08.12.11

Global Dimming for the Cult of Patents

Posted in America, Europe, Patents at 3:47 pm by Dr. Roy Schestowitz

Summary: Patents extravaganza meets its limit as the public continues to ask for change

WE LIVE on the verge of changes to the patent law. It is up for us to help determine whether those laws or amendments make things worse. Earlier today we covered the situation in different parts of Europe and we finally come to discussing the software patents situation in the United States and the rest of the world in general, having covered the situation in other, very specific countries. Here is what Ubuntu’s founder (based in the UK) had to say on the subject this week: “The patent system is often misunderstood. It’s sold as a way of giving the little guy an opportunity to create something big … when in fact patents don’t really work that way at all.

“What they do very well is keep the big guys entrenched and the little guys out. For example, it’s very common in established industries for all of the majors to buy up or file as many patents as they can covering a particular area. They know and accept that the other majors are all in the same industry and essentially cross-license each other to keep the peace within that defined market. But they use that arsenal to stop new entrants coming in and disrupting the market.”

Well said.

Stephan Kinsella, a longtime critic of patents, blogs in Mises.org about another patents-hostile study. Kinsella then tops that up with a rant:

In a nausea-inducing post, the US Patent and Trademark Office is trumpeting on its website the millions of patents it has issued. As the short version states: “The USPTO has issued millions of patents over the years. Number 1,000,000 was issued 100 years ago this month. Number 2,000,000 was issued in 1935. Take a closer look at these “million milestones” from patent history.” This disgusting puff-piece, of course, ignores the horrible cost of the patent system, and naturally, conflates innovation and invention, with patenting.

Glyn Moody argues that “more is less when it comes to intellectual monopolies,” referring to the above.

One patent lawyer accuses of bad conduct, which is interesting if true. “Patent Aggregator RPX Accused Of Extortion, Racketeering & Wire Fraud,” says the headline, with the following clarification immediately made:

The word “extortion” is often used by patent infringers (and their apologists) to describe licensing activity carried out by patent owners. In reality, however, the patent owner often does nothing more than exercise the basic right of enforcing a patent through civil litigation. Some suggest that these patent owners rely on dubious arguments or enforce patents that are likely invalid. However, patents enjoy a presumption of validity as a matter of federal law, and characterizing a lawsuit as frivolous requires more than just disagreeing with the infringement theory (which often turns out to be the case). While some patent owners might bluff, actually resorting to litigation requires convincing attorneys to put their reputations on the line by affirming that an adequate investigation was conducted.

The president of the FFII writes:

Lobbying for abolition would be way cheaper. And building an arsenal only works for big guys, does not solve trolls

RPX is just another pool, just like OIN. They do not help against patent trolls. They are unfit for this purpose. Moreover, it’s a money hoover and a club for super-wealthy corporations. Who does that really serve? Surely not the public. Thankfully, there are people who do speak for public interests and usually they call for the total end of software patents. Here is an interesting post about what the abolitionists (like the FFII) want:

To the die hard advocates it isn’t about the quality of the patents being issued or the term of exclusivity that is being given. It is about very existence of patent rights for software – period.

That’s right. And this is the ‘camp’ Techrights subscribes to. Here is what Masnick of TechDirt quotes in his site, which also belongs to the same camp and does fantastic exploratory work. The Google General Counsel is quoted as saying: “A patent isn’t innovation. It’s the right to block someone else from innovating… Patents are government-granted monopolies… We have them to reward innovation, but that’s not happening here.”

TechDirt also posts this:

If you thought bogus patent lawsuits were crazy now, just wait and see what might happen if a court rules the way two companies are arguing they should. The EFF has filed an amicus brief in two cases in which patent holders are arguing that they can drag third parties into patent lawsuits if those third parties do one part of a claim, while someone else does the rest. If you think about this, and are aware of current patent lawsuits, this is a horrifying prospect. Think Lodsys on steroids, where individual consumers could be sued for patent infringement, merely for making use of what a service provider offers. For example, in one of the two cases, Akamai is claiming patent infringement, and the issue is one claim in the patent. All of the steps of that one claim are handled by a third party… except for “tagging,” which is done by users. If Akamai’s argument holds, then users of Limelight’s services who do “tagging” could be liable for patent infringement without having any idea at all that they’re at risk, and without them even violating the vast majority of what’s claimed in the patent.

And one last article from TechDirt says, “Google Being More Aggressive About Bad Patents; But Should It Go Even Further?”

A few years back, there were some stories about how Google’s legal department was willing to take on big important issues, not just because they would help Google, but because it would strengthen the overall internet and innovation. That obviously would help Google too, but there was a sense that the company would fight for issues beyond just those that impacted Google. In recent years the company seemed to shy away from some of those fights, so it would be interesting to see if fighting against bad patents brings Google back around.

Of course, as some are noting, even as Google is getting vocal, it appears to be pulling some punches — focusing on the specific patent problems it faces, rather than speaking out against the fundamental problems of the patent system itself. In fact, nearly a month ago, Glyn Moody wrote an excellent piece explaining how Google’s best line of attack here would be to go after the very concept of software patents, something the company hasn’t shown a willingness to do just yet.

Unlike Groklaw, TechDirt does not try to help the legal case of particular companies (that already have an army of full-time lawyers handling the case and speaking to the judge). We realise that Groklaw also accepted — without much criticism at all — Google’s purchase of software patents from IBM. There are better ways to address the problems Google is having and we too urge Google to take another route. We have urged it for years. Pascal-Emmanuel Gobry writes several more rants on the subject, noting that “Patent War [is] A Multibillion Dollar Waste [and] Could End With A Stroke Of A Pen”. How about just ending all software patents like Mark Cuban suggested in the Huff & Puff (his views were even mentioned by software patents proponents)?

Just watch the chaos that carries on based on the past few days’ news. NTP makes a mess [1, 2] and more ridiculous patent lawsuits are filed. The Britain-based Independentny had gone ba asks, “Are there now so many patents in Silicon Valley that it’s impossible to innovate?”

But it’s not just about patent owners – some perfectly justified – grabbing themselves a chunk of the wealth generated by the technology industry. There’s much industry infighting, too. Oracle is suing Google over features of the latter’s mobile operating system, Android. Microsoft is also suing Motorola over Android-related issues. Yesterday Apple won a suit in a German court that accused Samsung of copying of the iPad’s “look and feel” for its Galaxy tablet. Samsung is gearing up a response amid its much-hyped Galaxy 10.1 tablet being seized by EU customs officials as a result of the case.

Apple is also accusing HTC of infringing 20 of its iPhone-related patents; meanwhile, HTC is countersuing over five patents of theirs.

With the number of US patent lawsuits rising by 20 per cent in the first six months of this year over the same period last year, many people are questioning whether innovation is taking a back seat to litigation. In the world of music and art, copyright is usually a black-and-white issue; you’ve either copied someone else’s work or you haven’t. But patents provide a certain amount of scope around your idea and that grey area has become a prime target for legal disputes. “The Patent Office examiners determine the scope of an allowed patent,” says Simon Davies, chairman of the computer technology committee of the Chartered Institute of Patent Attorneys. “They don’t always get it right.”

The accusation levelled against the US Patent and Trademark Office is that they’ve issued too many patents with too broad a scope for too long. Notable patents from recent history include a “method of refreshing a bread product” (basically toast) and the crustless peanut butter-and-jam sandwich, both approved in 1999.

As several people — myself included — have suggested, the UK should build an absorption science park to offer subsidised haven to software developers from the United States. Both sides would win, as the UK would get more talent and the developers would get peace of mind. Mike Masnick says we are “hitting something of an inflection point in getting people to realize just how incredibly broken the [US] patent system is.” To quote the article with some context:

It’s certainly beginning to feel like we’re hitting something of an inflection point in getting people to realize just how incredibly broken the patent system is. There has been a flurry of mostly excellent news stories from a variety of sources picking up on this and detailing specific cases of a broken patent system. The This American Life episode certainly helped kick off a lot of attention, but it’s definitely been growing in other areas as well. The latest entrant into the field is an excellent article from Ben Popper over at The Observer’s BetaBeat site, which focuses on one specific smaller patent troll, a company called IQ Biometrix, and what it’s done over the years… which is basically nothing productive. However, it does have two hugely questionable patents: 7,289,647 for a “system and method for creating and displaying a composite facial image” and 6,731,302 for a “method and apparatus for creating facial images.”

Masnick also explains the role of lobbyists in this: “We’ve noted how there’s suddenly been a lot of mainstream interest in the massive problems of the patent system, thanks in part to mainstream media operations like This American Life doing stories that expose just how damaging the patent system is today. And yet, despite all of this, we’ve been pointing out for a while that the patent reform bill making its way through Congress is useless. It does nothing to address the problems of the system and has a few things that will make matters worse. And it bizarrely includes clear favors to Wall St., protecting them from a few bad patents, while leaving everyone else — including Silicon Valley — to fend for themselves.

“So why isn’t Congress actually fixing the patent system?”

Read this article from the Huff & Puff (AOL):

After months of dead-end negotiations over raising the federal debt ceiling, President Barack Obama walked into the East Room of the White House on June 29 to demand action. The stalled talks not only threatened the integrity of the nation’s debt, he said, they reflected a lack of purpose about solving economic problems and improving the plight of middle-class families.

“Many people are still looking for work or looking for a job that pays more,” Obama said to a scrum of reporters. “There are more steps that we can take right now that would help businesses create jobs here in America.”

The first item on Obama’s list of immediate, job-creating congressional actions was the passage of patent reform legislation.

“Right now, Congress can send me a bill that would make it easier for entrepreneurs to patent a new product or idea, because we can’t give innovators in other countries a big leg up when it comes to opening new businesses and creating new jobs,” he said.

Obama was jumping into a drawn-out Capitol Hill battle, one that has never been particularly concerned with creating jobs or alleviating unemployment, despite what recent rhetoric might suggest. Lawmakers have spent nearly a decade jockeying over intellectual property rules in what has become a sprawling corporate feud — one that currently involves nearly 800 registered lobbyists.

Welcome to the shady world of K Street politics. As we showed a couple of months ago, Bill Gates and his mate Nathan Myhrvold are hiring many lobbyists and running campaigns to sustain the broken patent system and possibly make it even worse. The backlash against their scam (racketeering operation) is still seen all over the Web thanks to reporting from NPR (partly funded by Gates, not the public, but nonetheless still capable of investigating real issues sometimes). Patent trolls are devouring weapons of small companies that would never have sued as they have no way of defending against a counter-attack (whereas patent trolls haven’t got this problem), as I happened to have witnessed myself after a colleague’s company had gone bankrupt (the patents appear to have ended up in Myhrvold’s nest).

What is the role of Myhrvold in the grand scheme of things? We have a wiki page that explains it. Microsoft has become a very parasitic and mostly/almost non-practising entity in fields such as mobile, leading to substantiated claims that Microsoft makes more money from competitors’ products than from its own products that lose. Forbes says that “the company is licking its chops from the juicy licensing fees it gains from Android handsets. According to Horace Dediu, Microsoft sold around 1.4 million Windows Phone 7 in Q2, which brought in around $21 million from the $15 per Windows Phone 7 that it earns.

“On the other hand, HTC sold 12 million Android smartphones in Q2, and as it earns around $5 per Android phone from HTC patent licensing fees, Microsoft made around $60 million. This is 3x the amount earned from its own OS from the licensing deal with HTC alone.”

Microsoft is having those companies extorted from other directions, too. And for those who care, Red Hat has just been sued again over patents:

The suit was filed on August 9, 2011, in the US District Court for the District of Delaware against Adobe Systems, Inc., Alcatel-Lucent USA, Inc., IBM Corporation, Juniper Networks, Inc., NetApp, Inc., Red Hat, Inc., and VMware, Inc.

We wrote about the plaintiff, MOSAID (patent troll), not so long before this post.

In any event, the United States system (the USPTO in particular) seems to have become an enemy of companies within its perimeters, so these entrepreneurs would be better off moving to a place like Europe, where a lot of the above trouble is scarcely heard of. If the US relies on patents as a saviour amid economic collapse, then it ought to wake up and see what happens in China. Based on this new report, “The number of software patent applications filed [in China] during the period also increased significantly, going from about 500 in 2000 to more than 80,000 in 2010, according to the statement.” China is getting software patents armament on the face of it. Better to just abolish them all, universally. █

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