The trolls have had an easy time of it so far. Is this the end for them?
defending the right to innovate
Monopoly corrupts. Absolute monopoly corrupts absolutely.
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Floyd Norris writes on patent trolls and the law link here. It is well-worth a read as it offers hope that the Supreme Court will reverse common practice in appeals where the winner doesn't get his legal fees paid by the loser. This practice has made it difficult for small defendants to cover their costs and makes them reluctant to fight the trolls even when they have a good case as their company may not survive.
The trolls have had an easy time of it so far. Is this the end for them?
First, techdirt and then the Electronic Frontier Foundation examine the draft bill on patent reform introduced by House Judiciary Chair Bob Goodlatte. Techdirt (http://www.techdirt.com/blog/innovation/articles/20130923/17400624628/posturing-over-patent-reform-shows-how-young-companies-innovate-while-old-companies-litigate.shtml) looks at the sources of support for the proposal, mostly from startups that are innovators and are frequent critics of existing patents. Older firms which have an established position and may fear innovation are opposed. EFF's piece (https://www.eff.org/deeplinks/2013/09/troll-killing-patent-reform-one-step-closer) looks at the details and specifies what it likes in the draft, most of the bill's proposals. Given the balance of forces in the Congress, passage seems questionable but one can always hope.
Bartees Cox Jr. contrasts the company image and the public image of the patent troll, Intellectual Ventures (http://www.publicknowledge.org/blog/two-sides-intellectual-ventures). He sums it up, "Intellectual Ventures is giving you the good side of the story. They say that they are champions of invention and they're quick to point out their health and medical research. Everyone else in the battle for patent reform sees the other side. The side that preys on businesses without penalty, that buys up patents to sue innovators building companies, and that ultimately keeps innovation at a standstill while raking in massive profits. Later, he writes, "Because when a company like Intellectual Ventures sits on technologies and patents, waiting for someone to independently make a product to become unintentional fodder for a lawsuit trap, there is no benefit to knowledge, consumers, or to society." Worth a read and thought about the purpose of patents and current experience and whether we wouldn't be better off without them.
The other day, the New York Times published instructions for aspiring inventors on how to take their inventions through the patent granting process and on to the retailers' shelves link here. The examples are a couple of aspiring inventors and describes the pitfalls, the costs, and a rough estimate of the likelihood of success.
In the first example, the invention is a sun shade for a baby's stroller. The problem in this case was the number of thieves waiting to take the aspiring inventor's money without providing any service or charging an arm and a leg for minimal services. First lesson: know your help's history. Second lesson: you have to do a lot of the work yourself; it is hard to write a contract that specifies what is needed and to find a contractor who can provide it.
The second case is an inventor of a screw device to replace the broken one on the ear pieces of eyeglasses. The experience with companies who are selling consulting and other assistance is much the same as in the first case. The upfront costs of patenting and marketing are stiff and the need for added funding, often high.
The article seems to suggest that there is a growing number of successful inventor-developers and leaves the thought that with a bit of effort, you too can succeed. This does not account for the number who failed. Nor does the data cite the proportion that were brought to market by big companies who seem to dominate the marketplace when you shop and who turn out to end up with the patents that make market dominance possible.
The blog, Public Knowledge, argues that the International Trade Commission should consider the public interest in reaching regulatory decisions on patents. The Obama has so decreed when it overruled an ITC case and permitted imports of Apple phones that it had found to violate duly recognized patents of other companies, in this case foreign firms link here.
When I look at the mess in the whole patent system, I see a world of oligopolies and monopolies built on patents, supposedly designed to encourage innovation, but instead creating a self-perpetuating means to paralyze innovation.
I would do away with the whole system of patents, but that isn't going to happen. Too many huge companies have a vested interest in the existing highly profitable system. Instead, those of my persuasion must examine whether the legal change making importation illegal under a finding of public interest is a good thing, rather than allowing the competing imports and slowing Apple's ability to go on coining money. To put it differently, isn't allowing the imports in the public interest? In this case, the big American company was the winner. Who lost?
Public Knowledge has a couple of pieces up on the fight between CBS and Time Warner Cable over TWC's payment for the right to rebroadcast broadcasts and then charge the public link here and link here. CBS has already been amply rewarded through advertising on its over the air broadcasts free use of the public airwaves. But in the current fight, it wants still more money. Congress set this up in 1992 legislation which allowed the networks to charge for retransmission permission of its broadcasts.
CBS has the right to charge for its retransmission consent but the law stipulates that the fees must be reasonable. However, left to themselves the parties have self-interest to decide what is reasonable. The 1992 law gives the FCC the power to intervene on what is reasonable link here but it has so far avoided taking a position.
CBS has now upped its pressure and limited its over-the-air broadcasts in some areas served by TWC. The public pays in lost services and will pay again with higher charges.
Competition for cable-television providers looks safe at least for a time, as the result of two copyright suits link here. In one, Aereo TV captures from antennas and delivers regular programming via the internet for a monthly fee; this allows the subscriber to record the programs playing them back when he wants. In the other, the satellite Dish provider offered a service, Hopper, which allowed the customer to eliminate ads on home recorded programs. Neither service allows the broadcaster to charge for its programs since the courts ruled that they could not use copyright to enforce payment.
The crucial court decisions found that it was the customer who made the recording so copyright was not violated.
As the Times article points out, unless the two interlopers pay, the broadcasters can and now are likely to retaliate by ceasing to broadcast over the air and providing cable service only.
In judging the result of these cases, once again copyright appears to reduce competition and raise prices to consumers. But its ostensible purpose, to reward the creator of the program to induce new creativity, is largely avoided--if that ever happened, it was long in the past.
Here is one for the books; you may record copyrighted material and play it back without the ads, because dumping the ads is covered by fair use link here. Fox TV, the plaintiff, saw it was losing revenue when others downloaded and redistributed its on-line material without the ads. Dish, the TV redistributor, made a good business out of doing so and charging subscriptions from its customers. Its successful defense will no doubt attract others into the redistribution business.
I'm late with this but Public Knowledge announced two weeks ago that it was starting a Patent Reform Project link here. Given that we are surrounded with an incredibly expensive and inefficient and now corrupt (with the presence of the patent trolls' extortion) system, it is important for the informed and interested to weigh in.
One cannot be terribly optimistic about the outcome, but to leave the system to the big money and personally interested is to give up. We can do better. Given our democratic system, compromise is essential so one almost never gets all his wishes. But the critics have been making a dent in the unthinking belief that intellectual property was property like physical goods or land and that it always encouraged innovation and thus human progress. It is a right with characteristics like real property, created by law and law can be changed. Now is the time to change it.
Weigh in, please.
The New York Times went after another big patent troll yesterday, the second in less than a week link here. This one is called Intellectual Ventures. It seems to be a spinoff from Microsoft, a major patent holder, as it is run by Microsoft's former chief technology officer, Nathan Myhrvold. Its origin may raise the question as to how much business it does with Microsoft and whether it profits in some way from the new enterprise.
Another reason for the article is the announcement that "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 link here. 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." Although not part of the article, it is worth reading as a description of what the FTC is thinking.
Most of the article is a description of what Intellectual Ventures has been up to and what a toll it has levied on the cost of doing business in a world that fosters both patents and patent-trolls.
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