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Ask Slashdot: When Is Patent License Trading Not Trolling?

Unknown Lamer posted about 10 months ago | from the middlemen-like-to-think-that dept.

Patents 191

LeadSongDog writes "A piece in yesterday's Forbes offers arguments on why not all 'Non-Practicing Entities' are 'Patent Trolls.' Comments here on such businesses are often critical. Is there a right way to trade in patents for profit without abusing the process?" From the article: "The Founders’ decision to foster non-practicing entities and patent licensing proved crucial to America’s rapid technological progress and economic growth. Patent records from the nineteenth century reveal that more than two-thirds of all the great inventors of the Industrial Revolution, including Thomas Edison and Elias Howe, were non-practicing entities who focused on invention and licensed some or all of their patents to others to develop into new products."

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191 comments

Thomas Edison (2, Insightful)

Anonymous Coward | about 10 months ago | (#44885501)

Great example - just not for their cause.

Re:Thomas Edison (2)

arbiterxero (952505) | about 10 months ago | (#44885523)

Yeah, Edison profited off the research of his students, and everyone around him......a bad example to be used if they want to prove patents are useful.

Re:Thomas Edison (0)

Anonymous Coward | about 10 months ago | (#44885563)

most inventors had shops where lots of other people did the work and they managed things. edison wasn't the first one. Michelangelo and lots of other artists had students do lots of their work and they planned it and finished it up

Re:Thomas Edison (3, Insightful)

Sarten-X (1102295) | about 10 months ago | (#44885577)

He made his students' research into actual working inventions. That's what patents are supposed to cover - the working form, with all of the show-stopping problems worked out enough to have a functional device. Pure research isn't patentable, because without an application it just adds to the pile of useless facts about the world.

Re:Thomas Edison (0)

Anonymous Coward | about 10 months ago | (#44885625)

too bad the world moved on and we are way past the point of a single device being a single patent. LTE is dozens of not hundreds of patents covering lots of different areas of research

Re:Thomas Edison (3, Insightful)

BenfromMO (3109565) | about 10 months ago | (#44885669)

How exactly is Edison a bad example of how the patent process works? Whether we agree with his methods on farming work out and paying employees to invent things for him, we must recognize the fact that through this system he used that he both made money, and benefited mankind through his shops and his laboratories where his employees advanced human knowledge.

And isn't that the point to the patent system?

To advance our technology and to advance those who invent? The people all along had an option to not work for Edison and strike out on their own, but they chose to stay in the laboratory. That was their choice, and I would argue therefore that the process worked great back than. As for today, that is a different topic of conversation because things are slightly different today than they were in Edison's time.

Re:Thomas Edison (2)

king neckbeard (1801738) | about 10 months ago | (#44886445)

Edison was a convicted monopolist who tortured puppies to slander competitors and proudly used inefficient methods of research. Yes, technology advanced through his companies, but it would have probably advanced faster had he never been born.

Re:Thomas Edison (2)

tgd (2822) | about 10 months ago | (#44886067)

Yeah, Edison profited off the research of his students, and everyone around him......a bad example to be used if they want to prove patents are useful.

There's no crime in profiting off the work of employees and students.

You may disagree with it, but its completely orthogonal to the question of the usefulness of patents.

Re:Thomas Edison (4, Insightful)

ShanghaiBill (739463) | about 10 months ago | (#44886259)

Yeah, Edison profited off the research of his students, and everyone around him......a bad example to be used if they want to prove patents are useful.

And an even worse example if you want to show that NPEs are useful today. That fact that independent inventors were useful a century ago is irrelevant. They play very little role in modern innovation. Many companies refuse to even talk to independent inventors, because knowledge of their patents can expose the company to liability. What most NPEs do is sit on the patent and wait for someone to independently come up with the same innovation, and then demand payment. They are just parasites.

Re:Thomas Edison (0)

Anonymous Coward | about 10 months ago | (#44886599)

Yeah, Edison profited off the research of his students...

Students? Don't you mean employees?

Re:Thomas Edison (1)

retchdog (1319261) | about 10 months ago | (#44886819)

Isn't this the entire point of capitalism, though? If you want capitalism to work for inventions, I don't see how you could do it without something like patents.

The answer might be to move from this archaic system of absolute state-enforced monopoly to something a bit more flexible. Of course this would require economists and policy-makers to be imaginative and innovative themselves, rather than modeling `innovation' as white noise (wtf?), which seems unlikely.

Oh wow Forbes defends trolls what a surprise (0)

h4rr4r (612664) | about 10 months ago | (#44885507)

Forbes supports patent trolls, what a freaking surprise.

Re:Oh wow Forbes defends trolls what a surprise (1, Insightful)

i kan reed (749298) | about 10 months ago | (#44885561)

America is the country where you know that no matter how horrible and destructive someone's greed is, there will always be a news outlet to defend it.

Re:Oh wow Forbes defends trolls what a surprise (1)

shentino (1139071) | about 10 months ago | (#44886499)

A news outlet most likely owned by the greedy person in the first place.

Re:Oh wow Forbes defends trolls what a surprise (1)

i kan reed (749298) | about 10 months ago | (#44886703)

No, frequently it's owned by Rupert Murdoch or the House of Saud.

Re:Oh wow Forbes defends trolls what a surprise (4, Informative)

gnupun (752725) | about 10 months ago | (#44886071)

Wrong, you're twisting their words. This is what they say:

This is what some media commentators ignore when they try to tar all non-practicing entities with the same brush as abusive patent trolls.

NPEs (non-practicing entities) are people who don't manufacture products based on their patents, they just license the patents. Patent trolls are a subset of NPEs who abuse the patent system by blackmailing the public and companies with obvious, non-innovative and/or overly broad patents. The point being, not all NPEs and their patents are evil.

Re:Oh wow Forbes defends trolls what a surprise (1)

h4rr4r (612664) | about 10 months ago | (#44886119)

Rent seeking is not innovation.

Re:Oh wow Forbes defends trolls what a surprise (0)

Anonymous Coward | about 10 months ago | (#44886189)

Pointless comment.

They're rent seeking FOR innovation that has already occurred.

Re:Oh wow Forbes defends trolls what a surprise (1)

h4rr4r (612664) | about 10 months ago | (#44886197)

No, they are rent seeking for the sake of rent seeking. If they wanted innovation they would produce something or seek out someone to produce the thing.

Re:Oh wow Forbes defends trolls what a surprise (1)

gnupun (752725) | about 10 months ago | (#44886519)

Rent seeking is not innovation.

Newsflash! All businesses are rent seeking. This does not mean rent seeking is illegal/immoral. A professional also seeks rent (salary) based on his knowledge and skill, but he has to put in additional labor himself to extract that rent, whereas business get that labor done with machinery and/or employees.

If you work as an employee and reuse the same knowledge and skills over and over again to perform your job, you are rent seeking. Businesses are just more efficient at rent collecting than employees.

Re:Oh wow Forbes defends trolls what a surprise (1)

h4rr4r (612664) | about 10 months ago | (#44886581)

Not all businesses are rent seeking. The grocer does not seek rent, nor is salary anything like rent. It is a simple exchange of time for money.

Re:Oh wow Forbes defends trolls what a surprise (1)

gnupun (752725) | about 10 months ago | (#44886767)

Not all businesses are rent seeking. The grocer does not seek rent ...

If the grocer does not receive a minimum amount X per month (the rent) from his business to cover his business and personal costs, he will have to shut down his business.

...nor is salary anything like rent. It is a simple exchange of time for money.

Yeah, right. You forgot to mention the skills needed to obtain that salary. The job skills are learnt once and reused throughout the career. Skilled labor -- people collecting rent on supplying skills to customers through their employers. Why should programmers draw a salary of $30-$100/hr when burger flippers pull in only $7.50 or similar? It's about the skills the programmer possesses that allows him/her to be more productive than the blue collar worker.

Re:Oh wow Forbes defends trolls what a surprise (1)

h4rr4r (612664) | about 10 months ago | (#44886799)

http://en.wikipedia.org/wiki/Rent-seeking [wikipedia.org]

Please read that. Rent is a specific thing, neither of those are rent. As they actually create wealth.

Re:Oh wow Forbes defends trolls what a surprise (5, Insightful)

ShanghaiBill (739463) | about 10 months ago | (#44886317)

they just license the patents.

You make it sound like they hire a salesperson to go around and market their patent to potential customers. Or maybe you think the customers search for useful patents to license and then contact the inventor. Neither of these scenarios is common. What is common, is for the NPE to just sit on the patent, wait for someone to independently come up with the same innovation, and then demand payment. This is not contributing anything positive to the process.

Re:Oh wow Forbes defends trolls what a surprise (1)

TheRaven64 (641858) | about 10 months ago | (#44886737)

The obvious distinction is whether they invest a engineering effort in developing things. Most patent trolls just buy up patents and then try to turn them into money. Companies like ARM also don't make things, but the stuff that they license has obvious value: creating it independently from scratch would require a lot of time and money. Typically, these companies don't just license patents, they also provide detailed designs, engineering support, and so on.

Re:Oh wow Forbes defends trolls what a surprise (1)

Rob Y. (110975) | about 10 months ago | (#44886231)

At some level, they have a point. It's not really patent trolls that are the problem - it's what's being patented. You couldn't sit on a patented idea and wait for implementations to appear before suing if ideas weren't being granted patents in the first place. Of course our corrupt political system isn't about to write unambiguous rules that disallow software patents or gesture patents or file format patents, etc. So cracking down on non-practicing entities is the only solution available at the moment.

I wonder if Forbes would weigh in on bad patents as strongly as they do in their reflexive support for trolls.

Pretty much never ... (4, Interesting)

gstoddart (321705) | about 10 months ago | (#44885533)

I'm of the opinion that if you didn't create it, and your entity exists to do nothing than extort people for royalties on your patent ... you are a patent troll.

Re:Pretty much never ... (1)

kthreadd (1558445) | about 10 months ago | (#44885713)

I would go without the "if you didn't create it." I've yet to find a single patent case that wasn't trolling.

Re:Pretty much never ... (2, Informative)

tgd (2822) | about 10 months ago | (#44886117)

I would go without the "if you didn't create it." I've yet to find a single patent case that wasn't trolling.

If you get your "news" from stories on Slashdot, that would make sense. All you see on here is the fringe ridiculous cases, and the high profile games played between multinational corporations using patent portfolios as pawns. The vast majority of patents do exactly what they're supposed to do, and the vast majority of patents are licensed fairly and appropriately.

Re:Pretty much never ... (1)

kthreadd (1558445) | about 10 months ago | (#44886207)

No. I just find that the concept of patents is trolling the human mind, so everything that involves patents is trolling.

Consider this... (1)

mschaffer (97223) | about 10 months ago | (#44885805)

What if a bank, B, loans money to a startup, S, that is a small company where inventors have a few of their own patents, P. As part of the collateral for the loan, S assigns rights to B for the patents until the loan is repaid.
Startup S goes belly-up. The inventors blow through the cash and have nothing but the patents assigned to B.
B places S into receivership and sells rights to P.

By your definition of "patent troll", B and anyone buying rights to P are "patent trolls", but I don't' see it that way. If you wanted to remove all patent trolls, you will also make it almost impossible for a start-up company that only has intellectual property to get start-up capital.

Re:Consider this... (2)

Overzeetop (214511) | about 10 months ago | (#44885975)

Make patents non-transferrable. Then they can't be used for collateral and there is no conflict at all.

" If you wanted to remove all patent trolls, you will also make it almost impossible for a start-up company that only has intellectual property to get start-up capital."

  I don't see that as necessarily a bad thing.

Re:Consider this... (5, Funny)

Rinikusu (28164) | about 10 months ago | (#44886023)

"How much would we have to pay 'the Patent Holder' for licensing of their shitty little patent?"
"$50 million a year, sir."
"What's contract killers going for on Silk Road?"
"$15k/head"
"How many patent holders?"
"Six are listed." ...
"let's save ourselves over $49 million bucks. Fire up Tor."

Re:Consider this... (1)

mellon (7048) | about 10 months ago | (#44886003)

The patent still has value to practicing entities, just not to NPEs. But your basic point is correct—getting rid of NPEs won't solve the patent problem. Granting patents to all comers is like selling arms to all sides in a civil war. Sure, it's fair, but wouldn't it be better to get them to disarm and resolve their differences some other way?

Re:Consider this... (1)

mschaffer (97223) | about 10 months ago | (#44886845)

Restricting the sale of patents to PEs reduces the value of the intellectual property. Besides, in my example, most banks would be an NPE.

The problem is not that "granting patents to all comers is like selling arms to all sides in a civil war". Who is to decide who the PEs are? Who has the right to restrict how these are traded?

Rather, the real problem is that the patent system is broken---issuing patents for inventions that, as a whole, lack inventive steps or are very obvious to those PEs at the time patents are issued.

Re:Pretty much never ... (4, Insightful)

tgd (2822) | about 10 months ago | (#44886101)

I'm of the opinion that if you didn't create it, and your entity exists to do nothing than extort people for royalties on your patent ... you are a patent troll.

At the risk of burning karma, I disagree... licensing organizations are not the problem. Bad patents are the problem.

Licensing organizations are very useful, to big companies, small companies and individuals.

There are a fairly large number of companies that exist to profit off bad patents, but that doesn't invalidate the work the "good" companies are doing.

Re:Pretty much never ... (1)

WWJohnBrowningDo (2792397) | about 10 months ago | (#44886201)

your entity exists to do nothing than extort people for royalties on your patent

Let's say we make a new rule that says any corporation that derives more than 90% of its revenue from patent royalties is a patent troll.

The problem is that this rule is trivial to dodge. Large multi-nationals can just buy patent trolls and thus wash the patent royalties into the legitimate revenue stream. It doesn't matter if the percentage is set at 90% or even 1%, there are plenty of Fortune 500s out there with big enough revenue streams to do this.

This is a complicated problem which requires delicate solutions. There is no silver bullet. For every person out there with a genuine desire to fix the problem there are 10 lawyers coming up with new loopholes. That's why it's important that we keep the discussion going and spread the news so that more people becomes informed and involved.

Re:Pretty much never ... (2, Interesting)

Anonymous Coward | about 10 months ago | (#44886343)

I agree.

There is nothing in the Constitution that implies that a patent should be transferable to another party. The Constitution says,

Congress has the power 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 point was to provide an incentive, in the form of preventing their designs from being stolen, to inventors so that they would pursue their ideas and bring new devices to market. The point was not to enable individuals or companies to accumulate patent portfolios.

Also, note that is says "Authors and Inventors" - not "Authors, Inventors, or Companies".

Thomas Edison? (-1)

Anonymous Coward | about 10 months ago | (#44885537)

I thought he didn't actually invent much, but put his name on the patents of his employed engineers?

Isn't that the new history of Mr. Evil Edison?

Re:Thomas Edison? (0)

Anonymous Coward | about 10 months ago | (#44885647)

I believe someone else that blatantly abused patents is Westinghouse, he would do the same as Edison. I still hear from people how Westinghouse had been innovative. But he would invest in innovators, then patent them under his name, or hold an exclusive license to the patents.

That's true... (1)

mschaffer (97223) | about 10 months ago | (#44885927)

Yes, most of his patents were put in his name, but that's not why he was evil.

Almost never (0)

Anonymous Coward | about 10 months ago | (#44885553)

Patents are meant to protect ideas that are both novel and non-obvious; most patents today are neither, as proven by the fact that so many people are doing similar things independently.

Oh and you win no points for using Edison as an example; the man was a troll, pure and simple.

Re:Almost never (1)

tnk1 (899206) | about 10 months ago | (#44885757)

Troll or not, electricity and the light bulb and such did not suffer the possibility of completely being made unprofitable and undeployable by Edison or Westinghouse. In the sense that they may not have practiced personally, you may have a point.

However, it is important to differentiate between the patent "trolls" of yesteryear, who were actual semi-inventors running shops that did research and generated inventions (even if they claimed all the credit for other's work), and the patent trolls of today, who are almost all strictly law firms with a different name who simply buy the rights off someone else and do their best to make that patent into a robber baron's toll bridge regardless of the damage that the use of the patent will do to the very market that the invention is trying to contribute to.

Re:Almost never (1)

mellon (7048) | about 10 months ago | (#44886019)

Perhaps you could explain why that difference is important? Both outcomes seem bad to me.

err some confusion there folks (4, Interesting)

RobertLTux (260313) | about 10 months ago | (#44885555)

okay we have 3 different groups to deal with

1 inventor type that don't market anything (they invent and then sell to a Maker)

2 Makers that have on staff inventor types (they make stuff "with our patented..."

3 Leech types that just beg, borrow , steal and Buy patents (Holding Corps that only send bills around)

Trolls are type 3 not type 1

Yes, second parent. (1)

Anonymous Coward | about 10 months ago | (#44885705)

There are firms who's business model is to hire very smart people to innovate, invent, research, develop, and then patent - with the hopes that some firm will license their IP - and do all the nitty gritty manufacturing and distribution work - and then pay them a fee. It's a perfectly logical arrangement - some are great at inventing while others are great at making and marketing.

Win/Win.

Then there are those who buy or acquire IP - many times very vague IP - with the sole purpose to extort via the legal system.

Acid test: are the principals of the firm JDs (Folks who sat for the BAR?) - Trolls.

Any IP firm run by or owned by lawyers are Trolls.

Re:Yes, second parent. (1)

phantomfive (622387) | about 10 months ago | (#44885763)

Any .... firm run by or owned by lawyers are Trolls.

Too true.

There's got to be a better way to run our legal system than lawyers.

Yes, about that my dear sir. (0)

Anonymous Coward | about 10 months ago | (#44885979)

Any .... firm run by or owned by lawyers are Trolls.

Too true.

There's got to be a better way to run our legal system than lawyers.

No sir. First I appreciate not being lambasted for confusing "who's" with "whose".

There are quite a few noble lawyers. They may sound like dicks to most of us, but their job is to represent their clients - even if their (the client's) troubles are dickish..

Where IP firms deviate from that is that the lawyers ARE the clients, and hence the conflict.

When the lawyers ARE the clients is when you run into trouble - my dear kind person.

Re:err some confusion there folks (1)

Sarten-X (1102295) | about 10 months ago | (#44885795)

Type 3 buys patents from type 1, allowing type 1 to invent more (or recoup the initial investment).

That means that types 2 and 3 are effectively competitors, both trying to get the license from type 1. However, type 3 will buy from type 1 any time on speculation of future profit, whereas type 2 will only buy from type 1 when the patent is immediately useful. That's why type 3 is so often found associating with "pure research" type 1s, where profitable applications aren't clearly visible.

Those "leeches" provide the hedge bets that make invention a less-risky investment. Like any other risk-reducing entity, they take a cut of the profits in exchange for taking on the risk. It's not terribly different from buying insurance or investing with a diverse portfolio.

There are four types, silly (1)

robot256 (1635039) | about 10 months ago | (#44885945)

Type 3a firms are good--they buy patents from inventors and seek out companies who want to bring in new ideas by buying or licensing a patent.

Type 3b firms are patent trolls--they buy patents and seek out companies already using the patent in order to extort money from them.

The problem is that in many fields (like software and computer design) there are simply so many engineers working on any given problem that it is almost impossible to avoid the simultaneous/independent invention of any given idea. In that environment, telling one inventor that he has to pay someone else because they did the paperwork first is an insult to his intelligence. This is compounded by the fact that so many ideas are either a) mathematically optimal, which anyone could derive and everyone wants to use, and/or b) part of an interoperability standard where licensing constraints reduce competition, derivative works, open-source tools, etc.

Re:err some confusion there folks (1)

JaredOfEuropa (526365) | about 10 months ago | (#44885847)

Suppose you are an inventor. Perhaps you come up with something clever, but you cannot find a maker interested in making your widget. Or there are already a few making it but disputing their infringment of your patent (or simply using it without your knowledge), meaning massive legal fees before you can collect dollar one. In this case, the "IP venture" types can buy your patent. You get paid, and their market guys get to work finding makers interested in your invention, or they sick their legal department on makers who already use it.

The problem is not IP investors (your type 3); if you accept the basic idea of patents, and understand that inventors often lack the means to market or enforce their patent, then there is a legitimate market for people who buy patents and then do the legal legwork so they can turn a profit. The problem is threefold:
- The granting of overly broad patents, allowing the owners to tax the public for obvious stuff (Intellectual land-grab)
- The legal methods employed by some investors in IP (Legal extortion by what truly are patent trolls)
- The legal framework of patent law, for instance making it cheap to troll but expensive to mount a defense.

Re:err some confusion there folks (1)

tgd (2822) | about 10 months ago | (#44886151)

okay we have 3 different groups to deal with

1 inventor type that don't market anything (they invent and then sell to a Maker)

2 Makers that have on staff inventor types (they make stuff "with our patented..."

3 Leech types that just beg, borrow , steal and Buy patents (Holding Corps that only send bills around)

Trolls are type 3 not type 1

The problem is, there's really two kinds of companies in bucket #3 -- patent licensing companies that handle licensing (and sometimes legally holding) patents on behalf of the people in #1 and #2, and patent aggregators that seek out and buy up bad patents as companies are failing for the express purpose of monetizing them until they're found invalid. You can tell the latter by the random nature of their litigation and the tendency to keep licensing costs in the "extortion" range where its cheaper to pay than fight. The former won't do that -- their job is to get appropriate licensing, and the small fish are of no concern.

There are lots of stories on here that lump companies in #1 into #2 on grounds of anti-patent zealotry, not corporate behavior or intent.

NPE and Forbes (4, Insightful)

jbolden (176878) | about 10 months ago | (#44885585)

More of less the article says that NPEs encourage innovation by allowing people to sell patents. Everyone agrees that patent trolls/ NPE by being willing to buy patents help to make having a portfolio of patents a valuable asset. That's not a point in question. The point in question is whether the damage NPEs cause exceeds the benefits of their funding since the money for those buys comes from lawsuits. And Forbes doesn't even attempt to answer that question. Lots of terrible things often have some side advantages that don't come close to covering the downside of the terrible thing.

Re:NPE and Forbes (1)

Anonymous Coward | about 10 months ago | (#44885737)

Money to buy patents also comes off legitimate licensing fees from other patents.

As another poster positied, there could be pure research labs that turn things over to others for commercialization or marketing/manufacturing. I think a lot of the /. crowd would acknowledge Xerox parc and Bell Labs as doing a lot of useful research and turning up patents for their parent companies. Those guys didn't then start making and selling the widgets though. If you can make the leap from R&D to manufacturing, then having one corp do the research or design and another corp do the manufacturing then I think you're ok.

Its Sue first, last and always patent holders that are rent seeking tax on the productive mebers of society, and submarine patents ought to be illegal because of latches.

So, uh... (1)

Tridus (79566) | about 10 months ago | (#44885615)

Those patents covered actual working models, not taking something that already exists, slapping "Mobile" in the description, and suing small businesses that are using it.

This article is out to lunch and written entirely to benefit the patent troll industry (which now finds itself drawing unwanted attention).

For me it's easy... (1)

Foske (144771) | about 10 months ago | (#44885621)

A company should only be allowed to use a patent in court when it is active in the field the patent describes and the use of the patent by other organizations reduces the market potential of this company. Exception are research organizations of course, for which market value must somehow be redefined. A very effective troll-be-gone method.

Make licensing compulsory (2)

fustakrakich (1673220) | about 10 months ago | (#44885655)

Since a patent is a government granted privilege, if you don't market your patented device, you must allow somebody to do so at a reasonable price, set by the government, if need be. If you want to consider patents as property, let's levy taxes on it and use eminent domain where necessary. (See the Wright Brothers patent on lateral control of the airplane)

NPEs truly aren't the problem (5, Insightful)

SecurityGuy (217807) | about 10 months ago | (#44885667)

The problem is junk patents.

Imagine you invent a device that pulls water out of the air for free (unlike anything cold, which will do it for $$$). Anywhere. Even in a desert. This is a great innovation. I have zero problem with you selling your patent to someone else. The problem I have is that right after you invent this, a horde of lawyers will storm the patent office and patent things like drinking water that came from your device. Watering a lawn with water that came from your device. Making beer with water that came from your device.

The problem is the ridiculous deluge of patents for trivial and obvious things. They litter the business landscape and make it impossible to solve any real problem without tripping over them as you solve 100 trivial problems in obvious ways along the way. Cuz you know, who ever would have thought that the optimal number of clicks to buy something in would be 1? That must have taken a talented team of web developer (singular) literally hours to do.

Re:NPEs truly aren't the problem (4, Informative)

Anonymous Coward | about 10 months ago | (#44885799)

This, this, a hundred times this.

One example I can think of is in the salt water aquarium hobby, particularly the reefkeeping segment. Some stupid patent examiner let a patent get through that covers lighting for saltwater aquaria that incorporates a timer and LEDs. 'Cause, you know, replacing frakking fluoros or HID lights with LEDs and sticking a timer in it's 'non-obvious' or some crap. Sued several emergent companies out of business, while not actually producing a product.

Re:NPEs truly aren't the problem (2)

Derekloffin (741455) | about 10 months ago | (#44885875)

Pretty much. Put another way, the Patent system is being gamed now. It is like a really old server running old software, all the hacks are known and it will be serving porn within the hour. Patent system really isn't much different. The law is really old. All the cracks and exploits are now well known by the legal community, and it is now not doing its intended job, instead of the legal hackers are exploiting it.

Re:NPEs truly aren't the problem (0)

Anonymous Coward | about 10 months ago | (#44886047)

The true question is: Why did those employed to keep the server working and doing its intended job not install fixes and/or upgrades to prevent this?

Re:NPEs truly aren't the problem (0)

Anonymous Coward | about 10 months ago | (#44886309)

Wait... so when do we start getting patent porn?

"Oh, baby, your clause is SO BIG!"

Indeed, problem is inability to sue USPTO (2)

michaelmalak (91262) | about 10 months ago | (#44886379)

The problem is junk patents

And the cause of junk patents is the distorted economy of issuing patents. USPTO gets paid for every patent they issue, good or bad, yet are immune [patentlyo.com] from lawsuits from the businesses they negatively impact by their bad behavior.

The term for this immunity is royal perogative [wikipedia.org] .

Non-practicing or incapable-of-practicing? (0)

Anonymous Coward | about 10 months ago | (#44885683)

The vast majority of patent holders flat out don't have the resources, connections and/or skills to take advantage of their inventions.

Being able to design and patent a flying car doesn't mean you have the money or skills necessary to construct one.

missing from the article (1)

Anonymous Coward | about 10 months ago | (#44885703)

The difference between licensing and trolling is not actually highlighted in the article which is focused on the history of patent system in barely 200 words.
I want the five minutes of my life back.
Unsatisfied I'm off to av.com to search for real online debate on this issue.

Mostly the difference is real licencing has something useful people pay to use; trolling is trying to license something useful that people already use without paying: eg. when prior art exists from expert groups but the licensing costs are slightly lower than proving it in court.

The real problem with patents (2)

Skapare (16644) | about 10 months ago | (#44885721)

... is not that patents are bought and sold (this should be perfectly valid for valid patents). The real problem is that there are so many bad patents ... things that are not innovative at all ... things that don't fulfill the need to have a patent system. Once people start to understand what patents really are supposed to be, then we can solve the problem. It's not about trolls or software patents or things like that. It's about what justifies the government taking property rights away, and how that concept has been corrupted by corporations since the middle 1800's.

Read more ... [motre.net]

Re:The real problem with patents (1)

shentino (1139071) | about 10 months ago | (#44886765)

The system isn't broken, it's rigged.

Where the money comes from (0)

Anonymous Coward | about 10 months ago | (#44885751)

Does an entity make more money by licensing its patents, or by extorting those who may or may not be infringing on its patents?

If it's the latter, the entity is a patent troll. If the entity does not license its patents at all, or demands exorbitant fees, it's definitely a patent troll.

Until 1880 this was not a problem. (4, Informative)

tlambert (566799) | about 10 months ago | (#44885809)

Until 1880 this was not a problem.

Up until that point, there was a requirement of production of a working model, also known as a Reduction To Practice. After 1880, you could patent whatever, and get away with never having produced anything other than the speculation that your idea might be reduced to practice using some future engineering or technical ability which did not exist at the date of filing.

One common alternative method of patent reform is to bring back this requirement, and to place the model in escrow. In the limit, this permits future study of the model, whether it be hardware, or a process patent for software. This would incidentally remove patent protection from soft processes, such as business model process patents, which people tend to find very objectionable as abuses of the patent system.

Re:Until 1880 this was not a problem. (1)

BenfromMO (3109565) | about 10 months ago | (#44885911)

This should still be a requirement in my mind. If you can not build it or refuse to build at least a small proto-type, what use is the invention going to be for mankind when even the inventor refuses to build it?

Re:Until 1880 this was not a problem. (1)

geekoid (135745) | about 10 months ago | (#44886173)

You can't bring back the requirement, it's overly burdensome.

I have a patent for a omni-transducer polymer. I can't afford to get it made, so what? only people with money should be allowed to patent?
Of course, the person who invented the LASER would never have been able to gat a patent with Reduction to Practice, and last I checked, the LASER was pretty damn useful.

And yes, business models, or any 'model' should be removed, a should software; which should be protected by copyright.

Re:Until 1880 this was not a problem. (1)

Skapare (16644) | about 10 months ago | (#44886399)

I agree ... that requirement is burdensome. But there does need to be some kind of showing of innovation. It seems that 99% if patents are for things lots of people could easily do.

Theory vs. Practice (3, Insightful)

Schnapple (262314) | about 10 months ago | (#44885813)

In theory what a NPE does is actually quite admirable. You're an inventor and you invented something and you have a patent and big companies rip you off. They know you can't afford to fight them so they just do what they want. So you sell your patent to someone like Intellectual Ventures who goes after the big companies for you. Now no one can make your widget bolt without paying you, as it should be.

And look what's happened - even giant companies are scared shitless to defend against patent lawsuits. In that respect, the idea worked.

In practice though what happens is minute, even trivial things get patented and NPE's go looking for people to sue, using a byzantine series of shell companies and borderline gaming of the legal system. Whereas the inventor of the widget bolt has to make the exact specifications of how his bolt works open to the public (who could also just figure it out by looking at it) software companies don't have to make the source code of their patented inventions available to anyone.

NPE's to me are like the NRA or PETA - organizations/concepts which started out with noble intentions (responsible gun ownership, don't torture animals) and just strayed way off the mark.

Re:Theory vs. Practice (1)

Skapare (16644) | about 10 months ago | (#44886447)

The problem is that too many of the patents are not innovative. Anyone can make a widget bolt. That patent should have never been issued.

NRA did not stray off ... it was pulled off track by the "ban all guns" lobby. The problem today is even well intentioned changes like "background checks for mental illness everywhere" risks the slippery slope, and the "pro guns" lobby has to fight even that to be sure "ban all guns" isn't where we end up. To fix this, liberals need to show, by their actions, they are no longer wanting to "ban all guns", just to get "better background checks" through. Sad.

Re:Theory vs. Practice (1)

shentino (1139071) | about 10 months ago | (#44886831)

Better yet is to make it so NPE's or PAE's aren't needed int he first place.

Big corporations ripping off small fry inventors is the root of hte problem? Attack the problem directly and hold the corporations accountable for being rip-off artists.

Troll vs legitimate non-practicing entity (1)

David Muir Sharnoff (73602) | about 10 months ago | (#44885851)

What makes a troll a troll is the behavior of trying to get money from people for doing what they are already doing. There is no value add. A legitimate non-practicing entity, on the other hand, gets money by getting people do do something new that they were not already doing.

The distinction is clear and simple. If you approach me and tell me I need a license to do what I'm already doing, you're a troll. That's the only way to be a troll.

Re:Troll vs legitimate non-practicing entity (1)

geekoid (135745) | about 10 months ago | (#44885953)

Bullshit

If you are violating a patent, then it is perfectly normal, and expect, for the patent holder to demand you stop or pay royalties.
And yes, it might takes some time for then to discover you are violating the patent.

Read you last sentence again, you are basically saying 'If I do it then you have no patent protection'.

If they patent after you are in the market place, then it's trolling.

The rules are simple (0)

Anonymous Coward | about 10 months ago | (#44885853)

1) If you approach the company BEFORE you they come out with the product, you are not a patent troll - even if you have to sue them to pay for it.

2) If you ask a reasonable price - as in 10% of the added value you offer, not 10% of the total cost, then you are not a patent troll.

3) If you try and succeed to obtain money within 5 years of filing your patent, rather than waiting 10 or more years, you are not a patent troll.
4) You did not buy the patent from someone else, but rather developed it in house, (or made the registered inventor a partner in your firm - with a seat on the board if you are public), then you are not a patent troll.

Re:The rules are simple (1)

Skapare (16644) | about 10 months ago | (#44886523)

Any company that tries to collect on using XOR to implement a cursor on a bit graphic screen with text is a troll, even if they filed the original patent. This is an example of non-innovation.

The answer is no (1)

grumpyman (849537) | about 10 months ago | (#44885869)

"Is there a right way to trade in patents for profit without abusing the process" - as long as it's not illegal, in a capitalist society somebody will find a more 'efficient' way to do things.

Re:The answer is no (1)

Overzeetop (214511) | about 10 months ago | (#44886031)

Sure - compulsory licensing for IP, just like is done for mechanical rights of recordings; though I would favor a sliding scale of payment based on the quantity. You're ALWAYS allowed to negotiate a lower rate, but any patent may be licensed for production for a fixed rate simply by filing a form.

It puts a cap on what you can and cannot do, and it makes compliance very easy. Without it, the entire semi-pro music field would grind to a halt.

It is trolling when... (1)

BenfromMO (3109565) | about 10 months ago | (#44885879)

You patent things just to patent them and hope to eventually extort money from others as opposed to actually using said patent.

Cost (0)

Anonymous Coward | about 10 months ago | (#44885883)

You can tell a patent troll by the extortion amount they have calculated to cost you. When they are just below the litigation costs and it has nothing to do with the worth of the patent to the customer, it becomes quite obvious.

It's never trolling (1, Insightful)

geekoid (135745) | about 10 months ago | (#44885919)

Don't let the ignorant convince you otherwise.

Trolling is when you great a broader patent in order to try to claim royalties on existing patents.

This nonsense about people trying to protect their rights, or license their patent, is trolling is a pile of crap.
Generally supported by anti tort groups(i,e, insurance companies) that want to strip inventors of their rights.

Answer: never (0)

WOOFYGOOFY (1334993) | about 10 months ago | (#44885929)

Software patents are a fraud designed to line the pockets of lawyers.

Glad I could clear that up for you.

Troll Definition (1)

NEDHead (1651195) | about 10 months ago | (#44885937)

1) A Patent Troll is a person or entity who tries to extort payments from any entity for utilizing a patented process or design that should never have been patented.

2) A patent holder seeking to receive compensation for the utilization of a patent shall not be deemed a 'Troll' if said patent holder is me.

Thomas Edison - ick (1)

nurb432 (527695) | about 10 months ago | (#44885939)

Was NOT a great inventor. He was a businessman that took credit for his employees work. He also worked them like dogs, and lied to them. He may have been needed at the time to coordinate/etc, but that doesn't mean he should get credit for what he couldn't do.

Just read some of Tesla's notes about what happened, the guy was a total 'bag.

Edison is maybe not the best example (1)

Zontar_Thing_From_Ve (949321) | about 10 months ago | (#44885947)

I'm not saying that Edison wasn't smart and didn't accomplish anything, but do keep in mind that in a lot of cases he just simply improved what others did before him, profiting off the heavy lifting that others did. He promoted things that weren't really all that good to begin with such as the current wars. It's known that he took credit for things that were actually done by people who worked for him. And finally, it's not well known today, but you can research how his motion picture patents put the early motion picture business under his total control and it took deliberate, illegal violations of his patents to get the movie industry established in Hollywood. In fact, one of the reasons Hollywood got started was to be completely on the other side of the US from Edison and thus in a place harder for him to control. If I remember correctly the US government eventually had a conversion experience and invalidated those motion picture patents when it became convenient for them to do so because Edison was basically using them to prevent all competition. Then again, maybe he is a perfect example for this kind of discussion but not because he benefited society but precisely because his goal was pure old greed and to use his patents to remove competition so he could make more money.

Article's Definition of NPE is Incorrect (3, Insightful)

BBF_BBF (812493) | about 10 months ago | (#44885961)

After I RTFA, I realized that the authors' definition of NPE is a company that doesn't PHYSICALLY MANUFACTURE the product. And it's doubly disappointing that one author WAS the DIRECTOR of the patent office from 2004-2009. I wonder why the patent office is so screwed up?

It lists Qualcomm as an NPE!?!?! WTF!?! I guess it's because they don't FAB the chips themselves.

Qualcomm sells chips THEY DESIGN using their IP, they just CONTRACT OUT the device to others to build. How is that NOT an Practicing Entity?!? They also license out their patents for worldwide standards (WCDMA) that they may not have any part in the manufacture of the devices that use that standard.

So by the Authors' definition of NPE, Apple is also an NPE because they contract the assembly of their I-devices to other companies and don't actually FAB their A7 processors?

Meh.

Re:Article's Definition of NPE is Incorrect (3, Interesting)

Rinikusu (28164) | about 10 months ago | (#44886515)

What would you consider ARM Holdings? They don't make anything, either, they just employ a bunch of engineers to design and come up with CPU solutions for various problems (using the ARM architecture, obviously). And, of course, they patent their designs and then let approved licensors fab their designs (with and without approved modifications). Honestly, I'd say that ARM is the type of NPE that's "doing it right". Not only are they protecting their patents, but they are steadily trying to improve the state of the art and continuing to push forward. I think the key difference is, you can *buy* a Qualcomm branded chip (I've got a snapdragon in one of my phones, for instance). However, you're most likely never going to be able to buy an ARM Holdings chip, even though it's their designs (many of which Qualcomm uses and modifies). It's a subtle difference, but it does change the frame of the question.

Now, trying to compare guys who think they patented, I dunno, hypertext 7 years after the fact, that's absurd. :/

Invention and Implementation (2)

psydeshow (154300) | about 10 months ago | (#44885969)

Layman's answer:
It's trolling when the party seeking to enforce their patent rights has no intention of selling an actual working implementation on the open market.

If the purpose of your company is to make money by licensing an idea, rather than selling a product or service that incorporates that idea, then you're a troll. The system shouldn't allow you to feed on other companies and individuals that are using that idea in their own products or services.

Nobody cares if an inventor sells a patent to a manufacturer or a service provider who will actually use it, that's how the system is supposed to work. But holding companies and the builders of defensive portfolios should have no place at the table.

Also, just because business has been conducted a certain way up till now, doesn't mean that's the best way to conduct business. Thomas Edison wasn't a saint, he ruthlessly exploited the inspiration and perspiration of everyone who worked for him and went to great lengths to crush his competitors. WE CAN DO BETTER, is the point.

Re:Invention and Implementation (0)

Anonymous Coward | about 10 months ago | (#44886267)

You just declared Thomas Edison a Patent Troll. Not to mention half of the greatest inventors of our time.

Your definition works fine if a large corporation invents something. But when you are a loan inventor, often you can not sell your actual device. If you try, suddenly you get run out of business by people copying it. Then you try to sue them and idiots like you yell out "PATENT TROLL".

Re:Invention and Implementation (1)

dkleinsc (563838) | about 10 months ago | (#44886511)

I'd have a different answer:
- It's legitimate licensing when you either are the firm using the patent, or approach them with reasonable terms before they produce the product.
- It's trolling when you look for a successful product using an idea patented by somebody else, buy the patent, and then threaten to sue.

So let's say I have a patented process to harvest hemp that's more efficient than everyone else's. I find out that John Deere is working on a new line of harvester, so I go to Deere and say "I have a patented process for a hemp attachment that will make your harvester work better than anything anyone has built before. If you're interested, I can license it to you for X% of your earnings from that product line." That's different than if I have the same patent, wait until Deere has built a nice business from it, and sent a letter to Deere saying "Hang on, you owe me $14 gajillion."

When is it not trolling? Easy (2)

nurb432 (527695) | about 10 months ago | (#44885977)

When you have entities taking advantage of what you invented, and you have no choice but to involve the courts to force them to do the right thing.

Anything else is a troll.

Patents belong to People, as do Copyrights (0)

Anonymous Coward | about 10 months ago | (#44886025)

Patents - and copyrights - should only belong to People, not artificial fictions such as corporations, limited partnerships, or trusts, which should only be able to lease rights to them for the current renewal cycle, which should end with the death of the Person. And probably only be renewed once after the first patent period, or during the lifetime of the Person who has the copyright, or until their minor children (if any) reach adult age.

Corporations are not People. Never will be.

The purpose of patents (0)

Anonymous Coward | about 10 months ago | (#44886179)

The purpose of patents was supposed to be to encourage innovation by allowing an inventor to spend money researching and inventing, and then recover that money or turn a profit off the fruits of that intellectual property.

The issue is when an inventor doesn't actually spend money on research and development. When they patent a trivial idea that many people may have thought of but nobody has patented. Or maybe people have patented. Maybe people have patented and created works from that idea.

The issue is that the patent office approves patents where there exists prior art or conflicting patents, or they patent obvious patents. Patents should not exist for those 'ideas' but the patent office can not afford to investigate every patent application rigorously. They rely on courts to invalidate bad patents.

Then the problem is courts. Courts are not well equipped to work against patent trolls. It is also very expensive to defend yourself. The trolls take advantage of this to offer a settlement less than the cost of successfully defending yourself.

Maybe the issue isn't the patent system at all. Maybe it's the legal system surrounding the patent system. Maybe when you apply for a patent, instead of getting full approval, you get provisional approval. A less rigorous investigation of your patent needs to be done, which relieves stress on the patent office. Then, if you want to enforce that patent in the future, a professional investigation of the patent is done. If the patent is valid, it gets full status and are able to continue in the enforcement of the patent. If the investigation reveals that the patent is too obvious or in other violation, the patent is invalidated and the applicant is charged for the professional investigation. If the patent holder can't be determined or contacted by the patent office prior to the professional investigation, then the patent is invalidated.

This would put the burden on the applicant to ensure that their patent is fair and valid. Occasional misjudgments might happen, but an occasional penalty for a generally legitimate research operation wouldn't be a big deal. However, an operation that makes its living off of shady patents would constantly be paying to have their patents invalidated, prior to any cost of legal defense by any third party. The third party would just have to recognize that the patent claimed to be violated was provisional and somehow require a full investigation.

Most patents that exist do not get legally enforced. Many of these are legitimate patents. The existence of these patents and knowledge of their legitimacy is enough to cause people to respect them even without a formal investigation. A company with a legitimate patent would not have a worry about an investigation prior to enforcing their patent. However, a company who builds their business on hand-wavy fake patents would end up running the lottery and paying a lot of penalties.

It would still be necessary to be able to fight against a patent which has been legitimized in court, it could have been done in error. But it shouldn't be until the patent has been reviewed extensively and deemed valid that it could be used to cause other parties financial hardship.

Simple (1)

Virtucon (127420) | about 10 months ago | (#44886277)

A Patent Troll is a term used by a practicing entity to describe a patent holder that tries to collect license fees, usually in a hostile fashion, for use of their perceived intellectual property. Instead of calling them a "Weenie" they're a Patent Troll. What we all have to realize is that history has numerous examples of NPEs and Inventors who created novel inventions but weren't necessarily the prime manufacturer involving the technology. Thomas Edison and Rudolph Diesel are two inventors that come to mind but there are many others. What's missing from the conversation is what is a novel invention and that's the crux of the matter. When you start allowing patents for icons and rounded corners that's not a novel invention and it's a glaring deficiency within the patent system that allows it. That's why I don't think you should focus on NPEs or Patent Trolls per sey, but should go back and say "What is patentable?" If software patents are valid, then they need to describe something that's not obvious and novel; they should have a limited life span, say 7 years to ensure that you don't have companies monopolizing whole sectors of technology because they were there first. If you raised the bar and reduced the life span of Software Patents, you'd then find a lot of tech R&D money freed up that's currently feeding lawyers

Making Your Own Money (0)

b4upoo (166390) | about 10 months ago | (#44886493)

When one allows an entity to create fictional wealth all accountability is lost. The first great killer is the allowance of the earning of interest. Loans can not be paid back as private contracts create a demand to print enough money to honor the contracts. If you don't believe it make it a game. Get four buddies in a room and have each loan the next $100. in a circle at 8% interest due in one hour and forbid any money but the eight $100 bills to be in the room. If there are four people in the room then it will take $132. to pay off the loans and that $32. does not exist.
                Checking accounts, charge cards, and stocks and bonds all create the same issue. Bank do this as well as they give out loans thousands of times greater than the money they actually possess. Once this stuff is allowed then an ever growing debt and collapse of a nation is an absolute.
                All of these schemes exist as so many people fear doing labor. There are always people seeking to scheme to avoid labor or giving anything of value for their wealth. This is a treason against humanity as well as a treason against a nation. Yet we have people that love wars because they invest in military supply firms. Evil is among us.

Is it promoting progress? (1)

uncoveror (570620) | about 10 months ago | (#44886565)

Patent is based on the same constitutional clause as copyright. It is meant to promote the progress of science and the useful arts by granting temporary exclusive rights to authors and inventors. A patent held by someone other than the inventor goes against that. Grabbing a buck by stifling progress is what corporations that buy patents do. I am not aware of a single case where a corporation that bought out a patent promoted progress.

In my book (0)

Anonymous Coward | about 10 months ago | (#44886595)

A patent troll does not:
- invent, patenting the inventions to help fund more research
- build working kit out of research, patenting the results to help fund building more kit
- buy up patents to piece together innovations, and bring those to market
- buy up patents to produce kit to sell
A patent troll is not even
- a broker, bringing inventions and/or production capacity and/or markets together
- a patent pool, protecting a number of entities from legal action

A patent troll is simply:
- An entity that buys up patents to harass other entities with
- a party that cares no a whit about what the technology means, only what it can be monetised for
- a pretador looking for damages to sue for
- though it might settle for (outrageous) licensing and/or royalties

In short, a patent troll is entirely agnostic to the essence of why patents exist, does not present a positive addition to our technology base, does not produce anything useful, and is bent solely on abusing the system as much as possible for short-term gain.

Our beef is not with non-abusive entities you might also shove under the conveniently non-threatening "non-practicing entity" moniker. Our beef is with patent trolls, and the damage their abuse does.

In that sense, articles arguing that trolls are nice, really, because the author can come up with NPEs that aren't trolls, are deliberately confusing the issue and therefore not helpful.

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