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Fixing the patent system: government and industry push for reform

In the US it’s estimated that lawsuits from patent assertion entities, commonly called "patent trolls," have cost the US economy some $300 billion in lost wealth, causing far-reaching repercussions in terms of missed opportunities from companies scared of possible legal exposure. Many in Washington, Silicon Valley, and elsewhere have been calling for the system’s reform.

The cause has been championed by everyone from President Obama, to Google, to the EFF, all of whom argue that the current system disincentivizes innovation, often unfairly rewarding marginal and overly broad claims to inventions at the expense of future entrepreneurs. Follow this stream for the latest news in the fight to bring sensibility to the system.

  • Adi Robertson

    Jun 13, 2012

    Adi Robertson

    Berkeley Law professors propose 'tactical disarmament' agreement for patent suits

    Video Game Patent Art
    Video Game Patent Art

    A pair of Berkeley law professors are trying to stem the flood of patent lawsuits that have affected everyone from tech giants like Google to startups like Nest. Jason Schultz and Jennifer Urban have just launched the Defensive Patent License, an agreement meant to let companies use each other's patents without fear of lawsuits. Any group that used the license would agree to make all its patents available, royalty-free, to any other signatory. They'd also agree not to launch a patent suit against anyone else who had signed: a kind of mutual non-aggression pact. At the Usenix conference on cyberlaw, Schultz said that while patents are useful for encouraging innovation, the litigation around them has gone too far. "The idea is if you want to be part of this network of defensive patent people, you are committing that all of your patents, every single thing you’ve done, will be available royalty-free to anyone who wants to take a license, if they commit to only practice defensive patent licensing."

    Whether this will work, of course, is another question. While small companies have an incentive to join, there's not much reason for giants like Microsoft to let their (often very lucrative) patents into the wild in exchange for freedom from lawsuits, even if they can still sue anyone outside the agreement. Schultz said "this is one of the reasons we’re still tweaking the license a bit," but he apparently didn't elaborate on how he might entice larger parties. There are already patent-sharing agreements elsewhere, but because they don't require members to share their entire portfolios, it's possible for a business to join and then offer only its worst patents. On the other hand, Schultz says it could "decrease the weapon supply of [patent] trolls" since companies will have to make sure they only sell patents to groups that agree to follow DPL principles. Twitter has proposed a similar system, so we'll see if other companies follow suit.

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  • Nilay Patel

    Jun 7, 2012

    Nilay Patel

    FTC: using FRAND patents to block iPhone and Xbox would cause 'substantial harm'

    federal trade commission building
    federal trade commission building

    It was just last week that FTC Chairman Jon Leibowitz said he was "enormously concerned" about technology firms abusing standards-related patents in the global smartphone patent wars, and today his agency is asking the US International Trade Commission to carefully reconsider banning products like the Xbox 360 that allegedly infringe upon patents that are required to be fairly licensed as part of standards agreements. It's a major milestone in what has become a serious international dispute about rights and responsibilities of standards-patent holders — companies like Motorola and Samsung have relied heavily on their standards-related patents in various lawsuits, and the FTC is expressing deep concern about the validity of that approach to block products from market.

    Specifically, the FTC issued a statement to the ITC in both the Apple vs. Motorola and Motorola vs. Microsoft cases now pending, saying that it's concerned a company might make a promise to license a standard-related patent under fair, reasonable, and non-discriminatory (FRAND) terms, and then fight to ban products using those patents as a way to negotiate higher, unfair rates. That's exactly what Apple and Microsoft claim Motorola is trying to do, but so far they haven't been successful — Moto won ITC rulings saying the Xbox 360 infringed several FRAND patents on H.264 video encoding and that the iPhone and iPad infringe a FRAND patent on wireless communications.

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  • Andrew Webster

    Jun 5, 2012

    Andrew Webster

    FTC is 'enormously concerned' about use of standards-essential patents by mobile firms

    federal trade commission building
    federal trade commission building

    With the widespread patent disputes in the smartphone industry, the Federal Trade Commission is particularly concerned with the use of standards-essential patents, says chairman Jon Leibowitz. While speaking at the D10 conference last week, Leibowitz said that standards-essential patents were "an area that the commission is enormously concerned about." He went on to say that the FTC might file concerns with the International Trade Commission over the issue.

    He also wasn't the only one who discussed the topic — during a different talk at the same conference, Apple CEO Tim Cook explained that he didn't believe that companies should be able to get injunctions based off of these patents, saying that suing over them was "fundamentally wrong." Apple is no stranger to the issue — earlier this year it filed a complaint with the EU Commission claiming that Motorola was violating its obligations to license its standards-essential patents under fair, reasonable, and non-discriminatory (FRAND) terms, in just one of the many patent disputes between the two companies.

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  • Adi Robertson

    Mar 30, 2012

    Adi Robertson

    Linus Torvalds' testimony helped persuade judge to throw out Microsoft patent

    Linus Torvalds Wikimedia
    Linus Torvalds Wikimedia

    Linux creator Linus Torvalds may no longer be giving advice to Amiga fans on Usenet, but his testimony on a pair of 20-year-old posts apparently led a judge to throw out one of Microsoft's patents. Torvalds told Wired that in fall 2011, he was called to provide testimony after Microsoft had sued Motorola for allegedly infringing several of its patents. Among them was patent 5,758,352 (or the '352 patent) from 1996, which covers a way to assign long filenames in systems designed for short ones. Motorola, however, found that Torvalds had been working on the problem years before. "Motorola had found this posting of mine about long filenames used in a compatible manner with short [filenames]," Torvalds says, "and it predated the Microsoft patent by three years."

    As a result, Torvalds was called in to be deposed by Microsoft's lawyers. "It was actually pretty annoying, just because the way they tried to cast doubt on what the date was. The lawyer went on for about five minutes: ‘Are you really sure about this date thing?’" Microsoft wouldn't comment on the case, but Torvalds says his testimony helped convince a US International Trade Commission judge that Motorola wasn't infringing the '352 patent. Eventually, Motorola was found to infringe a different patent that covers remote synchronization of meeting requests via email.

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  • Jamie Keene

    Mar 5, 2012

    Jamie Keene

    The inner workings of a patent troll: Intellectual Ventures uncovered

    Research published in the Stanford Law Review has uncovered a number of new details about patent aggregator Intellectual Ventures (IV). The company is one of the most notorious patent trolls, purchasing patents from others not to use the technology, but to reap licensing fees or get litigious if its targets don't play ball. Despite its high-profile name (best known from its lawsuit with Motorola), IV is remarkably secretive. Formed in 2000 by two former Microsoft senior staff and two intellectual property lawyers, IV's advertised activities revolve around a number of technological and medical inventions. However, underneath the IV parent is a number of shell companies, which serve to purchase, hold, license, and defend patents.

    None of the above is new — the role of IV subsidiary Ferrara Ethereal LLC was detailed during the Lodsys vs. iOS developers case in May last year. However, the sheer scale of the company's operations is eye-opening. Professor Robin Feldman and lawyer Tom Ewing's research estimates that IV holds between 30,000 and 60,000 patents — a wide range, but even the low number would give IV the 15th biggest portfolio in the world. The company uses 1,300 holding companies to manage this stock, which often makes it difficult to track exactly when a company is facing legal action from IV. It's a business that has served the company well — in disclosures, IV claims to have made more than $2 billion from licensing alone.

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  • Jeff Blagdon

    Feb 17, 2012

    Jeff Blagdon

    'Everything is a Remix Part 4' looks at social evolution and patent law

    everything remix 4
    everything remix 4

    The long-awaited conclusion to Kirby Ferguson's Everything is a Remix series has finally been posted online and it doesn't disappoint. In this final installment — originally scheduled to be released in October, 2011 — Kirby takes a look at how humans are biased toward avoiding losses at the expense of realizing gains and the effect it has on our patent and copyright laws, tying together diverse threads from Shakespeare and Charles Dickens to Steve Jobs and Paul Allen. The 15-minute video contains dozens of original pieces of motion graphics and animation which are not only beautiful to look at, but really drive the artist's message home. Near the conclusion of the video Kirby moves on to focus on the absurdity of the current legal framework for software patents and the deluge of lawsuits flooding the smartphone industry. We won't spoil the video for you, but the following quote pretty much sums up the creator's take on intellectual property:

    Regardless of how you feel about copyright and patent law, it's hard to think of a better way to kill 15 minutes at work this afternoon. Also, check the source link below to watch the first three parts in the series.

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  • Joseph Parish

    Nov 7, 2011

    Joseph Parish

    Google patent lawyer on Microsoft: 'marginalized' business is behind legal action

    Wendell Moore pogo stick
    Wendell Moore pogo stick

    Google's patent counsel, Tim Porter, sat down with The San Francisco Chronicle to talk patents — a followup to the Chronicle's earlier interview with Microsoft patent counsel Horacio Gutierrez. It's an interesting interview — Porter says the main problem with the system is that too many broadly-written patents are granted. The problem isn't software patents as a concept, according to Porter, but he says the USPTO should use common sense, have clear boundaries for what's patentable, and make damages more reasonable to reduce incentives to sue over minor components.

    Echoing earlier comments from Google, Porter also accused Microsoft of using patent litigation to skim revenue off successful companies because it has failed to gain significant share in the mobile phone market — quite the opposite from Gutierrez, who said that Google is standing on the shoulders of companies like Microsoft. Clearly, Google isn't happy about Microsoft's success in extracting licensing agreements from smartphone manufacturers. Both interviews are linked below, they're an interesting read.

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  • Matt Macari

    Nov 4, 2011

    Matt Macari

    The White House weighs in on software patents, doesn't say much

    It looks like even the White House has software patents on its collective mind, at least in a rhetorical sense. You may recall that a petition to "Direct the Patent Office to Cease Issuing Software Patents" was created back in September through the new "We the People" online petition tool. As is apparent from the title of the petition, the goal was to convince someone in government to do away with software patents entirely. Nearly 15,000 people signed the petition, and the White House has now responded. 

    Compared to the demands of the petitioners, however, the government's response is considerably less controversial. In fact, the message appears to be that everything is pretty much under control. First, the Obama Administration believes the America Invents Act (the recently enacted patent reform law) will improve patent quality across the board, including software patents. This is an odd connection, considering the new law didn't really address software patents at all. Second, the White House declares its support for certain open source projects — even heralding the Department of Health and Human Services as "a leader in standards-based, open sourced policy to power innovations." This second point seems to be an afterthought with little relevance, but we'll just have to take it for what it's worth.

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