03.27.08

Proposed Patent Reform No Cure for Patent Trolls

Posted in America, Europe, Microsoft, Patents at 11:12 am by Dr. Roy Schestowitz

Oriskany ship sinks
“Sinking me Slowly” (USPTO)

In today’s patent news you find that a company assaulting Microsoft has suffered a big setback and might therefore sack 25% of its workforce in Europe.

Avistar said it ‘remains hopeful of reaching a favorable resolution with Microsoft on licensing Avistar’s intellectual property in the near future.’

Avistar is a developer of video-enabled communications networks for businesses and corporations. The stock closed the regular session at 88 cents.

What to learn from this? Defensive patents are nonesense. Companies in trouble will cling onto anything in their struggle to remain relevant. It’s their obligation to shareholders, as even Simon Shipps told us last week.

You may be hearing about “reform this” and “reform that” every now and then, but in the context of software patents, the planned reform is of no use.

It is clear that the players, and their attitudes, that dominated the feudal period will no longer carry the day. The newly established and emerging IP business models (and the players exercising such models) are not going away. That is, neither US Supreme Court decisions such as eBay and KSR, nor any of the so-called anti-patent troll legislative proposals floating through Congress, will force intermediaries out of the market.

With as much as three-quarters of the value of publicly traded companies in America coming from intangible assets, and global IP licensing revenue now being measured in the hundreds of billions of dollars, there is simply too much economic justification for such entities to exist. In fact, new players implementing the IP business models described herein are continually surfacing. And creative new IP business models will surely come into existence. Why? Quite simply, the business of IP (ie, the IP marketplace) itself is fertile ground for innovation!

Meanwhile, a company as notorious as Rambus (very infamous for its relentless abuses [1, 2, 3, 4, 5]), managed to somehow escape scrutiny, proving that the legal system is too weak to handle even patent harrassment, ambush, and frivolous prosecution.

Memory company Rambus won a patent case against rival memory makers on Wednesday when a court ruled that the company did not engage in anticompetitive behavior or violate antitrust laws related to on-chip memory technology.

This is sad news indeed. Luckily for those on the other side of the Atlantic (over in Europe), the system remains a little more sane. Here is a good new article. [via Digital Majority]

Patent law became an issue that is debated not only within small circles, but among a broad public. Not only, that software patents could stir one of the biggest participation waves in policy decisions on the European level – it is probably the first time that plans for patent reforms are debated during American presidential primary campaigns. We asked James Babineau, an American patent lawyer with Fish & Richardson, that opened an office in Munich a few months ago, on the future of the patent systems on both continents.

To sum it all up, Microsoft did not suffer from trolling in this case, there is little hope for the USPTO even if reformed, patent abuse or ambush goes unpunished, and it’s important to keep non-US patent systems under proper control. It’s hard to fix something once it breaks for the same reason that retracting pricey patents is… well, too pricey due to compensation requirements.

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