How to Become a Patent Troll

An article at The Age chronicles Forgent's JPEG patent lawsuits, (unintentionally) laying out a simple 4-step plan to convert your company into a patent troll:

Step 1: After failing in the marketplace, rummage around and see if you can find or obtain a dodgy patent:

Forgent's previous incarnation, a videoconferencing company called VTEL, fell on hard times in the late 1990s... The company lost $US6.1 million in fiscal 2002.

Cash-crunched, [Forgent] began rummaging through the company closets - and found a treasure.

Inventors working for Compression Labs, a company that VTEL bought, had registered for patents on a process that Forgent now claims is used in JPEG compression.

Step 2: Bomb Japan:

Mr Snyder first aimed his guns at Japan, a less litigious place than the United States, in hopes of setting a precedent. Forgent sent letters demanding a one-time licence fee to cover alleged past and future infringement. The strategy worked. Staying out of court, Sanyo paid $US15 million and Sony more than $16 million in fiscal 2002.

Step 3: Use Japanese companies' willingness to capitulate as leverage against US companies:

Emboldened, Mr Snyder moved on to the US market, going after more than 1000 companies that have used the JPEG in their products.

Step 4: Reinvest proceeds of settlements into more litigation, against bigger and bigger fish:

Forgent was left with two businesses: the $3 million NetSimplicity, which offers meeting-planning software, and the lawsuit business. That means that for Forgent, licensing is the name of the game. Patent law allows a company to force a violator to stop producing the item in question and pay compensatory damages, which can be tripled in the case of willful infringement.

In Step 2 & 3, you may subsitute other vulnerable and litigation-adverse groups in place of Japan. For example, Acacia has created a very profitable patent trolling venture by targetting first pornographers, who are also very likely to agree to terms keeping them out of court.

In Step 1, I used the term 'dodgy' to describe the Forgent patent. Perhaps that is too kind a term:

"I believe that the patent is invalid," says Dan Ravicher, the [Public Patent] Foundation's executive director, and it is "causing substantial public harm" by adding extra costs to an already taxed system for inventions and by threatening the JPEG standard that is now part of the public domain.

Some critics even question whether software patents like Forgent's ought to exist. "Software is a thought process," says Tom DeMarco, a fellow at the Cutter Business Technology Council, an IT consultancy. "To patent it is comparable to patenting induction or deduction." The European Union, for example, does not grant software patents.

Even more damning is the fact that US Patent Law is beginning to force innovative companies to flee our borders, moving off-shore to protect themselves from silly patent thickets such as those laid by Forgent. We are experiencing an exodus of jobs and revenue, thanks to our patent system:

The number of patents granted has exploded to 187,170 in 2004, up from 66,176 in 1980. There has been a similar explosion in lawsuits, which usually cost at least $2 million to defend if they go to trial. "Now you can make the case that it's driving innovation offshore," says Mr DeMarco. "If you want to start a new software company that does something imaginative and wonderful, you have every incentive to start that company in Slovenia or China or a place that doesn't have these rules."

Patent Infringement Exemption for Researchers?

As part of an Education and Research package in the newly proposed Protecting America's Competitive Edge (PACE) Act, Congress is proposing several patent reform measures, including:

Congress should implement comprehensive patent reform that--
(A) establishes a first-inventor-to-file system;
(B) institutes an open review process following the grant of a patent;
(C) encourages research uses of patented inventions by shielding researchers from infringement liability; and
(D) reduces barriers to innovation in specific industries with specialized patent needs.

The first two of these suggestions have been floated before, and are likely to be a part of almost any proposed reform package. The last two are truly interesting, and indicate that Congress has heard some of our complaints.

Specifically, we know that patents have had an extremely chilling effect on science, with 40% of research adversely affected by patent monopolies, and roughly 1 out of every 5 research projects being canceled outright. To those of you who wrote to your representatives about this startling fact, you can take item (C) from the above list as proof that, once in a while, our elected officials do listen to us.

Item (D) is also of interest, as it hints that Congress may be beginning to understand that not all intellectual monopoly is equal, and in particular, that there is now a general recognition that software patents and business method patents should be treated much differently that patents on physical devices. Once again, if you've written to your representatives regarding this issue, take heart.

If you have not yet written, today is a good day to send a nice letter to your Senators and Congressional Representatives, urging them to support and/or draft legislation that shields researchers from infringement claims, and which improves the fairness of the system with regard to overly broad and excessively long-lived patent monopolies granted for algorithms and business methods. As always, feel free to cut & paste any text from any article here at Right to Create in composing your letters.

And, if you have written in the past, please do so again, today. Nothing but continual pressure will bring about the meaningful reform that we truly need. Without your letters, the only ones pushing on our officials will be the expensive lobbyists paid by corporate America.

Emoticons: the New Wave of Innovation

Not to be left behind in the gold rush to gain patents on smiley faces, Cingular has applied for patent #6,990,452, which describes the genius invention of putting an emoticon into a stream of text via an 'emoticon button.' There are some other great innovations here that would never have been invented without the incentive of a 20-year monopoly, such as using the emoticon to influence an animated face that delivers the message, and allowing the user to select the 'amplitude' of the emoticon.

Cingular now joins the illustrious ranks of other smiley-face patent holders, including Microsoft, AT&T, and Jonathan O. Nelson. And, these guys aren't alone -- it seems that a lot of patent applicants think that there is tremendous value in submitting paperwork to the USPTO that could lead to a grant of monopoly power over very basic and obvious applications of smiley-faces in communications systems.

Thanks to goombah99 for pointing out some of the above links.

Ridiculous Patent: Popup Ads

Does the idea of popping up an advertisement in a separate browser window deserve patent protection? Both the USPTO and Brian Shuster think so.

The good news is that we all hate popup ads, so employing them is detrimental anyway. The bad news is that if you want to use a popup ad anyway, you need to pay Brian Shuster, or wait 20 years for the patent to expire.

Ridiculous Trademark: "Cousteau"

Shortly after Jacques Cousteau's first wife passed away in 1990, he revealed to his family that he had been having a 16-year affair with Francine, a woman 40-years his junior whom he met on a Concorde jet while she was working as an air hostess. He openly admitted to fathering two children by her. The two married six months later.

While his first wife, Simone, was alive, Cousteau shared ownership of his assets with her, including the famous ship Calypso. Cousteau's sons, most prominently Jean-Michel, spent many years working with his father in his oceanographic explorations, helping to build the prestige of Jacques' work and the Cousteau name.

Shortly after Jacques passed away in 1997, Francine claimed to represent her late husband's legacy and work, which the children of Cousteau contested. The courts eventually found in favor of Francine, awarding her sole custody of the Cousteau trademark in oceanographic endeavors.

Today, Jean-Michel and his siblings cannot use their own last name in conjunction with oceanographic pursuits.

BlackBerry Apocalypse: Soon?

The Supreme Court has refused to hear RIM's arguments regarding jurisdication of their BlackBerry service. Judge Spencer is now free to issue an injunction to shutter the wireless email service.

If RIM's BlackBerry is shut down, thousands of emergency responders will lose an important tool in their communication arsenal. Thousands of businesses will lose a tool that has become essential to their revenue.

You say you want a revolution? Well, it will be interesting to see how the masses respond if the trial judge carries through with his clearly stated intentions.

Previous coverage:

• The Wright Brothers & the BlackBerry
• BlackBerry Tiptoes
• BlackBerry with a Gun Against its Head
• Supreme Court to Reform Patent Law?

Twin Problems, Twin Articles

A pair of good reads today. The first, Patent System Stifling Competition contains a good summary of the problems surrounding business method patents, including a review of the cereal restaurant patent battles, and concludes:

While groups like the Electronic Frontier Foundation, FreeCulture and Downhill Battle are growing, intellectual property issues still don't command the same kind of attention as other progressive mainstays. But if the public doesn't start agitating for reform, Americans are going to find themselves increasingly at the whim of the large corporations who own the ideas that form the foundation of the American economy.

The second, Patently Absurd? Report Calls for Patent System Revamp, focuses on that other mainstay of patent abuse, software patents.

"There have been some really strange patents for software processes that have been common practices for a long time," Orr says, citing the footnote example and others like it. "In our litigious society, this makes business very difficult. As process patents become more popular, the number of nonsense patents grows daily."

The article finishes much like the first, with a call-to-arms:

"In the next decade, the intellectual property regimes for the 21st century are apt to be set," Orr says. "We should not be bystanders to that process."

How Not to Argue For Software Patents

Tim Lee over at The Technology Liberation Front has a nice article on SAP's arguments for introducing software patents in Europe, reasoning that when they were a young innovative company they didn't need patent monopolies, but now that they are a "fat, lazy incumbent, they’re discovering the joys of using patent law as a club against their more innovative competitors."

On the Necessity of Drug Patents

Everyone (except for the most unreasonable of intellectual monopolists) agrees that patent quality is a glaring problem in the software patent and business method patent domains, but most don't realize that patent quality is almost as bad in most traditional patent areas, such as the drug industry.

Generic pharmaceutical companies win 75% of their lawsuits against brand-name drug makers -- a striking indication that the big pharmaceuticals are just as likely to apply for and recieve low-quality patents in order to obtain unjust monopolies over drugs that don't deserve patent protection.

Of course, this fact is not lost on the big pharmaceuticals. In an attempt to bolster their monopoly protection, brand-name pharmaceuticals are now agreeing to shorten their patent terms by entering into agreements with generic pharmaceuticals which ban the production of knockoffs for a period of time less than the 20-year patent monopoly. The FTC worries that these agreements amount to payola for the generics companies -- free money for sitting on their hands and allowing the brand-names to charge monopoly prices for dubious 'inventions.'

We've previously argued that the case for patent necessity in the drug industry is actually quite weak.

GPLv3

Important news in the free software world today. The Free Software Foundation released a draft of version 3 of the GNU Public License, the cornerstone of much free open source software. The chief change in this version of the software license is in its dealings with those who would use patents against free software:

It is changes in law, not computer technology, that pose the principal challenges to the free software community. Chief among these changes has been the unwise and ill-considered application of patent law to software. Software patents threaten every free software project, just as they threaten proprietary software and custom software. Any program can be destroyed or crippled by a software patent belonging to someone who has no other connection to the program.

We were among the few to recognize the gravity of the software patent problem in 1991. At that time, however, the problem seemed to be confined to one country, the United States. Today the situation is very different. Most countries have followed the direction of the United States, permitting software to be patented to at least some degree. This worldwide shift in patent law has brought about immense harm and injustice. In 1991 GPLv2 was unique in raising a defense against the problem of software patents, in its section 7. It is indicative of the scale of this problem that, by the end of the decade, commentators were criticizing the GPL for doing too little to combat patents.

A program's own license cannot protect it from the threat of software patents. The only real solution to the problem of software patents is to abolish them. However, we can protect against attempts by some participants in a program's development to use patents against other participants. GPLv3 provides an explicit patent license covering any patents held by the program's developers, replacing the implicit license on which GPLv2 relies. GPLv3 also implements a narrow scheme of patent retaliation against those who undertake this precise form of aggression.

Specifically,

We have therefore decided to make the patent license grant explicit in GPLv3. Under section 11, a redistributor of a GPL'd work automatically grants a nonexclusive, royalty-free and worldwide license for any patent claims held by the redistributor, if those claims would be infringed by the work or a reasonably contemplated use of the work.

The patent license is granted both to recipients of the redistributed work and to any other users who have received any version of the work. Section 11 therefore ensures that downstream users of GPL'd code and works derived from GPL'd code are protected from the threat of patent infringement allegations made by upstream distributors, regardless of which country's laws are held to apply to any particular aspect of the distribution or licensing of the GPL'd code.

A redistributor of GPL'd code may benefit from a patent license that has been granted by a third party, where the third party otherwise could bring a patent infringement lawsuit against the redistributor based on the distribution or other use of the code. In such a case, downstream users of the redistributed code generally remain vulnerable to the applicable patent claims of the third party. This threatens to defeat the purposes of the GPL, for the third party could prevent any downstream users from exercising the freedoms that the license seeks to guarantee.

The second paragraph of section 11 addresses this problem by requiring the redistributor to act to shield downstream users from these patent claims. The requirement applies only to those redistributors who distribute knowingly relying on a patent license. Many companies enter into blanket patent cross-licensing agreements. With respect to some such agreements, it would not be reasonable to expect a company to know that a particular patent license covered by the agreement, but not specifically mentioned in it, protects the company's distribution of GPL'd code.

So, there you have it. A software company that distributes GPLv3 software explicitly licenses, royalty-free, any patents that may cover that software to all downstream users and developers. The number of companies that now rely on open source software as part of their business model is now huge: IBM, HP, Sun, Novell, and even Microsoft -- not to mention folks such as SCO. If they don't want to give royalty-free licenses away for patents covering open source software, their choice is clear: they must cease distribution of that free software.

Ridiculous Patent: Smiley Faces

Microsoft has applied for a patent for creating and transmitting emoticons during "real-time communication," as in while the user is instant-messaging. Never mind that popular non-Microsoft instant messaging software has been doing this for a number of years -- the idea is so obvious that even someone not familiar at all with instant-messaging should immediately see the absurdity in these claims.

Patent Expires, Innovation Flourishes

Patent Baristas reports on the expiration of the PCR (polymerase chain reaction) Patent, an event which is projected to spur growth and lead to new technologies in the field, as well as benefit academic research (which leads to between 55%-90% of all basic drug development).

This is an oftentold story: a patent monopoly ends, innovation flourishes. It happened with the steam engine. It happened with the RSA encryption patent. It happened with the aeronautics industry. What better evidence is there that in general, patents slow down progress and innovation, instead of promoting it?

FAT Filesystem: Patent Upheld

Microsoft announced yesterday that the USPTO concluded that two patents covering their FAT filesystem are valid. This follows a previous pre-final ruling invalidating the patents.

The implications for this ruling are far-reaching. Most USB devices utilize the FAT filesystem as a standard for storing data. Linux and other free operating systems implement the FAT filesystem for compatibility with Windows and to read devices such as digital cameras and thumb-drives.

US Patent 5,579,517 was not issued to Microsoft until 1996 (despite prior art dating to at least 1988). Unless a court overturns the re-examination, Microsoft can collect royalties from all USB storage device makers until 2016, and, more importantly, can exclude Linux, BSD, et. al from including support for the FAT filesystem, rendering them largely useless for accessing such commonly used devices as digital cameras and other USB-attached storage. The patents also threaten the Samba file server, widely adopted as a free competitor to Microsoft's offerings.

Public Patent Foundation President Dan Ravicher said his organization disagreed with the Patent Office's conclusions and offered a broader critique.

"Microsoft has won a debate where they were the only party allowed to speak, in that the patent re-examination process bars the public from rebutting arguments made by Microsoft," he told CNET News.com. "We still believe these patents are invalid and that a process that gave the public equal time to present its positions would result in them being found as such."

Compatibility and interoperability are the foundations of competition in the technology sector, and this patent is a powerful example of how to destroy that foundation. If disruptive technologies like Linux and Samba can be eliminated through clever use of the patent system, what does that say about the subversion of the constitutionally defined purpose of the patent system, which is to promote the useful arts and sciences? We can hope that the new mechanisms proposed yesterday will aid the USPTO in rejecting this type of patent in the future.

Patent Reform via Open Source

Big news in the patent world today: the USPTO will be partnering with the open source community to improve patent quality. Three key changes will be introduced:

1. Open Patent Reveiw seeks to form communities around specific topics and areas to aid patent examiners in determining application validity. No longer will prior art be determined only by the applicant and the examiner. Anyone can participate, and anyone will be able to receive email alerts or RSS feeds about new patents that they can then provide input on.


2. Open Source Software as Prior Art. OSDL and industry leaders in the open source world will build a database of existing open source software that is searchable so that it can legally qualify as prior art.


3. Patent Quality Index. Patents and applications will be assessed and evaluated with numeric scores to quantify their quality. This, again, will be an open process, with anyone able to participate, and has some potentially broad implications. Once such an index is in place, I could envision its scoring having a positive effect on litigation (low-scoring patents could be perceived as having higher chances of being overturned in court) and thus bring some form of market-pricing to royalties where now only monopoly pricing exists (low-scoring patents would have downward pressure on licensing pricing).

Even though IBM is pushing these reforms, it is hard to see how they benefit large corporations any more than they benefit small, independent inventors. Raising patent quality helps everyone, from the independent inventor to big companies. Better patent quality makes for increased certainty regarding patent claims, and reduces the number of bad patents that impede innovation and remove competition. And by introducing a numeric scoring mechanism for granted patents, the USPTO is formally admitting something that everyone has known all along: not all patents have identical quality.

The open nature of all three proposals is revolutionary. Currently, you (as a third party to the examiner and applicant) have no say in the process, no voice in the evaluation of prior-art, non-obviousness, or general quality. All three of these reforms are open, and anyone will be able to participate. That kind of democratization can't be a bad thing.

Further details can be found in several outlets, including news.com, LinuxElectrons, and Peter Zura.

Ridiculous Patent: Peanut Butter & Jelly Sandwich

What do you get when you take a regular peanut butter and jelly sandwich, cut off the crust and crimp the edges (like a Kellog's Pop-Tart)? You get USPTO Patent Number 6,004,596 and a monopoly on building this sandwich until at least 2019. And Smuckers (the owner of this wonderful invention) have already shown that they will enforce their patent by calling out the lawyers -- just ask Albie's Foods of Gaylord, Michigan, who were forced to stop making their "E.Z. Jammer" sandwich until they settled with Smuckers for an undisclosed sum, despite the fact that this type of sandwich had been made and sold in northern Michigan since the 19th century.

If you'd like to know more about this example of how our current patent system provides a means to crush innovation, stifle competition, and reinforce the strength of large corporations over smaller business and independent inventors, head over to MIT's Technology Review, or take a look at the Wikipedia entry.

Patent Office: Reform Thyself

On the front page of the USPTO website today a press release appeared, touting a major shift in patent examination policy.

[The US Patent and Trademark Office], in its continuing efforts to make the patent examination process more effective and efficient, is proposing changes that would reduce the amount of rework by the USPTO and reduce the time it takes to issue a patent and the patent review process. Specifically, these initiatives will prioritize the claims reviewed during the examination process and better focus the agency’s examination of patent applications by requiring applicants to identify the most important claims to the invention.

You can find more details about the proposed changes, as well as submit feedback to the USPTO on these modifications, by following the above links.

There are two interesting things to note concerning these proposals. The first is that the USPTO has been under fire of late for the large number of frivilous patents that it grants and the number of high-profile cases involving these patents that have given the whole process a black eye. Reform measures have been floated before legislators [1] [2] [3]. Stinging editorials have been written [1] [2] [3]. Criticism from nearly every corner is rising. The USPTO sees the writing on the wall; if they don't change their ways, someone else will force them to change. This is a smart preemptive move. But does it go far enough?

Which brings us to our second observation. By its own admission, the proposed changes will only be effective if patent applicants facilitate "more effective and efficient patent examination." Indeed, the changes rely 100% on the applicant helping the examiner by highlighting the most important claims and not submitting applications with too many claims. But what incentive does the applicant have? Will the USPTO give applicants a discount for applications it deems to have gold-star form (whether or not the patent is granted)? Or will the USPTO begin to favor granting patents to applicants who submit applications that facilitate "more effective and efficient patent examination" over those that do not? There must be some incentive for applicants to be helpful, but it seems that whatever incentive the USPTO can offer, it is not as large of an incentive as the applicant has to game the system and continue to abuse it in any way that might be advantageous to him.

Nevertheless, we applaud the USPTO for stepping up and trying to improve the process. There is certainly good to come if the patent office can implement some of these changes, and they have a fair chance at slightly improving things while we wait for more sweeping changes to come down the legislative pipe. Do add your voice to those now preparing arguments to submit to the USPTO regarding these proposals. Otherwise, only the parties that benefit most from a broken system (whether they be lawyers, large corporations, or small patent trolls) will be heard. You have until May 3, 2006 to submit written comments.

The Patent Epidemic

The mainstream press is paying more and more attention to patent system abuse, as is evidenced by a BusinessWeek editorial dated January 9.

How to determine when an invention is "obvious" is one of the most critical and contentious issues in patent circles. Over the past two decades, critics say, the hurdle for passing the obviousness test has been steadily lowered, and the U.S. is now awash in a sea of junk patents.

There are several appealing solutions that address the 'obviousness' problem, among them the independent invention defense and premature expiration for lack of usefulness.

The article continues:

A coalition of businesses...and...two dozen intellectual-property law professors have made a similar filing. Massive overpatenting, the professors say, "creates an unnecessary drag on innovation," forcing companies to redesign their products, pony up license fees for technology that should be free, and even deter some research altogether. [links added]

And concludes:

The bottom line: Rulings rejecting patents on the basis of obviousness are rare, and massive overpatenting continues to be a thriving business.

Well said.

Take action on this issue: write to your Senators and Congressional Representatives (feel free to cut and paste any text from this or any article at Right To Create -- you may find the text on the independent invention defense or premature expiration particularly easy to use as the body of a letter to your elected officials).

Premature Patent Expiration for Lack of Usefulness

In earlier days, inventors were required to submit working copies of their invention along with their patent application to the USPTO. The purpose? To prove 'usefulness,' which the patent office defines as:

the condition that the subject matter has a useful purpose and also includes operativeness, that is, a machine which will not operate to perform the intended purpose would not be called useful, and therefore would not be granted a patent.

Submitting working physical instantiations of inventions is largely impractical today, and so "usefulness" has become a subjective criteria, determined by a lone patent examiner on a case-by-case basis. It has been argued that this subjectivity has greatly contributed to the decline of patent quality, with many patents granted each year for 'inventions' that don't yet exist in the real world, filed by 'paper inventors' who have no intention of ever actually creating their "inventions," but rather lie in wait to sue anyone who independently arrives at the same idea and tries to sell some product based on it. Such patents have become the main fuel source for litigation instigated by patent trolls.

Reinstituting the requirement to submit a working instantiation is impractical. But there is a fix for all this: Automatic, premature expiration of patents that don't, within some fixed timeframe, have either 1) a corresponding product in the market place or 2) a licensee.

Under such a reform, the inventor could produce the invention himself, or pitch it to industries that might be interested in manufacturing it themselves. The additional hurdle to the inventor is not great; at worst, he would need to build one working copy of his invention and put it on his own website or eBay (perhaps for a hefty price tag) within the fixed period.

How does this reform increase patent quality and limit abuses by patent trolls? Classic patent trolls file applications with broad claims in anticipation of directions in which an industry might one day move, never working out the details of how exactly their 'invention' could be implemented. They then lay in wait for someone to create an innovation that looks like it might overlap with their claims, and file or threaten lawsuits. By forcing "paper inventors" to either create and market instances of their inventions or licensing them to third parties that will, the incentive to carve out huge land-grabs in the IP-space are greatly reduced. This class of inventors could still be wildly successful, but their success would hinge on the marketplace assigning appropriate value to their inventions.

Making the patented material prove itself in the marketplace removes the patent examiner's subjectivity and replaces it with the objectivity of the free market. Requiring that the inventor demonstrate usefulness in the marketplace gets us back to actually inventing things and rewarding that, instead of rewarding the act of dreaming up ideas and submitting paperwork to the USPTO.

Text from this post is placed in the public domain. Feel free to liberally cut & paste (in whole or in part) to write to your Senators and Congressional Representatives, or for any other purpose that you might deem useful.