Patents Haven’t Fostered Innovation For Years, Is How I Read This

I’m fond of saying that I hope to live long enough to go back and read everything I’ve favorited on Twitter.  That’s how I use the favorite button: to bookmark things so I’ll go back and read them when I have time.  Sometimes it’s because I actually agree with what was tweeted, but that’s not a solid guarantee.

This weekend I had time to peruse some stuff I’d bookmarked because it was cold and rainy which meant i couldn’t mow and weed the yard that’s looking pretty pathetic, virtually guaranteeing a letter from the Home Owner’s Association telling me I need to step up my landscaping game, and that’ll be a shame because then I’ll have to point out to them that it took 15 years to get a “No Soliciting” sign put up in my neighborhood and if they get 15 years to solve a problem then so do I.  #BecauseChildish

To the point (y’all know I always get there eventually), I read this Newsweek article about How Patents Kill Innovation And Hold Companies Back and was struck immediately by a couple of things:

1.  The citation of this article from 2012 by Lenny Kravetz that pointed out that “Over the past several years, the average popularity of patents has steadily declined among funded technology start-ups.” So we’ve known for almost three years then that arming yourself with a stable of patents didn’t equal success and/or innovation?

2.  Ditto this Michele Boldrin and David K. Levine study, put out the following year, which also indicates that it’s getting harder and harder to tie patents to actual innovation.  (I smell a trend, and it wasn’t started by the Stanford study.)  Tying them to litigation and lawyer incomes however, is not such a stretch.

I don’t understand why people are barking so loudly now about the Stanford study that says essentially the same thing?  Is it news, really?  Because it looks to me like a strikingly similar conclusion has already been reached.  Twice.

3.  This quote:

This brings us to IBM, which is such a patent hoarder it could inspire its own A&E TV show. The company recently announced that in 2014 it received arecord 7,534 patents, marking the 22nd straight year IBM has topped the list of most patents by a company. Over those 22 years, the company’s inventors have won more than 81,500 U.S. patents, swamping the total of any other company. Clearly, IBM spends a lot of time and resources seeking and securing patents, believing it’s the path to industry dominance.

Well played on the hoarder comment, lol.  Whenever I need inspiration to purge stuff from my house, which is almost never because I run a pretty tight ship, I watch a single episode and I’m spurred to give away anything that isn’t nailed down, living or not.

Mine

I disagree with the last sentence though…IBM may well spend time and resources building a patent arsenal, but it is it because they think it’s a path to industry dominance?  Or is it because they need a war chest to defend themselves, against trolls and other threats?  The best defense is a good offense, as they say.

4. Another quote:

And then some ancient patent circles back in the form of a troll with a bite—a patent that wouldn’t exist if nobody thought it was worth filing in the first place—and CEOs complain.

I don’t think troll patents “wouldn’t exist if nobody thought [they were] worth filing”.  I think in many cases they shouldn’t even have been issued in the first place, not least due in part to the issues with the USPTO examiner process.  Additionally, lawyers who excel at wordsmithing can go back and make any patent apply to any successful industry.  It’s what they are paid to do by patent troll companies who have no other way to be profitable but to sue other people.

I’m still not at the tipping point where we say patents are stupid and we shouldn’t even issue them anymore.  But despite the fact that the first words out of any of the Shark Tank mouths is “do you have a patent?”, thus perpetuating the now-dying notion that they equal innovation, I don’t think they’re serving the same purpose as originally intended: To promote the useful arts and sciences.

JustSayin_small_New

IPTT

{Pile of junk image found here?.}

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Interview With An Inventor, Part II

On this fair Monday morning, let’s continue our Interview with an Inventor, started last week here with Part I.  My goal in these questions was to divine how much time this particular inventor put into actually trying to get his product out there and if litigation was part of the strategy from the outset, if at all, or if it was something that ended up being a necessity because of the 400 lb gorilla companies that are (theoretically) preventing new entrants into the marketplace.

In this part, we’ll cover the next three question in the 10-question series:

3.  How have you approached the “big players” in your industry to attempt to get them to license your patent? What resistance were you met with, and how have you overcome it?

4.  What is the biggest barrier for small inventors to overcome when trying to approach the “big players” in their market?

5.  For you and your product/patent specifically, what is the single most troublesome thing about current patent reform legislation?

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3.  How have you approached the “big players” in your industry to attempt to get them to license your patent? What resistance were you met with, and how have you overcome it?

I have had extensive engagements with big companies, about a number of my patents, most of it negative unfortunately. Despite the fact that I have extensive technical educational background (a BS in EE from Caltech) and industry experience (I worked at IBM and two startups) one still universally gets the NIH response from companies.  

Let me give you an example.  In one instance a friend of mine knew the founder of the company.  He got us in touch with inhouse counsel, who proceeded to tell us he did not want to see any due diligence or evidence materials that would explain the utility of the patents, either by way of their current or future business.  This was rather amazing to me, since I asked them how I was going to demonstrate the value of the patents if they were not going to consider what materials we had prepared to show …exactly that.  This is an example of the corporate “blinders” I mentioned before.  Inhouse attorneys are taught to avoid looking at anything, or commenting on anything that relates to third party patents. This pretty much means there is no opportunity for a reasoned discussion.

Finally we reached a compromise where we agreed we would at least TALK to outside counsel on the phone to explain the relevance of the patents.  This of course was rather inefficient, awkward, etc., and prevented any meaningful assessment on their part.  We also agreed not to initiate any lawsuit during a limited grace period, all of which was fine by us.  

Despite all these handicaps this company did in fact make an offer on my portfolio. For reasons that are too numerous to list here (but I posted about it online) negotiations broke down.  Sometime after the grace period expired, I sent them a polite letter explaining to them in detail now why the patents had value – an opportunity they prevented me from doing before.  They then proceeded to try and kill my patent filings in the PTO as some kind of preemptive strike or payback.  Unbelievably they “manufactured” prior art to make it look to the PTO that they had already come up with my idea before me.  This was pointed out to the PTO after I discovered it but it was not until years later that they admitted the charade. The whole affair was just appalling to me to see what lengths they would go to not only denigrate my work.

Since that time I have had an occasion to send a number of other companies what I consider fairly friendly letters inviting them to take licenses on technologies I have invented.   In almost every instance they don’t even bother to acknowledge your letter.

This is why so many small inventors seek other channels, such as through brokers, to help monetize their assets. They have neither the connections nor the muscle to get the attention of large players, who can simply ignore you until you find someone willing to represent you in a lawsuit.

4.  What is the biggest barrier for small inventors to overcome when trying to approach the “big players” in their market?

Access.  It is almost impossible, unless you know someone in the company with authority directly, to get any attention whatsoever.  If you send them a letter inviting discussions it will be ignored 99% of the time.  To some extent this behavior is a legacy of older, now defunct case law which made it prohibitive to talk to inventors, because that could expose the company potentially to a charge of “wilfull” infringement later. This created a corporate mindset that pretty much shut down any exposure to third  party ideas, no matter how useful they might be, out of fear of being called out later for having “infected” the company with an outside “virus” if you will.  Engineers in fact were routinely told (in earlier days at least) NOT to read patents of any kind, again out of fear of being “contaminated” with third party ideas.

IPTT Comments:  So this is very interesting to me. I do understand the idea of not wanting to talk to inventors because what if someone at your company actually had the same idea?  What if that idea was just a slight tweak and Mr. Big Company had actually filed a similar patent that was still pending…you don’t want to open yourself up to trouble in the form of treble damages for willful infringement if you talk to a sole inventor.  So this makes sense.  But as our inventor acknowledged and as I mentioned in my backgrounder , agent or broker companies exist to help the smaller player get in the door.  I wonder if inventors don’t want to take that route because they lose a percentage to the brokerage firm?  Does it give an inventor less street cred if they have to use a broker vs. get in the door on their own?  Not judging, just asking.

Which, by the way, I realize those brokerage firms are NPEs.  Yeah, I get it.  But let’s keep it real here:  a company that can knock on Mr. Big Company’s doors and help you get in is not the same as an Intellectual Ventures or IP Navigation who actively seek out nebulous patents and set about suing the world over them.  No, there are decent NPEs out there who serve just the type of purpose our inventor would need them for.  Like the patent Shark Tank, if you will.

congressjpg-84c7dc3227d9b3ec

5.  For you and your product/patent specifically, what is the single most troublesome thing about current patent reform legislation?

As I see current legislative efforts, they are mostly driven by an anti-patent rights bias, and therefore are almost exclusively are directed to reducing inventor/patent owner rights.  There is not a single provision in any of the proposals that makes even an attempt at balancing interests.  [In my opinion], the current (now tabled) legislation was crafted and sponsored almost entirely by large corporate interests who simply don’t want to respect or compensate small inventors for their technical contributions.  Consequently every provision is intended either to make it harder for the small guy to get a patent, to make it easier to kill that patent even if it is granted, or to make it impossible for that person to enforce it. Every aspect of the bill is engineered to facilitate what I would call “economic infringement” meaning, rigging the game to make it easier for big companies to simply take/infringe patents with the knowledge that their maximum downside is less than the economic advantage they derive from using the invention.

IPTT Comments:  I’m on record many, many times agreeing that legislation is not the way to curb patent trolling.  It’s right there in the name of the offender: “troll”.  It may slow them down temporarily, but overall, anyone called a “troll” is going to come back swinging a few months or years later with a whole new set of workarounds.  It’s impossible to stay fully head of them with laws.

That said, I don’t agree that the current legislative attempts were crafted solely to keep Big Companies from paying small inventors.  I think, rather, that they are attempts by politicians to seem relevant because patent trolling all of a sudden came into vogue.  Cool people like me have been following the problem for many, many years.  So, nice try crashing the party, Congresspeople.

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Because that’s a lot of words already I think we’ll stop here and pick up next time.  Look for the remaining parts Wednesday and Friday of this week!

JustSayin_small

IPTT

{Cool shot of Congress found here.}

 

Oh He’s An Idiot Alright, But That’s Not Why

In Gene O’Quinn’s diatribe, we find this hilarity:

Mark Cuban, the flamboyant owner of the Dallas Mavericks,

Flagrant use of a derogatory adjective in a blog post:  Fifty points!

That’s one way to describe Mr. Cuban, flamboyant is.  I prefer hypocrite, but that’s just me.  One cannot claim to hate patent trolls (and evidently, all lawyers who make money in the patent industry) and be invested in one as well.  It just doesn’t…what’s the word?  Jive.  The complaints don’t make sense to me when the blog maverick himself says “Yeah, those trolls are rotten!!  But if you can’t beat ’em, join ’em.  Just buy right into them that’ll take at least some of their patent bats out of the arsenal”  Holy Mother of God, what a bucket of stupid that is.

That’s why I think he’s an idiot.

Back to the blog post though, this is a great point:

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.

I think it’s pretty well established that patent litigation defense does cost many millions of dollars so if Samuels wants the reader to believe that, she’s got a friend in me.  Gene’s right though when he says that those who pony up the coerced fees, as RPX’s chart shows, oftentimes pay less.  What I want to know though is this:  are the extortion payments as low as $25k?  I get the feeling that they are a lot more than that, on average.  Though the chart is, by their own admission, assumption-filled, I do tend to think that the average payment is minimum six figures.

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?

I think this is spot-on part of the issue.  I have been advocating for a while now that you don’t ever settle, and that you bring the fight to the trolls.  I think it will take more than individual companies doing it though.  I think it needs to be a collaborative defense.  Once the suits are filed, it’s not like you don’t know who else got sued.  Pool your resources and force an all-out battle royale every time a troll sues.  Stamina, people!

Or, you round up the posse and meet the enemy in their own backyard.  This has to be done pre-litigation.  Find out who’s zooming who before it gets to the legal system. Then you’ve got some real leverage.

The thing is, what the patent trolls are doing is not illegal as Gene points out.  They are abusing an existing system and I think he’s right when he says that some of the judges are complicit in that they don’t do enough to toss out the most ridiculous of suits.  But the fact remains that the trolls are skirting existing laws and manipulating the system. And you think adding to that system by creating more patent laws (hello, ineffective SHIELD act) is going to help?  Haven’t these guys proven that they will worm their way around the laws, whichever ones you create?   It’s what they do.

Finally, this was something of which I was heretofore unaware:

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?

He lost me at “play golf with patent trolls” because golf.  The only time golf was interesting was when that girl busted out her husband’s windshield with a nine iron.  That’s worth a Sunday afternoon inside to watch!  And I’m not sure you can substantiate that those kinds of back-room dealings are going on and even if they are, they are between the big players, the heavy hitters with access to lobbyists and to the daft morons congressmen and women on the hill.  The regular Joe patent troll target, the ones who are so hurt by the suits because they truly do hinder innovation by taking money out of their pockets that could be better spent bring a product to market, are not out on the green with anyone, troll or congressman.

But I’ll say this, I would really love to get me this “my patent troll” thing he speaks of.  I am imagining a little troll-doll wearing a sash that says “Patent” on it.  Someone should totally create that and sell it.  Ooh ooh, on The Shark Tank!  Mark Cuban would definitely invest in that.

Just sayin’,

IPTT

Patent Jeopardy: We Need Another Category, Alex

This whole SurfCast is suing Microsoft thing has been keeping me up at night in much the same way that a stiff drink and some Benadryl doesn’t.  Here’s the thing:  they are an NPE, a non-practicing entity.   They have a patent for something that they have never built a product on.  So, you know, the very definition.  But if I do say so myself, and I did, that alone does not make them a troll.  This guy thinks it does, and he’s entitled to his opinion no matter how wrong it is.  Besides which, their address is Maine, not Tyler,  TX.  To be a true troll, you have to own real estate in the Eastern District of Texas.  C’mon people, that’s Patent Trolling 101.  (Kidding.  Sort of.)

My heartburn with these folks comes in the form of intent.  What I want to know is, is did SurfCast approach MSFT with the idea of a license before they went and filed suit?  That goes a long way in telling me they are more of a “patent squatter” rather than an outright Troll wannabe.  And I don’t even like the squatter term for them either, though admittedly that’s pretty much based on the fact that the owner of Fuzzibuns got her fuzzibuns in a wad over a stolen idea and used that term with The Sharks.  I can’t get behind whiners.  Or the terms they use.  <– That’s petty, no?  Sorry.

What I am hoping happened, and maybe someone can confirm this, is that they developed this Live Tiling algorithm or whatever you want to call it and patented it and then ran out of steam.  Lost their mojo?  Couldn’t fund a company to actually build an OS around it?  Knew that if they did build an OS, it would never compete with Mac OS or Windows?  Who knows.  Maybe they never intended to build anything with it but knew they were on to something and were hoping that someone would pay them for a license at some point in the future.

This kind of thing happens all the time in business.  You start up a company in the hopes that some day someone bigger will buy you up and let you retire in style.  You put in a ton of work for 10-15 years and then sail softly down to your own private island on your buy-out parachute after you’re purchased.  That was the plan all along.  I’d love it if that’s what SurfCast was doing because that’s cool.  Even cooler if they’d get all authentic and vulnerable and admit it to the world.

Let’s face it, it’s not like they are actually running a company or anything, judging by their website.  SurfCast?  Get a new web designer because dayum, y’alls site is awful.  (And it evidently always has been.  Thank you, wayback machine.) I have a ton of beach pictures in my personal portfolio and probably some of them even have surfers in them so I can get you a better picture than a lady from the 50’s fishing off some random beach, and hereby offer to do so free of charge.  And hello?  Fishing is not the same as surfing.  I don’t get how your picture fits your company name at all, is what I am trying to say.  Back on point…companies who intend to make and/or sell something don’t have ugly static websites with pictures that do nothing to enhance their brand.  This helps my case.

As of this writing, I have emailed the company asking them if they asked Microsoft to take a license before suing.  I’m taking bets on whether or not they will reply.  My bet is no, as in “no”body, which is who I am to them. LOL!  Nevertheless, if I’m right about their intent, then we need a new category for companies/people who patent an idea knowing they’ll never build anything with it but rather fully intend to approach companies who may license it without them having to sue God and everyone else.  Which is not the same thing as purchasing a patent with the intent to shake people down.  Slightly nuanced difference there, but I see it.

Alex Trebek is the go-to guy for categories.  He’s my next email depending on how this plays out…

Just sayin’,

IPTT

P.S.  At least one commenter on this site agrees with me.  Whoever it is, I want them to bequeath me their vocabulary when they pass on:

SurfCast Lawsuit Comment

Wherein I Quote The Remake of Sabrina

I’m not generally a fan of remakes, but the updated version of Sabrina stars Harrison Ford, which is the only other reason than to laugh that I go to see a movie though I must make an exception to that for Cowboys and Aliens.  Harrison?  There is not enough tequila on the planet to have convinced you to make that movie. Ditto Daniel Craig.  For shame, on both of you.
My favorite line from the 1995 Sabrina is

“Do I look stupid?  You know, I never thought of myself as stupid, but maybe I am.”

David Larabee’s mother says it to Linus because David really thought we didn’t know he was out to get the chauffer’s daughter.  Please.  That’s kinda how I’m feeling about Friday’s Shark Tank episode with the FuzziBunz lady. By about ten minutes into her spiel it was crystal clear that she was there for one reason only:  to bitch about people stealing her idea.  “IP Squatters”, she called them.  Very soundbyte-ish and you could tell she couldn’t wait to use her $10 phrase.  Never mind everything else that was wrong with her business, she was all furious because she’d sent the plans to a manufacturer in China who *GASP* stole them, made a similar product, and sold it for (presumably) cheaper.  THAT HAS NEVER EVER HAPPENED BEFORE TO ANYONE IN THE HISTORY OF EVER.  That’s all I can assume she was thinking, the way she got all super-indignant about it.

First of all, let me just say that about 12 years ago Attachment Parenting was all the rage (in fairness, it may still be…my kids are long past the slinging age so it’s far less relevant to me now than it ever was) and there was a sub-part of a message board I belong to devoted to the practice.  I have half a mind to go do a search and recall all the threads about cloth diapering.  Fuzzibunz, while highly regarded, was but one of many nearly identical alternatives.  It’s not all that unique an idea, and I really need to go look up what exactly about it she has patented because that’s a whole bucket of stupid right there, that the USPTO would consider patenting something that’s been in existence pretty much since babies were invented.  So Tereson Dupuy really needs to take up her fight with Adam and Eve, is what I’m saying.

I’m a little surprised the Sharks didn’t attack her for the smoke screen she threw up.  Her appearance was a vendetta.  And for the sake of authenticity and the fact that I am reading Daring Greatly so I have to open up here, I myself have operated out of spite from time to time.  But spite and bitterness don’t grow a business.  Patents shouldn’t either.  What should grow a business is a sound idea well executed.  What has happened to Tereson is that she had only the first half of that equation.  Her business is not profitable twelve years into it.  According to her Shark pitch, she’s at $3.9 Million in sales, but $20k in profits.  Wait, what?  That’s pretty sad to be at that point so many years into it.  She admitted that she had a bad patent attorney so OK, everyone makes a mistake.  But once the super-secret diapering plans were out, you have to change your game.  Litigation is not a business plan.  Oh, wait

It would appear that she didn’t do that, and her business is suffering and she needs help.  She intended to use Shark money to fight the patent battle.  The Sharks didn’t bite, and well done on them.  Like Maude Larabee, they aren’t stupid.  I have a lot of ideas for how to grow her business, but so does she.  She knows.  She just got caught up in the patent wars, another victim of the “Intellectual Property as King” mindset created when the trolls took over the industry.

It’s a shame.

Just sayin’,

IPTT