Startups can now buy insurance against threat of patent trolls | Hacker News Reader

Startups can now buy insurance against threat of patent trolls

arstechnica.com

103 pointspjl30 comments

RPX IS a patent troll. RPX Corporation is a spin-off of Intellectual Ventures. John Amster and Geoffrey Barker, the CEO and COO of RPX, came from high level positions inside Intellectual Ventures.

  http://pando.com/2013/09/09/rpx-and-the-complicated-business-of-stockpiling-patents-for-good-not-evil/

RPX and Intellectual Ventures bought the Kodak patent portfolio together:

  http://www.iam-magazine.com/blog/detail.aspx?g=4d1024d9-1e6c-43fa-8f78-a123f22575da
  http://www.ipwatchdog.com/2012/12/19/kodak-sells-patents-to-intellectual-ventures-rpx-for-525-million/id=31737/

RPX and Intellectual Ventures own a common NPE holding company RPX-LV:

  http://www.plainsite.org/flashlight/rpxlv-acquisition-llc/

RPX was sued by Kaspersky Labs for extortion:

  http://www.scribd.com/doc/56754406/RPX-Criminal-Complaint

RPX cannot be trusted anymore than Intellectual Ventures. RPX is playing the same game as Intellectual Ventures. There is a better than good chance that RPX and Intellectual Ventures are working together as evidenced by their co-ownership of patent property and shared personnel history. The Kaspersky complaint raises the specter of RPX (with or without Intellectual Ventures) playing a good cop, bad cop style extortion racquet.

How does that insurance look now?

Buyer beware!

So just like the Mafia they're "offering" to sell you protection from...themselves.

Wouldn't they be liable for racketeering? If it can be demonstrated that a large share of NPE lawsuits originate with IV (over a thousand shell companies), and that they actively prevent meaningful patent reform (dedicated lobbying office in washington), it seems like they should be liable.

Isn't that what "patent trolls" are doing all day: Sell "insurances" to other companies ....

In the middle ages, some called such things "way toll" and those who asked for it where called "robber-knight".

Nowadays we call them rent-seekers.

As non-Nativespeaker, I did not know that word before ...

Thanks!

This seems like I have to pay protection money to a company which supposedly protects me from other patent trolls.

E-Mafia.

I'd be much more happy to pay into an "insurance" system that did promise to "fight to the death" over invalid/inappropriate patents.

It sounds like buying this insurance might tie your hands and require you to buy out the troll, even if the troll's claims are completely bogus (or are based on extremely broad claims that never should have been granted).

"Fighting to the death" runs directly counter to RPX's business model. If NPEs are discouraged from trolling by a streak of losses, no-one needs to pay RPX's premiums any more.

An other example, how software (and other low invention height-) patents are just existing to get money from small companies and startups (and thus being a new toll for innovation laid unto the later customers).

An insurance might be a good thing for some startups to reduce the risks, but it is only a second- (or third-) best solution for the main problem.

The main problem is, that what once should help innovative people, today does the opposite -- it hampers innovation and is a shield against creative companies for dinosaur corporations and a living for so called "patent trolls". And it is -- in any case -- a streaming money-fountain for lawyers.

IANAL/P, but why can't we just pass a law stating that "the patent is not being used for anything" is a valid patent suit defense?

I imagine this would instantly defuse patent trolling while having no collateral damage to businesseses that actually use their patents to defend investments (which is supposed to be the whole point).

Is the only reason we're not seeing such a law because trolling has a powerful lobby, or am I grossly oversimplifying?

> can't we just pass a law stating that "the patent is not being used for anything" is a valid patent suit defense?

That's how patent law worked until the 1940s. It was called the "paper patent doctrine." i.e., if you're patent was just on paper, and not used in industry, then the patent was dead.

Prof. John Duffy wrote a great paper about it last year - http://cornelllawreview.org/files/2013/10/98CLR1359.pdf

Patent trolls could just put out sham products that are cheap to produce but use their patent. And there are also legitimate cases for inventing something and licensing the patent out without producing anything yourself.

Of course in that case, the licensee is

Either a) Using the patent to to produce and sell the invention, in which case it's not a paper patent.

Or b) Using the patent purely to sue other people (which is what most of the big name patent trolls do) and therefore must be stopped.

>Using the patent to to produce and sell the invention, in which case it's not a paper patent.

If they're successful, patent trolls end up with licensees too.

If you're not allowed to sue anyone until you already have licensees, then if you invent and patent something and pitch it to a company, you can't sue them if they rip off the idea.

I agree that this is the way back to sanity.

Most of the patents I have been noticing waved around are "Do something we did 50 years ago... but on a computer". Is the "on a computer" really a definitive mark.

On the idea of 'paper patents', what is to stop someone from registering something barely plausible today that may occur in the near future? Say, something like "3d printed food" where a file that contains the information on the material is structurally printed and heated/cooled. It isn't possible with our current tech, but when someone figures it out 5-10 years from now, you could spring that Jack out of the box and rake in cash.

I am informed that actually the Patent Office is at least starting to back away from 'on a computer' patents.

I confronted a rather weaselly dude attempting to patent troll tabletop roleplaying games by filing for a claim on character conversions, with an exceedingly vague 'with a computer' veneer over it. Fortunately the guy had his application rejected twice, and looked due to have it rejected again (as well as having attracted attention from much bigger fish) before he closed ranks and disappeared.

There is an enablement requirement. The patent has to be able to teach a " person skilled in the art" how to use the invention. You can't patent 3d printed food without disclosing how to do.

But the strategy you suggest is sort of used. The patent attorney will keep open an application for years using procedural tactics, and then try to get claims focused on modern products into the patent.

Being the (literally?) Devil's Advocate... Can we imagine a situation where a company has created something truly novel, and chooses to sell their patent rather than build it out? There will be a period where it isn't being used for anything.

For example - let's say I come up with a much better way to make steel for cars. I patent it right away. Since I don't own a carmaker, it will take a while for me to sell or license it, and perhaps 4 or 5 years for an auto maker to actually use it.

Again, just being the Devil's Advocate.

patents were a way to encourage disclosure of inventions. That objective is now obsolete as pretty much anything can be reverse engineered quickly. So patents morphed into pure rent-seeking tool.

One can easily see that the idea that patents encourage inventions is just plain wrong - just imagine what would happen if patents were abolished - would inventions stop happening?

Inventions wouldn't, but perhaps some kinds of basic research would stop. I don't see this happening in software, but perhaps in Pharma. It's so easy to create a generic, that there wouldn't be any incentive to create something new. At this point we would need the government to fund, and decide what gets funded.

I like the idea. Trademarks are done a similar "use it or lose it" way

Patent trolls have been getting trounced in court for the last few months, especially in NY and CA. I suspect RPX is offering patent troll insurance now because their payout risk (exposure?) is now much lower.

The RPX insurance might still be a good idea. Just be sure to re-evaluate the current state of patent troll risk before you buy a $10,000 policy.

How is this different than standard Patent Infringement Insurance that already exists?

Wouldn't this create an adverse incentive (in insurance called a 'moral hazard') i.e. because you could access the most innovative and highest-value patented technology for the insurance cost alone? (For example, ARM does not have its own foundries.)

i.e. you could simply build a startup around reading through patents for the most valuable ones, and then willfully infringing them. Whether it's some kind of breakthrough addition to a generator in a nuclear power plant, or a futuristic warp drive or what-have-you, or just ARM's technology, you could compete directly with the entity who developed the technology (or their licensees) without paying the high patent costs.

How would this be dealt with? How can RPX keep from startups based on theft?

Wouldn't this be like offering "copyright infringement insurance" - how would you keep people from using it while actually violating the most valuable copyrights?

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

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

Smells like a press release to me. Wouldn't surprise me if 90% if that article were reprinted verbatim from a PR piece.

Given the increasing amount of PR pieces and fluff pieces fellating multinationals (the Firestone ebola article, anyone?), I wouldn't be surprised.

This is awful. Insurance companies are already printing money by "protecting" people from all sorts of things that don't require protection.

As a business case though, this is brilliant. Buy up all the ammunition, then charge your customers for protection. How's this allowed again? :(

Phew, problem solved.

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