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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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Score Two Wins Against Software Patents

Comments (17)

I have to keep reminding myself that some things just take a long time.  My rampage against software patents continues and, while my efforts around the StartupVisa have dominated my “government time” in the past quarter, I’ve still got my eye on the ultimate goal of rendering the construct of a software patent invalid.

I smiled yesterday when I saw the short article titled 3D Computer Graphics Patents Deemed InvalidThe key line from the article is “Though the calculations may be performed on a computer, they are not tied to any particular computer. For these reasons, the claims of the [patents-in-suit] fail to pass muster under the Bilski machine implementation test for patentability under 35 U.S.C. § 101.” 

This is super important because the vast majority of software patents have this problem.

In addition, the Federal Circuit issued an opinion in Hewlett-Packard Co. v. Acceleron LLC that makes it much easy for a company to file a declaratory judgment action when threatened by a “nonpracticing patent owner” (also known as an – ahem – patent troll).  The law firm Morgan Lewis has a great summary of this up on the web and the opinion is online.

I am an optimist.  And I am optimistic that progress will be made against software patents and for a Startup Visa in 2010.

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  • Bill Mosby

    One of the above links led to this gem, filed by BMW. Application number 20090271701, entitled "Method for Systematically Identifying Technology-Based Solutions", the first line of which reads:

    "A process for identifying technology-based solutions in the context of technical component development includes identifying technical components for particular technical systems, as well as the corresponding technological functions associated with the identified technical components."

    I guess they didn't have the actual gall to call it "Engineering".

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

      There should be a rule that automatically denies your patent if you use “tech*” more than twice in a sentence in a patent application.

      • Bill Mosby

        And "preferred embodiment".

  • http://www.facebook.com/StartupTrek Steve Bell

    It's cool that you are taking a position on this. My wake-up call was when i followed "the RIMM situation", then watched them pay out the better part of a Billion dollars to a patent troll firm. Well, ok it was before that… I was involved in fighting the Soderblum Token Ring patent, in the late 80's and early 90's.

    Soderblum was an SNA programmer who ended up with a patent on a piece of the HDLC protocol (which really, came out of academia). His lawyers filed a patent claim against all 802.5/Token Ring LAN adapter manufacturers – TI, Proteon, Madge Networks, Western Digital, National Semi, et al, and successfully extracted 15% of their gross revenues for years (since IBM had settled with him first). It struck me at the time, as even uglier than what the Mafia does to the local store keeper. And today, it has become much worse.

    The other problem is, as technology has advanced, the patent office has been unable to keep pace; so patents are granted rather indiscriminately.

    What a mess! Glad to see you are fighting "the good fight".

  • http://www.facebook.com/jaberman Jonathan Aberman

    Fighting the good fight? For whom? I've been involved with IP for 20 years as a venture capitalist and attorney. While there are a few "patent trolls" out there, the preponderant majority of software patents go to the larger companies such as MSFT, Apple, Intel, Google, etc., who use their market power to dominate distribution. They have an inherent advantage in their costs of customer acquisition, which reinforces their market dominance. Sure, there are always innovative new ideas (Twitter, Facebook, Salesforce.com) that shake things up, but can you really look at the software or pharma industries and tell me that innovation comes from the dominant players?

    This wouldn't be as much of a problem if Antitrust laws were applied more often, but they are not — notwithstanding some high profile investigations against Intel and Google.

    During the Bush Administration the composition of courts, both the SC and key Federal Courts, was tilted to judges that err on the side of protecting the economic advantages of established players. This is reflected in major changes in Antitrust and IP laws. The net effect of all of these changes is to make it harder for individual inventors and early stage companies to use the one advantage that they used to have to withstand market dominance — the creation of a legal counterweight, an IP right.

    As someone who only invests in early stage companies, I think that the idea that we should be happy about the current trends in attitudes regarding IP rights is just nonsensical. It's an example of where political dogma (free markets at all costs) becomes hidden by a "rational" argument. Let's not make pretend here — it's not about patent trolls, this is a political argument.

    From where I sit, as someone who makes his living by promoting innovation and new company creation, this isn't about dogma it's about what type of economy are we trying to promote. You want to fight about health care or the deficit, OK with me. But, with respect to innovation, the playing field shouldn't be tilted against the little guy.

    • Bill Mosby

      If the patent office can tell innovative ideas from prior art, patents are helpful. It's not helpful when people are issued patents on inventions that have been common practice for decades. The preponderance of software patents I have looked at seem to fit that description. And at least one software expert, Donald Knuth, is on record as having said the same thing back about 1994.

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

      I respectfully disagree with your perspective. 

      Before we get into a real debate, it seems like you don’t know that I also make my living by promoting innovation and new company creation.  My first business was a self-funded software startup that I created when I was 19 (and sold to a public company when I was 28).  Since then, I’ve directly invested in or co-founded around 150 software companies (entrepreneur, angel investor, and VC) while the VC funds I’ve been a partner in have made over 300 investments.  I’m also an LP in over 20 VC funds – that’s another 1000 or so companies.  Plus, I’m a co-founder of TechStars (39 software startups in the past three years).

      So – my point of view is NOT about politics.  I couldn’t care less about the politics of the situation (although I’m aware that one has to deal with it to get any legal changes done).  My strong point of view – which I’ve written about extensively at http://www.feld.com/wp/archives/category/patents is that (a) software patents are an invalid construct (e.g. software can’t be patented) and (b) the existing software patents are a tax on innovation for a variety of reasons.

  • http://www.facebook.com/profile.php?id=696276942 Chris MacAskill

    I was surprised to see Jonathan Aberman's comments because my little company has been in three courtrooms this year with non-practicing entities. From the number of calls I get from VC-backed startups about the problem, and from reading Fred Wilson's blog and TechCrunch, I got the impression it's a really big problem. In one of the cases that we're named in, in Marshall, Texas, there are about 102 defendants, many of them small startups.

    And as far as declaratory judgements go, we just tried that and lost. It was very expensive. http://patent-warrior.blogspot.com/2009/12/how-pa

    One of our co-defendants in two of the cases is moving their little company to Canada. Several have told us the cases limited their ability to raise capital or be acquired. For us, the costs involved are potentially many times larger than our engineering budget.

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

      Huge bummer on your declaratory judgment rejection.  I wonder if the judge was aware of or understood the implication of the Federal Circuit decision.  It looks like you got hosed on this one based on what you said.   Given the amount of these that are going to get filed in the Northern District of California, I hope the judges get clued in pretty quickly.  Every incremental case like this at a district level, that doesn’t line up with the Federal Court ruling, just makes everything that much messier.

  • Ken Jackson

    I personally am a fan of software patents. While it is true that MS, IBM, and Intel like companies dominate with number of patents, in my experience they rarely use them as an offensive measure. And virtually never against startup companies.

    My fear w/o software patents is the each at which large companies can steal ideas from smaller companies. Today many startups get formed and purchased by larger companies like MS, Google, Intel. In part to get their software, with key ideas protected by patents. In many of these cases, after a lengthy demo and discussion, I think Google could just as easily develop the ideas on their own. And lets be clear, while reverse engineering may be illegal, it is easy to do and nearly impossible to detect — a bad combination.

    Software patents don't level the playing field, but I do think w/o them there will be a lot fewer startups who will be able to confidently ship software w/o having to look over their backs (more than they already do).

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

      Ken – thanks for weighing in.  I’ve written extensively about why I disagree with this perspective at http://www.feld.com/wp/archives/category/patents…. I believe trade secret and copyright are more than adequate here.

      The problem has never really been large software companies as they’ve been primarily amassing patents for defensive purposes (since they’ve been so heavily extorted by patent trolls over the years).  Rather it’s the non-practicing entities (or patent trolls) that are using patents they now own, but have never used, and don’t plan to use, to get money out of – well – anyone they can.

      In addition, I strongly believe that the basic construct of a software patent is invalid in the first place.  The best argument for this is in Ben Klemens book <a href=\”http://www.amazon.com/gp/product/0815749422?ie=UTF8&tag=feldwebsite-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0815749422\”>Math You Can't Use: Patents, Copyright, and Software<img src=\”http://www.assoc-amazon.com/e/ir?t=feldwebsite-20&l=as2&o=1&a=0815749422\” width=\”1\” height=\”1\” border=\”0\” alt=\”\” style=\”border:none !important; margin:0px !important;\” />

      Finally, there’s real research finally being done to discuss the economic dynamics of software patents and whether then encourage and inhibit innovation.  The early quantitative research shows that they inhibit – the book <a href=\”http://www.amazon.com/gp/product/0691143218?ie=UTF8&tag=feldwebsite-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0691143218\”>Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk<img src=\”http://www.assoc-amazon.com/e/ir?t=feldwebsite-20&l=as2&o=1&a=0691143218\” width=\”1\” height=\”1\” border=\”0\” alt=\”\” style=\”border:none !important; margin:0px !important;\” /> is a great essay on this.

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

    First, you have to buy into the premise that software is a valid construct to copy.  I don’t agree with this premise.  And ultimately, I’m hopeful that the supreme court and federal courts will deal with this.  Ideally Congress would, but they don’t seem to have the focus or the will to do it.

    Since I don’t know about the software that you are working on, I have no real way to judge whether I agree that trade secret will be less effective in your case than patents.  In my experience, in compiled code situations, I’ve always found trade secret to be effective.  I’ve also found GPL to be more than adequate in open source situations. 

    For better or for worse, I’ve been involved in a bunch of software patent disputes.  The only real winner in any of them – except one – were the lawyers.  In one (filed during an acquisition process), the suit was settled for $1m just to “make it go away” – clearly a patent extortion situation (no merit, but not worth the money to fight it). 

    I struggle to get my head around RAND licensing for most cases.  The amount of software that is created outside the context of any coordinated standards body, or ad hoc standards activity, is enormous.  It’s hard for me to understand how to apply RAND in many of these situations.  Also, my interpretation of the impact of RAND is that it is often harmful to small companies as it often generates market control by the larger players that participate in the standard group, locking out smaller players.  So – this would seem to occasionally (or often) do the opposite of what you suggest it might do.

    Good debate – thanks for engaging!

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