Mark Cuban: If you want to see more jobs created -- change patent laws
blogmaverick.com
blogmaverick.com
A). Abolish software patents. Existing software patents, or parts of patents that govern software, are nullified.
B). ???
Personally, I'm fine with A, but I would like to hear a really good B. Anyone?
Bonus points: Provide a list of ~5 software patents that are "good" software patents. Something were granting the patent led to innovation, or where the technology would not have been developed without the existence of software patents. Actually, I would be happy with just one patent, so I know what it looks like.
Of course, this alternative would have to be specified in much greater detail to be effective, and have safeguards against further gaming of the system.
But it's a reasonable start, particularly as the patent trolls are buying simply to sue, not to produce a useful invention for sale.
Let's say I invent a new kind of power generation that requires construction of a large-scale power plant. I shouldn't have to wait until the power plant is built and operational before I get protection for the invention. I should be able to get a patent on the idea and sell the rights to implement it to someone who can.
And "use" doesn't have to mean implement. In your case, you'd just tell the truth: "I've been making a good-faith effort to license this generator technology to power companies, but they keep turning me down because they're waiting for my patent to expire instead so they get it for free." If you can document that effort, there's no reason we couldn't consider that a valid use and sustain the patent— and so the power companies have no incentive not to license your technology, and so the generator gets built and everyone wins.
Remember also that the only case this comes up in is if a power company sues you to get your technology for free on the grounds that you aren't using it. If you offered to sell it to them first, that's a pretty open and shut case.
The intended purpose of patents is largely to protect your idea while you develop it into a product. By the time the product is on the market, it's often too late to patent it. For example, drug companies often do 7-8 years of research between patenting a drug and releasing it.
No one really has a great definition for SW patent, especially since most SW patents are embodied as HW. Is the x86 architecture patentable considering one can implement it all in SW? Is signal multiplexing technology a SW patent? What about robotics in general?
I frankly don't think it can be done easily. I think it would be easier to say, "no patents, except drugs". And then carefully define drugs. I honestly don't think patents in the large are useful anymore, except in the case of drugs.
Ideas evolve over time, and the originate from something. Perhaps if inventors were willing to register their invention documents through a set of steps mapping to something like the Technology Readiness Level (http://en.wikipedia.org/wiki/Technology_readiness_level), then they could be eligible for immunity against patent based litigation.
But lets say this certified patent wants to protect its IP on the market through litigation. In this case, the inventor could first request certification of the invention in question before any further legal action occurred.
If we could create a certification process that is less than $2000 or so (about the cost of a provisional patent including attorney fees), it seems feasible. This system would seek to encourage a regulated invention process that filters new inventions from even being eligible for litigation. This allows for inventor insurance in a sense - keeping a capped cost for protecting certifiably original ideas while encouraging original invention and discouraging the incentive behind patent lawsuits.
One could, however, have a system where if two separate teams file patents before either are published, they should not have to license it.
2) How do I know which things need to be certified as inventions? Software patents are so vague that even simple applications can infringe hundreds of them. iOS apps are being sued just for having in-app upgrades.
3) Anything that requires more beurocracy or litigation is only going to make things worse because small players can't even afford to make use of the system, especially when they are fighting against dedicated full-time lawyers. The only alternative to solving that underlying problem is eliminating the ways it can be exploited.
2) Eligible inventions would include anything that a customer pays for - as in the exchange of value designates the scope of invention from a patent enforcement perspective. From a patent defense perspective, as long as the invention logs show no use of another patent (when the attacking inventor requests certification at their own expense). This would also focus invention on creation of value instead of creation of legal IP.
3) I disagree, this proposal is an attempt to let people opt out of a broken system by certifying invention through at least one adopted methodology of original design. Again, think of it like buying insurance - every complex industry requires some sort of overhead to deal with subjective enforcement of laws. The capping of costs reduces the average overhead so much vs the current system where anyone who succeeds in the market pays a big, unpredictable legal tax.
Seriously? Who the fuck has time...
You hear of an existing product? Who cares? If you can invent something similar without referencing related documentation or code during the actual process of invention keep it out of the legal system.
A new kind of certification for complex and novel inventions will not solve anything, because it's the simple and obvious inventions that everyone depends on that expose us to patent attacks.
Our government provides us many freedoms in the constitution, perhaps an amendment is a better proposal. That way the courts can interpret a more meaningful definition of Freedom to Invent as a way of shaping the current patent system.
The parameter that is changed is how long the patent lasts. And that is determined by the pace of innovation ("number of patents / yr") being awarded in that category. The more patents in software the shorter the duration of patents in this category.
I nominate RSA, which is kind of the foundation of modern commerce.
http://en.wikipedia.org/wiki/RSA http://www.google.com/patents?vid=4405829
If anything, this seems like an example that argues the insufficiency of patents. If you invent something as important as RSA, you should be rewarded with a kingdom— and the information should be freely available to everyone. I'm not sure our compromise is doing the trick.
This patent is definitely the kind of novel, amazing discovery that we want to reward.
Yes, the authors filed for a patent after their work was originally published [0], so they lost their international patents on a technicality. Yes, another scientist may [1] have secretly discovered the same thing, filing it away in classified documents, but by definition, "prior art" has been "made available to the public" [2].
Nonetheless, here are some important facts: first, if it weren't for this work, ecommerce would have been delayed for an unknowable amount of time. Second, if it weren't for this kind of fantastically profitable outcome, MIT (the original patent holder) would be hundreds of millions of dollars poorer.
[0] The wiki is misleading. It says "Since a paper describing the algorithm had been published in August 1977..." but it turns out that the referenced paper was on RSA itself, written by a pop science author. From the reference: "RSA was first presented to the public by Martin Gardner, in an article in Scientific American in August 1977."
[1] The wiki cites no source for this fact, so I can't compare the algorithms.
These (small) changes have a much better chance of being made than abolishing software patents altogether, and would help reduce some of the abuses that are out there today.
There are countless examples where copyright has only been defended in specific cases long after the copyright infringement was known of. Notable examples include the song "Happy Birthday" and the Amiga Kickstart ROM.
Feel free to provide any evidence for your opinion if you believe otherwise though.
http://en.wikipedia.org/wiki/Estoppel
EDIT: But IANAL, and on reflection I'm not sure I'm not confusing copyright and trademark here.
That amount is what one pays for a compulsory license or if successfully sued, and up to 3 times that for willful infringement, per year -- and no more. (But of course, patent owner can always negotiate a lower payment)
All of a sudden, everyone has an incentive to state a reasonable value for their patent. Copyright catalogs that are not being published (old music recordings, old books, old movies) would be assigned 0 value by copyright holder, to avoid tax - which means anyone can freely make a copy. If they believe -- at the end of the year -- that someone is making a profit at their expense, they can set the value as high as they want at the end of that year, pay the tax, and sue the profiteer.
Simple, elegant, and coffer filling.
Same incentive exists today to grant patents (government makes much less money from rejected patent than from granted patent), and to prevent them from expiring (collect more maintenance fees).
Hell, the Sonny Bono Copyright Term Extension Act (affectionately known as "The Mickey Mouse Protection Act") which extended copyright retroactively from 70 to 95 years showed that congress is all too willing to do that to help their friends in the media industry, without even requesting payments; it is definitely NOT the lack of "intellectual property tax" that stops congress from increasing the term of patents (or copyrights).
I read somewhere that although Russia has serious problems with alcoholism, public programs trying to fight it have been handicapped because a large part of govt. revenues come from a liqour tax. I think it is at least worth considering this outcome before creating any kind of 'sin tax'.
> it gives the government an incentive to grant patents and to prevent them from expiring.
as a downside to IP tax, when said downside already exists with said system, and is not made worse by my proposal. Then you say:
> Existing maintenance and filing fees clearly have not been enough to prevent large numbers of frivolous patents.
But this does not support your earlier assertion - the existing fees actually _support_ a large number of frivolous patents, because the value of a patent is (potentially) infinite, whereas the cost is known, and not prohibitive. The existing fees were NOT designed to curb patents -- they were designed to make it profitable for the government.
> Any IP tax would have to be quite a bit larger than fees existing now to be effective."
My proposal addresses this perfectly. It puts the "cost of carry" of a patent in direct proportion to its value. It is not a "sin tax", it is a "use tax" - if you use the legal system (courts, customs) to protect your profits, you pay according to these profits.
The end result is likely to be much fewer well written patents which are non-trivial and (relatively) easy to defend in court, which will be strategically selected by the grantees. Furthermore, it puts older and newer patents on equal grounds, unlike other suggestions of "from now on ..."
It is probably possible to balance the filing fees (because of fewer patents) and the IP tax so that it doesn't reduce the government intake; This might not actually be at 1%/year, but rather at 2%/year or 0.5%/year (or some other number), so the liquor thing might not be relevant -- although I agree, in general, that the government is itself a "fee / tax" junkee and therefore cannot be trusted to do the right thing.
Align value with cost - that's the way to properly allocate resources.
Applying for a multiple jurisdiction patent (in e.g. US, Europe and japan - which for example still doesn't let you enforce in Russia, Mexico and Switzerland) already costs upward of $50k
If you buy a £50k rolex do you have to pay tax on it every year?
Certainly in say Sydney, property tax (goes to state government revenue, only paid by large land owners) and council rates (pays for garbage collection, paid by everyone) are separate.
My point remains that you can't tie a link between "if it is property, it gets taxed".
So it's really no different than other "taxes for services" arrangements.
If they insist that its intellectual "property", then they'd best start treating it like property.
That's true. But hard-to-hide expensive stuff (houses, cars, land) IS taxed because it is hard-to-hide and expensive, and patents could equally well have the same fate.
In theory, they tell you it's services, etc. In practice, they rent-seek everything they can reliably lay eyes on.
I guess this could be solved by long term lock ins at specific fees.
1) Patents are monopolies to begin with. A monopoly can generally pass its costs on to the consumer. So the companies now being harassed by intellectual property leeches would just feel a bigger bits
2) The government getting revenue from patents would be an incentive for the government to expand patents.
3) It would legitimize the patents even further.
4) It would be a quick way for a company to claim a huge value. Even if it cost the company some taxes, showing a return that said "10 million dollars in intellectual property" would be a fabulous way to convince a naive investor you really had something worth 10 million dollars - that they could buy for a cheap only 1 million dollars.
...
I could probably go on. File under "the seductive lure of perverse incentives..."
1) Monopolies can pass costs only as so far as they have become essential monopolies - like the power company, Microsoft, US health care or phone companies. But 99.9999% of patents are monopolies on _inessential_ things, which the customer can just avoid if not competitively priced, so they CANNOT pass it on. New cheese making patent may give monopoly on a new cheese kind, but if not competitively priced would keep customers with their old Camembert.
2) that has already happened, that's why in the US, the patent office is already a rubber-stamp, patent examiners have 8 hours to review a patent, and are encouraged to accept the patent rather than reject it.
3) Patents are at the top of the legitimacy scale already in the US. Unfortunately. Which is what Cuban (the original article) is talking about.
4) Well, patents don't do that any differently than anything else. A company could just as well buy a house for $100K, claim it is worth $100M, pay property taxes to the local council, and claim "huge value". If someone is going to be this fraudulent, it doesn't matter if they do it with "house", "patent", "copyright", "trade secret", or any other "property".
You could probably go on, but nothing you mentioned is relevant to the discussion of patents in the US (which is what the original article and my proposal is about), and very little (3, maybe) has any bearing on that discussion in Europe.
You begin making a big about you (false) assumption concerning my location. That might be clue you could take a look at the world outside the one construct in your head. In any case, considering that your solution won't happening in any industrialized country, I most looked at this abstract proposal as a chance demonstrate how the intentions of would-be tax-creators often go awry. As to your arguments, the fact that we are having this debate shows that legitimizing patents is still a challenge in the US and it is Econ 101 that monopolies pass-on price increases.
Your initial false assumption might be a clue to your excessive in your own mental constructions.
1 - The point is that software are specifically on things that on can't easily work because they are so. And they sue the companies after their software is implemented.
2-3 - The fact that we're having this debate shows that the question is still in play
4 -
....
Considering your solution will happen in any case, my point were mostly concerning
> the fact that we are having this debate shows that legitimizing patents is still a challenge in the US
No. Hackernews and reddit are two places that don't consider patents legitimate. Outside of those two, there are fewer things in the US at large that are considered MORE legitimate than patents. (If we had a discussion here discussing how evil Zebras are, would that indicate Zebra innocence is still a challenge in the US?)
> it is Econ 101 that monopolies pass-on price increases.
No. Apparently, you've failed Econ 101. There's a huge difference between essential monopolies and inessential monopolies - if I open a banana stand, I have a monopoly over selling bananas in that stand. Does that mean I can pass on any price increases? Yes, if everyone needs a banana AND there is no alternative supplier close enough (making me an essential monopoly). Otherwise, no. Patents are mostly for very limited and inessential monopolies, and they therefore CANNOT do that.
> The point is that software are specifically on things that on can't easily work because they are so. And they sue the companies after their software is implemented.
I have no idea what you were trying to say here.
The important thing to note is that the baseline is not a patent-free world. The baseline is a world in which patents are legitimate, cheap, and let the patent owner set the value (including infinite value, stopping others from using that patent) without any increase to that cheap fixed value of the patent (beyond the costs of litigation)
Creators of works and ideas then file a return of how much work went into the ideas they are selling, and a good faith description of what other works they used to produce their works. This goes into a formula to distribute the money from the government fund - taking into account both the utility of ideas and the effort required to create them.
You might think at first this would lead to chaos. I don't think it would. I think it would make the world radically better. I can show this would work if you're curious.
But a lot of other people wouldn't care, and they'd happily drink the scam Coca-cola which tastes just like the real thing, but is made by somebody else, and is cheaper.
Such a scheme would have the added benefit of encouraging quality products to the point that companies producing poor-quality goods could lose their trademarks to quality companies. So if Dell began producing their own line of "Apple" branded computers, Apple could only sue Dell if the Dell "Apple" computers were causing harm to Apple's reputation. If Dell's computers were actually better that Apple's computers, Apple would have no cause of action. In time, if Dell could show that Apple's computers were actually causing harm to Dell's reputation, Dell could force Apple to pay damages for using the Apple mark.
The problem is much bigger than software patents.
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=10...
As it stands right now, this article has sort of a whining feel to it. "All my companies are getting sued because we're infringing patents, and I'm sick of paying for it! The only way to stop them is to similarly arm yourself with lots of patents so you can sue someone just as hard as they can sue you!"
I'd like to see more detail from him about how most of these patents are obvious and non-innovative, and that the idea of patent troll companies who do nothing with the patents but sue for infringement of them. I think that's what he was getting at with these lines:
> I’m not talking about a new company that had an idea that someone beat us to. No sir. I’m talking about companies that have been doing business the same way for years that are getting hit by patent trolls.
...but that could also be read as "we've been infringing these patents for years, and I'm pissed off that someone noticed." We all know that's not what he meant, but there's a lot to be said for clarity, and clarity wasn't a major component of this article.
> Google just spent $900mm buying a patent collection. Other big companies are spending the same way. That is money that for many companies would have gone to job creation.
That's exactly right. That money is going into the pockets of $500/hour lawyers instead of creating jobs for people that produce products. Just the public patent deals of the last few months amounted to billions. And there is a lot more we don't know about.
He could have explained more about how the vast majority of software patents are dubious at best, etc., but that takes more explaining, it's complicated. Focusing on the direct link to job creation is more straightforward.
> He could have explained more about how the vast majority of software patents are dubious at best, etc.
That's all I'm saying. He needs to explain why he shouldn't have to defend himself against patents, rather than just complaining that it's too expensive. Defending yourself against any lawsuit is expensive, but if you've done something wrong then it has to be done. Cuban just didn't take the time to explain that his companies hadn't done anything objectively wrong.
I wasn't disagreeing with him at all - I agree that there needs to be patent reform - but I just thought that he didn't adequately state his case. He complained about how expensive it was to have to deal with the lawsuits, but never made a compelling argument as to why those lawsuits were unjust.
If he thinks the patents are bogus (which I totally believe), why not fight a high profile, precedent setting case?
If he thinks the law is broken, why not lobby for patent reform? Or a loser-pays system?
If your feeling altruistic, however, the EFF is working to help get some particularly egregious examples revoked. [2] I've donated to them and I encourage others to do the same.
"The term patent usually refers to an exclusive right granted to anyone who invents any new, useful, and non-obvious process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof, and claims that right in a formal patent application. "
In my opinion, the key part is the non-obvious part of "new, useful, and non-obvious"; the invention of a new medicine is usually non-obvious, but the invention of Amazon 1-click shopping is obvious (in hindsight).
What is "non-obvious" ? If a single individual can come up with a similar solution (without access to the underlying research/data involved in the patent) in a short amount of time (a week, or at least in a DAY in the 1-click example) it does not represent a significant investment.
There should also be a requirement that the idea is implemented to be able to sue others. You may stop others' implementation if you have a patent, but you should not be able to charge them for anything until you have implemented a working solution yourself (to avoid patent trolls).
Or simply use the KISS principle and remove all software patents once and for all !
What if the DOJ scrutiny around the Nortel patent bundle went well for Google and Apple/Microsoft etc were forced to put essential patents in a pool and license it to other vendors under fair conditions? As Google's CLO said, it still does not give Google the weapon to negate Oracle or Microsoft or Apple's IP lawsuits. What if DOJ smites down the same way everytime an important patent auction is happening? As long as Microsoft/Apple etc is willing to throw money at it, the best outcome will always be everybody gets its fair share. Again, Google's patent WMD remains a dream.
Unless a patent reform retroactively grands Google all the immunity in the world I really do not understand how this would end well for Google without sorting everything out in court just as it is.
* Of course theoretically Google could buy up MMI or other companies with a giant patent trove in mobile space to balance things out. Then again all public companies' board have fiduciary duty to maximize shareholder value and as long as Apple/Microsoft are willing to pay more, Google has slim chance of exclusivity.
Extensions could be sold to any party before their "apply on" date, they are not specific to a particular patent until it has been attached to it. Once a patent passes its expiration date, it can never be recovered and is now public domain forever.
I think this would work best if the sum of the extensions was less than currently available. The basic idea is that a company who felt a patent really was central to their business could pay a potentially very hefty price for the privilege, so the number of extensions for sale should be kept quite small.
> The basic idea is that a company who felt a patent really was central to their business could pay a potentially very hefty price for the privilege, so the number of extensions for sale should be kept quite small.
It won't be. There's too much money to be made and too much lobbying involved.
It isn't clear to me why money lying around necessarily entails job growth in the tech industry, especially for larger software firms but even smaller ones. But again, I feel this would only be marginal contribution to the job situation were it the case.
but let's just play devil's advocate and say that the government refused to grant anymore new patents and grandfathered all the current patents, you would still need something else to take its place, perhaps say the latest trend of open source licenses, though some of the issues with some of these licenses seem to be on similar bad footing of corporate abuse.
i don't have any solutions myself, but i think china's ip laws are relatively lax and a good example of what would happen if there weren't patents or at least very poor enforcement. basically you'd have a bunch of companies competing against each other possibly reverse engineering or out right stealing things, at the end of the day, you, the consumer, would possibly have a better set of choices and these companies would be innovating to compete, not necessarily strangling you financially with patent litigations.
my major gripe with patents are the same as cuban, these big corporations are using it as a new line of business/revenue stream and are throwing their weight around with the protection of another big corporation (a.k.a. the government), this a major loophole in the system, what was meant to quite possibly protect the little guy, the small company, has now backfired and become a major liability. e.g. nobody in their right mind would file a suit against ibm, they would surely find some infringement in their arsenal of patents and make you hurt for a good long time. you're suing ibm for using your algorithm, they'd turn right around and sue you for something along the lines of using the bathroom on an airplane (http://news.cnet.com/2100-1017-961803.html).
the problem is truly systemic. when governments/companies/countries become too powerful, it really becomes easy to abuse/manipulate the system, absolute power corrupts absolutely. that's why there needs to be more refinement of government to handle these things, to make sure that the system works.
What I was asking was: if you change Cuban's argument from "If you want to see more jobs created – change patent laws" to "If you want to see more prosperity created – change patent laws", would you agree?
Yes I would agree. I think lawyers are generally pretty smart people and we're losing the prosperity they could be creating.
Given the choice between
1. Being satisfied that society is moving forward in some abstract sense because your job has been rendered unnecessary.
and
2. Being reasonably sure that there will be a roof over your head and food in your children's bellies in a year and a day.
most people pick 2.
Ideally, what we want to create is opportunities for people to create wealth via their own labour. This is the good sort of "job creation".
The bad sort of "job creation" is where you create non-wealth-creating jobs. For instance, if the Government were to declare tomorrow that every truck driver needs a supervisor in the passenger seat to make sure he doesn't fall asleep, that would create a crapload of jobs but no wealth. Or, if you pass any new law you'll probably create a need for a bunch of new lawyers.
The limiting factor on the number of people with programming jobs is the number of people capable of filling those roles. There simply are not competent developers who are having trouble finding work right now.
If you want to talk about creating high-paying jobs that will allow the US to be more competitive and prosperous in the future, that's fine, but then you still have to address the greater problem of creating a qualified work force.
"More jobs created" != total "solution to the unemployment problem". The logic as presented is sound; take away one source of needless drain, more jobs are a very likely result.
The problem isn't that the workforce can't be programmers, or other technology related discipline. Entry-level programming skills can be picked up in days by virtually anyone. The problem is that, unlike the jobs of the past, there is no force to drive companies to hire anyone but the very best.
If every single person in America knew how to program, they still wouldn't be working, because the companies would hold the position open until someone who is better at programming is available.
To do it right you really need the patent office to a real in depth analysis so that when the patent is finally granted it can really mean something.
Politically, that is simply not possible because it would require an expansion of the Federal Government which we all know now is somehow a horrifying thought.
How come lines of code fall under the category of 'invention', But English sayings, phrases and quotes do not?
The suggestion that abolishing patents will cause companies to spend that money hiring people instead is not intuitively obvious to me. It sounds a lot like trickle-down economics, which may be intellectually appealing but doesn't seem to have worked out as originally expected.