In The New Yorker, Tim Wu suggests some lines of counter-attack to use against patent trolls:
There are good laws in place that could fight trolls, but they sit largely unused. First are the consumer-protection laws, which bar “unfair or deceptive acts and practices.” Some patent trolls, to better coerce settlement, purposely misrepresent matters such as the strength of their patents, the extent of other settlements, and their actual willingness to litigate. Second, there are plenty of remedies available under the unfair-competition laws. Some trolls work by aggregating an enormous number of patents, and then present the threat that one of their thousands of patents might actually be valid. The creation of these portfolios for trolling may be “agreements in restraint of trade” under Section 1 of the Sherman Antitrust Act, or they may “substantially lessen competition” under the Clayton Antitrust Act. More generally, the methods of the trolls are hardly what you would call ordinary methods of competition; they should be considered, rather, what the Federal Trade Commission calls “unfair methods of competition” under Section 5 of the F.T.C. Act. The Commission has the power to define and punish methods of business that are inherently harmful with few or no redeeming benefits, and that’s what trolling is. Finally, it is possible that the criminal laws barring larceny and schemes to defraud may cover the conduct of some trolls.
Unfortunately, other than in Vermont, these laws remain largely unenforced, for reasons that aren’t particularly good. Trolls, to switch metaphors, are like cancer cells: they mimic ordinary activity, namely the assertion of patent rights. A war on trolls could become a war on patent holders in general. Since the line between the two can be fuzzy, the argument is that war might deter some real invention. It might, for example, lump universities in with the extortion artists.
But that justifies caution, not inaction. All law enforcement involves this problem of sorting. There is a narrow line between the legitimate trader who knows the stock market well and the criminal inside trader, yet that doesn’t mean securities laws should be left unenforced.
At Techdirt, Mike Masnick has some very good news:
Back in February, we were a bit surprised during President Obama’s “Fireside Hangout” when he appeared to speak out against patent trolls. Historically, most politicians had always tiptoed around the issue, in part because the pharma industry seems to view any attack on patent trolls as an existential threat — and, frankly, because some small time patent holders can also make a lot of noise. However, it’s become exceptionally clear that there’s political will to take on patent trolls. We’ve noted five different patent law bills introduced in Congress, all targeting patent trolls in one form or another.
And now, it’s been reported that President Obama is going to come out strongly against patent trolling, directing the USPTO and others to fix certain issues, while also asking Congress to pass further laws to deal with patent trolling. The President will flat out note that patent trolls represent a “drain on the American economy.” The announcement will directly say that “patent trolls” (yes, they use the phrase) are a problem, while also talking about the problem of patent thickets like the infamous “smartphone wars.”
The plan is scheduled to be released later today, but we’ve got a preview of the specific plan, and let’s take a look at each of the suggestions quickly. I’m sure we’ll be discussing the concepts in much more detail for the near future. The plan is split into two different parts: legislative actions (i.e., asking Congress to do something) and executive actions (i.e., ordering administration agencies/departments to do things). Let’s start with the executive actions, since those are likely to have the more immediate impact.
This is excellent news, at least for anyone not currently working as a patent lawyer for one of the trolls…
Cory Doctorow appears to have been plagiarized by real life:
Two minor characters from my novel Makers have apparently come to life and written an article for 3D Printing Industry. These two people are patent lawyers for Finnegan IP law firm, Washington, DC, which I don’t recall making up, but this is definitely a pair of Doctorow villains (though, thankfully, I had the good sense not to give them any lines in the book — they’re far too cliched in their anodyne evil for anyone to really believe in).
These patent lawyers are upset because the evil Makers (capital-M and all!) are working with the Electronic Frontier Foundation to examine bad 3D printing patents submitted to the US Patent and Trademark Office. The problem is that 3D printing is 30 years old, so nearly all the stuff that people want to patent and lock up and charge rent on for the next 20 years has already been invented, and the pesky Makers are insisting on pointing out this inconvenient fact to the USPTO.
This breaks the established order, which is much to be preferred: the UPSTO should grant all the bullshit patents that companies apply for. The big companies can pay firms like Finnegan to file patents on every trivial, stale, ancient idea and then cross-license them to each other, but use them to block disruptive new entrants to the marketplace. The old system also has the desirable feature of arming patent trolls with the same kind of bullshit patents so that they can sue giant companies and disruptive startups alike, and Finnegan can be there to soak up the tens of millions of dollars in legal fees generated by all this activity.
The question seems to be is it totally broken or only partially broken?
According to one well-publicised estimate, there are 250,000 patents relevant to a modern smartphone. Even if the number is one-tenth of that, it suggests an impossible thicket of intellectual property through which a company must hack to bring a cool new product to market.
A key issue is something called the hold-up problem. If a $1bn product depends on 1,000 patents, it is clearly impossible to pay the typical patent holder more than $1m. But any patent-holder could try to extort many times that amount by threatening to block the whole project.
Large firms have responded to this problem by buying or developing large collections of patents. This gives them the ability to launch countersuits, and that threat should make rivals reasonable. But although defensive patenting looks like a pragmatic solution, it has costs and limits. The wave of defensive applications swamps patent offices, which means more poor-quality patents and longer delays.
“Patent trolls” — a derisive name for companies that make money purely from their patents — have less to lose in a patent war but although some are legitimate, others are extortionists. And while established players may reach cosy understandings, a young company with a new idea may find it impossible to break into a market that is thick with defensive patents. If only the big boys can play the patent game, innovation will suffer.
At Techdirt, Mike Masnick has to restrain himself from just quoting the whole B&N submission to the Federal Trade Commission and the Department of Justice:
As Groklaw notes, the B&N filing is clear, concise and highly readable. It outlines the problem directly:
The patent system is broken. Barnes & Noble alone has been sued by “non practicing entities” — a/k/a patent trolls — well over twenty-five times and received an additional twenty-plus patent claims in the last five years. The claimants do not have products and are not competitors. They assert claims for the sole purpose of extorting money. Companies like Barnes & Noble have to choose between paying extortionate ransoms and settling the claim, or fighting in a judicial system ill equipped to handle baseless patent claims at costs that frequently reach millions of dollars.
As they point out clearly, even when they have a very strong case — either when they don’t infringe and/or when the patent is bogus, a lawsuit is incredibly costly in terms of time, money and effort.
In the current system, patent trolls overwhelm operating companies with baseless litigation that is extremely costly to defend. Patent cases generally cost at least $2M to take through trial, and frequently much more. Litigating, even to victory, also entails massive business disruption. Companies are forced to disclose their most sensitive and top-secret technical and financial information and must divert key personnel from critical business tasks to provide information and testimony. The process is exceptionally burdensome, especially on technical staff. Document discovery and depositions seem endless.
Patent trolls know this and as a result, they sue companies in droves and make settlement demands designed to maximize their financial take while making it cheaper and less painful to settle than to devote the resources necessary to defeat their claims. The current system lets them do so even with claims that are unlikely to prevail on the merits. That is because, whether win lose or draw, the rules effectively insulate trolls from negative consequences except perhaps a lower return than expected from any given company in any given case. They can sue on tenuous claims and still come out ahead. And so the broken system with its attendant leverage allows trolls to extract billions in blackmail from U.S. companies and, in the final analysis, consumers.
One of the great things about the filing is that it reminds the FTC and the DOJ of the constitutional underpinnings of patent law — not that patents are required or guaranteed, but that their purpose is to promote the progress of the useful arts. If that is not happening, then the use of patents in such a manner should be seen as unconstitutional.
Following up on an earlier post (“The case of the over-extended copyright“), The Economist explains why there is still legal wrangling going on over the copyright claims on Sherlock Holmes:
The situation is muddled by differing copyright regimes in America and elsewhere. No one disputes that the copyright has expired on Conan Doyle’s work anywhere where protection ceases 70 years after an author’s death (he died in 1930). Yet when America reformed its copyright rules in 1978 to introduce a “life plus” model in harmony with the rest of the world for works created starting in 1978, it retained its older term-limited system for property created between 1923 and 1977. Works produced within that range have had their expiration extended to a fixed 95-year term from first publication; anything produced earlier is in the public domain. This umbrella of protection covers ten Holmes stories published in America for the first time as part of The Case-Book of Sherlock Holmes in 1927. These stories are still under copyright until January 1st 2023.
[. . .]
The estate also asserts some trademark rights on the Holmes characters, but Mr Klinger confirms to your correspondent that this was not part of the license claim. Jennifer Jenkins, the director of Duke University’s Centre for the Study of the Public Domain, says trademark protection would be inapplicable, in any case. “Trademark law doesn’t fit what they’re claiming to own or what they’re trying to stop,” she says. Ms Jenkins also dismisses any copyright claim the estate might have to any pre-1923 elements of Holmes’s biography. “The problem is that Sherlock Holmes and Watson are quite clearly in the public domain.” The estate did not respond to a request for details about its intellectual property.
[. . .]
An expert in the duration of copyright terms in America, Peter Hirtle of Cornell University finds no basis for the Conan Doyle estate to claim general ownership over aspects of Holmes from stories that are in the public domain. “Let’s imagine that the fact that Holmes plays the violin was included for the first time in one of the copyrighted stories,” he says via e-mail, “then it can’t be included in any new story that draws on the public domain versions.” But if the “Company” stories rely entirely on public-domain elements, then the estate has no ground to stand on, he adds.
Michael Geist reports on a recent lobbying attempt that should be thrown out with contempt if we lived in a just world:
The deadline for comments on Industry Canada’s draft anti-spam regulations passed earlier this week with a group of 13 industry associations — including the Canadian Chamber of Commerce, the Canadian Marketing Association, the Canadian Wireless Telecommunications Association and the Entertainment Software Association of Canada — submitting a lengthy document that, if adopted, would gut much of the law. The groups adopt radical interpretations of the law to argue for massive new loopholes or for the indefinite delay of several provisions. I will focus on some of the submissions shortly, but this post focuses on the return of an issue that was seemingly killed years ago: demands to permit surreptitious surveillance by the copyright owners and other groups for private enforcement purposes.
During the anti-spam law debates in 2009, copyright lobby groups promoted amendments that would have allowed for expansive surveillance of user computers. Coming on the heels of the Sony rootkit scandal, the government ultimately rejected those proposals (the Liberals had plans to propose such amendments but backed down), leaving in place an important provision that requires express consent prior to the installation of computer software.
[. . .]
The Canadian Chamber of Commerce and other business groups want to ensure that the anti-spam law does not block their ability to secretly install spyware on personal computers for a wide range of purposes. In doing so, these groups are proposing to turn the law upside down by shifting from protecting consumers to protecting businesses. The comment period on the draft regulations may have closed, but it is not too late to tell Industry Minister Christian Paradis or your local Member of Parliament to reject demands that would gut the anti-spam bill and legalize spyware for private enforcement purposes.
Apple has patented the “page turn”:
If you want to know just how broken the patent system is, just look at patent D670,713, filed by Apple and approved this week by the United States Patent Office.
This design patent, titled, “Display screen or portion thereof with animated graphical user interface,” gives Apple the exclusive rights to the page turn in an e-reader application.
Yes, that’s right. Apple now owns the page turn. You know, as when you turn a page with your hand. An “interface” that has been around for hundreds of years in physical form. I swear I’ve seen similar animation in Disney or Warner Brothers cartoons.
(This is where readers are probably checking the URL of this article to make sure it’s The New York Times and not The Onion.)
Software patents are becoming a clear and present danger to innovation:
The basic problem being that there are so many patents, covering so many things, that the system is in danger of eating itself like Ourobouros.
When Dan Ravicher of the Public Patent Foundation studied one large program (Linux, which is the kernel of the GNU/Linux operating system) in 2004, he found 283 U.S. patents that appeared to cover computing ideas implemented in the source code of that program. That same year, it was estimated that Linux was .25 percent of the whole GNU/Linux system. Multiplying 300 by 400 we get the order-of-magnitude estimate that the system as a whole was threatened by around 100,000 patents.
If half of those patents were eliminated as “bad quality” — i.e., mistakes of the patent system — it would not really change things. Whether 100,000 patents or 50,000, it’s the same disaster. This is why it’s a mistake to limit our criticism of software patents to just “patent trolls” or ”bad quality” patents. In this sense Apple, which isn’t a “troll” by the usual definition, is the most dangerous patent aggressor today. I don’t know whether Apple’s patents are “good quality,” but the better the patent’s “quality,” the more dangerous its threat.
It’s near impossible to develop new software when there are so many such patents out there. Further, even if you tried to get clearance (or signed up to licenses and so on) to use them it would be near impossible.And we do need to recall what the purpose of a patent system is. No, it isn’t to provide and income to those who create inventions. That’s only the proximate aim: the ultimate aim is to maximise the amount of invention and innovation.
The economics of patents accepts that there is a tradeoff here. Yes, we’d like people who come up with useful new things to make money. Because that incentivises people to work on coming up with interesting new things to all our benefit. However, we also want people to be able to create derivative innovations and inventions. If our protection of the original inventors is too strong then we limit this. What we want is a system that hits the sweet spot, of encouraging the maximum amount of both, original and derivative. The problem of course being that to encourage one we weaken the incentives to do the other, either way around.
Software patents: two words that probably should not go together at all.
Mr. Phillips and Vlingo are among the thousands of executives and companies caught in a software patent system that federal judges, economists, policy makers and technology executives say is so flawed that it often stymies innovation.
Alongside the impressive technological advances of the last two decades, they argue, a pall has descended: the marketplace for new ideas has been corrupted by software patents used as destructive weapons.
[. . .]
Patents are vitally important to protecting intellectual property. Plenty of creativity occurs within the technology industry, and without patents, executives say they could never justify spending fortunes on new products. And academics say that some aspects of the patent system, like protections for pharmaceuticals, often function smoothly.
However, many people argue that the nation’s patent rules, intended for a mechanical world, are inadequate in today’s digital marketplace. Unlike patents for new drug formulas, patents on software often effectively grant ownership of concepts, rather than tangible creations. Today, the patent office routinely approves patents that describe vague algorithms or business methods, like a software system for calculating online prices, without patent examiners demanding specifics about how those calculations occur or how the software operates.
As a result, some patents are so broad that they allow patent holders to claim sweeping ownership of seemingly unrelated products built by others. Often, companies are sued for violating patents they never knew existed or never dreamed might apply to their creations, at a cost shouldered by consumers in the form of higher prices and fewer choices.
An interesting article in The Economist:
As an expert on intellectual property, Mr Weinberg has produced a white paper that documents the likely course of 3D-printing’s development — and how the technology could be affected by patent and copyright law. He is far from sanguine about its prospects. His main fear is that the fledgling technology could have its wings clipped by traditional manufacturers, who will doubtless view it as a threat to their livelihoods, and do all in their powers to nobble it. Because of a 3D printer’s ability to make perfect replicas, they will probably try to brand it a piracy machine.
[. . .]
As with any disruptive technology — from the printing press to the photocopier and the personal computer — 3D printing is going to upset existing manufacturers, who are bound to see it as a threat to their traditional way of doing business. And as 3D printing proliferates, the incumbents will almost certainly demand protection from upstarts with low cost of entry to their markets.
Manufacturers are likely to behave much like the record industry did when its own business model — based on selling pricey CD albums that few music fans wanted instead of cheap single tracks they craved — came under attack from file-swapping technology and MP3 software. The manufacturers’ most likely recourse will be to embrace copyright, rather than patent, law, because many of their patents will have expired. Patents apply for only 20 years while copyright continues for 70 years after the creator’s death.
[. . .]
In that, the record industry was remarkably successful. Today, websites and ISPs have to block or remove infringing material whenever they receive a DMCA takedown notice from a copyright holder — something that happens more often than actually justified. Google reckons that more than a third of the DMCA notices it has received over the years have turned out to be bogus copyright claims. Over a half were from companies trying to restrict competing businesses rather than law-breakers.
Rallying under the banner of piracy and theft, established manufacturers could likewise seek to get the doctrine of “contributory infringement” included in some expanded object-copyright law as a way of crippling the personal-manufacturing movement before it eats their lunch. Being free to sue websites that host 3D design files as “havens of piracy” would save them the time and money of having to prosecute thousands of individuals with a 3D printer churning out copies at home.
In the National Post, Jesse Kline points out that the grubby legal dispute between Apple and Samsung may end up hurting the consumer much more than either of the combatants:
Software is unique because it is covered under both copyright and patent law. Computer software is written in a human-readable language, called source code, that is then translated by the computer into something the machine can understand. Much like writing a book, or newspaper article, source code is automatically covered under copyright law.
But no one is alleging that Samsung copied Apple’s code. What Samsung was sued for was achieving the same outcome as Apple, even though it was done in a different way. In this literary world, this would be akin to someone being sued for violating the copyright on Harry Potter, just because they wrote their own story about a boy wizard.
Intellectual property laws are supposed to encourage innovation by allowing companies and individuals to profit off works that may have cost a significant amount of money to develop. Apple says it was undercut in price because its competitor simply copied its design. In actual fact, Android was cheaper to produce because it is based on the open source Linux operating system, which saved money compared to Apple proprietary system.
For its part, Samsung accuses Apple of resorting “to litigation over market competition in an effort to limit consumer choice.” It’s one thing for the legal system to protect new inventions and original works, but this is quite clearly a case of a company engaging in anti-competitive behaviour.
Cory Doctorow explains why we still need to fight against WIPO’s latest attempt to gain even more legal rights over content:
The UN’s World Intellectual Property Organization’s Broadcasting Treaty is back. This is the treaty that EFF and its colleagues killed five years ago, but Big Content won’t let it die. Under the treaty, broadcasters would have rights over the material they transmitted, separate from copyright, meaning that if you recorded something from TV, the Internet, cable or satellite, you’d need to get permission from the creator and the broadcaster to re-use it. And unlike copyright, the “broadcast right” doesn’t expire, so even video that is in the public domain can’t be used without permission from the broadcaster who contributed the immense creativity inherent in, you know, pressing the “play” button. Likewise, broadcast rights will have different fair use/fair dealing rules from copyright — nations get to choose whether their broadcast rights will have any fair dealing at all. That means that even if you want to reuse video is a way that’s protected by fair use (such as parody, quotation, commentary or education), the broadcast right version of fair use might prohibit it.
Worst of all: There’s no evidence that this is needed. No serious scholarship of any kind has established that creating another layer of property-like rights will add one cent to any country’s GDP. Indeed, given that this would make sites like Vimeo and YouTube legally impossible, it would certainly subtract a great deal from nations’ GDP — as well as stifling untold amounts of speech and creativity, by turning broadcasters into rent-seeking gatekeepers who get to charge tax on videos they didn’t create and whose copyright they don’t hold.