"Patent Trolls" Threaten to Drain Silicon Valley Startups [video] | Hacker News Reader

"Patent Trolls" Threaten to Drain Silicon Valley Startups [video]

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70 pointsRougeFemme42 comments

I wonder, is there still someone who believes that patents are protecting the small inventors and companies?

At least in the software and IT business it seems (it is clear to me) the other way around. Patents are protecting the incumbents and big companies, who can afford legal experts to defend themselves.

It does nearly never protect small inventors and small companies. In the current time of big lawsuits and big money for lawyers, big is what succeeds. Small companies either:

- can not afford to patent everything they do - can not afford to find potential infringing companies - can not afford patent lawsuits

Even when they patent, and even when they know, that some other company infringes their patent, they just are not able to take the risk of patent lawsuits. In the case of a big other company it also can be the same as suicide. There is an anecdote, that one big company (everybody knows) send their patent lawyers to a small company, saying, they are infringing their patent X. The small company proved to the lawyers, they did not. But those hard-boiled lawyers just said: Look, we have X-thousand patents. We will find many others, you infringe and sue you, unless you pay us now for this patent! They paid, of course!

The patent system has become like highwaymen -- many see the big money without effort -- and it is. Those that are robbed, oftentimes are the real creative persons. And so, the patent system just has become the opposite to what it pretends to be. And of course, patent-attorneys, lawyers and even politicians defend a corrupted system, because they benefit from it.

Best example is Bill Gates: In his early time he stated, that patents on software would harm the software industry. Today he is one of the biggest proponent of the system, since his company today is big and he things it would profit from it. But in the end, even for M$, I doubt.

Couldn't RICO be used in such cases? It is racketeering at best if this is worded like that.

I certainly don't. Worse, I don't think that what is currently labeled as 'patent trolls' is the worst aspect of software patents.

It's the huge tech companies which have amassed and keeps on amassing broad software patents which is the real problem.

The only reason we are actually seeing some legal action being taken against 'patent trolls' (i.e non-practicing entities) is because they are a nuisance to said huge tech companies.

Meanwhile these tech giants will use software patents to stifle / destroy competition instead of competing in the open market, you don't need to look any further than Microsoft and Apple's patent suit against Google which they are doing through third-party patents they bought specifically for that purpose, to stifle a competitor with which they can't compete on the open market through the value of their products.

Now Google is a massive company themselves and has the funds to atleast mount a proper defence (not that it will matter in the first instance as Microsoft and Apple chose East Texas as it's venue), but if you are a startup you have zero chance against these tech giants when they come knocking.

They can afford to drag this through court for ages, you most likely can't, and even if you could and if you won, they could most likely simply choose another patent from their arsenal and go after you again.

I agree. Patent trolls are not the biggest problem at all. Sometimes I think, they are a good distraction from the real problem. Instead thinking about what to do about patent trolls, the governments should think, if they really can afford an out-of-hands patent system.

There where times, when getting a patent was really difficult, also for bigger companies. But today, every little nuisance can be patented (e.g. 1-click), just formulate it right and bring old things into new contexts to convince patent-officers (e.g. round edges). Of course patent-officers have their own advantages today, when more patents are granted ... what a mess!

Yes. I do.

I do not speak for the (small) company I work for in any official capacity, so I will not go into the details. But we have quite a few patents, and they have been useful. There is considerable risk in coming up with a new idea and launching it in the market; a risk that a small company cannot afford to get wrong too many times. There is the risk of failure, and then just the opportunity cost of having your small team work on project A vs project B.

If our work was unprotected then larger companies could just sit and watch the small companies try, and then swoop in and take over the market if the idea is valid and the market is there. Recall that Microsoft received the "evil" moniker (which I don't really agree with, btw) in part because how often they did exactly this.

Sure, there are all kinds of injustices and inequalities in the system; I do not argue the system is perfect, nor do I suggest that I have any idea how to improve the system. There is value, however, in rewarding a company that takes risks and generates new ideas. Perhaps that value is overshadowed by the value destruction by patent trolls, I don't know (would have to see the numbers). But it is a value.

> If our work was unprotected then larger companies could just sit and watch the small companies try, and then swoop in and take over the market if the idea is valid and the market is there.

But could you actually take on a large company and win? Or is it just a theoretical possibility?

Do you have the means, or it's only luck?

In fact there is a much worse fate that having your precious idea "stolen": when you are the one sued, because someone (small troll or big Sauron company) has a patent on doing square roots on the internets.

> I wonder, is there still someone who believes that patents are protecting the small inventors and companies?

If that were true we wouldn't have any patent system at all.

Stop building things within the US, it's patent system is broken.

There are a few different reasons I do not agree with this comment. For one, I refuse to subscribe to the idea that it's OK to run away from the problem and let patent trolls win by default. I'm the kind of person that stands up for what they believe is right, and thus I would prefer to stand and fight a patent troll. I applaud the organizations out there that are taking a stand (NewEgg, Rackspace, etc). You win some, and you lose some, but in the end I think it's important that people take a stand for what they believe is right. Another reason I do not agree relates to fragmented markets/laws outside of the US. While I think many will agree that the US Patent System has many problems, the one thing it does do well is remain consistent. When you look at the landscape outside of the US, it becomes very fragmented and inconsistent. You may or may not have rights. You probably won't get sued by a patent troll, but you might get ripped off. As an example, consider the Samwer Brothers and their approach towards respecting intellectual property. Granted, this is the other (extreme) end of the spectrum, but it's something to consider. So while the US System does have some problems, there are also some positives that can actually work in your favor. My takeaway from the entire issue; Do your own due diligence. I'm not a Lawyer, but I do know how to search the USPTO Database for Prior Art. It's not rocket science, anyone can do it. If you are a founder, and you are worried, spend some time researching it. I recently made a pretty major UX change to one of my projects based on this advice. I identified a (Microsoft) patent that related to what I was building, and I made sure that my upcoming product does not infringe. Of course one cannot be expected to catch all prior art, but I believe it should still be included in the process at some level.

> "I'm not a Lawyer, but I do know how to search the USPTO Database for Prior Art. It's not rocket science, anyone can do it. If you are a founder, and you are worried, spend some time researching it."

You must be careful about doing research into patents yourself (as a founder or engineer). If it can be proven that you had prior knowledge of a patent, then you may be liable for treble damages.

> "For one, I refuse to subscribe to the idea that it's OK to run away from the problem and let patent trolls win by default."

Patent trolls "win" by extracting money from companies producing/doing actual things; see the recent Newegg case and many others. If you are thinking about creating a company or innovative product, and also decide to launch said company/product outside of the U.S., then you effectively deny them battle. You cannot lose a battle that you do not fight.

"He who knows when he can fight and when he cannot will be victorious." - Sun Tzu

From my understanding (which may be limited), treble damages only apply when someone willingly infringes on a patent. So this would be a scenario where someone identifies a patent that relates to what they're building, but they build it anyway. This is very different from identifying existing patents specifically to ensure one does not infringe. In this second scenario someone identifies a patent that relates to what they're building, so they modify what they're building as not to infringe. In some (extreme) cases, this might mean the project should be abandoned. In other (not so extreme) cases, this might mean you need to change one (or more) aspect(s) of the project. In any event, and aside from the legal aspects, I think it's a good exercise for anyone building something. You might avoid future legal issues, you might become more aware of where technology is going (vice a perspective built on currently released products), and it might help you innovate further. Brain food.

I believe that patent trolls "win" when everyone is too scared to stand up for what they believe in. Plain and simple, if people don't take a stand, then things won't change. And I don't necessarily mean just taking a stand in court, I'm talking more about how we (as developers and innovators) react to the issue. I agree that leaving the US will probably lower your chances of becoming a patent troll victim, but everything is relative. Maybe you're building something truly novel and innovative and you want to protect it? Would this outweigh the risk of becoming a patent troll victim? I guess it depends on what (and where) you're building.

It's for this reason I'm abstaining from opening up any company in the US and sticking to Europe until the patent trolls are reined in. I can imagine many foreign-born entrepreneurs are now taking the same approach, especially as the number of lawsuits appears to be increasing (800 vs. 2,900 small firms sued in 2005 [0]) with a further ~100,000 receiving letters from patent trolls demanding payment in a single year.[0]

[0] http://arstechnica.com/tech-policy/2013/09/op-ed-how-patent-...

Well, that's an interesting question... Would a company be any better off incorporating in hong kong or something when it comes to patent disputes? I've been looking into this for various reasons already...

How about a foreign corp that owns the IP (which a patent troll may at some point arbitrarily claim was infringing) licensing that IP to a US-based corp. Is the US-based corp exposed to any liability? Probably? Maybe?

Probably not. I'm under the impression it's where you do business that counts, not where you're incorporated. If you're incorporated in HK but have offices in SF you're likely exposed. The best bet is to start your company in Europe or some other sane business-friendly jurisdiction without offices in the US at all. Patent trolls have no power there.

For Americans, the Dutch-American Friendship Treaty[0] might be just what you're looking for.

[0] http://en.wikipedia.org/wiki/DAFT_%28treaty%29

If you sell to the US it does not matter.

Patent trolls don't go after non-US software companies so long as there's no US entity or office, mostly because they can't.

Uniloc sued Mojang (makers of Minecraft), which is a Swedish company. In Texas of course.

Mojang is bigger than many small companies, but is still quite small.

Thank you for pointing this out! I've actually been trying to find an example of a patent troll suing a foreign corporation that doesn't have offices in the US. This lawsuit does appear to be very rare and exceptional, and here's the complaint: http://notch.net/wp-content/uploads/2012/07/mojang.pdf

I wonder whether they'd have actually been successful had they not withdrawn. It seems a bit strained that they claim they're doing business in Texas.

That is just god damn disgraceful. http://www.google.com/patents/US6857067

"System and method for preventing unauthorized access to electronic data"

What in the world is going on with the US patent system that things like this are emitted.

What makes you say that the suit was withdrawn? I can't find confirmation of that anywhere.

Apologies, I think I'm wrong. I appear to have misread or misremembered what I read.

Patent trolls can sue the customers of the software company (as Microsoft did to Google by suing Samsung), or the trolls can seek to obtain the money which is paid to the respondent (software company) from the USA. It is more difficult to sue non-US companies for some issues other than patents.

For a lot of purposes though, that's unlikely to happen for small companies. I struggle to imagine Lodsys and friends suing someone who downloaded an app from Google Play or paid for a web app. Plus, if the money has already been remitted (and that tends to happen especially fast in the world of low ATVs), they haven't got a hope.

As one patent troll told me on reddit, there's just too much gold to mine and low hanging fruit in the US to bother with anyone else.

The patent system is broken. There should be some restrictions where a company cannot make money from suing based on a patent without them actually producing the product themselves. That way you know that the people owning the patent at least are capable of making what they have a patent for. If that is not the case then they should expedite the expiration of the patent where they would loose it in a certain amount of years if they were not able to produce that product in that time.

The patent is meant to be a legal monopoly for outstanding innovations for a set amount of time, not as a revenue models for lawyers.

> outstanding innovations

Which proposal from your first paragraph is going to ensure outstanding-ness of inventions? I recall company lawyers making the rounds asking us to write down any possible inventions among the things we'd already built. I don't remember the lawyers ever asking whether those possible inventions were outstanding.

What happens if a claimed outstanding innovation is not seen as outstanding by the majority, leading to the innovating entity running out of money and closing down, and then someone realizing the true value of the invention five years later (and reaping monetary benefits of it)?

I think we should simply abolish software patents.

Software engineering simply isn't a deep field, and most interesting ideas are not really inventions in the same way that a new hardware device might be. Sure there are some interesting and cool patents like SURF and SIFT, but they are a tiny minority.

Just out of curiosity, are start ups in other countries like Canada and Europe subject to patent trolling as well or do patent trolls avoid suing outside of America?

Startups should be http://www.defensivepatentlicense.com/content/frequently-ask... upon formation.

Won't help immediately, probably won't help much anytime soon. But the network effect has to start somewhere, and at least joining now commits startup to doing right thing.

They might want to get commit@defensivepatentlicense.com rather than @gmail.com...

Perhaps an oversimplification, but what would be the ramifications if patent law was altered to cover the inventor (or inventing body) _only_. "Prior art" becomes unpatentable, and the only legal argument occurs when there is a dispute about shared IP.

Would this effectively eliminate patents-as-a-business model, and still protect inventors who create _new_ ides, be they physical or digital?

The irony of paying a well known patent troll to get rid of other patent trolls can't be lost on the people at Ditto, right?

...Right?

I think, that was the only chance, they saw.

But that's what a patent-troll is for: Being paid. They are like highwaymen, they want to be paid, for what, is not important. If the money is OK, they will even go on their own kind.

Reminds me of old school mafias and their protection rackets. I'm surprised patent trolls didn't start doing this sooner.

Hate sites which start playing audio without prompting.

Anyone have a mirror for the video?

Fallout from the recently enacted and ironically titled "America Invents Act":

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

The global move to "first to file" seems basically an admission that the patent system is completely ideologically bankrupt and is nothing more than regulatory capture for cutting-edge industries and a jobs program for lawyers.

The paper matters more than the invention. What a world.

Of course it is completely ideologically bankrupt, but so is virtually everything else about our political and cultural institutions. Not a whole lot has changed on this front since Galileo was thrown into prison, at least not in terms of ideological fundamentals.

Yeah, I keep wondering why I didn't see more press blasting the "America Invents Act" as a fake reform that made things even worse.

Few people understand or take an interest in patent law, and the press is no better than the populace.

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