Patent Troll: Bloomberg calls it what it is
preview.bloomberg.com
preview.bloomberg.com
1. One of the nation's top patent lawyers (a "top earner" at Kirkland & Ellis - one of the nation's most prestigious firms - who served for the past 6 years on its management committee) walks away from his position in order to capitalize on buying a patent portfolio from Micron, setting up a holding company for those patents, and positioning himself in his own boutique firm to use that portfolio (we assume) either to file a multitude of infringement actions or to exact royalties on threat of legal action - vividly underscoring what is wrong with a patent system that hugely rewards "non-practicing entities" that specialize in litigation far more than in any form of true inventing.
2. A patent system that so skews money incentives that the best and the brightest (and, yes, by all accounts, Mr. Desmarais is a highly likable and much admired and talented fellow) would be drawn to the seamy side of this business in this way.
3. What this illustrates about how a patent nightmare scenario can so easily arise from the fall or decline of a traditional tech company. Here, it was Micron. What happens, then, when Novell auctions its IP assets to private equity firms who in turn parcel them out to firms such as this? Developments such as this can raise significant threats for Linux and the open source community, among others (see the write-up here on this issue: http://url4.eu/3p37m - "Novell auction could be patent troll bonanza").
4. How easy it would be for Congress to make simple modifications to the patent laws so as to preclude this type of trolling, as for example by imposing a simple test that an invention be truly "useful" (and not merely theoretically so) before qualifying for patentability (see a recent proposal to this effect here: http://ip.jotwell.com/patent-utility-reduxit/).
5. How patent drafting in large corporations can become as much a function of the legal department as of legitimate engineers who are actually inventing things.
6. How this sort of activity does not promote inventions or the useful arts in the slightest and yet characterizes so much of the day-to-day activity in the patent world.
Patents generally have had a useful role in our society, whatever their limitations, but this side of the business basically makes one want to scream.
If anyone could simply reverse engineer your work and produce it willy nilly, there really would be no incentive to innovate.
The patent system is broken, no doubt about it - but IMHO the view that all patents are evil/useless is myopic, and really only possible from the perspective of someone who doesn't have any experience with fields with high intrinsic costs (e.g., software, where marginal cost is basically nil).
In every other industry surveyed the patents may be felt necessary under current conditions but aren't considered useful in the sense you describe for rewarding innovation (e.g. defensive patents to stop others from blocking access to your own innovations).
I believe the research was cited in Eric von Hippel's Democratizing Innovation, ah here we are from, Chapter 6,
" The real-world value of patent protection has been studied for more than 40 years. Various researchers have found that, with a few exceptions, inno- vators do not think that patents are very useful either for excluding imita- tors or for capturing royalties in most industries. (Fields generally cited as exceptions are pharmaceuticals, chemicals, and chemical processes, where patents do enable markets for technical information (Arora et al. 2001).) Most respondents also say that the availability of patent protection does not induce them to invest more in research and development than they would if patent protection did not exist."
link to the full (and very good) book: http://web.mit.edu/evhippel/www/democ1.htm
By this, do they mean that imitators are typically able to operate despite patent protection or that there aren't attempts to imitate? The latter does not really support the concluusion that patents are not useful/effective, since a lack of imitators is something we should expect if they were (though it also is not proof that they are). The former suggests some problem with the legal situation surrounding patents, since it is exactly what patent law is meant to prevent.
They need to change. No doubt about that, but anything that causes even less R&D than is already going on is very short sighted.
That's an incredibly broad and completely unsubstantiated claim.
Considering that you just said one of the top lawyers in the nation has started a "patent portfolio company". I'd imagine his influence in Washington alone would make it pretty damned hard for Congress to do anything. Not to sound crass, but someone who is an enormously ambitious lawyer with a lot of money has the wisdom to understand his control over legal risks like the one the changes you propose. If passing the laws you're suggesting were a possibility, he never would have "gone trolling", so to say.
The piece I cite to above is basically a law professor's proposal and hence academic only at this point. It could theoretically work but there is probably little or no impetus behind it.
Didn't mean to suggest that the process of reform would be easy. It clearly won't (Bilski might bring some needed sanity to the area of software patents but congressional action is likely to be merely cosmetic along the lines of the Patent Reform Act of 2010 cited above). The entrenched interests are very strong here.
Obviously we are all against it, but why is that? It doesn't affect most of us. Sure, he is making money of something he didn't create, but so do lots of peoples, anyone who owns a shop for one.
1. The point is that the legal system is broken and he's doing something scummy by weaponizing the law. Just because something is legal/illegal doesn't change the right/wrongness of it. What he's doing is wrong.
2. "companies that are already rich" - this has a ripple effect that matters for everyone. All the money that is siphoned into the legal process isn't going to R&D, hiring, expansion, or giving people money to invest into other productive endeavors. But that's not the worst part, the worst part is it creates a huge scary barrier to entry for little guys who want to innovate.
3. It's not that he's making money off of something he didn't create, it's that he's not adding any value. He's not even pretending to add value, or questionably adding value. He's a parasite. Shopkeepers display and store things for you to use and make it easier to get what you want. Immigrants to the USA from the Soviet Union would always be amazed at supermarkets - "There's all this food? And you can just... buy it?" Truly, we live in a great era if people don't realize that stuff doesn't just magically appear all over the place for them to buy whenever they want. That kind of sorting, storing, logistics, display, packing, unpacking, and cleaning takes a lot of work and effort and planning, and adds a lot of value. This court lawsuit extortion racket does not add value, it destroys value.
So drug dealers and pimps are good people then? They do, after all, provide jobs.
I can understand the patent system harming small companies is bad, and I understand there should be no patents on simple ideas, but going after big companies is not as bad.
Good fucking god. Have we become so beholden to capitalist buzzwords even after the financial wizards stole reams of cash from the taxpayers and made it impossible for the middle class to afford a home, that we unequivocably deem "liquidity" to be a good thing?
Before making such statements there has to be some analysis of whether the sale of said "asset" is beneficial to society in any way—doubly so in the case of government-granted monopolies. Otherwise we may as well just jump right to urging serial killers to become hitmen so we can add liquidity to the murder market and boost the GDP.
That way, say when a new company like Apple gets into making phones, there can be a rush on mobile oriented patents.
R&D is very risky. A company invests a lot of money into R&D. A large part of this money produces no return. Some of this money may yield patents. A liquid market means that a company can take some of these patents (which may be worth nothing in an illiquid market) and convert them into cash. Liquidity increases return on a firm's investment into R&D and so may have the consequence of incentivizing corporate research spending.
That is, if the patent system works.
It's not so much how the world tolerates these people - how do these people tolerate themselves?
I can imagine doing some pretty seedy stuff in desperation, but the people participating in shenanigans like this are usually very intelligent, wealthy, and already successful. Surely they have higher-level goals (e.g., leaving a proud legacy, making the world better, etc) than merely more cash?
This reminds of the story of the creation of the Nobel Prize: a Parisian paper accidentally published Nobel's obituary early, and having read it he became concerned with being remembered as a merchant of death (being the inventor of TNT). It's one of the main drivers of why he established the prize. Surely smart, already successful people care about what they leave behind?
While there may be some correlation I don't think there is necessarily any causative relation. You also assume the patent and IP law issues have an obvious morally correct stance to everyone else.
I'm not sure either assumption is warranted.
After all, nobody wants to get his grave pissed on after he's dead. Nobody wants his children to bear the burden of having their father remembered as a parasitic burden on society.
Even in a completely selfish frame of reference, once you've reached some limit of wealth higher-order goals like this should start kicking in.
nobody wants to get his grave pissed on after he's dead.
He's a lawyer.
TNT != dynamite. TNT is an explosive compound in its own right, and dynamite is a stabilized form of nitroglycerin.
[According to Wikipedia: "The energy density (joules/kilogram or J/kg) of dynamite is approximately 7.5 MJ/kg, compared to 4.6 MJ/kg of TNT."]
Which is why I find it a little funny for him to be considered a merchant of death since the development of dynamite was prompted by the instability of nitroglycerin and the hazards of transporting it (which was usually a dangerous line of work). IIRC, it's main use was construction, mining, etc.
No, it's not a big question.
Very little content, but interesting to look at the design of the top graphic. According to article, logo was designed by his 14-year old daughter.
Consider this, if Micron had decided to enforce their patents across the industry would that be bad? They technically wouldn't be a patent troll since they actually are making products. Now they would almost certainly be countersued for patents in their competitors portfolios, whereas this company doesn't work in the industry so has no fear of defensive patents.
I could certainly see it funny if their competitors made similar agreements with this company or some similar one and all got sued for patents that had originally been in the hands of competitors. That seems to me to be the equilibrium if what Micron has just done becomes standard industry practice for generating liquidity from R&D.
The only thing I can think of that might improve the situation would be to apply something like adverse possession to the patent system. That is to say if someone is openly violating some patent that you have, then you have a limited amount of time to seek compensation.
That would fix a lot of the problem with patent trolls: namely that the industry has adopted some innovation wide-scale and suddenly someone shows up with a patent on it from 15 years ago.
I'm sure there would be negative consequences too, since every change has those, but I'm not thinking of them at the moment.
But this is precisely why it's wrong. Micron made patents for things they made. Instead of using them to stop others from using their inventions they chose to use the patents to let them violate other company patents. This was their choice. If they had chosen to enforce those patents, maybe no other company would have violated them. Now someone who wasn't involved gets to flip the table on all those companies who played along.
Imagine being a co-founder in a start up where your partner said "I'll never screw you out of anything" and then promptly hires someone else to do it. Would that be cut-and-dry enough for you?