More and more, I think patent trolling is a great business for startups. No need for expensive sales, marketing teams at all. You only need devs and patent attorney.
It depends entirely on the kind of software in question. The R&D cost for advanced vision processing technologies, advanecd radio technologies, robotics technologies, etc, are not at all minimal.
Universities have been among the biggest producers of patents for 50+ years now.
The patent system is, in fact, extremely well suited to the university research model. First, they generally produce technologies that involve very high R&D costs. The major U.S. research universities spend $350-$1,500 million per year on R&D. They work in fields like aerospace, medicine, etc, where the inventions take years and millions of dollars to make. These aren't "One Click" type patents here. Second, universities are not in the business of bringing products to market. But they are responsible for much of the basic technology that goes into those products. By taking out patents on those inventions and licensing them out, they can get a cut of the revenues that accrue from products based on technologies they developed. Patents also allow for the orderly creation of spin-offs to bring products to market while kicking back some revenues to the parent university.
I think one fact that is often lost on HN is that this kind of thing is what most engineers outside the software niche think of when they think about the patent system. In most engineering fields, there is a much tighter synergy between the universities and industry than there is in software, and patents are a key mediator between the two spheres. Most of the engineers I know (aerospace, chemical, mechanical) would consider it unfair for a company to implement the technology they read in a university research paper, technology that cost a lot of money to develop, without paying the university a license.
I don't think university research which results in patents can really be considered trolling. CMU does world-class, field-advancing research and actually makes money licensing the resulting patents. Suing random companies for infringement is not their main reason for acquiring patents.
It's more than a little reminiscent of the history of chemotherapy. All the commonly used drugs, the mustards, the folate antagonists, the vinca alkaloids, the platinum drugs, the taxanes, camphotecins, anthracyclins and nitrosoureas, and combination therapy were discovered at universities, financed with public funds and brought to market by pharmaceutical companies.
The same questions apply, the same dilemmas. Should research funded by taxpayers' money be free, or should it be licensed to private entities, so that the university can continue its mission. Should a university be allowed to do so in the face of shrinking public funds? Should a private entity be allowed to profit from publically funded research?
These aren't easy questions to answer, but they must be thought over before giving an answer.
If we're just ignoring the details of the article, we can just as easily characterize it as ripping off someone else's work and making lots of money on the resulting products.
"[Marvell] argued in the case that it didn't infringe the patents, which Marvell alleged were obtained improperly by withholding information about prior inventions from the U.S. Patent and Trademark Office." http://webcache.googleusercontent.com/search?q=cache%3Aonlin...
The way I read this, Marvell is claiming that CMU filed for the patent without having done a proper search for prior art? Can anyone dig up the relevant court docs? My legal-fu is not that strong.
Marvell was essentially trying to recite the incantation to get a patent invalidated. In order to get a patent thrown out, you need to show that it is not substantially different from prior art, so Marvell unsurprisingly argued that there was prior art which was substantially the same as the patented invention. Assuming they agreed that their products used the technology in the patent, AFAIK this is pretty much the only defense they could have made.
No. This is incorrect, assuming the newspaper quoted that part right.
When you file for a patent, you are required to file all sorts of info, and applicants have a duty to disclose prior art or background information that may be relevant to the patentability of the applicant's invention that they know about. Search for "invention disclosure statements" if you want to know more
So, withholding information would be something like "knowingly failing to alert the PTO that you had a previous publication or patent app on the same technology that was abandoned and is now prior art", etc.
Again, i'm assuming the newspaper used the right terminology, which is of course, dangerous.
Sadly, the federal circuit has set a pretty ridiculously high standard for what constitutes misconduct that would cause you to lose a patent.
You are, IMHO, much more likely to get disbarred by the PTO than you are to lose a patent.
Hrm, you might be right. My usual reporterese-to-actual-reality heuristic gave me "They said there was some prior art that wasn't noted at the time of the filing," and that is a commonplace situation — but your interpretation makes sense as well. My bad for autopiloting it.
I find it interesting that here, when a university is doing the patent-suing, HN errs on the defensive side:
"Accusing Carnegie Mellon of patent trolling is probably not the most effective way to advocate for patent reform."
"Universities have been among the biggest producers of patents for 50+ years now."
"The internet needs more details so we can make an uninformed opinion and collectively decide to be impotently pissed off at the university or not."
However, when a large commercial entity is suing (e.x. Apple v. Samsung [1]), HN bashes the patent system:
"these cases set a chilling precedent for the platform that looks likely to dominate the computing industry for at least the next decade."
"It will hurt innovation because every damn thing is going to have to go through a committee of lawyers before being approved, and it will hurt innovation because the idea that innovation always involves making something brand-new and from whole cloth is fucking retarded."
"Apple's successful use of the broken patent system sends exactly the wrong signal."
Are these entities (Apple and CMU) really all that different? Both spend a lot on R&D, and both want to protect their property. In a sense, there are better reasons to support Apple filing patent lawsuits (forgetting about the specifics of either suit) than CMU. CMU receives a large fraction of funding from taxpayer-funded sources, and produces no real products, just IP. By contrast, Apple receives very little taxpayer money, and uses the patent system to defend its real products.
It's almost as though these are different commentators (only about 20 of HN's thousands of users have commented on this story so far), different entities (yes, Apple Inc. is very different from Carnegie-Mellon University) and completely different patents (one covers a user-facing software feature and the other appears to deal with circuit design).
I don't know anything about the merits of this case, but there is something disquieting about a taxpayer financed non-profit entity, supposedly pursuing truth in a disinterested way, doing this. If CMU wants the freedom to pursue its self-interest, it should not be accorded any special taxpayer funding and be stripped of its non-profit status. You cannot have it both ways.
Next time a venture capitalist tries to talk me into taking venture capital because "our funds come from University endowments" - it is sacred money because you know it is sprinkled with the holy water of "education" - I know what I would say.
CMU should be at liberty to pursue its self-interest. Let's just not allow it to claim a sacred disinterested pursuit of knowledge.
Let me disclose my bias here. I have come to believe that the University system as it exists today is not true to its original mission. This case serves to reinforce my bias.
Personally, I'm a bit mixed. On the one hand, information wants to be free, blah blah. But on the other hand, if they really BASED the idea off what CMU did without compensating them, doesn't that mean the private industry is profiting off public work without compensating the public for it?
You're missing the fact that the university is not profiting here. This money doesn't go into shareholder pockets, it goes back into the university to support further research activities, reducing the need for government subsidy. This isn't a debate about whether universities should pursue their self-interest, but rather about how R&D costs for fundamental research are allocated among the government and industry.
The fact that universities are publicly subsidized does not mean that Marvell should get to use the technology they develop for free. My tax dollars pay for the NYC subway system, but I still have to pay a fare to take a ride.
Indeed, there is a very strong argument in favor of "charging fare" to companies that use publicly-funded technology. The university system is a huge subsidy to companies, particularly technology companies,* that benefit from the free R&D and free training of high-skill engineering workers. Requiring those companies to pay for access to that technology reduces the amount of government subsidy necessary to support the same level of R&D activity.
*) Next time a Microsoft or Google publicly complains about the "shortage of engineers" and how the U.S. needs to educate more people in STEM, realize that they are literally asking for an increase in the subsidization of their labor costs.
> This money doesn't go into shareholder pockets, it goes back into the university to support further research activities, reducing the need for government subsidy.
This is a reasonable intuitive expectation, but it's simply not the case in reality (former academic from an academic family here).
The vast majority of research, including graduate student stipends and professors' summer salaries, comes from sources outside the university's budget (this is complicated for the first few years of a professor's career during which they usually get "start up" funds from the departmental budget before they get their first external grant, but it is true over the long haul).
A professor can almost never go to the university and say "I'm doing great research. You just made $X million from patents, so give me money to continue my work." In fact, nearly the reverse is true; when the professor finds outside funding, the university takes a cut. So, if Professor X gets $100k from the NSF to study mole rats, the university will claim as much as $50k of that grant and put it into the university's general fund.
Now you might say, "Hey _dps that's fine first-order thinking, but if a university gets enough patent royalties they can reduce their demanded overhead percentage." In practice, overhead percentage at the best universities are set not by budgetary need but instead are set indirectly by the funding agencies themselves (e.g. the NSF has limits on overhead charges that institutions take very seriously in setting their internal schedules). The reason for this is that the academic employment market is extremely illiquid because transferring your entire research program from one school to another is a huge hassle; thus professors have comparatively little negotiating power in setting the university's overhead policies.
Having said all that, it's not clear that there's an obviously better system. I recognize the need to cross-subsidize university activities that aren't easy to fund externally. But it's important to remember that universities, in practice, make profits just like corporations. It's just that the profits go back into the endowment, capital expenditures like new buildings (though rarely capital expenditures like new research equipment), or at some institutions, administrator bloat. These profits are almost never directly pushed into new research, or used to reduce grant overhead rates.
CMU CS alum and Pittsburgh resident here. While $1.17 billion would more than double the university's endowment, it's hard to be excited about this. I don't understand how this settlement is remotely proportional to the damage Marvell could have done to CMU.
This case was also decided by a Pittsburgh jury, which doesn't seem right.
The patents in question covered technologies used in billions of chips over a number of years. I think it is quite conceivable that the rights to those technologies could have been worth $1.2 billion if Marvell had licensed them.
Note to the value investors out there: Marvell is an undervalued company (even after taking into account this $1.2 billion penalty.) Their stock price declined by 10% today, making it even more attractive.
uncertain. it is widely recognized that they are getting killed in all their main business segments and revenues are declining precipitously. the major silver lining was that their cash position would their cash and income streams to aggressively buy back stock to keep the share price higher even as they downsized their business.
guess what, their cash hoard is more than halved today alone. that brings shareholder equity to 3.4 (taking a straightforward look at the balance sheet) and cuts cash on hand by over 50%. And it could get worse if the judge increases the fine. that means less for buybacks.
working our way down their balance sheet, we see that 2 bil of the equity is in goodwill. this is usually overpayment for acquisitions and other pretty illiquid assets that don't fetch much value (high level generalization) so lets take that out just to be safe.
you have a company with shareholder equity of 1.4 billion in a shrinking market with earnings of...lets assume 200-300 million figuring that they somewhat arrest their astonishing decline.
this is trading at 3.6 billion right now. its not the worst bet but it is more than somewhat dicey. the semiconductor industry is winner take all and extremely competitive. this means value investing isn't the best strategy. value investing requires that you can reliably predict future income streams.
i've been looking at MRVL as well. i'm just saying its not straightforward
Interesting. I would like to know your source for the fact they are "getting killed".
MRVL gets a significant fraction of its revenues from the HDD industry (disk controllers, HBA controllers, etc), and AFAIK they are maintaining their position of a leader, especially in the consumer SATA market.
40 comments
[ 4.3 ms ] story [ 98.5 ms ] threadThe patent system is, in fact, extremely well suited to the university research model. First, they generally produce technologies that involve very high R&D costs. The major U.S. research universities spend $350-$1,500 million per year on R&D. They work in fields like aerospace, medicine, etc, where the inventions take years and millions of dollars to make. These aren't "One Click" type patents here. Second, universities are not in the business of bringing products to market. But they are responsible for much of the basic technology that goes into those products. By taking out patents on those inventions and licensing them out, they can get a cut of the revenues that accrue from products based on technologies they developed. Patents also allow for the orderly creation of spin-offs to bring products to market while kicking back some revenues to the parent university.
I think one fact that is often lost on HN is that this kind of thing is what most engineers outside the software niche think of when they think about the patent system. In most engineering fields, there is a much tighter synergy between the universities and industry than there is in software, and patents are a key mediator between the two spheres. Most of the engineers I know (aerospace, chemical, mechanical) would consider it unfair for a company to implement the technology they read in a university research paper, technology that cost a lot of money to develop, without paying the university a license.
The same questions apply, the same dilemmas. Should research funded by taxpayers' money be free, or should it be licensed to private entities, so that the university can continue its mission. Should a university be allowed to do so in the face of shrinking public funds? Should a private entity be allowed to profit from publically funded research?
These aren't easy questions to answer, but they must be thought over before giving an answer.
The way I read this, Marvell is claiming that CMU filed for the patent without having done a proper search for prior art? Can anyone dig up the relevant court docs? My legal-fu is not that strong.
When you file for a patent, you are required to file all sorts of info, and applicants have a duty to disclose prior art or background information that may be relevant to the patentability of the applicant's invention that they know about. Search for "invention disclosure statements" if you want to know more So, withholding information would be something like "knowingly failing to alert the PTO that you had a previous publication or patent app on the same technology that was abandoned and is now prior art", etc.
Again, i'm assuming the newspaper used the right terminology, which is of course, dangerous. Sadly, the federal circuit has set a pretty ridiculously high standard for what constitutes misconduct that would cause you to lose a patent.
You are, IMHO, much more likely to get disbarred by the PTO than you are to lose a patent.
"Accusing Carnegie Mellon of patent trolling is probably not the most effective way to advocate for patent reform."
"Universities have been among the biggest producers of patents for 50+ years now."
"The internet needs more details so we can make an uninformed opinion and collectively decide to be impotently pissed off at the university or not."
However, when a large commercial entity is suing (e.x. Apple v. Samsung [1]), HN bashes the patent system:
"these cases set a chilling precedent for the platform that looks likely to dominate the computing industry for at least the next decade."
"It will hurt innovation because every damn thing is going to have to go through a committee of lawyers before being approved, and it will hurt innovation because the idea that innovation always involves making something brand-new and from whole cloth is fucking retarded."
"Apple's successful use of the broken patent system sends exactly the wrong signal."
Are these entities (Apple and CMU) really all that different? Both spend a lot on R&D, and both want to protect their property. In a sense, there are better reasons to support Apple filing patent lawsuits (forgetting about the specifics of either suit) than CMU. CMU receives a large fraction of funding from taxpayer-funded sources, and produces no real products, just IP. By contrast, Apple receives very little taxpayer money, and uses the patent system to defend its real products.
[1] http://news.ycombinator.com/item?id=4430101
Next time a venture capitalist tries to talk me into taking venture capital because "our funds come from University endowments" - it is sacred money because you know it is sprinkled with the holy water of "education" - I know what I would say.
CMU should be at liberty to pursue its self-interest. Let's just not allow it to claim a sacred disinterested pursuit of knowledge.
Let me disclose my bias here. I have come to believe that the University system as it exists today is not true to its original mission. This case serves to reinforce my bias.
As an alum, no idea what to thing about this ruling.
The fact that universities are publicly subsidized does not mean that Marvell should get to use the technology they develop for free. My tax dollars pay for the NYC subway system, but I still have to pay a fare to take a ride.
Indeed, there is a very strong argument in favor of "charging fare" to companies that use publicly-funded technology. The university system is a huge subsidy to companies, particularly technology companies,* that benefit from the free R&D and free training of high-skill engineering workers. Requiring those companies to pay for access to that technology reduces the amount of government subsidy necessary to support the same level of R&D activity.
*) Next time a Microsoft or Google publicly complains about the "shortage of engineers" and how the U.S. needs to educate more people in STEM, realize that they are literally asking for an increase in the subsidization of their labor costs.
This is a reasonable intuitive expectation, but it's simply not the case in reality (former academic from an academic family here).
The vast majority of research, including graduate student stipends and professors' summer salaries, comes from sources outside the university's budget (this is complicated for the first few years of a professor's career during which they usually get "start up" funds from the departmental budget before they get their first external grant, but it is true over the long haul).
A professor can almost never go to the university and say "I'm doing great research. You just made $X million from patents, so give me money to continue my work." In fact, nearly the reverse is true; when the professor finds outside funding, the university takes a cut. So, if Professor X gets $100k from the NSF to study mole rats, the university will claim as much as $50k of that grant and put it into the university's general fund.
Now you might say, "Hey _dps that's fine first-order thinking, but if a university gets enough patent royalties they can reduce their demanded overhead percentage." In practice, overhead percentage at the best universities are set not by budgetary need but instead are set indirectly by the funding agencies themselves (e.g. the NSF has limits on overhead charges that institutions take very seriously in setting their internal schedules). The reason for this is that the academic employment market is extremely illiquid because transferring your entire research program from one school to another is a huge hassle; thus professors have comparatively little negotiating power in setting the university's overhead policies.
Having said all that, it's not clear that there's an obviously better system. I recognize the need to cross-subsidize university activities that aren't easy to fund externally. But it's important to remember that universities, in practice, make profits just like corporations. It's just that the profits go back into the endowment, capital expenditures like new buildings (though rarely capital expenditures like new research equipment), or at some institutions, administrator bloat. These profits are almost never directly pushed into new research, or used to reduce grant overhead rates.
This case was also decided by a Pittsburgh jury, which doesn't seem right.
guess what, their cash hoard is more than halved today alone. that brings shareholder equity to 3.4 (taking a straightforward look at the balance sheet) and cuts cash on hand by over 50%. And it could get worse if the judge increases the fine. that means less for buybacks.
working our way down their balance sheet, we see that 2 bil of the equity is in goodwill. this is usually overpayment for acquisitions and other pretty illiquid assets that don't fetch much value (high level generalization) so lets take that out just to be safe.
you have a company with shareholder equity of 1.4 billion in a shrinking market with earnings of...lets assume 200-300 million figuring that they somewhat arrest their astonishing decline.
this is trading at 3.6 billion right now. its not the worst bet but it is more than somewhat dicey. the semiconductor industry is winner take all and extremely competitive. this means value investing isn't the best strategy. value investing requires that you can reliably predict future income streams.
i've been looking at MRVL as well. i'm just saying its not straightforward
MRVL gets a significant fraction of its revenues from the HDD industry (disk controllers, HBA controllers, etc), and AFAIK they are maintaining their position of a leader, especially in the consumer SATA market.
There's a bunch of specific information about the case here, for the curious: http://dockets.justia.com/docket/pennsylvania/pawdce/2:2009c...
-_- the uspo has terrible links, but here are the links to the patents themselves too, they're pretty specific.
http://patft.uspto.gov/netacgi/nph-Parser?Sect2=PTO1&Sec...
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sec...