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I regularly get emails and have discussions with entrepreneurs who are on the receiving end of a software patent lawsuit. Many of these are young companies, often with little or no revenue. It’s total, completely madness. If you don’t believe me, read the latest rant from a young entrepreneur on the receiving end of a software patent lawsuit from a troll.
My startup, all five employees and $0 revenue, is being sued by a patent troll. It is madness.
Software patents are weapons of mass extortion. The trolls know that the cost of patent litigation is huge- millions of dollars for a thorough defense. The vast majority of companies do a simple cost benefit analysis and settle. It costs a pittance to file a lawsuit, a fortune to fight. A troll can sue many companies and live off the settlements. Trolling is a lucrative, legally sanctioned business model with virtually no risk. The longer this continues the worse it will get.
And getting a patent is not that hard. For less than the cost of a small friends and family round you make a series of claims that describe your “invention”. Sort of a technical concept document written by a lawyer. There is no code required, no detailed product spec. You don’t have to build anything. We are being sued for having a UI connected to a server connected to a mobile device. And get this- data goes back and forth between the UI and the mobile device. Break through, right? Yes, according to the Patent Office.
And just like with illegal extortion, patent extortion causes real personal and economic pain:
- I wake up in the middle of the night with my hands clenched like lobster claws. I’ve actually cried from the injustice and worry;
- Every three hours of legal advice costs the same as an on-shore customer service representative with benefits for a week.
- A full legal defense could be my entire future Series A. And who is going to invest in that round when use of funds says “litigation”?
It is romantic to fight but the trolls know that a startup’s number one job is to stay alive. Screw romance. Screw justice. One lawyer I consulted told me not to read the patents- they were irrelevant. And the troll agrees. He said he didn’t really understand my business and didn’t care. We just looked like other companies he has sued. If your startup hasn’t been sued yet, don’t worry. You will.
What we need is leadership. But where are our leaders? In court. It’s disgusting. The millions spent haggling over the curvature of an icon could fund a massive lobbying and social action effort. Is it possible we can send a million tweets about happy cats but not stop patent extortion? We’re a community that believes in big dreams and blowing up obstacles. We can do this. We just have to try.
I’m on a Google Hangout today at 1pm Pacific time hosted by the EFF. I’ll be discussing the broken software patent system with Jason Schultz and Parker Higgins.
I know this announcement is last minute – somehow the event eluded me and my calendar. Fortunately, due to the power of Twitter, I noticed that I was mentioned in a tweet about it.
I feel like it’s kind of trivial to be talking about stuff like this given the shooting in a movie theater in Colorado earlier today. I’m super bummed out about it and having trouble getting it out of my head. It’s so heartbreaking to me that we struggle with this kind of violence in our country and whenever it happens, especially close to home, it rattles me. I don’t know what to do other than send good karma to anyone who was a victim – so I’m sending out my thoughts and positive energy to whomever they are.
In the mean time, if you are interested in the ongoing saga of the broken software patent system, join me in an hour to discuss it more.
James Bessen, Jennifer Ford, and Michael Meurer of BU School of Law have written a phenomenal paper titled The Private and Social Costs of Patent Trolls. Rather than be politically correct and refer to NPE’s simply as “non-practicing entities”, they cut through all the noise, define what a patent troll is, and go through a detailed and rigorous analysis of the private and social costs of patent trolls. Some highlights from the paper follow:
- From 1990 – 2010 NPE lawsuits are associated with $500 billion dollars of lost wealth to defendants.
- In the past four years, NPE lawsuits are associated with an average of $80 billion per year of lost wealth to defendants.
- Very little of this loss wealth represents a transfer to inventors.
The litigation has distinctive characteristics:
- It is focused on software and related technologies.
- It targets firms that have already developed technology.
- Most of these lawsuits involve multiple large companies as defendants.
The authors suggest that these lawsuits exploit weaknesses in the patent system. They conclude that the loss of billions of dollars of wealth associated with these lawsuits harm society and state “while the lawsuits increase incentives to acquire vague, over-reaching patents, they decrease incentives for real innovation overall.”
While I’ve just summarized the executive summary, the paper is extremely well written, the topic rigorously researched, and the conclusions follow from the actual data. The footnotes are a joy to read as they tackle a few previous papers that use completely contorted logic to make their points. My favorite is footnote 6:
“In effect, Shrestha is arguing: A) Valuable patents receive higher citations, and, B) NPE litigated patents receive higher citations, therefore, C) NPE litigated patents are valuable patents. This is a classic logical fallacy.”
It’s a special bonus that the header on each page says “page # – Troll – 9/11″.
My partner Jason and I were talking about exactly the problem the other day as we wondered why so many people have trouble with logic and deductive reasoning. Our world of software patents is rife with this category of problem. It’s awesome that serious academics like Bessen and his colleagues are going deep into this issue.
I’ve been railing against software patents for a number of years. I believe software patents are an invalid construct – software shouldn’t be able to patented.
For a while, I felt like I was shouting alone in the wilderness. While a bunch of software engineers I know thought software patents were bogus, I had trouble getting anyone else to speak out against software patents. But that has changed. In the last few month the issue of software patents – and the fundamental issues with them – have started to be front and center in the discussion about innovation.
There have been two dynamite stories on NPR recently – the first on This American Life titled When Patents Attack! and one on Planet Money titled The Patent War. If you have an interest in this area, the two are well worth listening to.
In the past week, the discussion exploded starting with a post from Google titled When patents attack Android. The word “patent” shows up in 20 of the Techmeme River articles from the last week. Martin Fowler, a software developer, had a well thought out article titled SoftwarePatent. And they kept coming, such as Why Google Is Right Yet Short-Sighted To Complain About Mobile Patents.
But my favorite was Mark Cuban’s post titled If you want to see more jobs created – change patent laws. He starts strong:
“Sometimes it’s not the obvious things that create the biggest problems. In this case one of the hidden job killers in our economy today is the explosion of patent litigation.”
And he ends strong:
“We need to face the facts, patent law is killing job creation. If the current administration wants to improve job creation, change patent law and watch jobs among small technology companies develop instantly.”
I hope my friends in the White House are listening. And to all the software engineers who are co-authors on patents that they aren’t proud of, or think are bogus, or were forced to create the patent by their company, or were paid a bonus by their company to write a patent on nothing, or are now working for a company that is getting sued for a patent they co-authored that they aren’t even sure what it says, speak up!
We’ve shifted into a new zone in the world of software patent stupidity. A few weeks ago, Oracle sued Google over a series of Java-related patents they got when they acquired Sun. Last week, Paul Allen sued 11 major software companies, including Google, over four patents that were granted to his now defunct Interval Research think tank.
Much of the early commentary has already been said. And, from what I’ve read, it’s not very generous to either Oracle or Paul Allen. One of the best lines is from James Gosling, the authors of RE38.104 (Method and apparatus for resolving data references in generated code) in his post The shit finally hits the fan. There has been plenty of speculation about the motivation of the Oracle patents and the speculation as to Paul Allen’s motivation is just beginning. Regardless, there are lots of lawyers in the mix advising their clients and devising strategies around these patents.
My own opinion will be no surprise to regular readers of this blog. I think this behavior is an absurd abuse of the patent system. I think it’s a massive tax on innovation. I think it’s an insult to anyone who is a real innovator.
As I was reading through some of the Paul Allen commentary this morning, it occurred to me that this might finally be a tipping point. Last week, Microsoft asked the supreme court to hear their appeal of the I4i patent suit. I hope Google steps up and really takes a stand here given that they are on the receiving end of both the Oracle and Allen suits.