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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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The Supreme Court Has Another Chance To Fix The Software Patent Problem

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I’ve been railing about the evils of software patents – how they stifle and create a massive tax on innovation – since I wrote my first post about it in 2006 titled Abolish Software Patents. Seven years ago this was a borderline heretical point of view since it was widely asserted that VCs believed you should patent everything to protect your intellectual property. Of course, this was nonsense and the historical myths surrounding intellectual property, especially the importance and validity of software and business methods, have now been exploded.

My post from 2006 lays out my point of view clearly. If you don’t want to read it, here’s a few paragraphs.

“I personally think software patents are an abomination. My simple suggestion on the panel was to simply abolish them entirely. There was a lot of discussion around patent reform and whether we should consider having different patent rules for different industries. We all agreed this was impossible – it was already hard enough to manage a single standard in the US – even if we could get all the various lobbyists to shut up for a while and let the government figure out a set of rules. However, everyone agreed that the fundamental notion of a patent – that the invention needed to be novel and non-obvious – was at the root of the problem in software.

I’ve skimmed hundreds of software patents in the last decade (and have read a number of them in detail.) I’ve been involved in four patent lawsuits and a number of “threats” by other parties. I’ve had many patents granted to companies I’ve been an investor in. I’ve been involved in patent discussions in every M&A transaction I’ve ever been involved in. I’ve spent more time than I care to on conference calls with lawyers talking about patent issues. I’ve always wanted to take a shower after I finished thinking about, discussing, or deciding how to deal with something with regard to a software patent.”

Companies I’ve been involved in have now been on the receiving end of around 100 patent threats or suits, almost all from patent trolls who like to masquerade behind names like non-practicing entities (NPEs) and patent assertion entities (PAEs). We have fought many of them and had a number patents ultimately invalidated. The cost of time and energy is ridiculous, but being extorted by someone asserting a software patent for something irrelevant to one’s business, something completely obvious that shouldn’t have been patented in the first place, or something that isn’t unique or novel in any way, is really offensive to me.

In 2009, I got to sit in and listen to the Supreme Court hear the oral arguments on Bilski. I was hopeful that this could be a defining case around business method and software patents, but the Supreme Court punted and just made things worse.

Now that the President and Congress has finally started to try to figure out how to address the issue of patent trolls, the Supreme Court has another shot at dealing with this once and for all.

I’m not longer optimistic about any of this and just expect I’ll have to live – and do business – under an ever increasing mess of unclear legislation and litigation. That sucks, but maybe I’ll be pleasantly surprised this time around.

Want To Help Fight Patent Trolls? – Boulder Event 8/28

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Patent Summit

Join the Application Developers Alliance at a Boulder Developer Patent Summit August 28 at 6 PM at FUSE Coworking. The event is a chance to share stories of demand letters and lawsuits from trolls, discuss legal strategies and litigation costs, and share ideas for software patent reform.

DATE: August 28th | FREE | 6pm
LOCATION: The Riverside (FUSE Coworking) | 1724 Broadway | Boulder, CO 80302
AGENDA:
6:00pm Welcome (registration, drinks, food, and mingling)
6:30-8:00pm Brief Presentation, Panel Discussion, and Q&A
8:00pm Enjoy food and drinks, meet the panel, and network

Register today!

How Patent Trolls Really Work

Comments (11)

I’ve been asserting for at least six years that patent system is completely broken for the software industry. I’ve given numerous examples, dealt with the issue first hand as patent trolls have tried to extort many of the companies I’m an investor in, and I’ve had many public discussions about the topic.

On my run on Sunday, I listed to This American Life - When Patents Attack… Part Two! It is easily the best and most detailed expose I’ve ever heard on this issue. If you care to really understand how patent trolls work, spend an hour of your life and listen to it.

 

The issue has finally gone mainstream. Here’s a great quote on patent trolls from an article in Time Magazine (how much more mainstream can you get than that.)

“In 2011, Apple and Google spent more money on patent litigation and defensive patent acquisitions than on research and development. That’s not a good sign for the U.S. economy; in fact, it’s a stark indication that our intellectual-property system is broken. Rampant patent litigation is impeding innovation and ultimately increasing the costs of gadgets for consumers, according to legal experts and industry observers. Now President Obama says he wants to reform the system.”

There was an outcry of support last week when President Obama issued a set of executive orders and suggested legislative actions to fix the broken patent system. While the press release from the White House had a bland title, the substance was solid and the articles about it got to the point.

As expected, plenty of people suggest all of this is misguided or overblown. I read John Sununu’s (former New Hampshire Senator) Boston Globe OpEd Who is a patent troll? Obama calls nation’s techies to arms, but enemy is difficult to define and grimaced as he mostly missed the point, while at the same time blaming it on the government and lawyers.

All of this is shining a bright light on a deeply rooted problem that has spiraled completely out of control and has become an enormous tax on innovation in the United States. While I don’t believe Obama’s executive orders go nearly far enough, they are a start in something that has been ignored by the White House and our government for far too long.

Patent and Immigration Reform Activities

Comments (9)

h1b in canadaTwo of the public policy things I care about are patent reform and immigration reform. I believe our patent system – especially with regard to software and business method patents – is completely and totally broken. And our immigration system – especially concerning immigrant entrepreneurs – is an embarrassment.

There is suddenly a lot of focus and attention on both of these issues. That’s good, and I’m hopeful that it will result in some meaningful positive changes. It pains me to see other countries – such as Canada, the UK, and New Zealand – be more progressive, open, and forward thinking around entrepreneurship and innovation than the US. There are days when I’m discouraged by our political system, but as I’ve gotten older and spent more time with it the past few years, I’m getting to a zen state of not being discouraged, but rather accepting the reality of the process and just being consistent and clear about what I think is important and how to fix it.

On the patent front, Twitter recently finalized a powerful approach – the Innovator’s Patent Agreement (the IPA). With this, they’ve agreed – as a company – to only use their patents defensively. I think this is extraordinary leadership on Twitter’s part. Our government and the USPTO is not moving aggressively to fix a problem that is now stifling innovation in the software industry, so leaders in the software industry can, and should, take matters into the own hands. As Fred Wilson describes in his post today, the IPA is an incredibly clever and forward looking approach. I’m proud of my friends at Twitter for providing this leadership and I encourage entrepreneurs and investors to understand the IPA and consider applying it to their patent approached.

On the immigration reform front, today is the second to last day of the March for Innovation. Go to the March for Innovation page to tell your Senators how important this issue is and read what a bunch of tech leaders are saying on the Mashable March for Innovation page. If you want just my thoughts, you can go read them at Broken Innovation Shutters Innovation.

Potential Progress On Dealing With Software Patents

Comments (9)

I woke up this morning to a great article by Nick Grossman at Union Square Ventures on The Patent Quality Improvement Act. Nick does a great job of describing the software patent problem, suggesting several solutions, and explaining how the Patent Quality Improvement Act helps the increasingly dismal situation around software patents.

Nick has a great paragraph from Mark Lemley of Stanford Law School that describes a powerful solution to part of the problem – that of eliminating “functional claiming.” Regarding functional claiming, Mark says:

“This is a problem that is unique to software. We wouldn’t permit in any other area of technology the sorts of claims that appear in thousands of different software patents. Pharmaceutical inventors don’t claim “an arrangement of atoms that cures cancer,” asserting their patent against any chemical, whatever its form, that achieves that purpose. Indeed, the whole idea seems ludicrous. Pharmaceutical patent owners invent a drug, and it is the drug that they are entitled to patent. But in software, as we will see, claims of just that form are everywhere.”

Mark has written a strong paper on this called Software Patents and the Return of Functional Claiming that describes the problem – and the solution – in detail.

Fred Wilson, Brad Burnham, Jason Mendelson, and I have been talking about the problem of software patents for a long time and Fred brought it up again today on his blog in a post titled Piecemeal Patent Reform. It’s nice to see Senator Chuck Schumer proposing a simple yet powerful solution to part of the software patent problem.

While we continue to struggle with patent trolls in the US – which used to be called “non-practicing entities” (NPEs) but now apparently prefer to be called “patent assertion entities” (PAE) – the New Zealand government has announced that software will no longer be patented. Maybe someday we will be so bold.

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