FTC publishes a long list of questions it wants to ask “patent trolls” | Hacker News Reader

FTC publishes a long list of questions it wants to ask “patent trolls”

arstechnica.com

80 pointsSuraj-Sun35 comments

Patents have always struck me as a bit like a mob protection racket. Either you pay for the right to do business or they send lawyers in to make your life hell. The business landscape is a bit like New York back when it was ruled by gangs. A business might openly pay protection to one gang while secretly paying another gang to shake down their rivals. These patent troll companies are a bit like those shake-down gangs, only even less discriminating. They wouldn't exist if respectable companies weren't lining up to sell them patent rights.

Perhaps patent law, as it currently stands, really is analogous to DIY justice. If you want a patent, it is entirely incumbent on you to pursue it. There isn't any kind of public authority running around trying to determine who came up with what first and making sure they get compensated for it. Lawyers are the new hired assassins and goons. Perhaps the only way to tame this jungle of gangland warfare is to develop something like police for the business world.

I think we need to look at the reasons why patents were formed in the first place in order to determine how to modify patent law going forward.

Part of the reason patents came about was to prevent permanent monopolies, the idea being that you make your innovation public in exchange for a short term monopoly or what I will call "short term money." This is just one reason but it will let me illustrate an example that makes my point.

The problem with the exchange of knowledge for short term money is that the amount of time you are protected doesn't scale to the degree of innovativeness of your idea; the short term money now seems like way too much money for many patents, essentially creating the long term monopolies that patents were meant to prevent. Rather, certain things are patentable for a certain length of time, and that's that, regardless of the degree of innovativeness. To further compound the problem, the degree of innovation of idea x diminishes as we move into the future.

Consider idea x, selling images using the internet. Simple, right? This may have been considered innovative from 1980 until 1990 (this is hypothetical, please don't nit pick), because at that time not everyone has a computer, the internet, or a way to pay for things online, and maybe you have ideas for how to solve all that. But if you were to come up with that idea in 1990 it might only be truly innovative for 5 years. And if someone were to try to patent this today, assuming the USPTO worked flawlessly, we would laugh at them. It wouldn't be considered innovative for any amount of time because everyone has a computer, a way to pay for things online, and fast internet.

Yet the USPTO may grant this patent today anyway (again, hypothetical), causing companies to endure years of headaches and fork over thousands or millions in attorney fees. What's the solution to that? I don't know, but I do know there's something wrong with the incarnation we have now, because patent law is creating something it is meant to prevent (monopolies).

The point is, to modify patent law, we must first go back and look at the founding reasons of why patents were created in order to determine (a) whether we still agree with those reasons, and (b) how to modify law that nurtures those reasons going forward. It's only then that we'll be able to correct things because the situation has gone too awry for minor adjustments. I like the direction the FTC is taking, however, and I see this as a fact finding mission which must come before everything else.

> Patents have always struck me as a bit like a mob protection racket

Always? Seriously? Just like that? Even when a pharma company invests huge sums into R&D of a new drug and relies on patents to try and recoup this money? That's too a mob protection market for you?

The concept of the patent protection is solid. It's the execution that went astray at some point when they started issuing very generic patents. Bitch about that.

Always? Seriously? Just like that? Even when a pharma company invests huge sums into R&D of a new drug and relies on patents to try and recoup this money?

Yeah, just as drug gangs invest large sums of money to try and expand their turf.

The concept of the patent protection is solid.

No, it isn't. It has big problems even in the pharma industry, especially as the gold rush on small molecules winds down.

Patents are monopolies and monopolies are bad for consumers. The idea that we have to bribe inventors with such a dangerous power ought to be farcical and obviously wrong to most people at this point, yet it continues to be repeated. The other idea that markets will somehow align with the medical needs of the population is also wrong, as evidenced by the failure of health care in the US.

If we want important medical research done we ought to do the obvious thing and pay universities and non-profit research labs/hospitals to do it. Hell, we're doing a ton of that already and then selling the patent rights away for pennies on the dollar.

Publicly funded research typically focuses on curiosity driven, high-risk, long-term research that doesn't have very good odds of ever producing a viable commercial product. Private enterprise focuses on short-term, low-risk research and engineering, packaging, marketing, etc. to bring safe-bets to market. For every big-pharma dollar spent to produce a new drug, ten government dollars were probably spent to get the underlying science to the point where pharmacorps were willing to touch it, and a hundred dollars more of government funding probably went off on various other tangents that turned out to be dead-ends.

On the other hand, academics often suck at commercializing their research. Bringing a drug to market involves many years of careful study and clinical trials that are utterly boring to most researchers in academia. You can't get journal publications out of your twentieth double-blind study looking for side-effects! Big pharma companies do perform a valuable service, but the rewards they receive are out of proportion. Multiple decades of monopoly are an unreasonable reward for performing this last step in development, especially when a lot of drug patents are the result of meaningless changes to existing products that are made solely to restart the monopoly clock!

Taking academic research and turning it into a commercial product does take time and money, and without patents this crucial last-step might not be adequately incentivised. However, If corporations want exclusive rights to commercialize publicly funded research, perhaps the public deserves a cut. Perhaps Pfizer, etc. should be on the hook to help fund some of the taxpayer funded research they benefit from. Either that, or some alternative way to fund commercialization of academic research needs to be found.

>Bringing a drug to market involves many years of careful study and clinical trials that are utterly boring to most researchers in academia.

This sounds like an excellent argument for doing away with medical patents and replacing them with financial incentives (like a percentage of revenue tax on anyone who sells the new drug for a few years) with proceeds going to whoever paid for the clinical trials.

I have to be persnickety about this. A patent is a monopoly in the same way all property rights are monopolies: you get the exclusive right to use something. That's different from an economic monopoly on say a particular market. Now, one can lead to the other. If you own all the land around say a train station, you can leverage that into a monopoly on retail for travelers. But that incidental to the fact that a property right in land is a monopoly.

As for the pharma industry in the US it's been tremendously successful. The US leads the world in medical technology. The flaws of our healthcare system are an access problem and a distribution problem.

>A patent is a monopoly in the same way all property rights are monopolies: you get the exclusive right to use something.

If you wrap ideas and physical objects up in a box called "something," you've begged the question.

Not at all. There are lots of inchoate property rights. For example, the right to cut through someone's land. You don't own the land, so the property right is inchoate. Or consider the right to buy or sell another right (an option). Also inchoate, but a property right nonetheless. Indeed, these days, your bank account is an inchoate property right. Just the right to a particular configuration of bits.

The problem with software patents is not that they grant exclusive use of a particular configuration of bits. That's no different than your Paypal account. Rather, its that its hard to define the scope of the right and easy for people to accidentally and unintentionally infringe.

Right, but you haven't adequately explained why this principle should be extended to intangibles such as ideas. Hence, you have begged the question.

Begging the question means assuming the thing you're trying to prove. I'm not trying to prove that patents should be considered property rights. Indeed, I'm convinced they should be part of a tort-like regime. But that's neither here nor there. My original post was about the use of the word "monopoly." Someone claimed that "monopolies are bad for consumers" but as I explained any property right is a legal monopoly, but that doesn't mean it's a monopoly in an economic sense. The issue of whether patents should be considered property is irrelevant to the question of whether they are monopolies in the economic sense.

Pharma is a very bad example in this context.

See:

http://en.wikipedia.org/wiki/Evergreening

Part of this is a wider American legal problem, in that instead of funding regulators to enforce laws (of all kinds - patents, environmental, consumer protection, etc.) we tend to let people sue each other. The result is regulation only when it benefits someone with the money to pay a lawyer.

All I can say is... I don't get upset by much in this world, but this is one thing that turns my heart to such table-flipping, redhot, searing rage.

I am so glad to see this, it makes my soul glow.

Down with these abysmal scum of the earth.

I suspect this is not all you can say.

One question I'd like to see added is "how much revenue does this firm make from this patent and how much does it stand to loose due to this infringement".

This, I think, would immediately make it noticeable if the person is a patent-troll, or a legitimate business trying to protect their revenue.

I believe, that in the spirit of patents, a patent holder should have to prove damages to their revenue (or possibly future revenue).

The problem with that standard is that it leaves out legitimate inventors who lack the capital to produce and sell their invention.

This doesn't show up much when it comes to internet and software, because the barrier to entry is low. But there are a lot of legitimately patented inventions that require big money to manufacture. A small inventor who cannot afford to manufacture their inventor on their own would lose out, because other players could simply start using their invention without paying, knowing that the small inventor has no revenue to point to.

Personally, I think the real problem is that the obviousness test is simply not applied. Patents should be for inventions that take legitimately difficult insight and work to achieve. They should not simply be a way to reward the first person to think of an idea that a thousand other people could have come up with if they had been in the same situation.

Making revenue solely from licensing out a patent to other parties is not necessarily bad, if it's a good patent. This turns into "patent trolling" when the patent being used is something obvious, and the targets are being sued after coming up with the idea independently.

Yes. This is why I keep saying that to sue for infringement, one should have to supply objective evidence of nonobviousness: evidence that the problem the patent solves was previously known and was considered difficult.

The mere lack of demonstrable prior art should not suffice.

I'll agree with everything you've said about the non-obvious part, but what I'm saying isn't that a judges decision should be based on the revenue loss (or potential revenue loss), but rather it is to be used to help decide if this person is a patent troll or not.

But completely agree, non-obviousness should be key in any defence(or is that offence) of a patent.

Perhaps best case is that the FTC concludes that patent trolls aren't breaking the law at all. That could be the start of software patent reform.

It warms my heart to see hints that the tide might be turning on patent trolls. While this precise effort might not yield results, it's comforting to see that this has gained attention from the body whose job it is to address these sorts of abuses.

Better than nothing I guess, but what if this ends with FTC establishing a formal criteria for "patent asserting entities" and then said entities would start working around it, say, by hiring an outsourced VB developer to become a software company? Trolls are already run by people that lack ethics, so they will just bend yet another batch of rules when they hit them.

I helped fight Acacia on the Streaming video patent that threatened to kill porn on the Internet.

There are definitely trolls out there. Acacia was one of them.

At the same time there are organizations that are viewed as trolls that have legit claims to enforce their IP.

The MPEGLA that collects royalties for h.264 is a good example. Most people who use VLC never pay their royalty. They should. Part of the reason we don't get better video codecs is because the royalties don't get paid and so there isn't reason to do the research into improvements.

Yes, there is WebM, no it is not free of patent issues, but that is another subject, not for this thread. The point of this is that there are many times a patent is needed, and sending collection letters is necessary.

A codec is software. Software is mathematical formulae in code form. Math, and therefore software, should never be patentable.

Molecules are mathematical formulas. Machines are just simple physical devices governed by math. What matters is the R&D and protecting the R&D and incentive to do the research.

With all due respect: No molecule is a mathematical formula. Mathematical formulas - on the other hand - are.

Patents on software are a patent on describing how to use a machine. Almost every single component part of the machine has surely been patented at some point.

How many times do we need to patent the use of a computer and/or networks before we're done with this nonsense?

>A patent is a monopoly in the same way all property rights are monopolies: you get the exclusive right to use something.

After I get my series of patents on the use of a computer on a Ferris wheel. And the use of a smartphone on a Ferris Wheel. And networking on a Ferris wheel. And downloading on a Ferris Wheel. And a solution for predicting the position of a person on a Ferris wheel based on other people on that Ferris wheel with known positions...

Hardly. You clearly don't understand what a Codec is. It is not simply "math" anymore than Google Search is just "math" or a physics engine for a game is "just math".

Justify your piracy with better arguments.

MPEGLA collect royalties from device makers and chip-makers. Good luck to them if they want to collect royalties from every VLC user. I can think of nothing which kills the demand for H.264 decoding hardware faster.

EDIT: This is as an aside to the fact that I'm pretty sure they don't have an enforceable claim to kill x264.

MPEG LA also collects for software implementations Who do you think Microsoft Pays for the h.264 decoder in Windows.

X264 is derived from the SMPTE Sample code that is provided by the standards body. It is Open Source but it is not Free.

Functionally indistinguishable - x264 don't sell it. x265 was created precisely so vendors could sell it.

Physics is totally math.

Google keeps their algorithm secret, so the patent system isn't even helping there. And pagerank, the academic paper describing a mathematical algorithm? Don't even joke about that not being math. PR(A) = (1-d) + d (PR(T1)/L(T1) + ... + PR(Tn)/L(Tn))

Google Search is just math, and a physics engine for a game is just math. Both of those things also tend to be covered by trademarks, copyrights, and trade secrets, not patents.

Your argument is terrible. Justify your aggression with better arguments.

Other way round: we could have public research into codecs, but you can't make incremental improvement because of the licensing requirements.

Incremental improvements would break a Standard. We'd have HTML5 for Video. You'd have to upgrade your Bluray player every 2 months, and Disney Discs wouldn't Work In Sony Players.

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