Top Five Things I Learned From The Fortune Article On RPX

I don’t usually pick up Fortune magazine because my nightstand is already covered in InStyle and Vogue and Elle on account of I’m a fashion icon in my dreams.  But I was tipped off (thank you!!) about the recent issue with this article about RPX. You and I both know that I can’t not get involved in this kind of thing, right?

Read it I did and boy oh boy oh boy, were there some nuggets in there!  To wit:

1.  John Amster plays guitar?  I did not see that coming.

Mind? Blown.

2.  People (besides me) have hated Intellectual Ventures from the very beginning.  Commerce One’s bankruptcy, as the article explains, was the catalyst for the secondary patent market in that their GC Paul Warenski said “Hey, let’s not just sell our assets as one package, lets split off the IP and sell it separately.”  Kind of a Gordon Gecko-ish move, but I mean that in a nice way because Paul was a visionary kind of asset splitter-upper, not the nasty kind.

From the get go, it seems that the most important outcome of the auction was not that the patents fetch a high price, but that the winner had better not be IV.  That’s interesting, since purportedly, they were the early RPX:  the mission was to find and buy up patents to keep them “out of the hands of hostile NPEs”.

I suspect their business model got in the way…acting as a hedge fund and being expected to fetch a high rate of return for investors meant that IV going freak nasty and litigating to get that return was a forgone conclusion.  Nathan’s idea that all he had to do was “[price] his licensing demands correctly, [and] he would never need to sue anyone” was all well and good, but then the big players got more than a little sick and tired of the demand letter game and it all went to seed.  They stopped responding or starting fighting and then as we all know, in late 2010 the chickens came home to roost and IV began filing lawsuits.

It’s just interesting to me that Myhrvold has been a nemesis for so many for so long.

3.  Nathan Myhrvold was an original partner in ThinkFire.  ThinkFire was headed by Dan McCurdy, of none other than Patent Freedom and Allied Security Trust fame.  At the time of the Commerce One auction, in which ThinkFire and IV were bidders, Nathan was in cahoots with both IV and ThinkFire, which means he was bidding against himself.  See?  Evidently, even Nathan doesn’t like Nathan! Anyway, this was news to me, despite the quote in the article that it was “a spectacle the press gleefully highlighted.”  You can be rest assured of my gleefulness as I now re-highlight this information.

4.  The idea of idea theft is no longer relevant to John Amster, as evidenced by this quote from the article:

In Amster’s world, patent suits against tech companies no longer turn on quaint moral issues like, “Did Company X steal from Inventor Y”  For the most part, they don’t even turn on legal issues like, Is patent Z valid, and if so, is it infringed by Company X’s product?

What counts today are probabilities, statistics, and most of all, transaction costs.

I guess then that RPX’s business model is less “if you subscribe, we’ll invest your funds in buying patents that the trolls will use against you” than it is “statistically speaking, our data that we collected and collated ourselves shows that you will be hit by a patent troll unless you pay us a yearly fee, after which point we will protect you from an unspecified number of those suits and save you an amount of money that we arrived at using our own data.”

Hmmm.

5.  RPX divests it’s portfolios to trolls from time to time.  Which, I guess if you realize that they are “friends with them” and “take them to dinner”, it’d be like me selling my stroller to my newly pregnant friend after my kids are older. I mean, it’s not as if RPX thinks those patents aren’t troll-worthy or they wouldn’t have bought them in the first place.  It looks like they’re buying patents off the open market to snag new clients by telling them “Look!  We hath thwarted the Evil Empire and if you sign up, you shall not be subject to suit by this portfolio!”  And when that usefulness has been outlived and they’ve gotten a few years’ worth of subscription fees, they sell them back out to the open market.  And then use the fact that those patents are now once again at play to bring in more new clients.   Cue merry-go-round.

For the first time in a long time, this was an article that didn’t just restate the by now obvious facts about what patent trolls are.  And they didn’t touch lightly on the RPX business model either; I was kind of surprised at the tone they took and wondered if Amster’s camp was happy with the final print version of the article.

I think the original strategy of RPX, to get patents that the trolls could use off the market, was and is a good one.  I’ve praised them as one of the market-based solutions to patent trolling, something that was started by people who had a desire to stop bad behavior.  The only problem is that if they “solve” the troll problem, why does anyone need them?

Maybe that’s what they’re figuring out, and why the divestitures now (occasionally) involve re-selling back to trolls?

All I know is, whenever I read about RPX in the future, I’m going to picture a guy on a sofa with a vintage guitar.

IPTT

{John Amster image found here. Guitar image found here. Russell Brand mind blown found here.}

Should IBM’s Watson Be Patent Eligible: An Essay By An Idealogue Without A Clue

Just in case the subtitle isn’t clear, I’ll invite you to review the twitter conversation where Gene said I was not worth arguing with, then proceeded to engage in the conversation with five more tweets.  I’m not sure if he can’t count, or if he just can’t help himself?  The point was, he asked me if I wanted to debate whether IBM’s Watson should be patent eligible and I told him that I was far too wordy to do that on Twitter but that I’d be happy to respond on the blog.

And here we are.

I’m coming at this issue of patentability of Watson and of software in general not as an attorney, not as an engineer, not as a patent agent, nor as a government official.  In fact, other than making good on a Twitter promise, I don’t have a dog in this fight.  I’m just a girl, standing in front of a boy, asking him to love her.  Wait, what?

I look exactly like Julia Roberts, only with brown hair,
blue eyes, and much less height.
True story.
(Hint: not really)

I see this issue from a business standpoint, and as someone who has a background in computer programming/software development.  I’ve been doing it for over 20 years now so I think I have more than a passing understanding of what computer software is and does, and how it’s created.  I spent the better part of my 20’s in little hidey holes banging out line after line of code.  It isn’t as if I’m coming completely out of left field here, is my point.

The question of should Watson be patent eligible is moo…IBM does in fact own several patents for the technology behind the service.  So the question is more rhetorical in nature.  Scholars at every level have been tackling this question for in excess of two decades so the idea that I can work this out in a blog post or twitter conversation is hugely unlikely.

Nevertheless, you asked (and so nicely, too!) and I will proffer my answer.

Lines of code or algorithms are not, in and of themselves, useful.  From the US Constitution, Patents are issued:

to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.

To promote the “useful arts”, not to promote “really cool code” or “computers that can win Jeopardy”.  No, the intent as I read it was to protect those who spend their time and money developing something new, non-obvious, and useful.  Yet how useful is Microsoft Word if no one ever creates a document with it?  See where I’m going with this?

Using patented technology, IBM is promoting the useful arts.  They’re giving away some of the information that Watson’s powerful computing has generated from an article here :

In a demonstration of its power, Watson has 4.7 million patents and 11 million scientific journals published between 1976 and 2000.  In each article Watson carefully identified any previously unseen chemical compounds (in pictures or text), grabbed any related diagrams, grabbed relevant keywords, and lastly scooped up the author and company names.

The result was a database of 2.5 million compounds, which are thought by Watson to be unique.  For each of these compounds Watson discovered the earliest patentee.  IBM donated its superbot’s work — the “open chemistry” database — to the U.S. National Institute of Health (NIH), allowing scientists all over the world to dig into it.

But again, it isn’t the lines of code or the circuitry or the machine itself that makes Watson useful.  It’s what comes out of it.  This is why I don’t like patent trolls, incidentally.  They don’t make anything, they just buy patents and extort money from people by threatening to sue for infringement even, and especially, when there’s no true evidence that any such infringement took place.  But I digress.

I’ve spent the better part of a week reading all about Alice Corp vs. CLS Bank and the numerous briefs (brilliantly curated here by Dennis Crouch) surrounding it.  I’ve read countless articles about Watson itself (himself?) and this one is the best.  And in all my reading and Googling do you know what I discovered?  This is a multi-layered and complicated question with no clear answer.  Hell, if this statement via Wikipedia is any indication:

The fractured panel of ten judges issued seven different opinions, with no opinion supported by a majority. Seven of the ten judges upheld the district court’s decision that Alice’s method claims and computer-readable-medium claims were not patent-eligible, but they did so for conflicting and incompatible reasons. Five of the ten judges upheld the district court’s decision that Alice’s computer-systems claims were not patent-eligible. The panel did not agree on a standard to determine whether a computer-implemented invention is a patent-ineligible, abstract idea.

then there is not much hope that I can add thoughtfully to the discourse except to say this:  I think figuring out what is patentable and what is not has become so unbelievably complicated because complications mean lawyers who are necessary to decipher what’s going on and we all know that in any dispute, patent or otherwise, the real and clear winner is always the attorney.  They didn’t do it on purpose.  I think complication is a natural offshoot of people who are, by nature of their vocation, extremely risk averse and also?  Happen to bill by the hour.  They spend all their time looking for any loophole to any given statement (either on the loophole creation side or the loophole avoidance side) so they dream up crazy tests and rules and talk their clients into suing each other over them.

Lawyerus billalotus.

But just as an aside, regarding Alice Corp v. CLS Bank, what kind of crazy-making is this, anyway?  Alice Corp creates “a computer-implemented, electronic escrow service for facilitating financial transactions”.  From their own website:

An Alice Market enables end-users and investors to create flexible contracts that meet their hedging and investment needs in a real-time, secure and anonymous electronic market. It also ensures that participants are not exposed to the possible failure of the parties with whom they contract.

Is it possible to “ensure that participants are not exposed to the possible failure of the parties with whom they contract” without an Alice Market?  If what CLS Bank was doing uses the exact same methodology and code that your patented software does, then I suppose you’ve got them on infringement.  It doesn’t seem that hard to me to figure out…CLS is either using your software methodologies and code and algorithms or they aren’t.  As a coder, it’s pretty easy to figure that out so honestly, I don’t get what all the fuss is about in terms of whether or not they’re infringing.  Or maybe I’m stupid and am missing something really obvious, in which case I have zero doubt that Gene someone will let me know.

Either way, this isn’t really what the case is about anymore, it’s about can you patent software?  Nee’, is IBM’s Watson patent-elibible?

My answer?  Like I said on Twitter…code that simply replicates business rules should not be patentable.  But for the broader question of all software in general, I don’t honestly know.

You can bet, though, that I’ll be waiting on the Supreme Court’s answer to the question like some people wait for a shoe sale at Nordstrom’s.

IPTT

{Image of Julia Roberts’ front and Hugh Grant’s back from Notting Hill found here. Image of Harvey Specter found here.}

About Those Proposed Government Demand Letter Requirements

This is sort of old news, in that the original story came out last year after a series of Senate hearings on patent trolls.  The government has proposed a set of rules that they want patent holders and their legal counsel to follow when sending out demand letters.  I don’t think they can make those requirements stick legally, nor would I necessarily want them to.

You’re shocked, I can tell.

Here’s my reasoning.  Well, wait a sec….first of all, here’s a cut and paste of what new legislation would require, from the EFF write up about it:

• Require that demand letters contain certain basic information, such as a description of the patent at issue, a description of the product or service that allegedly infringes it, the names and contact information for the patent’s owners, and disclosures of ongoing reexaminations or litigations involving that patent.
• Define as an illegal unfair or deceptive practice certain egregious behaviors, such as sending letters threatening litigation without a real intent to file litigation or sending letters that lack a reasonable basis in the law.
• Explicitly give state attorneys general the power to to target similar bad behavior in their own states.
• Allow the Federal Trade Commision to enforce these rules by levying penalties of $16,000 per each violation.

You know what all that information that sounds like?  That sounds like a lawsuit filing to me.  Demand letters are not lawsuits, and they shouldn’t be treated as such.  Now, I think that it would be wise to force trolls to include the patent number, you got me there.

The issue for me is that patent trolls are bullies, plain and simple.  I just happen to feel, very much like Elie Mystal over at Above the Law, that bullies ought to be handled by the bully-ee (and his posse, as necessary) rather than by the authorities.

It’s about information and education to me.  Teaching the general public how to handle these letters by a) collecting them in order to get research and report on the troll modus operandi and b) providing resources for companies when they do receive one.  The White House launched a website (complete with 1980’s clip art icons!) where people can go for resources when that happens.  That’s awesome and the appropriate response because it puts the power to decide if and how they will respond in the people’s hands where it belongs.

Let me tell a personal story here…my 5th grader was recently called a fata$$ on the playground.  It was during a pickup game of rugby (rugby?  wth??) wherein my guy landed on another guy during what all the witnesses say was a legitimate play.

This is what the scene looked like in my head.

Well the guy he landed on didn’t think so and started with the hurling of insults.  My son, God love him, did not go running to the teacher.  He did not demand a hearing before a jury of his 11 yr old peers. He did not call me up from the nurse’s office in obvious emotional distress and demand that I sue the parents of the potty mouthed hooligan.  He did not start a petition to hang signs in the school yard, warning that trash-talk is illegal.  He simply stood up, said “WHAT’D YOU CALL ME??!!”, and proceeded to handle his business.  I’m not going to explain how because I don’t want a bunch of hate mail about how I taught my son to fight, even though it wasn’t really me so much as it was Peter Brady when he took out Buddy Hinton on behalf of Cindy.  Thanks, Brady Bunch reruns.

My point is, I think that the demand letters the trolls send are designed to be threatening and in many cases deceptive (and I do love that some of the states Attorneys General are going after the senders for it, because it’s after the letter’s been sent and completely appropriate).

I’m not as sure though, that the government ought to come in and tell people what they can and can’t put in a private letter to another company or individual.  Barring libelous statements, companies are within their rights to be a jerk and make threats.  And we, as citizens, are within our rights to build and deploy software solutions to combat those threats.  I don’t think that federal time and resources ought to  be spent on the problem at that stage of the game.

This post came out of a retweet by @GCToGo of a tweet by Cisco’s Mark Chandler (@ChandlerCisco).  Limiting myself to Twitter’s 144 characters is always at times painful for me, so this was one of those times it had to go to the blog.

Plus, what else is there to do on a cold, rainy Sunday but write about patent trolls?

That’s what I thought you’d say.

IPTT

{Fantastic rugby image found here.}

Cory Doctorow Is Spot On, Even If You’ve Never Heard Of Him

Probably everyone else has heard of Cory Doctorow, but I hadn’t until I came across a piece that was so brilliant (in large part because he agrees with me, of course) that I had to read it several times and then find a copy of the movie so I could watch it.  His article is about The Magnificent Seven business model and how it applies to patent trolls (and copyright trolls too, but we’ll leave those to Ali.)

Got you in our sights, trolls.

I’ve banged the drum loudly for almost three years now that one surefire way to beat the trolls is to use collective action, preferably prior to litigation.  There are a number of offerings that help once you’ve been sued (IP litigation insurance, RPX’s Collaborative Defense™), but by then the money’s already flowing in the wrong direction, which is to say out of your bank account and into to some attorney’s.  A little too late in the game if you ask me.

That’s one reason I and others have put up tools to collect patent demand letters.  As Cory states in his article:

Since the victims are spread out and don’t know each other, it’s hard to fight back together.

That’s what the trolls count on.  But what if there was a place to input information about which trolls are asking for how much regarding which patents before they actually sue?  Hello?  We have that here (MINE!) and here (THEIRS!).  Cory’s exactly right when he says:

the relatively small profits from being a jerk are concentrated, the much larger effects are diffused, which means that the jerks can afford better lawyers and lobbyists than any one of their victims.

But what if those victims got together?  What if they created a fund for defense, like I suggested in this prior blog post:

In other words, if that’s too subtle for you, why don’t you guys do the same thing?  Coordinate a response.  It looks like some of you did in this case by filing an amicus  brief or two, but seriously?  That all you got?

Open up your wallets, find a bank somewhere (I know!  I know!  Make it Switzerland, since you’re already there!), get an account, and FUND A MASS DEFENSE.  The only thing evil people understand are lawyers, guns, and money.  You have two out of the three, and that ain’t bad.  In fact, it’s enough.  Get some lawyers and some money, and you won’t even need the guns.

This really, truly isn’t rocket science.

Cory’s saying the same thing, only he suggests a Kickstarter campaign.  There’s another option, Defense Mob, that is getting off the ground as well.  There’s a particular brilliance to the way he puts it that you have to read and read until you fully ingest it and let it spur you to action:

Once a troll is worried about a pushback from his victims, he’ll need to raise a war-chest, and since the only thing a troll makes is lawsuits, he’ll start sending more threats. Those threats will attract more people to the kickstarter [or other collaboration effort], raising its profile and its search-rank. The more the troll wriggles, the more stuck he becomes.

DING DING DING, we have a winner, folks.

This is exactly what demand letter registries are all about.  Getting the word out and forcing the trolls’ filthy, dirty, long-fingernailed little hands.  And actually, if users will collaborate and talk to one another about what’s going on, you may not need a war chest after all.  All you really need is information.  A collection of data that you can query and find out who else is on the trolls’ hit list.  Once you do that, you can talk to one another and then all of the victims can simply refuse to play the game.

If every person that a troll sends a demand letter to says “NO”, how’s that going to play out?  They’re going to take it to the next level and sue everyone they sent a demand letter to?  OK, they might.  But now go back and re-read Cory’s quote:

The more the troll wriggles, the more stuck he becomes.

I read this article back in November and it still excites me today because I lead a very boring life I love a good plan to take down the bad guys and I’ve advocated doing this since day one.  If I had any smarts at all I’d have tagged all the relevant posts with something like “collaboration idea” and link to them here, but alas, you’ll have to take my word for it.

You want to rid the patent landscape of bottom-feeder trolls?  Then round up your posse, seek out and find your Magnificent Seven, then take the banditos out.

IPTT

{Magnificent Seven screenshot found here. Obama finger point found here.}

Samsung Calls Dyson “Intolerable”, Files Lawsuit To Prove It

Samsung, it seems, is not a fan of patent trolls and as they’ve sued Dyson for calling them names (presumably because they didn’t have a woodshed nearby to take them behind), I think that means that they think Dyson is a troll.  In a way, I sort of agree with this because Dyson is awfully proud of it’s patented technology for vacuum cleaners, machines that have cords that are entirely too short and a trap-door release mechanism for their canisters that is fraught with design flaws.

I’m not the biggest fan of Dyson, as you can see.

This time, it wasn’t the famous cyclonic motion that Dyson’s panties are all in a wad over, it’s a steering mechanism.  The conversation between Dyson and Samsung went something like this:

James Dyson:  Pardon me, but as wherefore and thus and suchwith I am a Sir, which means of course that I myself hath been knighted by The Queen, I henceforth do allege and assert that you have created a “cynical ripoff” of the mechanism by which my vacuums are hitherto steered from one place of dirtiness to another.  Thou musteth pay up now-eth, so saith The Queen.

Samsung Rep:  That would be a no.  We’ve been working on a way to steer our vacuums for over a year.  So take your stuffy Queen’s Speech and blow it out your ear, pal.

James Dyson:  Shitters and briggety.  You have?  Really?  Dern it all.  Well, then, as this case has thus appeared not to provide us with the smashing victory for which we were dearly hoping, I suppose we shalt take our marbles and proceed to the homestead.  Bugger.

Not content though to put Dyson to shame, Samsung sues back for

“intolerable” litigation that has “seriously hurt its corporate image.”

Dyson didn’t so much get to take their marbles and go home, as they’ve had them stolen and hurled back at them.

Disclaimer: Not the actual marbles tossed at Dyson.

Here’s my issue with this whole thing:  Dyson, we get it.  We know that you invented cyclonic technology and now no one  can ever even use the word “cyclone” and “vacuum” withing ten miles of each other that you won’t slap them with an infringement suit.  And now you’re all over the  ball-steering feature like a tick on a hound.  Because no one else could possibly have ever come up with the idea, like, say, your brother?

Dyson is not a patent troll, not even by my definition.  But boy do they ever sue a lot and make a nuisance of themselves!  That’s what patent trolls do, and therefore I think they must be a distant cousin or something.

I’ve pointed out before the personality matters in the patent world.  James Dyson is a personality, all right.  The sort of personality that makes companies want to come  back after you for stupid litigation.  This piece does a nice job of explaining what I don’t like about his business model:

he takes a problem you didn’t know you had and finds a solution for it that doesn’t account for the fact that if you could afford a car, you wouldn’t need a better bus ticket.

I don’t have anything personally against James Dyson, though I recognize it probably feels like I do.  Rather, it’s simply my feeling that patent litigation ought to be reserved for severe cases of infringement that are clear, willful, and actually caused damages to the patent owner.    Patent litigation that is a nuisance, designed to scare people into stopping their own forward progress, and not properly researched is wrong.

Bad and wrong and costly and trollish and Dyson-ish.

IPTT

{Marbles image found here.}