Almost a third of our portfolio is under attack by patent trolls. • Hacker News Board

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

#51

Post by danek » Tue, Jan 12, 2010, 9:59 AM UTC

alain94040 wrote: post #16

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.

Conventional wisdom says that pharma qualifies. Labs wouldn't spend the resources if anyone could come up with generic drugs once the hard work of finding out which drug works is done.

i don't know if this is true, but i heard somewhere that drug companies don't really innovate anything.

it's the NIH and universities (via government funding) that actually discover the drugs, then they sell the exclusive rights to manufacture it to big pharma (who then spends a lot to get it approved and market it and such...)

(this is the book, i haven't read it) http://www.amazon.com/Truth-About-Drug-Companies-Deceive/dp/...

so in this case (if true) patents fail again.

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

#52

Post by mseebach » Tue, Jan 12, 2010, 11:09 AM UTC

danek wrote: post #51

alain94040 wrote: post #16

Earlier quoted context omitted.

Conventional wisdom says that pharma qualifies. Labs wouldn't spend the resources if anyone could come up with generic drugs once the hard work of finding out which drug works is done.

i don't know if this is true, but i heard somewhere that drug companies don't really innovate anything. it's the NIH and universities (via government funding) that actually discover the drugs, then they sell the exclusive rights to manufacture it to big pharma (who then spends a lot to get it approved and market it and such...) (this is the book, i haven't read it) http://www.amazon.com/Truth-About-Drug-Companies-Dec…

I don't know if that's correct, but if it is, it's patents that make it possible for the universities and NIH to sell the right exclusively.

Since manufacturing, testing and marketing a drug is hysterically expensive, the patent seems to serve a purpose there -- even if pharma companies are more akin to specialized investment bankers than scientists.

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

#53

Post by scottdw2 » Tue, Jan 12, 2010, 11:16 AM UTC

Personally, I don't value software parents much.

I think they are a giant waste of money. You spend $20K on lawyers, to get nothing more than the right to spend more money on lawyers in the future.

That $20K could be better invested elsewhere (like on product improvement).

I think it would be worth considering eliminating software patents.

However, I don't think an "independent invention defense" is a good idea. It would essentially eliminate all patent protection. Basically, the absence of proof that you knew a patent existed, would get you off the hook for infringing on it. This means that as long as you had the right set of rigorous policies in place, you could operate with complete immunity from patent infringement claims.

If all employees were trained (by mandatory corporate training) that "under no circumstances should you ever read any patents, ever", and "if you ever have any doubts about anything being patentable, direct the question to our lawyer", and you were very strict about enforcing it, you could make a case that pretty much every invention was discovered independently.

That would defeat the whole purpose of patent protection. The idea is that by getting inventors to disclose details of their invention (which benefits society), that they get a monopoly on its use. Without the monopoly, there is no point in having a patent.

If software patents pose a fundamental problem, then I think the best course of action is to eliminate software parents, not to undermine the entire patent system.

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

#54

Post by ssp » Tue, Jan 12, 2010, 11:49 AM UTC

electromagnetic wrote: post #41

decode wrote: post #31

Earlier quoted context omitted.

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.

> their whole business is litigating patents, so tying them up in court is not exactly a deterrent. Lawyers can make a considerable amount of money, any disruption to the Patent Trolls' game will severely reduce their numbers. These Patent trolls, as you said, are often lawyers and by tying them up in court you are costing them profitability. Every non-settlement forces them to go to court and actually fight. This is…

Eventually, only Trolls with a fair-case will fight

Don't a lot of trolls actually have valid patents that read on whatever it is you do?

If this worked, why wouldn't Microsoft just "self-insure" and never, ever settle a patent claim?

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

#55

Post by imajes » Tue, Jan 12, 2010, 1:01 PM UTC

ssp wrote: post #54

electromagnetic wrote: post #41

Earlier quoted context omitted.

> their whole business is litigating patents, so tying them up in court is not exactly a deterrent. Lawyers can make a considerable amount of money, any disruption to the Patent Trolls' game will severely reduce their numbers. These Patent trolls, as you said, are often lawyers and by tying them up in court you are costing them profitability. Every non-settlement forces them to go to court and actually fight. This is…

Eventually, only Trolls with a fair-case will fight Don't a lot of trolls actually have valid patents that read on whatever it is you do? If this worked, why wouldn't Microsoft just "self-insure" and never, ever settle a patent claim?

because a license might cost $1m, but going to court to fight it might cost $100m or more. It's a no-brainer whatever size you look at it. The win-lose equation here is about risk management: it's too risky for Microsoft, with an 'endless budget', to go against a troll.

In this instance, Microsoft's attorneys risk alienation too by playing the chicken game, and they don't want to do that.

How it could work is to find a judge who thinks patent cases like this are ambulance chasers, and then ensure that all the suits against you are relocated into her court. If you have a friendly judge then it becomes much easier to play chicken.

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

#56

Post by Retric » Tue, Jan 12, 2010, 1:50 PM UTC

phil wrote: post #33

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?

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.

The assumption is if you have few assets and the insurance then there would be little reason to litigate. Which would drive down the cost of the insurance.

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

#57

Post by noonespecial » Tue, Jan 12, 2010, 2:21 PM UTC

imajes wrote: post #55

ssp wrote: post #54

Earlier quoted context omitted.

Eventually, only Trolls with a fair-case will fight Don't a lot of trolls actually have valid patents that read on whatever it is you do? If this worked, why wouldn't Microsoft just "self-insure" and never, ever settle a patent claim?

because a license might cost $1m, but going to court to fight it might cost $100m or more. It's a no-brainer whatever size you look at it. The win-lose equation here is about risk management: it's too risky for Microsoft, with an 'endless budget', to go against a troll. In this instance, Microsoft's attorneys risk alienation too by playing the chicken game, and they don't want to do that. How it could work is to find…

How it could work is to find a judge who thinks patent cases like this are ambulance chasers, and then ensure that all the suits against you are relocated into her court. If you have a friendly judge then it becomes much easier to play chicken.

How exactly do you do this? I've been wondering. It seems trolls are able to get these cases heard in disproportionate numbers by a strange little puppet court down in east texas that has become famous for being troll friendly. (and indeed seems to have based its entire local economy around it)

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

#58

Post by noonespecial » Tue, Jan 12, 2010, 2:27 PM UTC

scottdw2 wrote: post #53

Personally, I don't value software parents much. I think they are a giant waste of money. You spend $20K on lawyers, to get nothing more than the right to spend more money on lawyers in the future. That $20K could be better invested elsewhere (like on product improvement). I think it would be worth considering eliminating software patents. However, I don't think an "independent invention defense" is a good idea. It w…

If all employees were trained (by mandatory corporate training) that "under no circumstances should you ever read any patents, ever", and "if you ever have any doubts about anything being patentable, direct the question to our lawyer", and you were very strict about enforcing it, you could make a case that pretty much every invention was discovered independently.

Thanks to the "treble damages" part, this is exactly how it operates right now, right down to the corporate training. Unless you're a patent attorney, "never ever read a patent" is pretty good advice for any technical professional.

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

#59

Post by amalcon » Tue, Jan 12, 2010, 2:41 PM UTC

phil wrote: post #33

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?

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.

There are a couple of other angles you could work here. In some jurisdictions, it's possible to seek damages for the cost of defending a failed lawsuit. I don't know if any of these jurisdictions extend this to patent litigation, or what tax and other implications might be of incorporating there (so that one might legitimately change venue to such a location). The two typical problems with this approach are getting into the right jurisdiction and being able to front the money for the defense in the first place.

Also, if the patent troll is suing a bunch of companies you're insuring based on the same patent, you could attempt to combine the cases, thus consolidating the defense costs. This works because patent trolls work by firing off lots of very similar lawsuits, each for a small enough amount that it's economical to settle. That's what keeps their costs down; such an insurance policy would let the defense leverage the same economy of scale.

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

#60

Post by JCLevesque » Tue, Jan 12, 2010, 3:01 PM UTC

tptacek wrote: post #29

Psyonic wrote: post #28

Earlier quoted context omitted.

What is the business model associated with differential power analysis? Why is it your favorite?

They discovered a horrible, systemic vulnerability and then patented most of the effective defenses for it. It's pure evil genius.

And that's why patents are broken.