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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Patents, Commons, and Anti-Commons

Comments (8)

Yippee – the criticism of the software patent stupidity is starting to heat up and some really smart people are making both useful arguments about the issues and interesting proposals about the solution.  In addition, there are some general articles starting to appear that explain that while patents (and property rights) have an important role in our society and in encouraging and supporting innovation and entrepreneurship, there are some well understood problems that emerge from patenting small components of complex systems – especially when the vector of innovation is steep (like – for example – with software or the Internet.)

James Surowiecki has a great short article in the New Yorker Magazine titled The Permission ProblemIn it, he gives a great example of what Columbia law professor Michael Heller calls the "anti-commons" in his book The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives.

"In the second decade of the twentieth century, it was almost impossible to build an airplane in the United States. That was the result of a chaotic legal battle among the dozens of companies—including one owned by Orville Wright—that held patents on the various components that made a plane go. No one could manufacture aircraft without fear of being hauled into court. The First World War got the industry started again, because Congress realized that something needed to be done to get planes in the air. It created a “patent pool,” putting all the aircraft patents under the control of a new association and letting manufacturers license them for a fee. Had Congress not stepped in, we might still be flying around in blimps."

The anti-commons is a great reference point for what has happened with software patents.  Simply put, if too many people own individual pieces of a valuable asset – especially if those pieces are overlapping and vaguely defined (e.g. software) – you can end up with gridlock instead of innovation.  Surowiecki explains:

"When something you own is necessary to the success of a venture, even if its contribution is small, you’ll tend to ask for an amount close to the full value of the venture. And since everyone in your position also thinks he deserves a huge sum, the venture quickly becomes unviable."

So – we have (a) Google Sued For Patent Infringement For Keeping Track Of How Many Ads People Click OnAt the same time, we have (b) U.S. Patent Office Rejects All Ninety-Five NeoMedia Patent Claims.  For those of you uncertain about my perspective, (a) is bad.  (b) is good.  Hopefully (b) motivates the folks at Google to fight like hell to invalidate silly patents, rather than take a "let’s retrench and patent everything in sight" position.

Finally, I read an article by Timothy Lee on Ars Technica last week titled Patent Office finds voice, calls for software patent sanity.  We need smart people to step up, shout from the rooftop about how fubared the software patent system is, and provide real alternatives.  I’m optimistic that this is finally starting to happen.

  • http://qwang.net Q dub

    Another implication of the “vector of innovation is steep” is that co-innovation, or independent invention occurs frequently.

    We should challenge the notion that the 1st innovator can claim infringement on the 2nd innovator, when the 2nd can prove that the invention occurred independently (e.g., occurred before the 1st patent application was published).

  • Curious

    How will this effect EmSense, the latest Foundry Group investment, and the 22 patent applications they currently have pending?

    • http://www.feld.com Brad Feld

      I never get confused between my desire for reform and change and the practical realities of the current patent system.  Until things are fundamentally changed, young companies still need patents, if only to provide for defensive positioning down the road.  The metaphor in the software business has long been that “patents are like nuclear weapons during the cold war.”  It’s a grotesque – but appropriate – metaphor.  So – EmSense is just operating as effectively as they know how to under the current patent system.

  • tim

    it is not just software that does not pass the three prong test. i have a manufacturing background, and for every one bogus software patent out there, i can show you two mechanical patents that are prior art, obvious to one skilled in the art, or that are absolutely useless – the focus should not be on software, it should be on the patent system and the competency of the patent office in general.

  • http://barfieldmanagement.com Chase Barfield

    I agree that the patent system needs reform. In this day and age of technology, it can still take two years for a patent. You can have tens to hundreds of thousands invested in time and material in a physical product that is original art plus the attorney's fees, patent search and patent application all stolen away from you by overseas copycats. Your defense mechanism statement is right on the nose. If you do not seek a patent and simply blitz the market instead, another person can file a patent around your design, call it theirs and try to unjustly get rich of off your work.

  • http://www.naffziger.net/blog Dave Naffziger

    I'm pretty sure Google has already reverted to 'patent everything in sight'. I've heard of stories where they've looked at MSFT's patent rate as a way of setting goals to beat, etc.

  • http://streetstylz.blogspot.com/ streetstylz

    NeoMedia's Patent Review Moves To Next Phase

    http://streetstylz.blogspot.com/2008/07/neomedias
    :)

  • Richard Leavitt

    I really like Lawrence Lessig's brief history lesson on copyrights and their evolution into a crippling force that works against innovation, partly for the message and call-to-action, and a lot for the presentation style he uses:

    http://randomfoo.net/oscon/2002/lessig/free.html

    btw – if you get a strong line echo on this presentation, pause and restart.

  • http://intensedebate.com/people/dave_naffzi2081 dave_naffzi2081

    I'm pretty sure Google has already reverted to 'patent everything in sight'. I've heard of stories where they've looked at MSFT's patent rate as a way of setting goals to beat, etc.

  • streetstylz

    NeoMedia's Patent Review Moves To Next Phase

    http://streetstylz.blogspot.com/2008/07/neomedias
    :)

  • http://intensedebate.com/people/qdub qdub

    Another implication of the "vector of innovation is steep" is that co-innovation, or independent invention occurs frequently.

    We should challenge the notion that the 1st innovator can claim infringement on the 2nd innovator, when the 2nd can prove that the invention occurred independently (e.g., occurred before the 1st patent application was published).

  • http://intensedebate.com/people/chase_barf55451 chase_barf55451

    I agree that the patent system needs reform. In this day and age of technology, it can still take two years for a patent. You can have tens to hundreds of thousands invested in time and material in a physical product that is original art plus the attorney's fees, patent search and patent application all stolen away from you by overseas copycats. Your defense mechanism statement is right on the nose. If you do not seek a patent and simply blitz the market instead, another person can file a patent around your design, call it theirs and try to unjustly get rich of off your work.

  • http://intensedebate.com/people/bfeld bfeld

    I never get confused between my desire for reform and change and the practical realities of the current patent system.  Until things are fundamentally changed, young companies still need patents, if only to provide for defensive positioning down the road.  The metaphor in the software business has long been that “patents are like nuclear weapons during the cold war.”  It’s a grotesque – but appropriate – metaphor.  So – EmSense is just operating as effectively as they know how to under the current patent system.

  • tim

    it is not just software that does not pass the three prong test. i have a manufacturing background, and for every one bogus software patent out there, i can show you two mechanical patents that are prior art, obvious to one skilled in the art, or that are absolutely useless – the focus should not be on software, it should be on the patent system and the competency of the patent office in general.

  • Richard Leavitt

    I really like Lawrence Lessig's brief history lesson on copyrights and their evolution into a crippling force that works against innovation, partly for the message and call-to-action, and a lot for the presentation style he uses:

    http://randomfoo.net/oscon/2002/lessig/free.html

    btw – if you get a strong line echo on this presentation, pause and restart.

  • Curious

    How will this effect EmSense, the latest Foundry Group investment, and the 22 patent applications they currently have pending?

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