Wednesday, June 01, 2011

Time to Change or Eliminate Software Patents

Fred Wilson on patent trolls:
The whole thing is nuts. I can't understand why our goverment allows this shit to go on. It's wrong and its bad for society to have this cancer growing inside our economy. Every time I get a meeting with a legislator or goverment employee working in and around the innovation sector, I bring up the patent system and in particular software patents. We need to change the laws. We need to eliminate software patents. This ridiculous Lodsys situation is the perfect example of why. We need to say "enough is enough."
I've commented on this issue before; it's one that affects most people but few know about and fewer care about, hence the status quo. Once big companies build a portfolio of patents and have sufficient revenue to pay off trolls as necessary, they mostly seem to become complacent about the current system as it serves as a barrier to entry for potential competitors.


  1. "Patent trolls" are a creation of the same big patent-holding entities who whine about them. Joe Smallinventor doesn't have the money to go after Oracle or Microsoft or Apple for ripping him off, so he sells the rights to a "patent troll" outfit to let them try.

  2. I don't disagree that small inventors are often left helpless against the violation of their patents. But although I'll grant that you may know more about their operations than I do, I'm not aware of patent troll firms buying patents from "little guy" inventors. It seems to me that they more often buy patent portfolios from failing or bankrupt companies.

    I would not characterize a firm that acquires a solid patent from a small inventor who doesn't have the resources to enforce it, and then enforces it against the corporations who previously felt free to trample the inventor's right, as trolling. Given that the cost of merely evaluating a patent for potential litigation is probably in the vicinity of $50,000 - $100,000, a company making that type of acquisition would be excruciatingly careful about which individual patents it acquired.

    The larger problem, though, isn't so much that there are trolls or that there are corporations who build portfolios of often dubious patents for the purpose of being able to make counterclaims if alleged to be in violation of a competitor's patent. The larger problem is that business model patents and software patents allow for the patenting of minor innovations (or arguably non-innovations, such as the patent on what seems like little more than a mathematical matrix), creating a byzantine web of overlapping patents that is impossible for any emerging company - actually, for any company - to navigate.

    Let's use the term "patent acquisition company" for now. If you're a major tech company and you believe a competitor is infringing on your patents, before you sue you have to consider the probability (it's almost an inevitability) of a counter-suit based upon your alleged violation of their patents, as well as the possibility that your patent will be interpreted by court more narrowly than your would like or even be declared invalid. The difference with a patent acquisition company is that it is not subject to a counterclaim - so you have to settle with cash, not a mutual exchange of licenses - and the stakes are a lot lower for it if one of its patents is invalidated.

    Realistically speaking, IP law has been expanded to protect a handful of major corporations such that copyrights last far too long and patents cover too many trivial innovations.


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