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12.10.17

Patents Are Becoming a Welfare System for the Rich and Powerful

Posted in Patents, RAND, Standard at 3:42 pm by Dr. Roy Schestowitz

Recent: The SEP/Patent Trolls’ Lobby Insults the Victims, Calling Them “Free Riders”

Welfare of dogs

Summary: A culture of litigation and more recently the patenting of broad industry standards may mean that multi-billion dollar corporations are cashing in without lifting a finger

THE gross saturation of patents in the United States used to work in favour of patent law firms, at the expense of firms which actually produce things.

A few days ago we learned about yet another large sum (nearly 0.1 billion dollars) being passed based on a patent dispute/lawsuit that alleges “lost profits” (as if it’s corporate welfare, wherein you declare an entitlement for profits). We wrote about that subject a few weeks ago. “The lawsuit is related to WesternGeco’s patents on marine seismic surveys,” Patently-O wrote. “Adjudged infringer ION manufactures components of the system in the US, for assembly and use “on the high seas.” A jury found liability under 271(f) – exporting components of a patented invention for assembly abroad. The jury also awarded the patentee $12.5 million in reasonable royalties in addition to $93.4 million in lost profits based upon specific competitive contracts lost.”

“Since when have patents become merely a tool of ‘wholesale’ wealth passage?”So that’s even over 0.1 billion dollars (all in all). Based on potential alone, or the mere claim of potential.

Since when have patents become merely a tool of ‘wholesale’ wealth passage? Patents were not originally envisioned as such and this does not contribute to innovation, it just makes already-rich people even richer.

Now let’s look at so-called F/RAND, which ought not exist in the first place. It’s the basic idea that even industry standards are ‘owned’ in the patents sense, and we’re supposed to think that’s “fair”, “reasonable” and “non-discriminatory”. In reality, it is the opposite of all these things. It’s an unjust tax which empowers monopolies.

“It’s the basic idea that even industry standards are ‘owned’ in the patents sense, and we’re supposed to think that’s “fair”, “reasonable” and “non-discriminatory”.”A short while ago (in academic terms) Colleen Chien mentioned her new paper which can be found here. “Patent litigation is down but transactions are up,” she said. “I discuss in my new paper, “Software Patents as Currency, Not Tax on Innovation” @BerkeleyTechLJ”

Here is her abstract: “Software innovation is transforming the U.S. economy. Yet our understanding of how patents and patent transactions support this innovation is limited by a lack of public information about patent licenses and sales. Claims about the patent marketplace, for example, extolling the virtues of intermediaries like non–practicing entities, or characterizing software patent licenses as a tax on innovation tend not to be grounded in empirical evidence. This Article brings much–needed data to the debate by analyzing transactional patent data from multiple sources and reporting several novel findings. First, this study finds that, despite reductions in the enforceability of software parents and levels of patent litigation, the market for software patents has remained remarkably robust, and actually grown in the number of transacted assets. The strength of this demand appears to be driven by the defensive—not only offensive—value of software patents, the importance of software–driven business models, and bargain shopping in the acquisition of patents. Second, this Article explores the extent to which software patent transfers support the transfer of technology as opposed to supporting just the transfer of liability, or freedom from suit, with mixed results. This study finds that the majority of material software licenses reported by public companies to the SEC from 2000–2015 (N=245) support true technology transfer. However, in recent years, large numbers of software patents apparently have also been sold to avoid litigation or to provide general operating freedom, rather than to access specific technologies. Software patents transferred between public companies from 2012 and 2015 were two to three times more likely to go from an older company to a younger company, and from a higher revenue to a lower revenue public company. These findings underscore the enduring importance of software patents in supporting both technology transfer and freedom to operate. Despite the prevalence of NPEs, most patents are not bought for assertion, but to support these critical innovation functions. As such, the data support the characterization of software patents as a currency of—rather than a tax on—innovation.”

It is certainly good news that litigation is decreasing, but software patents ought not be viewed as patent-eligible anymore. A lot of these transactions Chien speaks of are akin to FRAND and it’s a form of loophole, just like the so-called ‘NPEs’ (trolls) she alludes to.

Looking at sites of the patent microcosm rather than academic papers, one finds another new lawsuit. Here is what IAM said:

Sprint, the US’s fourth largest mobile company, has launched a patent infringement lawsuit against Charter alleging that the cable TV giant infringes on 11 patents relating to voice over packet (VoP) technology.

The case was filed in Delaware district court earlier this month and marks the latest attempt by Sprint, which is owned by Japanese tech giant Softbank, to monetise its patent portfolio. As well as the suit against Charter, Sprint also filed a case using the same patents against another cable business, Mediacom Communications.

Unfortunately, VoP is — quite arguably — about software, just like VoIP (Internet Protocol, which deals with packets too). We hope that Charter will fight back and attempt to invalidate these patents (invalidating a dozen won’t be cheap and definitely not fast).

“We hope that Charter will fight back and attempt to invalidate these patents (invalidating a dozen won’t be cheap and definitely not fast).”The patent microcosm shares IAM’s blood-lust. It wants a lot of litigation or taxation as it gets a share of the loor. See this for example. Just about everything that’s bad for society Bristows will love. It is celebrating with patent trolls and maximlaists again (SPCs). It’s also lobbying for software patents, FRAND, SEP, and the UPC, which this guy too is promoting, along with the rest of that toxic bundle. “Isn’t it funny,” he asked, “that the free market loving Anglo-Saxons want judges to determine the #FRAND rate while the Germans (of all people) want the judge to provide boundaries and let the market set the #FRAND #royalty for an #SEP #Patent”

“A lot of that tax pertains mostly if not entirely to software patents.”The term “royalty” is a euphemism for tax. This new article by William New speaks of the 5G tax, which we wrote about earlier this winter.

The bottom line is, patents are becoming merely a tax in many areas. Sure, litigation is on the decline in the US (unlike — say — in China or Germany), but that in itself does not guarantee end of injustices. A lot of that tax pertains mostly if not entirely to software patents.

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