Mark Cuban is an Idiot, Patents Do NOT Impede Innovation
|Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog, Inc.
Principal Lecturer, PLI Patent Bar Review Course Posted: March 7, 2013 @ 9:02 am
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I am in New York City this week taping the new patent bar review course, which is a part of our effort to bring the course current with the latest changes in the law and rules that will begin to be tested starting April 2, 2013. After a long day of lecturing and preparing materials and writing questions, I had dinner and found myself sipping a drink at Randolph’s, which is the bar attached to the Warwick Hotel, where I stay when in New York City. Unwinding from the day I decided to catch up on news – for me that means reading Politico or The Hill typically. I learned that Rand Paul engaged in a filibuster over drone strikes and Jeb Bush is on a book tour and folks are speculating about whether he will run for President in 2016. But I also learned that the self-appointed anti-patent billionaire idiot – Mark Cuban – was at it again. I quietly asked for the check and excused myself from an otherwise enjoyable evening of relaxation. Mark Cuban is an idiot!
Mark Cuban, the flamboyant owner of the Dallas Mavericks, has said some truly ridiculous things about patents. Recently, he complained to Tech Crunch about patent lawyers that “make too much money,” which is something that only a truly out of touch billionaire could rationalize. Really? A capitalist billionaire complaining about anyone making too much money ought to be a bridge too far for anyone. But Cuban doesn’t stop there, he talks about “dumbass patents,” and how patents on things that others later figure out ought to be invalidated. As if hindsight doesn’t make everything obvious in retrospect. Seriously, if he really holds these thoughts it has to be a complete accident that he managed to become a billionaire.
But this time it wasn’t that Mark Cuban made this idiotic and completely indefensible statement about the patent system that got me started. Nevertheless, he is still to blame. You see, Julie Samuels is the “Mark Cuban Chair to Eliminate Stupid Patents” at the Electronic Frontier Foundation. What a title! The Mark Cuban Chair to Eliminate Stupid Patents? And folks are actually supposed to take this seriously?
Nonetheless, Samuels authored an opinion piece in Politico explaining that the patent system is impeding innovation, taking the anti-patent mantra of her boss to a new level. It is one thing for Tech Crunch to report on anti-patent sentiments. This is their beat and they publish both sides of the isle. But when a mainstream political daily like Politico publishes an opinion piece leading into Congressional Hearings, someone needs to stand up and say NO!
But wait, there is more! Samuels even had the audacity to state that there is unanimous agreement in the technology industry that patents are impeding innovation. This statement is completely and utterly nonsense. Samuels either knows that there is no unanimity, or she should know. If she actually thinks there is unanimity she isn’t qualified to offer an opinion on the issue because she has only been speaking to those inside an echo chamber. So let me set the record as straight as I can — there is no unanimous agreement that patents impede innovation. To the contrary, all of the evidence contradicts Samuels, and there are a great number of companies and individuals who simply disagree with her factually erroneous assertions.
Frankly, I am getting tired of having to defend the patent system. Opinion authors, journalists and editors should be doing a better job at getting to the facts rather than pandering to the Silicon Valley tech-elite that want to dismantle the patent system. Especially since they want to dismantle the patent system because they are not innovators, but instead are copy-cats. They have their patents, they have their dominance, and they want Congress and the public to believe patents are evil and should be outlawed. What they want is to preserve their dominance, ensure their right to copy and weaken the patent system so that they are entitled to stay at the top of the industry despite their inability to innovate. True innovators know the patent system is critical. You don’t hear IBM yelling about a patent system run amuck. You don’t hear the innovative start-ups and small businesses complaining about the patent system, they know that the patent system is essential in order to provide incentive and ensure access to capital.
Those that do the complaining erroneously state that they speak on behalf of the entire industry. But I know they don’t speak for IBM, or Qualcomm or Tessera or the many other innovative companies that exist in the high-tech sector. They certainly don’t speak for the pharmaceutical industry that absolutely needs strong patents to survive, and they don’t talk for the biotechnology industry where start-ups and even large companies largely have little in the way of asset value outside their patent portfolios. And they absolutely don’t speak for the independent inventor who needs a patent system to protect their innovations from being ripped off by… well by those same Silicon Valley elite who so hate the patent system.
So what did Samuels say that has gotten so under my skin and is so provably erroneous? She wrote:
[W]e have a consensus in the tech community: The patent system has started to impede, rather than incentivize, innovation. The laundry list of what’s gone wrong is long, including a standard for patentable subject matter that makes no sense, notoriously vague and hard-to-understand claim language and — the troubling result — the rise of the patent trolls.
There is not at all a consensus in the tech community that the patent system is impeding innovation. On the contrary, the patent system incentivizes innovation, period! There is absolutely no logic behind the erroneous claim that the patent system impedes, rather than incetivizes, innovation. Who in their right mind would spend millions or hundreds of millions or in the case of pharmaceuticals and biotech innovations billions of dollars to invent and take to market their innovations if the day they get to market they can be ripped off? Do the people who make the claim that the patent system fails to incentivize know anything about basic economics? Apparently not. Have they ever heard of free-riders or sunk costs? Please, for the love of God, would you enroll in a basic Economics 101 class at your local community college?
The basic laws of economics are simply factually reality for those of us living in the real world. If you spend money to create you must recoup that investment before you make any profit. If others are allowed to copy you starting day one they have bypassed the development costs and are able to make a profit at a lower, perhaps much lower, selling point. In fact, they can make money at a selling point so low that the original creator couldn’t make money and couldn’t compete.
Let me say this VERY slowly… the original creator couldn’t compete and make money selling what they themselves developed while those who copied could make money. Why would anyone ever innovate? Why would anyone ever invest to invent anything? This is why great thinkers and leaders like President Abraham Lincoln called the patent system one of the greatest innovations of all time — because it “added the fuel of interest to the fire of genius.” Similarly, none other than George Washington, the Father of our nation, implored Congress to, with all due haste, pass a Patent Act. Washington did this in his first State of the Union Address. See Celebrating Presidents Who Advocated for the Patent System.
Samuels went on in her article to state:
The patent troll business model takes advantage of a legal system that makes it nearly impossible for parties targeted by lawsuits to fight back.
Again, the only problem with what she says is that is it flat wrong! It is not nearly impossible to fight back. Choices are made — conscious choices — to pay extortion-like settlements of $25,000 rather than mount any kind of defense. Samuels wants the reader to believe that patent litigation defense costs many millions of dollars. That is true on average, but for those who cave and pay extortion the fees are substantially less. So who is to blame? Aren’t those who complain about the system and say they will never settle and will fight to the death to blame for caving when they jump at that first, extortion-like settlement offer of $25,000?
Simply stated, if anyone is serious about fighting patent trolls contact me. If you want to take the fight to the patent trolls, to the bad actors, then do it. But the reality is the industry doesn’t want to take the fight to the bad actors and go to the mattresses. They want patent trolls to exist so they can parade around the halls of Congress demanding reform that will weaken that patent system altogether. There is a strange symbiosis between the so-called Silicon Valley elite and patent trolls.
Did you know that many of the so-called Silicon Valley elite play golf with patent trolls? Did you know that they go out to lunch and dine with patent trolls? Did you know that they are on first name basis? Many of the so-called Silicon Valley elite refer to those who they vilify in the halls of Congress as “my patent troll.” They believe that if they work together in a cordial way they will be able to get along better. Doesn’t sound like they are really all that upset about the phenomenon if you ask me, now does it?
It is true that there is a litigation abuse problem, as Chief Judge Rader of the Federal Circuit recently explained at the AUTM annual meeting in San Antonio, Texas. Rader explained:
Interestingly, that has been misdirected towards the patent system. Even earlier this afternoon I received an invitation from a House Committee to come and talk about abuse of the patent system. I’m not sure I’ll be able to attend, but if I could attend I’ll tell you exactly what I would say: There is nothing wrong with the patent system.
The patent system has a narrow focus. It is not a consumer affairs program. It is not a manufacturers guarantee compliance program. It’s not a competition program. It has one objective, summarized well by the Constitution: promote the progress of science and the useful arts. It’s there to create more investment and more incentive for innovation and invention. The things that the patent system is criticized for is not its job.
Indeed, there is nothing wrong with the patent system. There is litigation abuse, and if district court judges would look behind the curtain to see the litigation blackmail that is going on and do something about it the problem would disappear. The problem isn’t that the courts don’t have the authority they need to stop abuse. The problem is they don’t use the authority they have to stop litigation shake-downs. This is NOT a patent system problem. It is a litigation problem. Those who claim the problem is associated with the patent system being broken are simply not being truthful. They have an agenda, which is to dismantle the patent system, and they are using old-fashioned litigation abuse that has nothing to do with the patent system as a rallying cry to do what they otherwise couldn’t ever hope to accomplish. They might as well be saying: “look at this shinny object…” They are diverting attention away from what is the real problem and pretending it is as a result of the patent system. Utter nonsense!
What about Samuels assertions that patent claims are hard to understand and vague. Well, patent claims have been hard to understand for hundreds of years. That is hardly something new, so it is utterly disingenuous to pretend that is a new phenomenon. Go back and look at patents from 10 years ago, 20 years ago, 50 years ago, 100 years ago and more and you will be left scratching your head and asking yourself… what in the name of all that is holy did that mean? It is a clever, charlatan’s trick to point to difficult to understand claims. It is the height of intellectual dishonesty to pretend that patent legalese is any different than any other legalese. I bet the rental agreement you signed was difficult to understand, and I know that if you even read the mortgage paperwork no one understood what was said there either. Legalese is thick, dense and virtually a different language. For crying out loud, much of it is in Latin! But is that new? Absolutely not.
Is patentable subject matter in disarray? Yes, but because courts are finding policy exceptions to patentable subject matter that are not anywhere within the Patent Act or the legislative history of the Patent Act. Funny how these folks love legislative history so much and look for the intent of Congress when it suits them, but when it is 100% against them they ignore it as if they are a Justice Scalia disciple. How intellectually dishonest.
Is there litigation abuse associated with the enforcement of patent rights? Yes. Does that have anything to do with the patent system? No. Is there unanimous agreement that patents impede innovation? Are you kidding me?!? Absolutely not!
Ask yourself this… if President George Washington, President Abraham Lincoln and Thomas Edison would disagree with an innovation related policy statement or position why would you even give the thought passing consideration? Those who want to dismantle the patent system might as well say that the most revered public figures in American experience were out of their mind and a part of the problem. Now if that doesn’t make you wonder I don’t know what will.
I’ll leave you with this… Did you know that Mark Twain (aka Samuel Clemens) was an inventor? Yes. In fact, he was the inventor on three granted U.S. patents. In 1871, he received his first patent for an adjustable strap that could be used to tighten shirts at the waist. Twain also received patents for a self-pasting scrapbook in 1873, and in 1885 for a history trivia game. Twain also wrote this about a patent system:
“[A] country without a patent office and good patent laws was just a crab that couldn’t travel anyway but sideways and backwards.”
So to those who think I am nothing more than a patent apologist, you are right. I prefer being factually correct and intellectually honest. The anti-patent zealots can have Mark Cuban and the Mark Cuban Chair for the Elimination of Stupid Patents. I am honored to hold the same lucid, deliberate and thoughtful opinions on the issue as other radicals like Washington, Lincoln, Edison and Twain.
Picking sides in this debate ought to be easy. Sadly, however, it isn’t. Now who is it that has the agenda?- - - - - - - - - -
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Posted in: Anti-patent Nonsense, Gene Quinn, IP News, IPWatchdog.com Articles, Patent Trolls, Patents
About the Author
Gene Quinn 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.