree in which our comprehension of the elements of the idea would be identical to the way we perceive the properties of a ‘real’ or ‘physical’ object.

    I believe any idea could be described clearly, but many inventors just haven’t bothered to.

    “Yes, by all means let’s put AOL, Apple, eBay, Facebook, Google, Netflix, Office Depot, OfficeMax., Staples, Yahoo and YouTube out of business, then take Blue’s suggestion and round up all the dirty rascals (whoever they are) and throw them in jail.”

    Ron, not sure if you are aware that these companies ARE in the business of stealing ideas. The people running these companies are not dumb, they KNOW what they are doing. BUT when they get caught, they play dumb, like they didn’t know someone had the idea before them or that the idea was already in the public domain for decades…

  86. “I’m sure that a metaphysical discussion of the nature of reality would be fascinating, but perhaps a bit off-topic her”

    Yes a full-blown metaphysical discussion would be considered off-topic but the nature of your inquiry IS metaphysical.

    “Sorry, no relation to Paris Hilton :( . Inquiring minds always want to know. Are you a member of the Blue Man Group?”

    thats disappointing…

  87. @Gene
    If infringement is far worse than theft, than calling it theft undermines how bad it is. If your own position is correct, than calling infringement theft could be seen as ‘anti-patent rhetoric.’ As I said before, we are in agreement that they are not of equal harm, so using the same term to describe them is clearly irresponsible.

    And yes, your claim is misleading. Infringing peer to peer filesharing, for example, can probably be shown to fund less terrorism and organized crime than many legitimate methods of distribution. I’m pretty sure the evidence would show that the lion’s share of the funding of crime through counterfeiting is in street vendors selling things like knockoff Rolexes, handbags, and bootleg DVDs, but not even all of them are funding crime. Realistically, only part of part of infringement funds crime, so saying or implying the blanket statement of infringement funds terrorism is a fear tactic akin to ‘think of the children.’ Recently, the Russian government raided some NGOs that the Russian government didn’t like, supposedly on behalf of stopping infringement of Microsoft’s software, but claiming that enforcement of IP is a method for the government to silence critics would be misleading even though I’ve provided a concrete example of this happening. Good laws make distinction between things that are of distinct natures, and the de facto enforcement of the law as it is focuses where the criminal actions are.

    @blue
    Even describing it very clearly doesn’t change the fact that the realm of patents is intangible. Proving harm is far much more difficult, and it requires much more active enforcement that can step on the rights of others. And as I said before, any infringer on a scale that can even by an extreme pro-enforcement view warrant criminal charges is going to be done by a corporation, making criminal enforcement of this sort of a moot point.

  88. “Even describing it very clearly doesn’t change the fact that the realm of patents is intangible.”

    Ah..so if you stole someone’s software or computer program which was not fixed on a tangible medium then what you did would not be considered theft but something else? What about if you, a bank employee illegally transferred your client’s money which was in digital/intangible form into your own account?

    I believe its the ‘intent’ not whether or not the item in question was in tangible or intangible form. agree?

  89. @blue
    “Ah..so if you stole someone’s software or computer program which was not fixed on a tangible medium then what you did would not be considered theft but something else?”
    Software can’t be stolen. One can make copies of software. One can make a copy of software and delete the original, which would be the most similar thing to theft, but is really a combination of two distinct actions. One can steal the medium on which software is held, which is theft, but of the medium.

    “What about if you, a bank employee illegally transferred your client’s money which was in digital/intangible form into your own account?”
    That would have elements of fraud and theft, but the client is still deprived of access to an easily quantifiable, tangible money.

    The difference with theft is that the owner is deprived of usage. If you need to call infringement by the wrong name, call it trespassing, which has a much more similar nature. I have a legal right to exclude someone from being on my land, and if they are on my land, they are trespassing. I still own my land and retain the right to exclude others if someone trespasses on my land, but a trespasser is infringing upon my legal rights and I may use legal remedies to solve this problem. Please note that you shouldn’t call infringement trespassing because they are still distinct, but if you insist on using the wrong term, at least use the right wrong term.

  90. Rape?
    For the record.
    “RAPE”: an act of plunder, violent seizure, or abuse; despoliation; violation: “the rape of the countryside.”

    Sounds like Dish to me… along with the folks driving their getaway limo.

    Sam

  91. Sam-

    Nice try. You said: “a person is found guilty of rape…” The crime of rape, which a person can be found guilty of, is well defined legally and not at all what you are trying to say you meant now. Clearly you were not referring to the usage of the term as you now try and weasel your way out of what was a clearly inappropriate comment.

    So, for the record, I am not going to allow this forum to descend into the absurd. You can either keep things civil without ridiculously insensitive assertions or you can go elsewhere. It is up to you.

    -Gene

  92. In a legal context and virtually all modern parlance, rape refers to a specific kind of sexual assault. If someone is “found guilty of rape”, it would not be the definition you used. Even your provided definition doesn’t actually fit Dish’s actions towards Tivo when taken literally. Rape in the context you are using is explicitly a physical act of taking and destroying.

  93. Gene, 12/21
    In order to not be argumentative…I re-word my metaphor:
    Even in the most basic court in America when
    a person is found guilty of plundering… that court
    orders him to stop plundering. No matter
    how many times he appeals.

    Sam

  94. Bobby,

    you are starting to talk nonsense…:-D

    You make these ‘distinctions’ that make no sense to me. willful infringement IS stealing!

  95. @blue
    Not according to the law.

  96. Okay okay okay:
    PLUNDER:
    1. to take wrongfully, as by pillage, robbery, or fraud: to plunder a piece of property.
    Yup! That really really describes what Dish did. Much better than the “r” word.
    Sam
    PS
    Does anybody have any comment about the persuasions of the new judge
    that apparently has been added to the CAFC?
    A lady by the name of O’Malley…

  97. Sam, in view of your recent foray from hyperbole into pedantry, perhaps you can tell us the last time someone in the United States was “found guilty of plundering”?

    And when you’re done with that, you can explain how using someone else’s idea without actually taking away anything of theirs or making them any poorer, and without any pillaging, robbery or fraud, is anything like “to take wrongfully, as by pillage, robbery, or fraud”.

    Just because we call infringement “piracy”, that doesn’t mean every word that applies to actual marine pirates can also be used to describe infringers. Also, pharmaceutical patent infringement doesn’t count as “pillage”.

  98. Also, pharmaceutical patent infringement doesn’t count as “pillage”.

    I nominate this for the cleverest comment of the string!

  99. Bobby,

    u’ve completely missed my point.

  100. @blue
    No, you are conflating two very different things with very different natures. The law sees them as different because they really are different.

  101. Nice review, it gives me broad idea about it, thanks for taking your time explaining this to us, it really helps a lot.

  102. Gene,

    I don’t know.
    Maybe your Green Gargoyle is irresistibly inviting to all the blog trolls.

    Infringement is a form of trespass on property. When you step on my lawn without permission, you do not take the real estate away from me. But you do deprive me of “exclusive” enjoyment of said property. The extent of your trespass can vary from a mere annoyance to something far more profound. It’s sort of the same for patents.

    Happy Holidays all.

  103. Step-

    Don’t forget that patents are a wasting asset, unlike real estate. You only get a limited time to exploit. Your comparison to trespass would be far more persuasive if patents lasted forever, or at least for the life of the creator. Because they don’t, it is erroneous to compare trespass to infringement. With real property you yourself also get to enjoy something even when there is trespass. With patents the entirety if the right is to prevent trespass so when there is trespass the owner loses everything that is conferred by the right.

    Happy holidays to you too.

  104. @Gene
    Real estate is permanent, but one’s right to use real estate may not be. Many businesses lease the land or buildings they use, and their usage within the lease period often has various conditions for use. Thus, one could paint patents as rights leased from the public. The real estate trespassing metaphor breaks down a bit due to various aspects of the nature of patents, but it is a far better analogy than theft. However, the problems of infringement should stand on their own merits, and thus it shouldn’t be conflated with other things.

  105. Bobby,

    You make two good points.

    Yes– real estate rights can be limited to a term of years.
    Yes– infringement is separate form violation of ones patent rights and thus it shouldn’t be conflated with other rights and violations of those other things

    That said, patent rights are much akin to real estate rights in that the claims of a patent set forth the metes and bounds of the invention-practicing territory which is covered by the patent. When one steps into that territory by making, using, offering to sell, importing, etc.; one trespasses on those rights.

  106. err.. Yes– infringement is a separate form of violation of one’s patent rights

  107. What it all comes down to is legal costs. If costs are awarded to the defendant when the defendant wins, it will change the economics of trolling, and make it less rewarding.

    And with patent cases costing millions to litigate, awarding costs is only fair. Why would ABC company be stuck with the costs of defending themselves against a patent suit, if they are found not to have infringed?

    Wayne

  108. “If costs are awarded to the defendant when the defendant wins, it will change the economics of trolling, and make it less rewarding.”

    This is always an option when a suit is truly frivolous and without merit. However,I rhink most trolls (e.g. IV, NTP) have deep pockets, whereas many legitimate small inventors and patent holders do not. So I’m not sure that would be much of a deterrent to trolls, but instead would simply further tilt the playing field in favor of the major corporation ripping off the little guy.

  109. Ron,

    Money is always an issue. For most companies spending $1 million on a lawsuit is not practical. For other companies it’s small change.

    It has nothing to do with the suit being ‘frivolous or without merit’, rather it has to do with issues in the patent system itself. When a company is awarded a patent, which is later invalidated, who should pay? I have suggested that the Patent Office should be responsible, after all, they are the ones who issued the patent. But say the patentee did not include all of the prior art? Maybe they should pay.

    Which doesn’t address the real problems. It is too easy to get a patent. I know that Gene disagrees with me, but a lot of patents are for things that are so damned obvious, that they don’t meet the bar. Remember Teleflex V. KSR? The patented improvement came down to relocating a microswitch, in other words an obvious solution to the problem, which was the the switch position wasn’t optimal.

    Or for that matter the I4I patents, which actually cover file manipulations which have been done for years. I4I’s real problem is that Microsoft doesn’t honor non-disclosure agreements, of course that might be harder to do in court now, since Microsoft has truly draconian email retention policies…

    Wayne

  110. Wayne,

    Patent quality is the issue, I agree. I believe that part of the solution is a tiered patent system, such as proposed by Kristen Osenga at the University of Richmond in Virginia. Under her proposal, Tier 1 would receive only a cursory examination. Tier 2 would be comparable to today’s patents. Tier 3 would involve a much higher fee, and would entail a much more rigorous examination. Only Tier 3 patents could be used to bring an infringement suit. Patents could be upgraded from one tier to the next through the payment of the appropriate fee and passing the next higher level of examination. Such a system would reflect the reality that not all patents are created equal in terms of quality. NDAs are not the answer. Many companies refuse to enter into NDAs, and in fact require confidentiality waivers before evaluating technology submissions.

  111. Ron,

    I’m quite certain that they’d try to game that system too!

    As to NDA’s the family joke was that I was under so many NDAs that I could tell you my name. Seriously though, if someone wanted us to sign an NDA, they first had to explain enough so that I’d know it was worth talking to them. In several cases we already had the same or similar technology in production, and I told them that. Most often it was the smaller companies who’d push to have you sign an NDA before they were even willing to tell you what the product was. And most often they didn’t have anything worth looking at.

    In fact I can’t think of one smaller company that wanted an NDA signed, that had a worthwhile product. Of course we were in a highly technical field (Manufacturing emission control systems for internal combustion engines).

    I’m a cynical old bastard at the best of times. I would not have considered any of the patents that Gene published in his ‘Christmas’ edition, worthy of being patented.

    A last thought – maybe what we need is an equivalent to ‘Small Claims Court’ for patents.

    Wayne

  112. DISH WAS FOUND GUILTY
    No matter what you guys say… when a defendant is found “guilty”
    by an American judge and jury… that defendant should have to pay.
    If Dish wants to appeal that is its business. BUT THE INJUNCTION
    SHOULD BE IN PLACE DURING THE APPEAL.
    PERIOD.
    That’s what has really stunk up the Tivo case and has perpetrated
    5 years of “irreparable harm”. And that isn’t even counting the
    previous 5 years of Dish thievery.
    Tivo should be to DVRs and stuff… what Apple is to money.

  113. So do the other satellite and cable TV providers have a license agreement with Tivo for their DVRs, and Dish is the lone holdout?

  114. SLOW JUSTICE STINKS
    Tivo is basically being held hostage by the fact the judges
    refuse to take diligent action to make Dish stop stealing
    Tivo’s patents. The American jury found Dish guilty.
    The other companies are just doing whatever they want..
    knowing that even if Tivo tries to protect her patents they
    just have to dip into their deep pockets and drag lawsuits
    out for years and years.
    Who knows.. maybe the courts system will let them
    drag it out long enough for Tivo to disappear.. or heck
    let the Appeals judges overrule the American juries.
    Everybody knows judges are smarter than regular
    old Americans.
    Thus these satellites and cables have nothing to lose.

  115. A while back I read the TIVO patents, and was not impressed. The ideas were simple and obvious.

    Where was the invention?

    In effect all they did was imitate a VCR, using a computer with a hard drive. This is not what I call an invention. It’s the addition of two existing ideas. Simple+Simple=Simple.

    The standard for inventiveness accepted by the U.S.P.T.O. seems to be that if you can fill out our forms, you’ve proven that you are inventive.

    Wayne

  116. IT’S A MATTER OF FAIRNESS..
    AND COURAGE
    Honest Americans who believe in
    Justice can only pray that judge
    Rader (and any pals who see
    things in his disconjerkutigulated
    way) are reading these reports.
    And that these judges are learning
    what has helped make America
    great; a protected Patent System.
    One that is free from wanton
    thievery by big companies preying
    on small innovative companies
    like Tivo.
    Sam

  117. Mad Hatter,

    You are missing the point . . . many patents are simple and right in front of us. Someone has to put them together . . . the copier is carbon black on paper which is fused with heat . . . does pencil on paper sprayed with hairspray sound familiar? How about reinforced earth . . . the inventor noticed that pine needles in sand made his castles stronger . . . no kidding.

    Anyone that has used a Tivo knows it was a great idea, (I’ve had Tivo I, II, III, and now the priemere). You must have been using a typical DVR which definitely is not as impressive or useful . . . my ex wife had one of those and it was pathetic. The Tivo invention changed my life . . . not small potatoes in my book (excuse me, Kindle).

    I believe in our judicial system – it does work, but oh is it slow . . . what American would not want to believe in it . . . eventually Tivo will have it’s day and it will be a “super” one . . . maybe even this week!

  118. Anyone that has used a Tivo knows it was a great idea, (I’ve had Tivo I, II, III, and now the priemere). You must have been using a typical DVR which definitely is not as impressive or useful . . . my ex wife had one of those and it was pathetic. The Tivo invention changed my life . . . not small potatoes in my book (excuse me, Kindle).

    Complete waste of time is more like it. There isn’t anything coming out of Hollywood worth recording.

    Wayne

  119. I agree with you on that Wayne. My big use is in watching sporting events. I still have the fire and my teams like the Green Bay Packers and the Wisconsin Badgers are doing just fine thankyou. Watch them Saturday beat the undefeated Ohio State Buckeyes . . . if you’re busy, just record it on your HD Tivo and watch it later if you please. Either way it will be a classic . . . and no, you can’t make this stuff up. lol

    Take care and have a great week!

  120. Intellectual Ventures’ Nathan Myhrvold told Business Week in July 2006 that he didn’t think suing people was a good idea. Apparently, his investors – including universities receiving government funding, private equity funds, and corporations – decided that his returns were not coming fast enough. Or maybe, he was just marketing one story on his way to his real business plan. Back in 2006, his position was summarized in the following manner.
    “Myhrvold adamantly rejects the idea that suing people will become a mainstay of his business operation. “Litigation is a huge failure,” he says. It’s “a disastrous way of monetizing patents.”
    Times have changed. However, M•CAM’s commitment to patent quality is as clear today as it was when he and his investors first started Intellectual Ventures. And, given Intellectual Ventures’ recent cases, we thought the public may want to know a bit more about what’s ‘under the hood’.
    Today M•CAM, Inc. released its Patently Obvious® report today on the patent infringement lawsuits filed by Intellectual Ventures in December, 2010.
    The M•CAM Patently Obvious® report on Intellectual Ventures’ infringement lawsuits can be found HERE.http://www.m-cam.com/patently-obvious/intellectual-property-analysis-intellectual-ventures-patent-infringement-lawsuits