The Dire Straits And Stanford Weigh In On Patent Trolls

Something about Stanford University says “totally legit” to me.  Why is that?  I’m not even sure, because I’m not a California college kinda gal.  It just seems like anything that comes out of that neck of the woods is a good thing, and the recent article about the US patent system is no exception.

Jeff John Roberts, who wins the prize for “Most First Names in a Row”, wrote a piece last week about the current state of patent affairs, and how patents actually do little to facilitate technology transfers, his comments based on a study done by a couple of Stanford guys.  In said study, they found out that patents purchased from trolls are old and useless and amounted to nothing more than a tax on innovation.

I’m not sure how this is news, because a while back I took the top 10 most litigated patents right out of the NPE Litigation playbook that Goodwin Proctor cooked up and did a little bit of Tableau magic on it:

Top10LitigatedPatents

I was stunned to find that the average age of those patents was over 11 years.  (Hint: I was totally not stunned.)  So, yeah, that part isn’t news, particularly when so many of the patents are technology-related and therefore they age at an accelerated rate.  One year in technology is like 15 years in any other industry, on account of how quickly things change.  I taught a class recently with a student who mentioned a Zip drive.  Zip.Drive.  Raise your hand if you even know what that is anymore, and then harken back to the days when it was the bees knees as it topped out at 750 megs of storage space.  OMG, I can now fit that on a thumb drive the size of my…thumb.

ZIP_Drive_100,_2

Connect it using a parallel port. Oh, for cute!!

 

But what is news, according to Jeff and the study, is that Universities are singing the same song, and just as badly out of tune:

The paper also notes that the same phenomenon, in which licensees pay money for nothing, is also pervasive when universities are the ones wielding the patents. Instead, as with the trolls, university patent deals rarely lead to meaningful tech transfer or innovation. The findings could have important implications at a time when more universities, including MIT and Boston University, are using decades-old patents to demand money from Apple and other big companies.

Dire Straits, IP Troll Tracker

What confuses me is why on earth Universities are allowed to patent any of the things anywayIt seems a little bit desperate for Universities to try and be hangers-on to the brilliance of their students and professors if their stated goal is to advance knowledge for its own sake.

It’s interesting though that they have the same track record that patent trolls do in terms of using old patents to extort new money from companies.  And here I used to argue that they were the purest form of NPE:  they weren’t trying to extort money!  They were simply taking all that Sheldon and Leonard-ish knowledge and selling it so as to fund more and more cool stuff and to further innovation.  Survey says?  Not so much, lesson learned.

This quote from the study is key to me, and it’s something that I want to say to all of the inventors on Twitter with whom I routinely engage on the idea of how to get paid for their innovation.

A critical factual assumption that underlies this debate is whether patent licensing is in fact a mechanism for technology transfer to the licensees and the creation of new products, or whether a request for a patent license is simply a means of collecting money in exchange for agreeing not to sue.

Inventors routinely claim that they can’t make any money off their invention without patent trolls (which many claim don’t exist, Paul Morinville I’m looking at you), willing to fight dirty to get them the royalties they deserve.  First of all, do you get those royalties?  Really?  Let’s take a look at another quote:

Further, studies suggest that such rewards are not flowing. In what economists are calling the “leaky bucket,” only an estimated 20% of the payments to NPEs get back to the original inventor or into internal research and development by the NPE.

Whether the troll is an NPE or a university, you’re not really going to get your money it would seem.  Just go read how Yale handles its patents.  They start out getting 50% of the royalties, though it does go down slightly on a sliding scale.  Blech, how is that of any good to an inventor?

That’s not the whole point of the article though, getting money for your invention.  The point is to answer the question, which I’ve paraphrased because I can, “Do patents further innovation anymore, or do they just cause the exchange of money from one company/individual to another, often under duress as in the case of patent trolls?”

Great question, given that the original intent of patents was, and I quote from the US Constitution, Article I, Section 8, Clause 8:

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

Is that even what patents are doing anymore?

Or are they just money for nothing?

JustSayin_small_New

IPTT

{Dire Straits image found here. Zip drive image found here.}

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3 thoughts on “The Dire Straits And Stanford Weigh In On Patent Trolls

  1. OK Steph… you must have a very thin thumb, but that’s not really the point here. The point is that you can ask if a patented invention created more innovation, or you can ask if a license to use the patented invention that comes along well after the fact (infringement being the fact) created more innovation. All this rigorous (I’m not sure that’s the right word, but it comes from law professors so it must be rigorous) (oh wait… they get big bucks from Google so maybe it’s just rigged-orous) analysis from the point that the previously stolen patent is licensed seems to me can’t measure the innovative value of the patented invention because it does not consider the before and after effects at the time of the patent’s theft. I’m just sayin’ …but who am I… I’m not on Google’s payroll.

    Steph, you’re a smart person. I can’t think of a thinner argument that is more blatantly false than these doltish “professors” have come up with. It’s embarrassing for me to have to present a counter to this idiotic unprofessional smear. I’m surprised a educated Texan like you would buy it. Very surprised in fact. You’re smarter than that and Texans are notoriously critical of BS. Please give me more faith in the Texas education system and re-evaluate your position.

  2. Hey Paul!

    So first off, while I did graduate from THE University of Texas in Austin, my formative elementary school years were spent in Connecticut, which explains why I talk super fast, and why I was thoroughly confused upon moving to Texas in the 6th grade that my classmates did not saddle up their horses to ride to school. When you grow up in the Northeast, your view of Texas is seriously skewed, even when you have, as I did, Native Texans as parents.

    Let’s look at your statement: “…you can ask if a patented invention created more innovation, or you can ask if a license to use the patented invention that comes along well after the fact (infringement being the fact) created more innovation.” Did the patented invention create innovation, or did the licensing and/or unlawful use of the invention create the innovation. Wait, what? You’re saying the infringement caused the innovation? And you want your cut of that because it’s your patent that was infringed? Am I getting that? Not being facetious at all, just trying to understand.

    If you look at the constitution where the whole shebang got started, you see that patents were created “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”. I think the Stanford guys are simply asking “Do patents, as currently used in the US of A, promote the progress of science and useful arts?” Their answer seems to be “Oh heavens to Betsy, no. They do not.” I wonder if I agree with that. I’m not 100% sold on the idea that we don’t need patents at all. But I’m very much sold on the fact that there are companies out there that exploit they system, and that some manner of change is necessary.

    Another point of the article (to me, anyway) was to say “Look, inventors, if you use an NPE to help you license your patent, are you really getting the right value from it?” It’s a total Catch-22, I get that. If you don’t have someone to help you knock down the door to sell your idea, you might not sell it at all. But if you use the NPE or “monetization company” to get in the door, they’re going to suck WAY more than a fair share off the top. You’re stuck either way. Which is why I don’t invent anything because really, what’s the point anymore? KIDDING. The real reason I don’t invent anymore is because when I’m not working I’m busy catching up on my soaps and trying to get my new puppy, Robert DeNiro, to stop eating my desk. Dog has serious chompers.

    I have to say though, you’re 1000% right when you say Texans (native or not) are leery of BS. We can smell it a mile away, and right now, the only whiffs I’m getting are of a nice, cool, Spring-is-on-the-way breeze…

    Cheers,

    Steph

  3. Pingback: Patents Haven’t Fostered Innovation For Years, Is How I Read This | IP Troll Tracker

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