I think that the argument for why software patents are dangerous is the $4.5 billion figure. If companies are shitting their pants to this extent then clearly the patents have a huge impact on business from their perspective.
Exactly. The price is well above expert estimates. While these tech giants can afford that extra cost, the same tension is playing out for smaller startups that cannot.
But if these patents were say, automotive in nature, and a coalition of automotive companies bought them for 4.5 billion, would we immediately jump to the conclusion that automotive patents are bad? I wouldn't (necessarily).
>if these patents were say, automotive in nature, and a coalition of automotive companies bought them for 4.5 billion, would we immediately jump to the conclusion that automotive patents are bad?
Without going too deep into a philosophical discussion, I think that the competitive nature of our society is hindering progress more than anything else. When people learn to build social structures based on cooperation (I consider a small group of people cooperating to compete against everyone else to be too small in scope), we will see progress increase by orders of magnitude. Just look at the advantage the limited type of cooperation we have now has given us over animals which do not cooperate at all. Now scale that up to the next level (open source is a live example of this, in fact). In concrete terms, imagine if, just as individuals in a company cooperate, companies cooperated with each other. Everyone would be better off. At it's root, this is the difference between seeing life as a non-zero-sum game as opposed to a zero-sum one.
Again, you are missing the point. Imagine if the USSR and the US cooperated and spent all that money they used to make their dicks look bigger on, for example, flying to mars.
>In concrete terms, imagine if, just as individuals in a company cooperate, companies cooperated with each other. Everyone would be better off. At it's root, this is the difference between seeing life as a non-zero-sum game as opposed to a zero-sum one.
So... it's exactly what MS, Apple, RIM, etc. did. They cooperated, combined their resources, and outbid Google for the pool. There's no indication that these patents aren't going to be used. Since RIM is in the group, it seems that the hardware patents are definitely going to be used, and who knows what Apple and MS want from the pot.
I still don't see how this is an argument specifically against software patents.
Imagine if MS, Apple, RIM AND Google all cooperated and said "this is silly, let's get rid of all our nukes (patents) and live in peace". Collectively, they would be $4.5 billion better off and could use it to build something instead of stocking up on weapons.
The argument is simple, not thin. Instead of spending billions on new R&D, new innovation, these companies have to spend money on the shenanigans of the current software patent system.
The money spent on these patents creates a market for innovation by monetizing patents. If Google et al. thought these patents were invalid, obvious extensions of the prior art, would they be willing to spend this much money?
No, it creates a market for filing patents by monetizing patents. Innovation means coming up with an idea, implementing it, and bringing it to market in a way that's cost-sustainable. Filing a patent just requires a lawyer.
The evidence that things are broken is that a bunch of otherwise productive companies just paid a boatload of money for a grab-bag of IP, primarily to immunize themselves from lawsuits from companies with less productive revenue sources.
My point is that patents give inventors a way to cash out early without having to go to litigation. It's this property right that they can sell to someone else who wants the use of the idea. Maybe the buyer wants to make money off lawsuits, maybe he wants to produce the product. Doesn't matter. The patent lets the inventor sell his idea to someone who can make better (more economically efficient) use of it.
You're still missing the point though. If these patents are valued so highly because of their potential as weapons (as opposed to their production potential), then this is a distortion of the market that patents are supposed to foster.
This cannot be stressed enough: our patent regime is intended to foster the progress of technology. Where the market for these patents acts efficiently as as intended, the value of a patent is based strictly on its ability to allow a company to generate revenue. This is a specific condition and the threshold of quality tends to be high for patents that can genuinely enable production.
The threshold needed for patents to be merely wielded as weapons is much lower. However, as you can plainly see, this does not diminish their value in the patent marketplace. Thus, the patent system in its current form encourages the misallocation of resources toward patents that do less to promote progress.
Software patents encourage the worse kind of abuse, in part because the patent office is utterly incapable of properly evaluating them; you can patent nearly anything.
> If the only way you can make money off of a good idea is by suing other people who are using it, then it's not a good idea.
Huh? It's clearly a valuable idea, otherwise said other people wouldn't be making money by using it. (We can argue about how much of that money is due to other things how much is due to the idea, but let's assume that the idea is somehow essential to to implementation.)
So, what makes it a bad idea? Surely it can't be the existence of a patent held by someone who isn't practicing.
The basis of patent system is a desire to further innovation and not, as you seem to believe, on recognizing inherent value of being paid for having ideas.
If you have an idea and do nothing with it, society is not better off.
If you can prevent other people who had the same idea as you from making products based on them just by describing the idea on a piece of paper and getting government's stamp that you were the first one to come to them with it, then the society is worse off.
The scenario you described is an unintended consequence, or a perversion, of how patent system is supposed to work.
I note that you're ducking the question of why something that is clearly relevant to a useful product is not a good idea simply because the wrong person has a patent.
> If you have an idea and do nothing with it, society is not better off.
Define nothing. If I write a textbook that other folks use to do something, most people would claim that my textbook made society better off. Do you disagree? Note that patents are disclosure....
> The scenario you described is an unintended consequence, or a perversion, of how patent system is supposed to work.
Oh really? The patent literature says that patents are a trade - a limited term monopoly for disclosure of an idea. You seem to think that patents are protection for folks making stuff.
> If you can prevent other people who had the same idea as you from making products based on them just by describing the idea on a piece of paper and getting government's stamp that you were the first one to come to them with it, then the society is worse off.
So? Every law has cases where it comes to the "wrong" result.
More to the point, the overwhelming number of "non-practicing" inventors just want to get paid. You seem to think that they shouldn't get paid.
Note that inventors sell to trolls because trolls are better able to get paid. If you weren't so opposed to inventors getting paid, we could look at ways for inventors to get paid without getting trolls involved.
Kind of late here, but I think the point with software patents is that the majority of cases tend towards the "wrong" result, basically every case except for maybe novel encryption/compression algorithms.
> I think the point with software patents is that the majority of cases tend towards the "wrong" result
That's the claim, but there hasn't been much supporting evidence other than "that doesn't deserve a patent". The vast majoritiy of the "that was obvious" claims are pure hindsight. (Yes, some software patents have been overturned because of prior art, just as happens in other fields.)
I particularly like the "that's just math" (which is often claimed wrt RSA). You never hear someone says "that's just chemistry" wrt chemical application patents. (You can't patent chemistry any more than you can patent math.)
This money goes to pay the debts of a bankrupt company.
If the patents ("innovation") were so valuable, Nortel wouldn't have gone out of business.
Successful companies can (and have been) successful without patents (or without enforcing patents). Nortel was unable to be successful despite having lots of patents.
Given those facts, the case for patents as a way to "reward" innovation is thin.
There's only a weak correlation between success and patents in that successful companies are forced to pile up patent portfolios, including paying $125k per patent as in this case, not because they care about any of the technology, but because they are afraid of being sued for even greater amounts of money by some other patently rich company.
> If the patents ("innovation") were so valuable, Nortel wouldn't have gone out of business.
I am no supporter of software patents. But I don't think this follows directly. Producing innovations is different from having the business acumen to make money out of it.
"This money goes to pay the debts of a bankrupt company."
Not disputed. Nortel was mismanaged into oblivion. That does not show that the fundamental incentive in the patent system is broken.
"If the patents ("innovation") were so valuable, Nortel wouldn't have gone out of business."
That's a total non sequitur. Any business can be driven off a cliff. The patents are that valuable and that's been clearly shown at auction.
"Given those facts, the case for patents as a way to "reward" innovation is thin."
Your "facts" are better termed anecdotes and only disprove the straw men that "you can't be successful without patents" and "patents guarantee success" neither of which is being claimed by anyone.
My take from the article is that the patents fetched so much money because they would be a good defense against being sued. In Google's case, 'the search giant's interest was primarily defensive, “to create a disincentive for others to sue Google."'
So the patents don't represent innovation to the bidders, the patents represent a legal defense fund.
I don't understand. For one thing, Google wasn't "the early front runner", they were the stalking horse bid--essentially the minimum. There seems to be this retroactive meme going around to the effect that Google was expected to win with that bid or that they somehow deserved to. It's an auction, folks.
It's not clear to me that that was their final bid, either. Maybe it was, but I can't imagine Google letting something important to them climb at auction from from $0.9 billion to $4.5 billion without staking another bid.
The second thing I don't understand is the connection between the price paid by a consortium of major tech companies[1] for a collection of patents from a formerly major tech company--only a few of which are even software at all--to Fred Wilson ranting about Lodsys. Who is the troll here? Nortel? What is the significance of the dollar figure? How does it "echo the sentiment" of Wilson?
[1]:BetaBeat says "...a coalition of Microsoft, Apple, RIM, and Sony...", while the actual press release[2] states: "Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony."
The complaining was around companies needing to spend $4.5B in pre-emptive legal defense. The $4.5B being pre-emptive is extrapolated by me (and I'm assuming the author) from Google stating their $900M was.
Nowhere in the article did it even imply any of the players in this transaction were trolls.
The whole article was about "Software patents are bad". The Nortel auction was just one example of why patents are bad. Fred Wilson's comments were to back up that theme. Lodsys is just another example.
Read it in that light, and things tie together much more smoothly. Whether it is good writing (e.g. effectively conveying a point) is questionable, since it obviously has cause confusion.
I think the patent law being broken arguement that the article is trying to make is as follows:
the consortium that bought nortel's patents didn't do so for the patents themselves, they did so to prevent google from having the patents. And they didn't want google to not have the patents not because they were afraid of google bringing products to market based on those patents, but because they didn't want google to be able to shield themselves from patent lawsuits.
Nortel has several 4G LTE-related patents in the pool(http://mobile.eweek.com/c/a/Mobile-and-Wireless/RIM-Not-Goog...). Those are HUGELY valuable to Apple, RIM, Sony Ericsson and Nokia. I would be very surprised if none of those companies came out with 4G phones in the next year or so. Getting control of the patents can save them a pretty tremendous amount of money on licensing fees.
These were probably the ones that those companies wanted, and the entire reason that the price is so high. They simply could not let Google be the sole owner of the patents, because that would give Google way too much power in the mobile space.
Out of all the companies, MS is probably the only one that did it specifically to hurt Google. However, this also could signal that MS is going to make their own WM7 phone.
How exactly would Google owning "several" patents on LTE translate to them being a sole owner of the technology? My understanding is that there are a couple of thousand patents on parts of LTE, with companies like Qualcomm, Nokia or Ericsson controlling hundreds of patents.
>"MS is probably the only one that did it specifically to hurt Google"
Exactly what is the basis for this?
As you noted Nokia with whom Microsoft shares some interest would benefit from owning those patents. In addition, Microsoft as owner of Skype now has a substantial interest in patents applying to telephony networks.
I worked briefly at Nortel. It makes me sad reading these articles. Nortel was a great company that still could have been successful today were it not for terrible corrupt high level management.
Isn't it better that a coalition won instead of Google? Now at least these companies will not sue each other. Its much better that way. Google should have joined the group rather than going itself.
Also Nortel was a really huge company and a really good one at their peak. So its not surprising it amassed that many patents or that they fetch that much value.
Google expressed an interest in using the patents defensively, and implied that it would share them with the open source community. If the coalition intends to use the patents offensively, which is very plausible considering the companies involved, then it is not better that it won.
Nations express an interest in obtaining nuclear weapons for peaceful purposes. One side effect of obtaining them is that it limits their neighbor's options when the tanks roll into their back yard.
No kidding, I heard in the spirit of innovation, open source, and allowing consumers to get a better ad display and search experience that Google will soon release it's search algorithms and ad sense code for others to improve on. /snark.
Probably coincidental, but the math lines up where Google could retroactively buy into the group at the price of it's 900M bid. After that the 4.5 Billion would be split evenly between the five companies.
Edit: Looks the BetaBeat article excluded EMC and Ericsson, so the split wouldn't work so nicely.
It describes a strong-armed patent consortium formed around the turn of the century which controlled filmmaking technology. Indie filmmakers reacted by establishing new operations in a little place called Hollywood.
It seems like there is a simple tweak that would make everything better: DOJ should force the "consortium" to allow Google to join at the same price. It seems each company will pay $750 million. Google should be allowed to pay $750 million for the patents as well.
That way Nortel gets more money and Microsoft, Apple and RIM won't be able to torpedo Android with lawsuits (as opposed to doing a better job).
49 comments
[ 3.4 ms ] story [ 92.3 ms ] thread1. Google, Microsoft, Apple, RIM, and Sony are willing to pay a lot of money for a bundle of patents, including both software and hardware.
2. Therefore, software patents are evil and a tax on innovation, rabble rabble rabble.
It's not much of a syllogism.
I have to agree with the parent comment.
Without going too deep into a philosophical discussion, I think that the competitive nature of our society is hindering progress more than anything else. When people learn to build social structures based on cooperation (I consider a small group of people cooperating to compete against everyone else to be too small in scope), we will see progress increase by orders of magnitude. Just look at the advantage the limited type of cooperation we have now has given us over animals which do not cooperate at all. Now scale that up to the next level (open source is a live example of this, in fact). In concrete terms, imagine if, just as individuals in a company cooperate, companies cooperated with each other. Everyone would be better off. At it's root, this is the difference between seeing life as a non-zero-sum game as opposed to a zero-sum one.
So... it's exactly what MS, Apple, RIM, etc. did. They cooperated, combined their resources, and outbid Google for the pool. There's no indication that these patents aren't going to be used. Since RIM is in the group, it seems that the hardware patents are definitely going to be used, and who knows what Apple and MS want from the pot.
I still don't see how this is an argument specifically against software patents.
The evidence that things are broken is that a bunch of otherwise productive companies just paid a boatload of money for a grab-bag of IP, primarily to immunize themselves from lawsuits from companies with less productive revenue sources.
This cannot be stressed enough: our patent regime is intended to foster the progress of technology. Where the market for these patents acts efficiently as as intended, the value of a patent is based strictly on its ability to allow a company to generate revenue. This is a specific condition and the threshold of quality tends to be high for patents that can genuinely enable production.
The threshold needed for patents to be merely wielded as weapons is much lower. However, as you can plainly see, this does not diminish their value in the patent marketplace. Thus, the patent system in its current form encourages the misallocation of resources toward patents that do less to promote progress.
Software patents encourage the worse kind of abuse, in part because the patent office is utterly incapable of properly evaluating them; you can patent nearly anything.
Huh? It's clearly a valuable idea, otherwise said other people wouldn't be making money by using it. (We can argue about how much of that money is due to other things how much is due to the idea, but let's assume that the idea is somehow essential to to implementation.)
So, what makes it a bad idea? Surely it can't be the existence of a patent held by someone who isn't practicing.
If you have an idea and do nothing with it, society is not better off.
If you can prevent other people who had the same idea as you from making products based on them just by describing the idea on a piece of paper and getting government's stamp that you were the first one to come to them with it, then the society is worse off.
The scenario you described is an unintended consequence, or a perversion, of how patent system is supposed to work.
> If you have an idea and do nothing with it, society is not better off.
Define nothing. If I write a textbook that other folks use to do something, most people would claim that my textbook made society better off. Do you disagree? Note that patents are disclosure....
> The scenario you described is an unintended consequence, or a perversion, of how patent system is supposed to work.
Oh really? The patent literature says that patents are a trade - a limited term monopoly for disclosure of an idea. You seem to think that patents are protection for folks making stuff.
So? Every law has cases where it comes to the "wrong" result.
More to the point, the overwhelming number of "non-practicing" inventors just want to get paid. You seem to think that they shouldn't get paid.
Note that inventors sell to trolls because trolls are better able to get paid. If you weren't so opposed to inventors getting paid, we could look at ways for inventors to get paid without getting trolls involved.
That's the claim, but there hasn't been much supporting evidence other than "that doesn't deserve a patent". The vast majoritiy of the "that was obvious" claims are pure hindsight. (Yes, some software patents have been overturned because of prior art, just as happens in other fields.)
I particularly like the "that's just math" (which is often claimed wrt RSA). You never hear someone says "that's just chemistry" wrt chemical application patents. (You can't patent chemistry any more than you can patent math.)
The innovation represented by these patents just made $4.5 billion. That's the definition of rewarding innovation.
"Instead of spending billions on new R&D"
If it was legal for every KIRF to come in and use every other companies innovations there would be much less incentive to invest in R&D to begin with.
If the patents ("innovation") were so valuable, Nortel wouldn't have gone out of business.
Successful companies can (and have been) successful without patents (or without enforcing patents). Nortel was unable to be successful despite having lots of patents.
Given those facts, the case for patents as a way to "reward" innovation is thin.
There's only a weak correlation between success and patents in that successful companies are forced to pile up patent portfolios, including paying $125k per patent as in this case, not because they care about any of the technology, but because they are afraid of being sued for even greater amounts of money by some other patently rich company.
I am no supporter of software patents. But I don't think this follows directly. Producing innovations is different from having the business acumen to make money out of it.
Not disputed. Nortel was mismanaged into oblivion. That does not show that the fundamental incentive in the patent system is broken.
"If the patents ("innovation") were so valuable, Nortel wouldn't have gone out of business."
That's a total non sequitur. Any business can be driven off a cliff. The patents are that valuable and that's been clearly shown at auction.
"Given those facts, the case for patents as a way to "reward" innovation is thin."
Your "facts" are better termed anecdotes and only disprove the straw men that "you can't be successful without patents" and "patents guarantee success" neither of which is being claimed by anyone.
So the patents don't represent innovation to the bidders, the patents represent a legal defense fund.
It's not clear to me that that was their final bid, either. Maybe it was, but I can't imagine Google letting something important to them climb at auction from from $0.9 billion to $4.5 billion without staking another bid.
The second thing I don't understand is the connection between the price paid by a consortium of major tech companies[1] for a collection of patents from a formerly major tech company--only a few of which are even software at all--to Fred Wilson ranting about Lodsys. Who is the troll here? Nortel? What is the significance of the dollar figure? How does it "echo the sentiment" of Wilson?
[1]:BetaBeat says "...a coalition of Microsoft, Apple, RIM, and Sony...", while the actual press release[2] states: "Apple, EMC, Ericsson, Microsoft, Research In Motion and Sony."
[2]:http://www.marketwatch.com/story/nortel-announces-the-winnin...
Nowhere in the article did it even imply any of the players in this transaction were trolls.
Read it in that light, and things tie together much more smoothly. Whether it is good writing (e.g. effectively conveying a point) is questionable, since it obviously has cause confusion.
the consortium that bought nortel's patents didn't do so for the patents themselves, they did so to prevent google from having the patents. And they didn't want google to not have the patents not because they were afraid of google bringing products to market based on those patents, but because they didn't want google to be able to shield themselves from patent lawsuits.
These were probably the ones that those companies wanted, and the entire reason that the price is so high. They simply could not let Google be the sole owner of the patents, because that would give Google way too much power in the mobile space.
Out of all the companies, MS is probably the only one that did it specifically to hurt Google. However, this also could signal that MS is going to make their own WM7 phone.
Exactly what is the basis for this?
As you noted Nokia with whom Microsoft shares some interest would benefit from owning those patents. In addition, Microsoft as owner of Skype now has a substantial interest in patents applying to telephony networks.
Also Nortel was a really huge company and a really good one at their peak. So its not surprising it amassed that many patents or that they fetch that much value.
Google is no more benign than any other company.
As far as I know, Google hasn't sued anyone for violating their patents.
Apple, RIM, Nokia, Microsoft sued plenty of companies in clear attempts to further their already strong position in the market.
Facts contradict your opinions.
Edit: Looks the BetaBeat article excluded EMC and Ericsson, so the split wouldn't work so nicely.
Google said so in its initial blog about the Nortel portfolio.
Many VCs have been expressing the same thing in recent weeks.
These two separate actions represent the very early and very late stage of the technology game.
The fundamental problem, however, remains the same.
It describes a strong-armed patent consortium formed around the turn of the century which controlled filmmaking technology. Indie filmmakers reacted by establishing new operations in a little place called Hollywood.
That way Nortel gets more money and Microsoft, Apple and RIM won't be able to torpedo Android with lawsuits (as opposed to doing a better job).