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Almost a third of our portfolio is under attack by patent trolls.

unionsquareventures.com

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Re: Almost a third of our portfolio is under attack by patent trolls.

#31

Post by decode »

lliiffee wrote: post #21
alain94040 wrote: post #17

Earlier quoted context omitted.

Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible. So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is…

The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?

It doesn't work with Patent Trolls (AKA Non Practicing Entities). What is the team of scary lawyers going to do? Since the trolls don't actually have a business or product, you can't sue them for patents they infringe. And their whole business is litigating patents, so tying them up in court is not exactly a deterrent. The trolls themselves are often lawyers, or just a company that employs lawyers on retainer.

Re: Almost a third of our portfolio is under attack by patent trolls.

#32

Post by decode »

aristus wrote: post #13

I'm a little cautious about this post. He is exaggerating by stretching the definition of "patent troll", if I am reading correctly. A true patent troll is a company that produces nothing except lawsuits. With a company that produces something and also sues over patents, there is at least the possibility of a countersuit / crosslicense / armed truce. I assume their portfolio companies pool their patents together for…

"With a company that produces something and also sues over patents, there is at least the possibility of a countersuit / crosslicense / armed truce."

Unless you're a startup that just wants to make a good product and isn't interested in spending tens of thousands of dollars acquiring patents on software you think shouldn't even be patented in the first place. Then you have no defense. You also don't have the funds for a protracted legal battle, since you're living on investment capital, or are barely profitable.

Re: Almost a third of our portfolio is under attack by patent trolls.

#33

Post by phil »

lliiffee wrote: post #21
alain94040 wrote: post #17

Earlier quoted context omitted.

Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible. So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is…

The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?

There are still problems.

For example, if USV is typical and 1/3 of venture-backed companies are being attacked by patent trolls, then the premiums for this insurance would have to be extremely high -- enough to cover a third of the cost of defending a typical case.

Re: Almost a third of our portfolio is under attack by patent trolls.

#34

Post by amalcon »

zaphar wrote: post #14
thaumaturgy wrote: post #7

I would really like to see something along the lines of a TED talk in which the presenter stands up, spends a couple of minutes demonstrating some kind of really interesting new technology -- something that could really help people, either in their lives or in their jobs -- and then the presenter would pause for a moment and say, "...but none of you are going to get to use this", and continue the talk but on the subj…

I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development. I hear people say this but they never give an example. Can you name an area of research and development where patents hold a valuable position? I myself have trouble coming up with any and I'm curious what others think.

Mechanical inventions are what patents were most obviously designed to deal with. There are still plenty of these being made today; they just don't make the waves they used to, because the new ones are mostly used in industrial settings.

Re: Almost a third of our portfolio is under attack by patent trolls.

#35

Post by baguasquirrel »

amalcon wrote: post #34
zaphar wrote: post #14

Earlier quoted context omitted.

I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development. I hear people say this but they never give an example. Can you name an area of research and development where patents hold a valuable position? I myself have trouble coming up with any and I'm curious what others think.

Mechanical inventions are what patents were most obviously designed to deal with. There are still plenty of these being made today; they just don't make the waves they used to, because the new ones are mostly used in industrial settings.

The thing about mechanical inventions that made patenting important was that there was often a lot of hidden knowledge in their design.

If we take the familiar example of the ICE, simple dimensions like the bore and stroke of the cylinder aren't arbitrarily chosen. Altering the ratio of the bore and stroke changes the revving characteristics of the engine (a somewhat larger bore than stroke will cause the engine to have a higher rev limit, for example), and increasing the size of the bore requires disproportionately heavier cylinder heads (because cylinder heads have to have some depth and lateral reinforcement).

The size and weight of the cylinder heads, combined with the stroke effect the strength and dimensions required of the connecting rods and the crankshaft, so on and so forth.

Basically, a lot of mechanical "inventions" are big physics and engineering puzzles where the mere dimensions of each part was worked out through a lot of equation crunching (and probably a lot of plain old tinkering and testing as well). So for someone to just go and copy someone else's design, well that's kind of a big deal.

Re: Almost a third of our portfolio is under attack by patent trolls.

#36

Post by chrischen »

The fundamental problem with patents is that it rewards the first person to file a patent, disregarding the possibility that two people can synchronously, or asynchronously come to the same idea independently of each other.

I guess the "American" (assuming you're in America) course of action is to speak to your senator to push for reform and help evolve our government. If that fails, ditch the government altogether and either start or move to another country.

Re: Almost a third of our portfolio is under attack by patent trolls.

#37

Post by joe_the_user »

lliiffee wrote: post #21
alain94040 wrote: post #17

Earlier quoted context omitted.

Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible. So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is…

The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?

It could be further augmented by a cross-patenting association and a large common fund to put down enough collateral to allow appeals to continue indefinitely.

Essentially, if you could show that any patent-troll would face an SCO vs IBM situation, I think you could have some plausible deterrence.

Re: Almost a third of our portfolio is under attack by patent trolls.

#38

Post by paulgb »

decode wrote: post #31
lliiffee wrote: post #21

Earlier quoted context omitted.

The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?

It doesn't work with Patent Trolls (AKA Non Practicing Entities). What is the team of scary lawyers going to do? Since the trolls don't actually have a business or product, you can't sue them for patents they infringe. And their whole business is litigating patents, so tying them up in court is not exactly a deterrent. The trolls themselves are often lawyers, or just a company that employs lawyers on retainer.

Part of my assumption is that if the patent should truly not have been granted, the start-up has a decent chance of winning if they have the resources to fight it. (I do know of some counter-examples, like RIM and D2L)

The trolls don't want to enter a losing battle because of the cost (even if they're in the business of litigation, time spent suing one company is time that could be spent suing another). Also, losing would damage the validity of the patent for future cases. (In my understanding, that is. IANAL)

Re: Almost a third of our portfolio is under attack by patent trolls.

#40

Post by manbearpig »

I hate software patents and don't think they should be issued at all, but the idea that "if, on the other hand, the troll was required to show the startup had some prior knowledge of their technology, the burden would be shifted to the attacker, and this blatant abuse would come to a grinding halt" flies in the face of what the patent system is intended to achieve.

"Patent" means open. When you file a patent for a new innovation, you disclose the underlying technology to the general public and open it for all to see. In exchange, you receive legal protection that nobody can use your innovation without your consent. It doesn't matter whether they stumble upon your technology completely independently. The technology is yours.

The alternative to disclosing your technology in a patent is to keep it a trade secret. You don't own the rights to the technology itself, so anybody who develops it independently will be able to be able to use it as well. However, other companies still cannot explicitly steal the innovation from you. This is how Coke has guard its formula for decades.

Just because multiple groups can arrive at the same innovation in a similar time-frame doesn't mean that that innovation was obvious. In fact, this has happened with many great innovations. The telephone and the integrated circuit are prime examples.

And how can you guys not understand the importance of patents to the development pharmaceuticals? A group cannot invest a billion dollars into the development of a compound without guarding it from competitors. Once these patents expire, generic companies are able to significantly undercut the creators. The generic makers are aided by the openness of the patent system, but this is not necessary to copy a medication. It's structure can be easily deduced, and even extremely complicated medications such as taxol have been synthesized using several different pathways.

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