A VC - Latest Comments in http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

aneet4880 — Mon, 30 Mar 2009 22:18:32 -0000

Right g2sb

Patents should be rarely granted and of very short duration. 20 years is way too long in the modern world, with the possible exception of developments in medical and pharma that currently involve lengthy testing and government approval. Our Apples, MIcrosofts, and Googles would not stop innovating if there were no patents. Small developers would, in the net, be empowered.

Small developers would, in the net, be empowered.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

aneet4880 — Mon, 30 Mar 2009 22:07:34 -0000

D.C. <<<the world="" has="" changed="" a="" lot="" since="" the="" first="" u.s.="" patent="" law="" was="" enacted="" in="" 1790.="" a="" serious="" question="" is,="" to="" what="" extent="" do="" we="" still="" need="" to="" give="" inventors="" a="" 20-year="" exclusionary="" right="" to="" encourage="" them="" to="" come="" forward="" with="" their="" inventions?="" or="" do="" other="" incentives="" provide="" comparable="" benefits="" at="" lower="" societal="" cost?="">>>
You just made his case D.C.! You talk about societal costs and either ignore or am so calloused that you are beyond compassion. Warren Buffet has the right idea but he is ignored or misunderstood too. Warren admits that without the little guy - he is nothing! This law of 20 years you refer too, when a giant has the resources and every reason to wait out the 20 years (as we are seeing now concerning the stifling of innovative automotive progression) why should the giant do a thing for the little guy? It is called sustenance and I'd sure appreciate your intelligence but this time it is a waste of my time. Understand yet? I doubt it, too simple. Skip the 20 years, let it flow like the tundra. Better yet, in a computer age and converging economies - hit delete. How's that for other incentives? Hard yes, but hey, that's the ball game, right?

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

aneet4880 — Mon, 30 Mar 2009 21:43:37 -0000

Mikie Simon

You said it...thanks...I posted earlier and then read further...this is complicated... and to add to my simple input previously, it's all about greed and the results are ominous, we are witnessing this looming over my homeland, America.

You take care Mike.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

aneet4880 — Mon, 30 Mar 2009 20:14:27 -0000

you said
<<<<<patents and="" copyright="" should="" have="" a="" "use="" it="" or="" lose="" it"="" clause="" like="" trademarks="">>>>>
that is a great idea to stave off trollers but it doesn't close the legal loopholes corporations use to monopolize on a previous concept and or a patent that they've spent $$$ and has come to fruition...I don't buy into the legal explanation from companies who stifle innovation by purchasing a portfolio? If we stipulate a "use it or lose it" then it should apply to everyone, yes, including business's who buy patents with the premises of a portfolio when in fact they buy them to stave off competition and the end result is stifling innovation. Please read this article if you're serious and truly fair and want an end to the madness that has taken America to the lower ebbs of living the good life.
http://www.legalnewsline.co...

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

fredwilson — Mon, 16 Mar 2009 12:05:28 -0000

That's an interesting argument

I think its going to take a long time to eliminate patents entirely and high
capex/high regulatory industries probably even need patent protection

But not software and probably not IT in its entirety

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Dan Lewis — Mon, 16 Mar 2009 08:25:21 -0000

You may want to read this:

http://www.marginalrevoluti...

Here's the lead:

"Long ago Jack Hirshleifer pointed out that markets can reward innovative activity even in the absence of patents (H.'s point was actually that markets could over-reward such activity but the point was clear). If an inventor discovers a new source of energy that requires the use of palladium, for example, he can buy palladium futures, announce his discovery and wait for the price of palladium to increase."

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

fredwilson — Tue, 24 Feb 2009 05:20:09 -0000

Marcus great post. I tried to leave this comment on your blog but the
captcha was hanging. So here it is:

this is what I would like to unleash on the trolls:

"using the legal and technical arena to put them entirely out of business or
if challanged ending up in multi million dollar lawsuits with a very fierce
and savvy (based on all crowsourcing) competitor"

thanks for the inspiration. i think if we get the entire VC/startup
community to get together and crowdsource our opposition to these nasty and
unsavory characters, we can indeed put them out of business

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

fredwilson — Sat, 21 Feb 2009 09:25:11 -0000

Did you write a blog post? Clearly you've thought a lot about this issue and I'd love to read more

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Marcus — Sat, 21 Feb 2009 08:40:31 -0000

Interesting Post and tweet, have followed silently for some days and now decided to take a stance (and will write a related blogpost, this inspired me to). I just wanted to reply with my view to some (perhaps unwillingly missing or duplicating someones answer) questions/suggestions in your post and in the comments.

* regarding "alliances against troll"
I would recommend you to visit Allied Secured Trust (http://www.alliedsecuritytr... and RPX (http://www.rpxcorp.com/inde... one alliance and one "insurance".

* regarding "use it or lose it".
I am not a fan of this. There are many practical reasons, where patent portfolios could be the most clear. I.e. which patents protecting a portfolio are actually in use. Secondly, what would happen in licensing issues, if the licensor does not use it but merely licenses the technology á la Qualcomm? Is licensing = use? And for how long would this use or lose thing be in place? I'm also guessing it would kill all new and rising IP savvy companies who, especially in this financial climate, are trying to generate revenue from dormant patents, which they have been paying annuities for, and thus in the extension impede some of the fastest ways of innovating and transfering tech which is out there and being used at this point.

* regarding shorter patent lifetimes.
I am slightly against these sorts of categorzations - and who would be the judge to say what a technology really is. Take the example of Health IT - such patient monitoring and diagnosting aid tools take years to come up with, but might in the end "only" churn out a couple of algorithms and some speech recognition or sensory threshhold calculations. But wouldn't these "software" technologies be qualified as medical? This could be yeat another strain on the PTO.

* regarding trolls as a tax on innovation
This is a hard nut to crack (and one I will elaborate more on in my blogpost). I think Mike Masnick makes a good point on Matt Blumberg's blog regarding validity of patents in general. My stance is that many settlements are ridiculously high - no doubt and many lawsuits are regarding "shady" patents. One action in this field is by MAPP (http://www.mfgpatentpolicy.... who wrote a letter to president Obama on the subject, signed by many Fortune 100 companies. I still do believe that there is space in the marketplace for some actors (be they trolls or NPE's or licensing companies or whatever) which take the fight for small inventors trying to reach the market, but also which help companies turn dormant patents into dollars, as well as (serendipidously) serving as a cleaning mechanism for prior art and hopefully reaching a new market equilibrium where less intentional infringement takes place, courts are more savvy and damages are at a reasonable level.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Steve Kane — Thu, 19 Feb 2009 13:40:35 -0000

Yes, I read that Gladwell piece and (as always) thought it was terrific. But his point has little to do with whether or not IP protection plays a useful role (regardless of the inevtable abuses and pitfalls). The Gladwell piece is about debunking the "great man" (or genius, as you say) theory of history -- that history is made by uniquely talented or insightful or visionary individuals having "eureka" moments.

But just because a trillion monkeys typing may eventually write Hamlet is no argument to kill the rights of authors. And just because some patents are silly or harmful and some patent owners are shallow (imagine -- working with innovation and technology to try to make big bucks! who would ever do such a thing!) is no reason to destroy the legitimate and absolutely necessary legal right to IP protetction and theft prosecution

As I've said, I am willy in favor of reforming the system. But Fred, I'd argue that your position favors to a fault those who have existing access to capital and prejudices against the independent inventor, where my poistion favors to a fault the inventor and prejudices against the powers that be. Given that no system is ever 100% correct or fair or inarguable, I always prefer to default to a position that err on the side of individual rights, and social mobility, and egalitarianism, and equal protection under law......

(Btw, I still think if you really really believed your position in your heart of hearts then 1) you would not use silly inflammatory words like "trolls", and 2) you would tell the world you recommend your portfolio companies never use "assignment of invention" employment restrictions on employees.)

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

dinnerbell — Wed, 18 Feb 2009 16:05:49 -0000

please see http://www.piausa.org/ for a different/opposing view on patent reform

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Michael — Wed, 18 Feb 2009 08:34:04 -0000

Here is another proposal: http://www.mttlr.org/volthi...

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

fredwilson — Wed, 18 Feb 2009 06:08:11 -0000

You've got my argument wrong Steve. I think it's impossible to identify true
invention. Here's a piece from Gladwell:

As Gladwell points out -- rarely is it about "genius," but about the fact
that all of the previous work in the field naturally leads to this end
result -- and if it wasn't one person discovering it, someone else would.
The article lists out big name invention after invention that all have
"multiples" -- multiple entirely independent individuals who came up with
the same thing at the same time. Not only that, but almost always the person
who gets credit for the discovery isn't actually the person who discovered
it. In fact, someone even coined a term for it: Stigler's Law: "No
scientific discovery is named after its original discoverer."

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Andy Freeman — Tue, 17 Feb 2009 23:13:01 -0000

> The rationale is that the government's collection of patents is available as a research tool for others, and that exclusionary rights are supposedly a necessary incentive to get inventors to disclose their inventions. That might well have been true 200 years ago; whether it's still true should be open to discussion and debate.

Actually, the disclosure argument doesn't depend on whether the govt's patent collection is a useful research tool.

Suppose that you came up with a way to speed up processors by 10-20% but were not in a situation where building processors was practical. Why would you go to the trouble of publishing said idea if you're not currently in academia or industry? (No, it's not going to get you a job.)

Note that the processor industry is one of many where the major players don't sue one another over IP.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Andy Freeman — Tue, 17 Feb 2009 23:05:05 -0000

The "major players" in many industries have "we don't sue each other over IP" agreements (either formal or informal).

If the law said that only operating companies could sue for infringement, none of those players will buy. They won't buy to bring infringement actions themselves, because they've agreed not to. They won't buy to avoid infringement actions because IP that they don't own isn't owned by someone with standing to sue (under the proposed rule).

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Steve Kane — Tue, 17 Feb 2009 14:55:44 -0000

Fred, do your portfolio companies have employees sign "assignment of inventions" employments agreements?

How about non-disclosure agreements?

If so, I think you should at least withhold or retract funding from any company that uses these employment agreement stipulations -- as they obviously are directly incompatible with your views on the ownership of software and other technology innovations. If patenting is a detriment to progress, how can banning employees access to ownership of IP be useful or appropriate?

For the record, a company I founded and was CEO of at the time was sued for patent infringement - a complaint that we felt was frivolous and ridiculous etc. and I hated every minute of it and wanted to kill them and the suit was baseless and accomplished nothing. So I feel your pain.

But I hate the argument that its OK to throw the baby out with the bathwater -- and thats the best I can say of the arguments here against IP protection and litigation rights for patent owners.

(And calling them trolls may satisfy the high-school emotional side of our brains but name-calling is the crutch of those who can not win arguments by reason and persuasion. Call them patent owners if you really believe your position. Or do we still call African-Americans n----rs in certain settings?)

Any case, Fred, your argument seems to me to boil down to -- patent litigation is always expensive and often distracting and can slow down companies who are well funded and busy working but apparantly have not done enough prior art due diligence or whose claims are not so clear that litigation is not a scary threat. Well, I am wildly in favor of reforming the patent system and better resourcing the patent office! But I am always extremely anxious to hear the people who control capital or have access to it spitting bile and name calling while explaining that intellectual property protection -- particularly awarded to those with less control or access to capital -- is a nuisance.

It is not a nuisance or a distraction -- it is the bedrock foundation on which our modern western-style democracy and capitalism exists.

Hell, why should every single citizen have the same rights? Why don't we sell rights to whoever can afford to pay? All those poor people -- they're just cluttering up the courts and the legislature with their obviously frivolous claims and needs. Yes, let's charge for rights -- we can get rid of the economic crisis and cut down on the lines at the DMV!

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Steve Kane — Tue, 17 Feb 2009 14:37:18 -0000

Amen.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

fredwilson — Tue, 17 Feb 2009 12:23:33 -0000

Very funny!

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Michael F. Martin — Tue, 17 Feb 2009 11:08:25 -0000

The simple fact of the matter is that the economics of consumer Internet startups are quite different from the economics of more capital intensive markets, including biotech, pharmaceutical, and even semiconductor equipment. So long as everybody is yoked together, nobody is likely to be happy.

But thanks for taking a slightly more nuanced look at the issue than most consumer internet VCs.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

ozymandias — Tue, 17 Feb 2009 10:54:42 -0000

I work Venture Debt and I have to disagree with you on this. Our businesses has achieved some remarkable successes. Plus, it is their choice to take on the debt model, we are not holding them at gunpoint.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

IanWilson — Tue, 17 Feb 2009 10:14:55 -0000

Here is a different proposition, make it easier, much easier, and therfore much cheaper to file patent applications. At the same time reduce the monopoly to 10 years. Hopefully this would result in a tsunami of applications that would clog up the system for long enough that by the time patents were granted they would already be out of time.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

fredwilson — Tue, 17 Feb 2009 08:19:22 -0000

Matt, I reblogged your post today on avc

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

andrewparker — Mon, 16 Feb 2009 22:51:41 -0000

I also really like the idea of small private fund insurance to solve this solution... if a company is willing to spend ~10-25K to make a patent troll go away, I'd much rather see that money be put towards an insurance deductible to an agency that will go punish trolls.

However, I can't envision an insurance model that would actually work because how do you properly incentive people to not get patent infringement insurance and then go around infringing on everyone's patents? Deductibles alone likely won't work because malicious patent infringement can be lucrative. There's no easy way to cover only trolling cases.

But, again, I'd love to see this work.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

Matt Blumberg — Mon, 16 Feb 2009 20:25:53 -0000

Well said, Fred. I just responded with my own post at http://onlyonce.blogs.com/o.... For those reading this, we were the company Fred referred to in his post.

Re: http://www.avc.com/a_vc/2009/02/how-patent-trolls-are-a-tax-on-innovation.html

josex — Mon, 16 Feb 2009 17:13:14 -0000

Have people gone insane (or been so for years now)?

Every idea, from the most trivial to the modest, to the sophisticated, to the genius, to the eureka moment of a lifetime for a genius... happens a first time.. and frequently a second, a thousandth, and a millionth+ time.

All of these "firsts" are thrown into a pot with the patent writer aiming for the widest scope possible (to catch not just that idea, but anything else that gets caught in the wide net)..

and 20 years are given of *monopoly*.

Worst, you need not be the first with an idea. You can be the thirtieth, for example. You just need to get to the patent office quickly and then get wide protection limited mainly by whatever had been published ahead of your filing date.

Are people insane?

Do you know where "science" would be if these monopolies were enforced on scientific works? Do you know where entertainment would be if people were taking patents out in those areas as well? Do you know how impossible it would be to win even a simple case if lawyers exercised monopoly control over methods of the court and argumentation?

People are insane, and IP lawyers need a taste of their own medicine.