Today, Amazon’s 1-Click patent was confirmed following a four year re-examination.  Amazon now has ownership of a highly controversial and very absurd patent which I hope will only be used defensively.  This a classic example of a “business method patent” that should simply not exist.  I continue to wait patiently to see what the Supreme Court says re: Bilski.

In other patent news, Google and Facebook were sued over a social network patent.  This was a patent issued in October that apparently has something to do with how people join social networks on mobile phones.  Egads.

In better news, it looks like I’ll soon be able to buy a jet pack for $86,000.

The Apple patent suit against HTC really riled up my friend Sawyer.  I wasn’t planning on posting another missive from him until next week, but I thought this was particularly timely given the public statement from Apple, including a specific quote from Steve Jobs about its competitors stealing their patented inventions.  Sawyer explains why this is simply inflammatory rhetoric and actually has no basis in fact or the way patent law works.  He also makes the case – using this as an example – that patents stifle, rather than promote innovation.  Enjoy.  And, after you read this, if you want a little “doesn’t this sound familiar” action, take a look at the Wikipedia page on Apple Computer v. Microsoft Computer with regard to the GUI – with a little Xerox tossed in as a side dish.  And now, my friend Sawyer.

The other day Apple announced that it is suing HTC for infringing several patents related to the iPhone, including patents on the UI, i.e., software patents.  As part of the press release, Steve Jobs said the following (emphasis mine):

“We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it. We think competition is healthy, but competitors should create their own original technology, not steal ours.”

The rhetoric of "stealing" and "theft" surrounding accusations of patent infringement is bothersome, both because substantive patent law doesn’t embrace the concept of theft, and because most patent cases don’t involve credible allegations of actual theft or even copying. 

Plaintiffs try to use "theft" to inject a moral element into patent suits, but there is no substantive moral element in patent law.  The point of a patent is to grant a monopoly in exchange for public disclosure, and patentees want people to use the ideas (in exchange for license fees), otherwise the public disclosure aspect is pointless.  The Constitution doesn’t authorize patent or copyright law for moral reasons either:  “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries…” 

The only doctrine in patent law that shades into morality is willful infringement.  The shifting law on willful infringement will be the subject of another post, but in any case, willfulness isn’t a morality doctrine; willful infringers aren’t bad people, they are just people who decided to continue possibly infringing because they didn’t think they infringed, thought the suit was frivolous, or thought they would lose more money by stopping, at least in the short term.  The doctrine is set up to penalize people who recklessly infringe by potentially trebling damages, and so acts as an incentive to settle suits and pay licensing fees.  This isn’t a moral calculus, it’s a utilitarian one.

Willfulness, however, acts as the main vehicle for plaintiffs to inject moral rhetoric and copying allegations into a patent suit.  “Copying” in a patent law sense means that an infringer either literally read the patent and copied what the claims said wholesale, or saw a product embodying the patent and copied the patented aspect of it.  Copying in patent law does not mean “theft.”  Theft of secret ideas is actionable under trade secret law, and I know of very few cases pairing the two.  Literal copying is often actionable under copyright law as well.  Isn’t it the case though that patentees want people to copy?  Doesn’t copying mean that their ideas are spreading and being used for follow-on innovation, which are good things?  The issue if anything is proper compensation, not the act of copying itself.

Unsurprisingly, we don’t usually even get into copying as a consideration.  A paper by Mark Lemley and a good blog post titled Patent defendants aren’t copycats shows that the vast majority of patent cases don’t involve an assertion of copying (and we’ll have to see if the Apple case does).  Putting in place an independent invention defense to infringement, as suggested recently by Brad Burnham at Union Square Ventures, would potentially wipe out 90% of patent cases. 

Setting all of that aside, in my experience, when plaintiffs do allege copying, particularly in software cases, the allegations are uniformly flimsy and bogus litigation tactics aimed at getting “black hat” stories about defendants told to juries.  And it’s a great tactic because juries are people, and regardless of the merits, they like to stick it to the bad guys, especially so where the merits are boring patent law issues that no one understands anyway.

Now we have one of the biggest and most innovative companies out there, Apple, trying to sue one of its competitors out of the market with patents, and using the false rhetoric of theft to justify the suit.  This underscores that the patent problem isn’t just "trolls" versus "big companies," it’s big companies using patents to sue others in the same market into oblivion, cutting off competition and destroying innovation.  Imagine, if HTC weren’t making great Android phones to compete with the iPhone, would Apple be incentivized to significantly improve its products?  Would we have no iPhone if patents didn’t exist?  I think it’s fairly obvious that in the absence of patents, we would have more competition and more innovation here, not less.

In any case, the takeaway for reform advocates is that we need to shift the rhetorical frame in discussions around patents from the moralizing of "stealing" and "theft" to what the issue actually is, a dry utilitarian calculus about what outcomes are better for innovation and competition.  When we think about the issues in that frame, it sort of takes the wind of out of Steve Jobs’ sails, doesn’t it?

I saw a tweet today that said “The doubly-linked list, a structure I studied thirty years ago, has recently been patented.”  After giggling at the absurdity of the idea, I went and at a patent dated 4/11/06 that appears to be for the doubly-linked list.  The prior art was extremely thin, only went back to 1995, and didn’t mention that entire computer languages have been created around the list as a core data structure.  One of my first Pascal programming exercises in high school (in 1981 – on an Apple II using USDC Pascal) was to write a series of operations on lists, including both linked and doubly-linked lists (I always thought it was funny they were called “doubly-linked” instead of “double-linked” lists.)  Anyone who ever graduated from MIT and took 6.001 learned to love all varieties of the linked list, including the doubly-linked one.  That was 1984 for me by the way.

Ironically, Wikipedia had great entries – with source code no less – about both linked lists and doubly-linked lists.  The linked list history goes back to 2001, well before the patent was filed.  My understanding is that patent examiners aren’t allowed to use Wikipedia – I’m meeting with some PTO folks on Friday and I’m going to ask them if this is fact or fiction.  Regardless, this patent is another example of how ridiculous the situation has become.

My friend Sawyer is back with another post in his series of talking about software patent issues.  As I mentioned before, Sawyer is a real person named after our intrepid friend in LOST (I haven’t seen it this week – no spoilers please) who has agreed to help us navigate the parallel universe known as software patent land.  I’m channeling Sawyer’s points of view as a public service announcement since he’s uncomfortable being named publicly – these are his words, not mine.  Today’s post is on the famed “Eastern District of Texas” (EDTX), one of the most popular places in the United States for patent litigation.

In the past several years, the Eastern District of Texas (EDTX) has become one of the premier venues for patent litigation, along with NDCAL, CDCAL, DDEL, and WDWIS. Although the dockets are packed now, when the trend first started, plaintiffs could anticipate trials in short order, perhaps 12 to 18 months, and plaintiff-friendly juries.  There is also a basic sense of unfairness that defendants, rightly, feel when they have nothing or almost nothing to do with the district and yet get hauled down to court there, but the ability of plaintiffs to do that is a more fundamental flaw in the Supreme Court’s personal jurisdiction jurisprudence that is best left for another discussion.

There are a lot of stories told about EDTX and how it became a big spot for patent litigation. I won’t name any names here because EDTX lawyers have a tendency to sue anyone who says anything that could be portrayed in a negative light (see, e.g., the Troll Tracker defamation suit.) The basic story I’ve heard though, is this: EDTX was well-known as district with plaintiff-friendly juries after a raft of tort litigation where juries handed down large judgments. The judges and practitioners in area, seeing the coming wave of patent litigation, got together and decided to retool the district for being “patent-friendly.” This mainly involved adopting rules to streamline patent cases, similar to NDCAL, so that plaintiffs would get to juries faster. It’s important to note that this isn’t per se a bad or unethical thing – lots of federal districts are known as “rocket dockets” for one kind of case or another because of concerted efforts to attract and streamline litigation of certain types of cases.

The adoption of those patent local rules, along with a general unwillingness of the courts to throw cases out before trial on what’s called “summary judgment,” lead us to where we are today. Another thing to note, which is changing due to recent appellate decisions, is that EDTX courts have been very unwilling to transfer cases out to other venues. The Fifth Circuit and Federal Circuit have issued an unusually high number of reversals of EDTX decisions not to transfer, and the message seems to be taking and moderating both the desire to keep cases and any “pro-plaintiff” bias one could see.

These days, EDTX actually isn’t so bad for defendants. They win a significant number of cases, primarily because defense counsel has figured out how to navigate the courts, how to wear the “white hat” with the judges, and how to appeal to the juries down there. Still, the data show that when plaintiffs win in EDTX, they tend to win bigger than in any other court; and, when certain defendants develop “bad” reputations with the court or with juries, they get hit with big judgments repeatedly.

It’s also appears that EDTX has made a concerted effort to be “patent friendly,” and that the concomitant economic impact on the area, particularly in Tyler and Marshall, Texas, has been significant. From observation, EDTX is also where most of the software NPE/troll cases are filed these days because it’s still the fastest and most friendly docket for those cases.

That said, blaming EDTX won’t solve the underlying problem of patents and the patent system, especially in software. If there was no EDTX, another district would crop up to attract the big-ticket software patent suits, especially the NPE/troll cases. As long as the expected value of an NPE suit is positive, plaintiffs will find friendly places to file, and districts will make themselves friendly to those suits to stay busy, attract the economic windfall, and generally stay relevant. Don’t get me wrong, venue is a significant issue and has a big impact on the outcome of cases, but focusing reform and publicity efforts on grumbling about the courts won’t get us anywhere. The real problems are more fundamental to how people get patents, what is patentable, what the patents themselves look like, and how the legal system allows them to be used; focusing on the mechanics of where suits are filed is a distraction from the real issues that are bleeding our most innovative technology sectors and slowing down technological progress.

I love the stuff that ya’ll email me (or comment) after I write a post that challenge my thinking.  While occasionally the notes are hostile (which is mostly just entertaining), they are usually really thought provoking even when I disagree.  And, when they give me a new way to think about something, they are really satisfying.  For all of you out there that read this blog – you guys are great – thanks for helping me think!

Last week I got an interesting proposal to deal with the problem of patent trolls.  Here it is. 

“It seems to me as though the solution to patent trolls is a pricing issue.

If patents were to get progressively more expensive over time, a patent holder would have to weigh the financial return of a patent against the cost of maintaining it. For example:

Patent Fees
Year 1 — $1,000
Year 2 — $10,000
Year 3 — $100,000
Year 4 — $1,000,000
Year 5 — $10,000,000
Year 6 — $100,000,000
Year 7 — $1,000,000,000

The model above protects really valuable patents and sets patents that aren’t valuable free. Pharma could live with the fee schedule above, and software companies which have patents that are really core to a business would be protected for 4-5 years, an eternity on the Internet.”

What do you think?  What’s the fundamental flaw in this?

I have a number of friends who are patent attorneys.  Some have strong negative feelings about software patents that mirror mine while others keep me entertained by arguing both sides of the situation with themselves while I sit around and listen.  One of my friends – let’s call him Sawyer – has very strong negative opinions as he’s spent most of his time recently defending his clients against software patent suits including an increasing number from patent trolls (non-practicing entities).  He spends a lot of time in East Marshall, Texas and has figured out where all the best restaurants are.  While East Marshall isn’t quite as nice as an invisible, mysterious island in the middle of the Pacific Ocean, it clearly has a number of similar characteristics.  Sawyer has decided that he can’t write publicly about his thoughts and experiences so I’ve agreed to channel his experience into my own parallel universe.  Look for more missives from him (and better references from me with regard to Lost as I finally learn what really has been going on.)  In the mean time here’s his reaction to the New York Times profile last week on Intellectual Ventures.

Last week there was an article in the New York Times profiling Nathan Myhrvold and his company Intellectual Ventures ("IV").  I suppose since it’s a profile, the article is by nature one-sided, but given how I broke into a cold sweat upon reading it, I was a little surprised at how unbalanced the presentation was on the merits.  Mr. Myhrvold is characterized as a savior of inventors while his detractors are those big scary companies who want to infringe patents without compensation to the little guys.

What is the underlying premise of IV as a net positive for innovation and the U.S. economy?  The traditional defense is that patents incentivize innovation.  That has to mean innovation in a particular field, e.g., "software patents incentivize innovation in software."  Let me underscore this point:  there is no positive evidence for software patents improving or increasing innovation in software.  None.  I could make the same statement for pretty much any other field except biotech (which has its own problems that can be explored another time).  There are a variety of articles setting forth why patents actually hurt innovation in software particularly, (e.g., the famous Bessen and Maskin working paper on the subject).  Note that raw empirical data is hard to come by either way by nature of how the patent system operates, but the lack of positive evidence is telling.

Perhaps Mr. Myrhvold recognizes this, because in the article he says “I’m trying to get inventions that kind of respect as an economic entity.” (Emphasis added).  IV apparently incentivizes innovation on…inventions?  "Inventions" are actually a term of art in patent law, they are the things for which one can legally be granted patent rights.  IV, therefore, seems to admit that it wants to enforce patent rights so that we can…have more patents.  Mr. Myhrvold wants to create an entire economic category based on payments to entitles that don’t build, produce, sell, etc, any products, or create anything of value (i.e., that don’t innovate, at least in any useful way that advances human progress), in exchange for not being sued on exclusionary patent rights.

Let’s internalize that for a second.  IV has collected over a billion dollars so that it can get more patents.  They make no products.  They apparently don’t funnel ideas to anyone else who makes products.  Heck, the only useful thing I’ve seen out of IV is that mosquito-killing laser that Mr. Myhrvold showed off at TED this year.  They collect massive amounts of money for their investors, and funnel much of it into buying and developing more patents.  When I talked to a headhunter recently, in the midst of the worst market for legal jobs ever, she told me that the one employer who was always hiring people with experience in patents was IV.  So, anecdotally, they hire a lot of lawyers.  They set up a lot of shell companies.  They sue people, or threaten to sue people, for massive license fees. 

Now think about where this money would go otherwise.  Microsoft, Apple, and Google, not to mention other large technology companies, have sizable legal departments with teams of attorneys focused full-time on managing the 50+ software patent cases they each are a defendant on.  My guess is that they individually spend hundreds of millions of dollars defending and settling such suits per year.  Most of the suits are backed by investment funds (here’s an example of one) through shell entities.  Many of these funds are backed (with no transparency) by traditional investment banks and hedge funds.  What we have, then, is a net outflow, on a yearly basis, of at least several hundred million dollars, from technology companies who "make stuff" and unquestionably innovate, to speculators and investors who don’t.  I don’t think that baseline fact is something anyone would question.  IV dresses that up in the clothing of "invention," but they’re really just out to capitalize on a broken patent system like every other non-practicing entity ("NPE" as we call them – they hate being called trolls).  What kinds of cool products and technologies would that money be used to develop?  We’ll never know, I suppose.  At the very least we can presume that the pace of innovation in technology is being slowed by this net outflow of capital to non-innovating parties.

One thing I haven’t mentioned is that it isn’t just big companies who get sued.  Startups, especially in software, are constantly targetted by patent suits, especially by pseudo-competitors who want to kill more innovative upstarts.  How many great companies have been sunk by the costs of patent litigation?  Think about it this way – if Facebook had been sued on a social networking patent within a year of its existence, would it be around today?  It’s doubtful.

Finally, I think it’s important to address the moral point that’s always in the background when NPE’s talk about their business – having a patent doesn’t mean that you really invented anything, or that the person you’re suing would actually infringe in a rational world (the U.S. Constitution also only allows Congress to grant patents for "promoting progress," not for moral reasons).  Patents are legal documents, highly opaque, and the meaning of patent claims rarely, if ever, rationally corresponds to a real world product.  Patents are granted through a pseudo-adversarial administrative procedure where highly trained lawyers do their best to push extremely broad claims with extremely sparse/vague disclosure through overworked and underpaid patent examiners.  That’s the name of the game.  As much as companies like IV want to turn patent enforcement into a moral issue, it isn’t.  Patent lawyers are paid to get broad patents, not capture the essence of a real "invention."  And alleged infringers, in every case I’ve been involved in at least, don’t flagrantly violate patents.  They’re caught unaware, and even when they are aware, have the impossible task of figuring out if they would infringe.  It’s really a difficult Catch-22, but the patentees enjoy it, because it allows them to call defendants the "bad guys" while taking the moral high ground.

If there is one thing you read today, go read Brad Burnham at Union Square Ventures excellent essay titled Software patents are the problem not the answer.

Several years ago when I first started saying things like “software patents are invalid constructs” or “software shouldn’t be able to be patented” or “software patents are a huge drag on innovation”, I was told by many people (lawyers, journalists, patent trolls, and other VCs) that while I might be right, no other venture capitalist would agree with me or support this position.

Several years ago my partner Jason Mendelson agreed and since then he’s become outspoken about his desire for the end of software patents.  Some people said that was cheating since he’s one of my partners at Foundry Group, but I’m ok with getting people on board one person at a time.  BTW – my other partners – Ryan McIntyre and Seth Levine – also strongly agree with this position.

Several months ago, Brad wrote a great essay titled We need an independent invention defense to minimize the damage of aggressive patent trolls.  I’m good friends with Brad and his partner Fred Wilson and we’ve had a number of conversations about this over the past six months, including the creation of an ad-hoc group we are calling “Abolish Software Patents” (which is similar in structure to the group behind the Startup Visa Movement.

Today, Brad wrote Software patents are the problem not the answer in response to the New York Times article on Nathan’ Myhrvold’s firm Intellectual Ventures approach to creating “invention capital” which was a soft profile piece in response to Myhrvold’s HBR article The Big Idea: Funding Eureka! 

Brad’s post is outstanding and mirrors my perspective on this.  And – if you want some entertainment (and additional perspective on what’s really going on) go take a look at TechDirt’s post today titled Nathan Myhrvold’s Intellectual Ventures Using Over 1,000 Shell Companies To Hide Patent Shakedown.

This problem with software patents (and the patent system in general) is going to come to a head in the next year or two and I hope the venture capital industry and broader software / Internet entrepreneurial community can rally behind intelligent solutions to this problem.

After not seeing the word patent in my daily information routine for a few weeks, I saw it twice today – first in an article titled Turning Patents Into ‘Invention Capital’ (in the NY Times) and then in Region Sustains Robust Patent Production in the WSJ.  Both stirred me up early this morning, but for different reasons.

If you are interested in patents, I encourage you to read Turning Patents Into ‘Invention Capital’ as I’m very interested in your reaction.  I’d love to hear what you think in the comments (anonymous is fine if you are concerned about attribution on this one.)  I have an opinion and this article didn’t add anything to my thoughts (which is partly why I’m looking for yours as I’m curious what others think.)  So I hit Ctrl-W and went to the next tab in Chrome.

The title of Region Sustains Robust Patent Production was fine (and yes it refers to Silicon Valley), but the first sentence in the article made me nuts:

“The economic slump has yet to damp innovation in Silicon Valley, at least not by one widely followed measure: patent production.”

It’s a short article that basically states that Silicon Valley received a similar percentage of utility patents granted in the US in 2009 that it did in 2008 and 2007. 

“Silicon Valley denizens received 13,231, or 7.9%, of the total 167,350 "utility" patents granted in the U.S. in 2009, according to IFI Patent Intelligence, a unit of Wolters Kluwer Health that analyzes patent data from the U.S. Patent and Trademark Office. That is on par with Silicon Valley’s share of patents nationwide in 2008 and 2007, according to IFI.”

Other than the factual statement, there is no possible way the conclusion made in the first paragraph can be extracted from this data.  The primary flaw here is that patents take many years to be granted.  The number of patents granted in 2009 has nothing to do with the innovation activity in 2009! 

Now, I don’t believe that patent activity correlates to innovation.  While this might have been true in the 1970’s, there are so many factors in today’s broken patent system that undermine this.  The article even points one out in the list sentence:

“Like many tech firms, Cisco offers some financial incentives to employees who file and receive patents, he (Tony Bates, SVP at Cisco) says.”

The “pay to file” dynamic is a mechanism that undermines the integrity of the patent system.  Here’s the issue: assume I am a huge company that pays my engineers on average $100k / year.  I offer $1k for every patent filing they make during work time.  So, as an engineer, you can increase your compensation by 1% for every patent you file (forget about whether it actually gets granted).  As the large company, I’ve got a huge legal machine in place to file the patents – all you need to do as an engineer is going through a prescribed process, write up a bunch of stuff that gets dropped into the patent application, and come to a few meetings to review the patent application.  Is that worth an additional 1% of your comp regardless of the quality of the application?  Sure! 

Regardless of whether you think patents are useful, this is just such a crummy indication of “innovation”. 

I had a very interesting meeting yesterday with an MIT Professor who I’ve known for a long time.  He is anti-software patent, as am I.  However, he suggested something I hadn’t really spent much time thinking about, namely that patents slow down innovation.  Some very credible folks have been talking about this for a little while, including James Bessen and Michael Meurer in their excellent book Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk. 

In my conversation Friday, I heard a very interesting example.  Regularly, patent advocates tell me how important patents are for the biotech and life science industries.  However, there apparently is academic research in the works that shows that patents actually slow down innovation in biotech.  The specific example we discussed was that there is increasing evidence that when a professor or company gets a patent in the field of genetics research, other researchers simply stop doing work in that specific area.  As a result, the number of researchers on a particular topic decreases, especially if the patent is broad.  It’s not hard to theorize that this results in less innovation around this area over time.

I’m just starting to read some papers about this stuff, including those by MIT Professor Fiona Murray.  If you are interested, Stuart Macdonald’s paper When means become ends: considering the impact of patent strategy on innovation frames the discussion nicely.  And Stephan Kinsella’s excellent essay Reducing the Cost of IP Law absolutely nails this.

I’m still obsessed with my mission to “abolish software patents” especially after receiving yet another email from a new startup that claims to be a “Patent Insurance Company.”  A number of these have popped up recently in the past few years, including several that are funded by VCs.  Their pitch is that you pay them an annual fee, license any patents you have to them, and they will “protect you” against any patent litigation.  Whenever I hear this pitch, all I can think about is Al Capone walking the streets of Chicago going door to door offering “protection” to all of the local businessmen if they will pay his vig every week.

Brad Burnham at Union Square Ventures put up a very important post last night titled We need an independent invention defense to minimize the damage of aggressive patent trolls.  His partner Fred Wilson echoed Brad’s thoughts on his blog with a post titled Why We Need An Independent Invention Defense.

Brad’s post starts out with the following:

“Almost a third of our portfolio is under attack by patent trolls. Is it possible that one third of the engineering teams in our portfolio unethically misappropriated technology from someone else and then made that the basis of their web services? No! That’s not what is happening. Our companies are driven by imaginative and innovative engineering teams that are focused on creating social value by bringing innovative new services to market.”

It’s a fantastic description of the fundamental problem with software patents.  For example:

“The problem is that the patent system has fallen way behind the pace of innovation, especially in information technology. Originally designed to protect the brilliant independent inventor of a better mousetrap, the patent system has been stretched to be applied to software. Software is a language and like any language, it can be very abstract. Everyone applying for a patent pays a lawyer to take their invention and render it into the broadest, most abstract language they can slip through the patent office. A mouse trap is a mouse trap, but a method of allowing one piece of software to talk to another (the generalized language often used to describe a software system) can be almost anything, and can, if approved, impact markets the original inventor could never even have imagined.”

Brad goes on to discuss the specific problem of patent trolls and proposes a solution to address this – that of an independent inventor defense.  If you’ve gotten this far, go read Brad’s full essay on the independent investor defense.

I’m extremely excited to see Brad and Fred come out so strongly against software patents.  I’ve been talking against this for a long time and I expect my rants against software patents are well known to any readers of this blog (if you aren’t familiar with them, feel free to indulge yourself if you are so inclined.)  But this is the first time that I’m aware that any of my peers – other than my partners at Foundry Group – have come out so strongly in public against software patents. 

I purposely limit my “special initiative” work and try to focus on a few things that I think will make a substantial difference in the world of software / Internet entrepreneurship (the domain that I’ve chosen to dedicate my professional life to.)  Right now I’m deep in the effort to get a Startup Visa created but have continued to pay attention to the software patent issue while looking for the right time to scale up an effort.

That time is now.  I just emailed with Brad and he’s game to lead a charge with me.  I saw tweets from several friends last night including Chris Sacca who knows this issue firsthand.  As with the Startup Visa there are plenty of other credible smart people who are putting real intellectual energy into this issue, such as the End Software Patents initiative and Wendy Seltzer, a well known researcher who is currently spending a year at Silicon Flatirons researching software patents and innovation (disclosure: I’m providing some of the funding for this initiative at Silicon Flatirons.) 

It’s now time to get the practitioners (entrepreneurs and investors in software innovation) to get organized around this.  If you are interested in helping out substantively, leave a comment on this blog with your email address as I start to get organized.

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 Invalid.  The 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.

I had an incredible experience yesterday.  My friend Phil Weiser, who is now the Deputy Assistant Attorney General at the US Department of Justice, Antitrust Division (I prefer to call him America’s Top Cop on Agriculture) invited me, my partner Jason Mendelson, and my wife Amy Batchelor to attend the Supreme Court Oral Arguments for re Bilski.  A rare tie sighting ensued as a jacket and tie is required to attend.

For those that know about my fervent anti-patent bias with regards to software, Bilski is an important case.  Depending on how the Supreme Court rules, it could open the door for both the invalidation of business method patents as well as begin a serious discussion about the validity of software patents.  One can hope.  So, this wasn’t a random Supreme Court visit, but rather one that is highly relevant to something I’ve spent a lot of time thinking, talking, and writing about.

As you walk up the steps to the Supreme Court, you can’t help but stop and stare.  It was a beautiful day and we just soaked up the sunshine for a few minutes.  We then walked to the side entrance, went through security, and proceeded to the Supreme Court Cafeteria where we met Phil for lunch.  We were all a little nervous which was evident as we struggled to get salads from the salad bar (how hard is it to get lunch?) before sitting down in the relatively small cafeteria.

The Oral Arguments were from 1pm to 2pm so at 12:30 we mobilized.  The process of getting into the Courtroom is tedious, but surprisingly chaotic as they check IDs and accompany people in waves.  But once in, it’s powerful.

We sat down and waited quietly.  The courtroom was full.  At exactly 1pm, the Justices entered.  They sat, and immediately called the Petitioner (J. Michael Jakes).  Jakes got about thirty seconds into his oral argument when Justice Scalia jumped in with a question.  A short attempt at an answer by Jakes followed by a question by Breyer.  Another short answer and then a question by Ginsburg.  Then Breyer. Then Sotomayor.  Within five minutes I was stunned at the high level of understanding the Justices had in this particular case, the insightfulness of their questions, and their level of participation.

Breyer, Roberts, Scalia, and Sotomayor continued to question the petitioner for the next five minutes.  Their tone was aggressive – bordering on hostile – but never quite crossing the line.  Jakes kept his cool although he didn’t have strong responses to much of anything (at least from my perspective).  While I was biased against the Petitioner and could have heard what I wanted to hear, it sounded to me like the Justices were leaning strongly against business method patents and trying to understand how they could possibly be valid.

The Petitioner abruptly finished (reserving the balance of his time) and the Respondent (Malcolm L. Stewart) began.  It was a similar drill – the Petitioner got started and Justice Alito jumped in with a question.  A short answer followed by Sotomayor.  This continued for about 30 minutes.  Several times the idea of software came up.  Stewart steered the conversation away from this each time or – in some cases – refused to address the question.  This was frustrating to me as I thought the Justices were throwing him fat pitches to link software in with business methods as things that shouldn’t be patent eligible.  At some point it became clear that Stewart had a clear charge to keep software out of it as he went so far as to say that the government had argued against having the Supreme Court hear this case as there were difficult problems in software innovation that hadn’t yet been worked through.  Near the end, the State Street Bank case came up (not surprisingly) although in my opinion Stewart really fumbled his response.

At the end, the Petitioner got a four minute rebuttal.  At 1:55 Chief Justice Roberts promptly stated “Thank you, Counsel.  The case is submitted.”  The justices then rose and left the courtroom.  A minute later everyone else left.

We quickly said our goodbyes to Phil (he had to get back to work), wandered around for a few minutes looking for our car, and then headed to Ronald Reagan Washington National Airport to head back to Colorado.

When we landed, the transcript of the Oral Argument was up. And John Schwartz, the NY Times reporter who we stood behind in the security line (he’s got a cool black skull wallet), had his article up titled Justices Hear Patent Case on Protecting the Abstract. The web is an amazing thing.

In short, the experience was awesome.  I’m rarely speechless but as I walked out of the Supreme Court afterwards I realized I had nothing to say.

There is a great article by Timothy Lee, an adjunct scholar at the Cato Institute, out today titled The Case against Literary (and Software) Patents.  Lee, an adjunct scholar at the Cato Institute who is also a Ph.D. student in Computer Science at Princeton, totally nails it. 

Here’s the beginning:

“Imagine the outcry if the courts were to legalize patents on English prose. Suddenly, you could get a "literary patent" on novels employing a particular kind of plot twist, on news stories using a particular interview technique, or on legal briefs using a particular style of argumentation. Publishing books, papers, or articles would expose authors to potential liability for patent infringement. To protect themselves, writers would be forced to send their work to a patent lawyer before publication and to re-write passages found to be infringing a literary patent.

Most writers would regard this as an outrageous attack on their freedom. Some people might argue that such patents would promote innovation in the production of literary techniques, but most writers would find that beside the point. It’s simply an intolerable burden to expect writers to become experts on the patent system, or to hire someone who is, before communicating their thoughts in written form.

Over the last 15 years, computer programmers have increasingly faced a similar predicament. We use programming languages to express mathematical concepts in much the same way that authors use the English language to express other types of ideas. Unfortunately, the recent proliferation of patents on software has made the development and use of software legally hazardous. That’s why many of us are hoping the Supreme Court definitively rules out patents on software when it hears the case of Bilski v. Doll this coming term.”

And here’s the conclusion:

“The writing of software, like writing in English, is a creative activity practiced on a vastly wider scale than other activities commonly afforded patent protection. Small businesses and nonprofit organizations far removed from the traditional software industry have IT departments producing potentially infringing software. The Brookings Institution’s Ben Klemens has documented that this is not a theoretical problem. Entities as diverse as the Green Bay Packers, Oprah Winfrey, Kraft Foods, and J. Crew have been sued for developing or using ordinary business software.

Regulations that work well when applied to a handful of large, capital-intensive firms can become an intolerable burden when applied to millions of small organizations and individuals. It’s not reasonable to expect hundreds of thousands of small businesses to vet the software they produce for patent infringement, any more than it would be fair for them to face liability for publishing a brochure with an infringing turn of phrase.

The high overhead of the patent system demands that it be limited to relatively concentrated and capital-intensive industries in which most participants have the means to comply with the requirements of patent law. Patents on English writing would not meet this requirement. Neither do patents on software.”

There’s plenty of good stuff in between.  Go read it.  I just got invited to go to the Supreme Court and listen to re: Bilski.  Psyched!

I haven’t written about software patents in a while.  I still hate them and think they are an illogical construct.  But first, a haiku from xkcd to warm you up (and make you smile).

I woke up this morning to the announcement that Microsoft can’t sell Word anymore.  Apparently a judge in that hot bed of intellectual thought and discourse, the U.S. District Court for the Eastern District of Texas, has ordered a permanent injunction that "prohibits Microsoft from selling or importing to the United States any Microsoft Word products that have the capability of opening .XML, .DOCX or DOCM files (XML files) containing custom XML.”

Wait, is this the same Microsoft that was forced to change their doc formats and make them “more open” by some judiciary somewhere for antitrust (“anticompetitive”?) reasons.  Ok.  But wait, the rabbit hole gets deeper.

Apparently this injunction (filed by i4i – a company that according to their web page provides “Labeling Conversion, Collaborative Authoring, Document Management and Publishing Solutions to support your global regulatory compliance requirements.”) is based on an assertion that Microsoft willfully violates a 1998 patent (No 5,787,449) about how to “create and edit XML content from a word processor.” 

Pause for a second.  Note the irony and weirdness of all of this.  There have been a spate of specific XML related patents recently (I’m going to bet that Microsoft has a few of them – why not, gotta keep that patent group busy.)  Um – isn’t XML an open standard?  Aren’t there a bunch of document processors that read and write XML (like all of them)?  Seems like it should be illegal (or at least invalid) to be granted a patent on something built on top of an open standard!  Nah – let’s just argue about GPL and its various forms for a while – that’s more fun.

It gets worse.  The judge in the case, in addition to enjoying torturing Microsoft with an injunction, ordered Microsoft to pay i4i over $290 million in damages.  At this point I paused and pondered why a Canadian company was suing Microsoft in East Texas.  Maybe it’s warmer there.  I certainly know the beer isn’t better.  I could keep going, but I’m running out of sarcasm (has someone patented that yet?)

In one of my fantasy parallel universes, long time software thought leaders – ranging from individual software artists (you know who you are) to the very largest companies would get together and decide how to take an approach to this absurdity that could be proposed to the appropriate government entities (we’ll start with the PTO and Congress, but it’s always worth a trip to the Supreme Court if necessary.)  To do this, some of the largest software companies need to step back from their stupid case by case legal strategies and decide to try to reform (transform?) how this works.  Until then, it’s probably going to just going to go on and on and on.

Q.E.D., Bitches! indeed.  That’s often how I want to just end my argument on software patents, but I know this particular universe doesn’t work that way.  Too bad for me.

Oh – and did anyone notice that a different judge (Patel in this case) ruled against RealDVD and “granted a preliminary injunction in favor of the major motion picture studios and DVD-CCA in their legal battle with Real Networks over its RealDVD products.”  I’m going for a run now – maybe that’ll make me happier.

If I told you that I had just filed a patent for “a system to sell equity in domain names”, I’d expect you to laugh at me.  I haven’t ranted and raved against software (and business method) patents for a while because I got bored of doing it.  The PTO has gotten so far behind on responding to patent applications that the whole notion of a four year cycle to get a software patent approved just underscores how ridiculous the whole thing is given the pace of innovation in software.

But – today’s silly patent popped up somewhere and I just couldn’t resist poking fun at it. Go Daddy has filed a patent for a method of selling equity in domain names.  I can’t wait to see what the SEC has to say about this one.

I sure do hope the new regime in Washington D.C. has the balls to address the software patent issue this time around and end this madness.