$4.5 B. Nortel Bid Shows the Disastrous State of Software Patents
betabeat.com
betabeat.com
It's not clear to me that that was their final bid, either. Maybe it was, but I can't imagine Google letting something important to them climb at auction from from $0.9 billion to $4.5 billion without staking another bid.
The second thing I don't understand is the connection between the price paid by a consortium of major tech companies[1] for a collection of patents from a formerly major tech company--only a few of which are even software at all--to Fred Wilson ranting about Lodsys. Who is the troll here? Nortel? What is the significance of the dollar figure? How does it "echo the sentiment" of Wilson?
[1]:BetaBeat says "...a coalition of Microsoft, Apple, RIM, and Sony...", while the actual press release[2] states: "Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony."
[2]:http://www.marketwatch.com/story/nortel-announces-the-winnin...
Nowhere in the article did it even imply any of the players in this transaction were trolls.
Read it in that light, and things tie together much more smoothly. Whether it is good writing (e.g. effectively conveying a point) is questionable, since it obviously has cause confusion.
the consortium that bought nortel's patents didn't do so for the patents themselves, they did so to prevent google from having the patents. And they didn't want google to not have the patents not because they were afraid of google bringing products to market based on those patents, but because they didn't want google to be able to shield themselves from patent lawsuits.
These were probably the ones that those companies wanted, and the entire reason that the price is so high. They simply could not let Google be the sole owner of the patents, because that would give Google way too much power in the mobile space.
Out of all the companies, MS is probably the only one that did it specifically to hurt Google. However, this also could signal that MS is going to make their own WM7 phone.
Exactly what is the basis for this?
As you noted Nokia with whom Microsoft shares some interest would benefit from owning those patents. In addition, Microsoft as owner of Skype now has a substantial interest in patents applying to telephony networks.
1. Google, Microsoft, Apple, RIM, and Sony are willing to pay a lot of money for a bundle of patents, including both software and hardware.
2. Therefore, software patents are evil and a tax on innovation, rabble rabble rabble.
It's not much of a syllogism.
I have to agree with the parent comment.
Without going too deep into a philosophical discussion, I think that the competitive nature of our society is hindering progress more than anything else. When people learn to build social structures based on cooperation (I consider a small group of people cooperating to compete against everyone else to be too small in scope), we will see progress increase by orders of magnitude. Just look at the advantage the limited type of cooperation we have now has given us over animals which do not cooperate at all. Now scale that up to the next level (open source is a live example of this, in fact). In concrete terms, imagine if, just as individuals in a company cooperate, companies cooperated with each other. Everyone would be better off. At it's root, this is the difference between seeing life as a non-zero-sum game as opposed to a zero-sum one.
So... it's exactly what MS, Apple, RIM, etc. did. They cooperated, combined their resources, and outbid Google for the pool. There's no indication that these patents aren't going to be used. Since RIM is in the group, it seems that the hardware patents are definitely going to be used, and who knows what Apple and MS want from the pot.
I still don't see how this is an argument specifically against software patents.
The evidence that things are broken is that a bunch of otherwise productive companies just paid a boatload of money for a grab-bag of IP, primarily to immunize themselves from lawsuits from companies with less productive revenue sources.
This cannot be stressed enough: our patent regime is intended to foster the progress of technology. Where the market for these patents acts efficiently as as intended, the value of a patent is based strictly on its ability to allow a company to generate revenue. This is a specific condition and the threshold of quality tends to be high for patents that can genuinely enable production.
The threshold needed for patents to be merely wielded as weapons is much lower. However, as you can plainly see, this does not diminish their value in the patent marketplace. Thus, the patent system in its current form encourages the misallocation of resources toward patents that do less to promote progress.
Software patents encourage the worse kind of abuse, in part because the patent office is utterly incapable of properly evaluating them; you can patent nearly anything.
Huh? It's clearly a valuable idea, otherwise said other people wouldn't be making money by using it. (We can argue about how much of that money is due to other things how much is due to the idea, but let's assume that the idea is somehow essential to to implementation.)
So, what makes it a bad idea? Surely it can't be the existence of a patent held by someone who isn't practicing.
If you have an idea and do nothing with it, society is not better off.
If you can prevent other people who had the same idea as you from making products based on them just by describing the idea on a piece of paper and getting government's stamp that you were the first one to come to them with it, then the society is worse off.
The scenario you described is an unintended consequence, or a perversion, of how patent system is supposed to work.
> If you have an idea and do nothing with it, society is not better off.
Define nothing. If I write a textbook that other folks use to do something, most people would claim that my textbook made society better off. Do you disagree? Note that patents are disclosure....
> The scenario you described is an unintended consequence, or a perversion, of how patent system is supposed to work.
Oh really? The patent literature says that patents are a trade - a limited term monopoly for disclosure of an idea. You seem to think that patents are protection for folks making stuff.
So? Every law has cases where it comes to the "wrong" result.
More to the point, the overwhelming number of "non-practicing" inventors just want to get paid. You seem to think that they shouldn't get paid.
Note that inventors sell to trolls because trolls are better able to get paid. If you weren't so opposed to inventors getting paid, we could look at ways for inventors to get paid without getting trolls involved.
That's the claim, but there hasn't been much supporting evidence other than "that doesn't deserve a patent". The vast majoritiy of the "that was obvious" claims are pure hindsight. (Yes, some software patents have been overturned because of prior art, just as happens in other fields.)
I particularly like the "that's just math" (which is often claimed wrt RSA). You never hear someone says "that's just chemistry" wrt chemical application patents. (You can't patent chemistry any more than you can patent math.)
The innovation represented by these patents just made $4.5 billion. That's the definition of rewarding innovation.
"Instead of spending billions on new R&D"
If it was legal for every KIRF to come in and use every other companies innovations there would be much less incentive to invest in R&D to begin with.
If the patents ("innovation") were so valuable, Nortel wouldn't have gone out of business.
Successful companies can (and have been) successful without patents (or without enforcing patents). Nortel was unable to be successful despite having lots of patents.
Given those facts, the case for patents as a way to "reward" innovation is thin.
There's only a weak correlation between success and patents in that successful companies are forced to pile up patent portfolios, including paying $125k per patent as in this case, not because they care about any of the technology, but because they are afraid of being sued for even greater amounts of money by some other patently rich company.
I am no supporter of software patents. But I don't think this follows directly. Producing innovations is different from having the business acumen to make money out of it.
Not disputed. Nortel was mismanaged into oblivion. That does not show that the fundamental incentive in the patent system is broken.
"If the patents ("innovation") were so valuable, Nortel wouldn't have gone out of business."
That's a total non sequitur. Any business can be driven off a cliff. The patents are that valuable and that's been clearly shown at auction.
"Given those facts, the case for patents as a way to "reward" innovation is thin."
Your "facts" are better termed anecdotes and only disprove the straw men that "you can't be successful without patents" and "patents guarantee success" neither of which is being claimed by anyone.
So the patents don't represent innovation to the bidders, the patents represent a legal defense fund.
Also Nortel was a really huge company and a really good one at their peak. So its not surprising it amassed that many patents or that they fetch that much value.
Google is no more benign than any other company.
As far as I know, Google hasn't sued anyone for violating their patents.
Apple, RIM, Nokia, Microsoft sued plenty of companies in clear attempts to further their already strong position in the market.
Facts contradict your opinions.
Edit: Looks the BetaBeat article excluded EMC and Ericsson, so the split wouldn't work so nicely.
It describes a strong-armed patent consortium formed around the turn of the century which controlled filmmaking technology. Indie filmmakers reacted by establishing new operations in a little place called Hollywood.
That way Nortel gets more money and Microsoft, Apple and RIM won't be able to torpedo Android with lawsuits (as opposed to doing a better job).
Google said so in its initial blog about the Nortel portfolio.
Many VCs have been expressing the same thing in recent weeks.
These two separate actions represent the very early and very late stage of the technology game.
The fundamental problem, however, remains the same.