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United States Government Patents

Patent Trolls Getting the Attention of the Feds 92

Posted by samzenpus
from the who's-that-tramping-over-my-bridge? dept.
crazyvas writes "The New York Times has published an article on the FTC's plans to investigate the patent system, and likely patent trolls such as Intellectual Ventures. From the article: 'To its defenders, Intellectual Ventures is a revolutionary company unfairly viewed, in the words of its co-founder Peter N. Detkin, "as the poster child of everything that is wrong with the patent system." To its critics, it is a protection racket otherwise known as a patent troll. This summer, the Federal Trade Commission is expected to begin a sweeping investigation of the patent system after the agency's chairwoman, Edith Ramirez, urged a crackdown. She has singled out a particular kind of miscreant, one that engages in "a variety of aggressive litigation tactics," including hiding behind shell companies when it sues.'"
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Patent Trolls Getting the Attention of the Feds

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  • by Anonymous Coward on Wednesday July 17, 2013 @08:28PM (#44313575)

    They should invent a rule that requires you to file your patent lawsuit in the county the business has its headquarters located in.

    • by norpy (1277318) on Wednesday July 17, 2013 @08:35PM (#44313617)

      They already have that rule, all the shell companies are headquartered in east Texas.

      • Where to sue (Score:5, Interesting)

        by Firethorn (177587) on Wednesday July 17, 2013 @09:51PM (#44314071) Homepage Journal

        I think the AC was talking about making the suing company sue the business in the business's home county.

        IE let's say the patent troll wants to sue Bobcat. Given that, as best as I can tell they're incorporated in West Fargo in North Dakota, that would mean that the troll would have to sue them in West Fargo, ND not East Texas.

        It means that the patent trolls can't judge shop anywhere as well.

        • by Trepidity (597)

          Wouldn't that bias the system against legitimate small inventors whose invention was ripped off by a giant corporation? They wouldn't be allowed to file suit near their home, but would have to travel to the state where the corporation is headquartered to sue them. And the corporation could itself judge-shop by placing its headquarters in districts known to be friendly to corporate defendants.

          • by Firethorn (177587)

            Wouldn't that bias the system against legitimate small inventors whose invention was ripped off by a giant corporation?

            Perhaps, but as the AC notes, there's not actually a lot of small inventors anymore, and I guess it becomes what you consider a larger problem at this time - patent trolls or patent violators?

            One more complicated option would be to require you to sue* where the corporation has a 'business presence'. It would indeed be very complicated, but would avoid some problems - if Amazon has no real presence in 'East Texas' other than mailing stuff people order there, then you can't sue them there. Walmart has store

          • by sjames (1099)

            Since a patent suit will run into millions anyway, it seems unlikely that travel would be a deterrent to the 'small' multi-millionaire.

        • That gets you the opposite problem. Look at how Microsoft's home-court advantage has been favoring them in Seattle.
    • by rijrunner (263757)

      Back in the early days of automobile and aircraft manufacturing, there were similar problems to this. In aircraft manufacturing, the Wright-Curtiss lawsuits held back aircraft development by a couple decades.

      There automotive industry came up with a fairly decent solution fairly quickly, which is interesting as the Ford Company was well on its way to becoming a monopoly when it agreed to the terms set out. The Society of Automotive Engineers (SAE) was formed as a licensing and technology sharing organization

  • by al0ha (1262684) on Wednesday July 17, 2013 @08:29PM (#44313587) Journal
    Let's see, how many Wall Street executives are in jail due to the Fed investigating the irrefutable evidence of fraud at the highest levels perpetuated by Goldman and others which led to the collapse of the economy.

    Oh yeah; 0
    • by jbolden (176878)

      Not Goldman and nowhere near enough but some little ray of sunshine: http://www.justice.gov/ag/Hayes-Tom-and-Darin-Roger-Complaint.pdf [justice.gov]

    • Uh, almost 1. Rajat Gupta [reuters.com] has been convicted of insider trading, ordered to pay a $13.9 million fine, and sentenced to 2 years in prison. He's also been banned from serving as an officer or director of any publicly traded company.

      He's never seen the inside of a jail though, and he's still out on bail, pending appeal, so we'll see.

  • by dpilot (134227) on Wednesday July 17, 2013 @08:30PM (#44313593) Homepage Journal

    Sounds like this may trigger legislation. When legislation is written, big corporations frequently have at least a virtual seat at the table, "helping" to get it written.

    The true fear hear is that any sort of reform to solve the problems of patent trolls will tend to favor those big corporations in ordinary matters. The problem is the new person or company with something new and disruptive to the existing market. Though it's a little painful, in the longer run it's for the better when the market gets disrupted this way, because new opportunities emerge in the process. If the "reforms" give big corporations more power to "manage" the disruption, preserving their own markets and business models, we all lose. (The disruption will happen anyway, outside the US.)

    • by foniksonik (573572) on Wednesday July 17, 2013 @10:24PM (#44314257) Homepage Journal

      Which is more likely? A small guy invents something truly unique or a small guy invents something with a unique quality but incorporates lots of industry standard technology?

      In the first case the small guy should have a clear patent that is not disputable.

      In the second case one of three things can happen. He can file and be awarded an overly broad patent which is clearly just a rewrite of prior art at which point he sells it to a patent troll or he can file and be awarded a small patent on something unique but unfortunately can't do anything with it because a patent troll already laid claim to the industry standard stuff he built it on top of.

      The third thing that could happen is that the guy realizes he's screwed and his idea will never make it past the startup phase - so he gives up and goes back to work to a corporate gig.

      This third possibility is becoming more and more common. This is the chilling effect of patents and patent trolls. People are afraid to do anything new for fear of being sued, even when the new thing is a simple improvement on something that's been done for decades. Worse yet, companies are afraid to buy new stuff from small guys because they can be sued just for using the invention (no indemnity against IP lawsuits, no sale).

      • by Teancum (67324) <{ten.orezten} {ta} {gninroh_trebor}> on Thursday July 18, 2013 @01:21AM (#44314997) Homepage Journal

        The purpose of patents, supposedly, is to help protect the garage tinkerer that comes up with a really cool idea to have exclusive rights over that invention.

        I've asked this question repeatedly on Slashdot and elsewhere, and I fail to get any sort of realistic reply:

        Do you personally know somebody (aka a close blood relative, somebody you knew in your youth and considered a "best friend", somebody who would be at your bedside in a hospital if you got into a serious accident merely by hearing you by name were hurt) who has ever earned more than the patent filing fees on any patent they've developed?

        I know personally (including my grandfather... who spent hundreds of thousands of dollars in patent attorney fees over the course of many years) several people who have earned a patent, and many others who have invented some pretty interesting devices that definitely are worthy of patents. I also know of several people personally who have filed for patents due to work they've done for companies they worked for. Note: If you are an employee as an engineer, it is a standard contract that you will turn patentable inventions over to that company... often even if you come up with the idea outside of work. Certainly for stuff you invent "on the job". Some companies offer royalties on those inventions, but most companies simply assume your salary is compensation for those inventions.

        I do know some people personally who have earned money from copyrighted content (mainly books, although some movies). I don't know a single person who has even earned "pizza money" (aka a few bucks "profit" to buy a pizza or something very cheap.) above and beyond even the filing fees from patents. I also know of several very prominent people (notably Philo Farnsworth and Nikola Tesla, not to mention the Wright Brothers) who spent an insane amount of time in courtrooms trying to defend their patents, often without effect, and in the mean time these incredibly prolific inventors wasted literally decades of their life in a fruitless attempt to earn money off of ideas that "the system" said they deserved.

      • In the first case the small guy should have a clear patent that is not disputable.

        Yeah, like this guy: http://en.wikipedia.org/wiki/Flash_of_Genius_(film) [wikipedia.org]

      • In the second case one of three things can happen. He can file and be awarded an overly broad patent which is clearly just a rewrite of prior art at which point he sells it to a patent troll or he can file and be awarded a small patent on something unique but unfortunately can't do anything with it because a patent troll already laid claim to the industry standard stuff he built it on top of.

        The third thing that could happen is that the guy realizes he's screwed and his idea will never make it past the startup phase - so he gives up and goes back to work to a corporate gig.

        The fourth thing that can happen is he gets a patent on his invention of a "unique quality" and then sell that to a patent troll or a large corporation manufacturing the relevant device. Your second point seems to ignore this possibility.

        • Good luck trying that route. I've seen people getting bankrupt, but I've never heard about anybody that made any money this way.

          When a patent troll decides to sue you because he owns the invention, and your patent is invalid, or when the manufacturing corp decides to ignore your patent and just build whatever you invented without licensing, you'll feel what it is like to go to a court.

      • by dpilot (134227)

        What you say may be the norm, but it is worth mentioning that market disruption has happened, and it has happened reasonably recently. It's just not that common, and probably shouldn't be.

        Market disruption is (probably correctly) frequently squashed by reality - I'd rather not see it squashed by law, as well.

    • Politicians have been paying attention to patents a lot lately. My guess is because tech companies have been ramping up the lobbying...
  • In other words... (Score:3, Interesting)

    by Anonymous Coward on Wednesday July 17, 2013 @08:31PM (#44313595)

    Enough people who own congress are getting pissed off.

    • Enough people who own congress are getting pissed off.

      Well it's about fricken time. Took them long enough.

  • by Anonymous Coward

    But at least they made the mosquito laser zapper before they patented the hell out of it and are apparently demanding enough royalties that nobody's even bothering to try.

    • by Xicor (2738029)
      there are a lot of patent trolls out there... and they are ridiculous. it is about damn time that our government is getting around to revamping the ages old system that doesnt work right in modern times... now if only they would go through and rewrite ALL of the ridiculous laws that were created in an age before electricity that somehow apply to our current technology.
      • by Anonymous Coward

        I'm no fan of IV either, but I'm surprised that the summary doesn't link to the /. interview with Nathan Myhrvold that was all of three months ago,
            http://features.slashdot.org/story/13/04/03/1219259/nathan-myhrvold-live-qa [slashdot.org]

      • > there are a lot of patent trolls out there

        When you said that, it got me wondering, how many patent trolls are there? A little research suggests there are about 16. They filed 62% of the patent suits last year. It shouldn't be too hard to take a look at how those 16 trolls operate "successfully" and find a few ways to ruin their business model.

        That's encouraging to me because it means that a) it should be quite fixable and b) we don't have to take the risk of screwing over all the hard working people
        • by Xicor (2738029)
          you must not know about the huge conference about the patent system a couple months ago. companies all over the country sent delegates to talk with the guys making the patent rulings(i cant remember what it is called). they came in and discussed the problems of patents in their current forms(this included huge AND small businesses). big companies are tired of being trolled for settlements, and small companies cant afford the lawsuits and are afraid to make new software because they are afraid of being sued
          • Did you click Reply to the wrong post?
            I didn't say anything about large versus small defendants. I just thought it was interesting that 16 patent trolls file most of the suits - that the patent troll problem is a problem of a very few major assholes causing a lot of problems.

            To your point, while researching how many trolls there are, I learned that they are targeting smaller companies than before. Most defendants had sales of under $10 million (meaning profit less than $1 million, probably). I also found
    • by dargaud (518470)
      I thought of that mosquito zapper a DECADE ago while I worked in sound detection and ranging. When I saw the price and complexity for a patent for a lone inventor, I said screw it. I'm not jealous that they made it, I'm bitter that they are not selling it.
  • by raymorris (2726007) on Wednesday July 17, 2013 @08:56PM (#44313767)
    Hopefully they'll come up with some sensible changes that will address 96% of the problem.
    All too often, a headline grabbing bad guy like Intellectual Ventures results in a demand for HUGE new laws, smashing to bits a system that needed a tune up. The Patriot Act is an example - a few words needed to be changed in the law regarding how the NSA, CIA, and FBI can and cannot share information. 9/11 was big though, so people demanded big change, and ended up with the constitution shredded.
  • by Joe_Dragon (2206452) on Wednesday July 17, 2013 @08:59PM (#44313785)

    software patents need to be cut down as well as well the patents on basic stuff.

    • software patents need to be cut down as well as well the patents on basic stuff.

      They should be eliminated completely, since software is already protected by copyright.

      • software patents need to be cut down as well as well the patents on basic stuff.

        They should be eliminated completely, since software is already protected by copyright.

        Software isn't adequately protected by copyright. Just ask Zynga competitors like NimbleBit.

  • by Anonymous Coward

    O's administration might be a cluster fuck.

    The this wouldn't even be considered under Romney's administration.

    Remember the last Republican's administration?

    The preceding Democrat had a conviction and breakup against Microsoft. But the Republican administration said "The case is without merit". and rolled over.

    • by msmonroe (2511262)
      ....and we would have kool aid flavored water and eat cotton candy for breakfast, lunch and dinner Republican = Good Democrat = Satan
  • Another "industry" will have to start making them if they want to survive.

  • I came to a different conclusion(spin) to the summary presented by the New York Times; this is not about protecting "software designers, smartphone makers and the like" (and definitely not in the case of Microsoft, Apple and Nokia who are both PAE as described in the article and form have created mega patent pools with each other).

    This is about those same companies (Microsoft, Apple and Nokia) attacking start-up companies; stillborning competition; competition within the IT industry or as the linked article

    • Here's my favorite quote:

      PAEs may generate even greater indirect costs by distorting incentives to innovate. Patents asserted against existing products raise the risk of patent hold-up, which can discourage investment in product development. Particularly in the high-tech sector, where patent notice is notoriously difficult, licensing fees are likely to reflect investments the implementer has made to bring a product to market, rather than the true economic value of the patent. And because licenses are always negotiated in the shadow of the law, the problems the Commission has previously identified with the framework for patent remedies – including the uncertainty associated with damage awards and the threat of an injunction or exclusion order – add to the risk of hold-up associated with PAE activities.

  • by Anonymous Coward

    Cancel any patent that contains the word "plurality" in the claim section.

  • by L. J. Beauregard (111334) on Wednesday July 17, 2013 @10:17PM (#44314203)

    it can start by not issuing bullshit patents.

    • by jfengel (409917)

      The FTC doesn't issue patents. That's the Patent Office. They're not even in the same department. The USPTO is in Commerce; the FTC is an independent agency.

      The whole point of an independent agency is to provide checks and balances, so that the departments don't feel compelled to cover up for each other and can try to compensate for each other's mistakes. Unfortunately, that can also mean that the left hand doesn't know, or like, what the right hand is doing.

      "The government" isn't a big monolithic entity.

  • If the FTC is serious about innovation, they'll look into everyone who uses patent portfolios to block innovation by competitors.

    If they are merely helping large corporations with a problem, they'll focus on patent trolls only.

    • I can't imagine corporations with all their money and control (thanks largely to their money) will allow the system to be changed toward anything they don't like.
  • Fundamental issues (Score:5, Interesting)

    by Skapare (16644) on Thursday July 18, 2013 @12:10AM (#44314765) Homepage

    Patenting software is not a fundamental problem. Patent trolls are not a fundamental problem. Instead, these are the results and effects of the true fundamental problem, which is that the patent system itself is patenting anything that comes along that has no obvious conflicts, if even that. It considers its duty to be simply to record the patent ... and take all the money. It's real duty is to separate truly innovative inventions from all the junk.

    If something is truly innovative, then without the inventor having done it, it is likely to not have been done at all for many years (when based to genius thought), or for a substantial investment into the work needed to come up with it (when based on a huge amount of work). The vast majority of patents are not true innovation. Most of them are just broad brushes of things they see as inevitable and coming, anyway.

    It doesn't matter if it is done in software or hardware, if it is innovative. We should reward true innovation either way.

    It doesn't matter if someone comes along and buys out the inventor of true innovation. It's just like getting a cash advance on a time payment you expect to receive.

    The real problem in the system is all the junk patents that get issued.

    • by laffer1 (701823)

      I think the patent office shouldn't get the money for patent applications. They should have a budget independent of the number of applications they process with a minimum goal for each year to get through that's reasonable.

      Sure we'll have a backlog, but when you can't get everything through and the patent office doesn't have a financial incentive to rubber stamp patents anymore it might cause change.

      Another idea, give patent reviewers an incentive (bonus) when they find prior art for a patent.

      • I think the patent office shouldn't get the money for patent applications. They should have a budget independent of the number of applications they process with a minimum goal for each year to get through that's reasonable.

        Sure we'll have a backlog, but when you can't get everything through and the patent office doesn't have a financial incentive to rubber stamp patents anymore it might cause change.

        Another idea, give patent reviewers an incentive (bonus) when they find prior art for a patent.

        The patent office makes money off of rejections, and therefore has a financial incentive to reject applications and have people re-file new ones. This explains why, for example, they initially rubber-stamp 85% of patent applications "REJECTED". This is as opposed to your implication that they allow everything.

        Also, patent examiners are graded on a point system, and they receive points for rejecting applications. It seems like your suggestions are all already implemented, and therefore may not actually addr

    • Certainly you're right that the source of the problem is bad patents.
      Also, there have always been bad patents. It's become such a big problem recently because of big trolls. If 16 trolls file 62% of the patent suits, dealing with the trolls would eliminate at least 62% of the problem. Actually more, because some of the non-troll cases aren't a problem. So those 16 trolls are maybe 80% of the problem.

      Any citation for "the vast majority of patents aren't true innovation"? It appears to me that of the hundr
    • Patenting software is not a fundamental problem. Patent trolls are not a fundamental problem. Instead, these are the results and effects of the true fundamental problem, which is that the patent system itself is patenting anything that comes along that has no obvious conflicts, if even that. It considers its duty to be simply to record the patent ... and take all the money.

      If true, you would expect to see 99% of patent applications immediately allowed. Instead, 85% are initially rejected [patentlyo.com]. Apparently, the system considers its duty to reject patent applications until they're properly narrowed.

      If something is truly innovative, then without the inventor having done it, it is likely to not have been done at all for many years (when based to genius thought), or for a substantial investment into the work needed to come up with it (when based on a huge amount of work).

      I disagree with that definition. "Truly innovative" things may be due to a spark of insight, and then not require significant work. For example, I bet most any engineer now could draw a schematic for a working internal combustion engine on a napkin. Does that mean it wasn't truly innovativ

    • The real problem in the system is all the junk patents that get issued.

      The real problem with a bridge made out of pudding is that people tend to get wet. Oh well, let's build it anyway.

  • Apple is the biggest douchebag trolls of them all. The way they aquire patents and sue everybody is kind off disgusting. The Samsung case is in recent memory.
    • Is that worse than buying competition to create a monopoly the way corporations like Microsoft do? IMO Patents aren't as much the issue so much as the laws surrounding corporations and their free run on power. Power derived from money. A good example is how they can do illegal/dangerous/harmful things if they want because often a fine is less than the profit they'll make. Shouldn't they be put out of business and their cash given back to the public or shareholders rather than scolded mildly so they can repe
  • In practice: "We'll go after you if you're not big enough to fight back."

    More and more I see the actions of the federal government, and in particular those of the DOJ, as being largely career-driven and opportunistic. Which is why you'll never ever see them go after really big fish: because that could be a future employer.

  • Ironic how something that was meant to promote innovation is instead abused by these greedy entities to increase their wealth while stifling innovation.
  • I've always wondered if they could make it a requirement of patent infringement that the entity claiming infringement has to prove that the patent is a component of a product they make or can substantively prove they are going to make within two years?

    Or make patents a two step process -- patent application and product verification. You get granted a provisional patent but have to come back and demonstrate the use of the patent in an actual commercial product. Failure to do the second step means no paten

    • You can not comercialize your invention before your patent is at least registered, otherwise it counts as prior art. So it can be a two step process, but the one step option is clearly not viable.

      Also, I'd disagree that this solves anything at all. Big corps (the ones that can create manufacturing lines fast) don't need more protection against small inventors. Extinguishing the patent system has a much better outcome.

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