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Investment Companies Backing Patent Trolls 147

Posted by kdawson
from the arms-merchants-in-the-patent-wars dept.
greenbird sends us to Forbes for an account of billions in investments flowing to US patent troll companies. One example is DeepNines, who is suing McAfee over a patent that covers combining an IDS and firewall in a single device. The patent was filed on May 17, 2000 and issued on June 6, 2006. No prior art for that, no siree. DeepNines is funded by "an $8 million zero-coupon note to Altitude Capital Partners, a New York City private equity firm, promising in return a cut of any winnings stemming from the lawsuit. The payout is based on a formula that grants Altitude a percentage that decreases with a bigger award."
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Investment Companies Backing Patent Trolls

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  • LOL PATENTS RULE LOL
    • Allow me to introduce myself.

      I'm an investor.

      I like money, and I like stuff. I like money and stuff so very much that when you were out there studying the world we live in, or the arts, or technology, I was studying money, and the systems that move it around and attribute power to individuals in the system.

      I know what patents and copyrights are for. They're so people like me can pluck your creations up and use them to squeeze money out of other people. Everyone in this industry knows thats what they're f
  • Seems like there's money to be made here. Probably google can shed some light on the situation, but where can one find what is needed to apply for a patent as a Canadian? I mean... wtf, RRSPs suck, getting a patent (on everything and anything) seems to be much easier.
    • by philpalm (952191) on Tuesday April 24, 2007 @08:58PM (#18863961)
      Computer software geeks meet the Big Drug companies. If you Google enough you will find that the lawmakers were in bed with Big Drug Companies who wish that Patent rights laws were stronger.

      As opposed to software and other user generated innovations that build upon the writings and methods of those who have gone ahead in the discovery game.
      Computer development is linear, you can see how each company leapfrogs another and soon the king of the hill pushes everyone off of their mountain.

      Drug companies claim that they discover a certain formula and test the hell out of all side effects before coming to market. They spent all that money and want to be reimburst for the money spent on failures and developments.

      Two industries with different methodologies and financial successes yet both are in the same patent boat. There ought to be a law but a King Solomon hasn't decided nor is likely to solve it soon.
      • The king solomon solution in that case would be to cut the child... seriously, a total overhaul of the patent system is really needed not the reinforcement of the current one. There are various solutions to the problem, some have to deal with gradual patent times, getting rid of patents in areas which grew without them, and also try to cut down massively on things which patent trolls live on etc... the solutions would be clear without sacrificing the patent law in areas which grew with it (pharma industries
      • by delt0r (999393)
        Drug companies use a *lot* of Governemnt funding. In fact they are tring to "recover" money they never spent in the first place. Well in the US anyway.
    • by FiniteElementalist (1073824) on Tuesday April 24, 2007 @09:19PM (#18864129)
      This doesn't suprise me in the least that there is investment in these sorts of companies. Speculators will take bets on all sorts of different aspects of the economy. This could just be a don't pass bet on patent reform, since the trolls stand to make money or be bought out if their patent portfolios aren't overturned. Having a buyout target is good because a buyout will inflate the value of the stock.

      Or, there is a possibility that this is just hedging against the effects of patent trolls. With hedging the investors could being trying to remove some of the risk of the targets of patent trolls by putting some money on the troll's position. This will dampen the effect on the portfolio as a whole either if trolls get their way or if not, as it is likely the stocks of the trolls and their targets will be negatively correlated.

      If it is actually billions being funneled into trolls I doubt it is all hedging though.
    • Re: (Score:3, Insightful)

      by j00r0m4nc3r (959816)
      But your entire business model hinges on the patent office not reforming. I think this scheme was invented by the lawyers, them being the ones who will ultimately profit the most from this.
    • by Radres (776901)
      Why can't someone just patent being a patent troll?
    • by Ihlosi (895663)
      Seems like there's money to be made here.



      That's not the really important thing.

      More important, from the investment company's point of view, is that there's a lot of money to be made in a very short timespan, after which any investments can easily be redrawn and moved to other, similar ventures. This allows for high, continuous profits to the investment company even if each single patent troll has only marginal success.

  • by Anonymous Coward on Tuesday April 24, 2007 @08:34PM (#18863773)
    MOD THE PATENT TROLL DOWN!!!
  • by FlyByPC (841016) on Tuesday April 24, 2007 @08:35PM (#18863777) Homepage
    ...you don't feed trolls, you mod them down!
  • Prior Art (Score:2, Interesting)

    by qdygwakf (1092883)
    Is there a clearing house for patent threats and corresponding prior art? A GROKLAW equivalent for prior art is clearly needed.
    • by jkgamer (179833)
      If there isn't, maybe we should start one. And by the way, submit a patent request for the use of a website to assist in prior art searches for patents!
    • Re: (Score:3, Interesting)

      by Timesprout (579035)
      Prior art is irrelevant to these people. In the Alcatel Lucent case MS believed they had legitimately licensed the patents they were later sued over and having acted in good faith could end up paying twice for the same thing. The whole decision, the amount awarded and the fact that it was also against sales in areas outside of US patent jurisdiction was seriously dodgy.
      • Re: (Score:3, Informative)

        by kripkenstein (913150)

        Prior art is irrelevant to these people. In the Alcatel Lucent case MS believed they had legitimately licensed the patents they were later sued over

        Umm, what? What is the connection between prior art and the supposed 'belief' Microsoft had that they did have a license?

        Prior art can be used to invalidate a patent (or prevent it being issued in the first place). The Microsoft-Alacatel case wasn't about that. It was that Microsoft had a patent license from Fraunhofer, but the issue at hand - MP3s - consis

    • by Temposs (787432)
      After a little Googling, it seems this [wikipatents.com] would be a good place to start.

      It seems to have a patent repository, a prior art voting system, and ways to figure out if your idea if patentable.
    • Yes, but willful infringement is a whole lot easier to prove if you research beforehand. No research, no knowledge of prior art, no willing infringement.
  • by Anonymous Coward on Tuesday April 24, 2007 @08:38PM (#18863809)
    In a decade or two we'll likely see that it's impossible to build a solid economy upon intellectual "property". Unlike manufactured goods, IP has no inherent value. At least the material used to make a tangible product is often of some worth, even as scrap. The same can't be said for a patent, or a trademark, or an industrial design. The only way value can be derived from such things is through the use of artificial monopolies and the threat of civil lawsuits and/or other punishment.

    A drive through Detroit, Buffalo, or most of the US midwest clearly shows how the manufacturing capacity of the United States is essentially gone. In such areas you'll see abandoned factory after abandoned factory. What's left is minimal, and even those firms are being squeezed out by foreign manufacturers. On one hand, these investment companies can only really put their money in IP. America has very little left in the way of actual manufacturing. Investing in businesses that no longer exist isn't really useful.

    But eventually America will have to face the fact that it produces nothing with intrinsic value. All it takes are countries like India and China deciding to ignore American and international IP law, and the main item of production (ie. IP) of the US drops to a value of nil. China and India will exhibit strong economies, due to their actual production of goods with intrinsic value. The economy of the US, built around goods without any intrinsic value, cannot remain strong.

    • by Grishnakh (216268)
      Hey, aside from IP, you're forgetting about the other major output of the US economy: lawyers and legal work. If IP loses its value, we can just fall back on... oh, wait... never mind.

      Maybe I'll just start investing in rupees.
    • by iminplaya (723125)
      But eventually America will have to face the fact that it produces nothing with intrinsic value.

      But we'll be dead by then, so screw it. Take the money and run, while there's still time.
      • Re: (Score:1, Insightful)

        by Anonymous Coward
        But we'll be dead by then, so screw it. Take the money and run, while there's still time.

        Dead in ten years? For most of us, that's doubtful.

        We only need to look to India and China to see how quickly their economies have grown, even in just the past decade. Their economic growth has been immense. This is because those nations have begun to produce virtually all of goods that are then exported around the world. But their growth has, as mentioned earlier, essentially destroyed the manufacturing base of the US.
        • Re: (Score:2, Interesting)

          by iminplaya (723125)
          Dead in ten years?

          Listen, this is nothing new here. It's been going on for hundreds of years, ne, thousands. Unless there's an epiphany, or you get nuked, nothing is going to change. You will trudge on as dutiful as the Chinese do, and you will like it. That's the world being left to you. And chances are you will leave the same thing to your kids... and so on. This is the nature of nature. So, unless you are against nature, you will settle down, have a bunch of kids so there will be somebody to take care of
    • Re: (Score:3, Insightful)

      by Somnus (46089)
      That's crap. Lossy compression algorithms, for example, are clearly valuable, or people wouldn't use them. Intrinsic versus extrinsic is not at issue, but enforceability and the external consideration of profitability of research v. the public good of free information.

      Just as the tractor replaced the plow, automation replaced the assembly line worker, so purely intellectual goods will replace tangible goods.

      I predict just the opposite of parent. As China and India develop research regimes, they'll want t
      • Example: The Mechanical Loom, Back in the day it was incredibly valuable to have a copy of those plans to make this machine. What value does a copy have now? Ironically the US made it's wealth at first on natural resources but then from stolen IP from europe. The cycle is just repeating itself in Asia.
      • by vux984 (928602) on Tuesday April 24, 2007 @10:30PM (#18864787)
        That's crap.

        No it isn't.

        Lossy compression algorithms, for example, are clearly valuable, or people wouldn't use them.

        No, they are clearly useful. That doesn't make it valuable. Value only shows up when there is scarcity.

        That is why air, for example, which is essential to life is free. There is (currently) no scarcity.

        A lossy compression algorithm, once thought up, is like air. There is be no scarcity of an idea once thought up, except through deliberate and artificial suppression.

        At this stage, it takes little more to make an idea or algorithm infinitely available than a decision. In the past, replicating, ideas/algorithms/software/whatever and distributing them was enough of a chore that ideas algorithms and processes were literally scarce, and had value.

        But today, in the 'internet age' the price of replicating and distributing information has dropped so close to zero that its almost irrelevant. The only thing that gives them any value, is our collective decision not to make 'unauthorized copies' in order to artificially prop up scarcity, and by extension prop up their value.

        If we ever collectively chose not to, its game over for IP. There is nothing intrinsically scare about it (once created).

        • by Somnus (46089)
          You didn't read my post. I understand that freely available information is a public good -- it is precisely because data is cheap to replicate. The issue is incentivizing the research behind innovation.
          • by radtea (464814) on Tuesday April 24, 2007 @11:08PM (#18865131)
            The issue is incentivizing the research behind innovation.

            I think he did read your post and you're talking past each other.

            He is pointing out that bits can be copied for free. You are pointing out that to prevent that we need robust laws to stop people from copying bits for free. I'm pretty sure he understands your point. He just thinks you're wrong.

            Material goods are easy to protect from copying because they are relatively hard to copy. "IP" is inherently copyable at almost zero cost, and therefore has no market value unless that value is created by an artificial scarcity produced by extremely expensive laws, with all of their outrageous secondary effects like the creation of patent trolls. There is no evidence that "IP" when so protected can ever generate sufficient wealth to pay for the legal infrastructure required to maintain the required artificial scarcity, much less support the parasitic growths that that legal structure will necessarily attract.

            It may be possible to generate sufficient artificial scarcity at a low enough overhead cost to create a primarily "IP" based economy, but it would be extremely foolish to bet the future of your country on it.
            • by Somnus (46089)
              I completely agree with you that digital IP enforcement is a nightmare. However, we're talking patents here as well -- they are indeed costly to enforce, but it's not the same as "making water unwet" like with pure data.

              I read his/her post as making the case that material scarcity is what should drive the law. That's totally besides the point: the issue is incentives for innovation production. Copyright and patents do create artificial scarcity (intended to be temporary) to achieve this end; what is a v
            • Material goods are easy to protect from copying because they are relatively hard to copy.

              You can say that, but for how long will this be the case? I don't think copying something is very hard right now, and the barriers seem to continue to go down.

              What happens when anyone can copy anything? I'm trying to figure out the economic consequences of that when it is carried out that far. It doesn't seem as if a person can make money using their talents to improve on something. I'm skeptical that the equivalen
              • Re: (Score:3, Insightful)

                by vux984 (928602)
                You can say that, but for how long will this be the case? I don't think copying something is very hard right now, and the barriers seem to continue to go down.

                For the foreseeable future at least. You can give me the complete specs on a Core 2 Duo chip, and I still won't be able to make my own for less than what it would cost to buy one.

                Even the desk in my office, which I probably could 'copy' if I were really inclined to probably isn't worth it once you factor in the time, material cost, and tools cost.

                What
            • by sjames (1099)

              It may be possible to generate sufficient artificial scarcity at a low enough overhead cost to create a primarily "IP" based economy, but it would be extremely foolish to bet the future of your country on it.

              It's an especially bad bet when other countries that produce actual tangible products might decide to declare IP protection null and void. Should they do so, only military action might potentially force them to reconsider. Even the shrub would hesitate to go to war w/ China. (for example). For a cou

      • so purely intellectual goods will replace tangible goods. I predict just the opposite of parent. As China and India develop research regimes, they'll want the same IP protections that the US and Europe demand; they are violating IP now because it is expedient. As long as there is scarcity at all in our economy, IP will be with us.

        "IP" laws are designed to create scarcity and the laws enforcing them will always be oppressive. A country that tries to build an economy on, "you can't do that because I say I

        • by Somnus (46089)
          You've made the case that the current IP regime is broken (patents too easily granted, prior art, overly long patent/copyright extension), not that IP is fundamentally broken. [You may wish to read the other branch under my first reply.]

          Specifically, software and drug patents are more contentious than machine and business process patents.
        • Re: (Score:3, Interesting)

          by The Bungi (221687)
          M$ and other US companies would like to shut down or tax every other software company on Earth.

          I hate to break it to you, troll [slashdot.org], but "M$" is getting nailed [slashdot.org] by the very system you claim they enjoy. Ever heard of Eolas? [w3.org] I'd really appreciate it if you showed us a single instance of Microsoft (oh, "M$") using a patent offensively. That does not include FAT32, which is about as common a licensing scheme as it comes in the hardware world.

          Microsoft plays the game [ffii.org] the same way IBM [ibm.com] and everyone [slashdot.org] else [slashdot.org] does [slate.com] to pro

          • by Kalriath (849904)
            It's twitter. He replies to EVERYTHING with something about how it's Microsoft's fault.
          • by makomk (752139)
            You must've missed the whole "Linux infringes our patents" charade, the way they tried to avoid the patentability of software being challenged in a Supreme Court case (despite that it'd help their case), and the fact that the only reason that anyone implements the patented parts of FAT is that they have to if they want their devices to interoperate with Windows machines. The fact thay they're taking heavy damage from patent lawsuits doesn't mean that they don't want the current system to continue.
      • "purely intellectual goods will replace tangible goods."

        Think so? What's the nutritional value of IP?
        • by Somnus (46089)
          You could make the same argument about tangible goods that are more sophisticated than food.

          As our economy has evolved food productions has rightfully shifted to countries with cheaper labor, as our intellectual goods have a more far-reaching impact.
    • If the factories are still there the capacity still exists. What is lost is the will to put the unemployed people on the unemployed machines, and make products that far to many people in America don't have. This is a symptom of the disease of free-market madness.
    • China and India will exhibit strong economies, due to their actual production of goods with intrinsic value.

      Selling to whom? If the US economy goes down it'll take India & China (US represents ~20% of their exports) with it.

      The economy of the US, built around goods without any intrinsic value, cannot remain strong

      The US produces IP because it's more value added. Any item you make has IP in it's design. The US has just seperated the IP generation from the item production - designed by Apple in Calif

    • Re: (Score:3, Informative)

      by maxume (22995)
      Pish posh. The US has plenty of manufacturing capacity. Only recently has China started to overtake the US in exports of real goods(points 4,5 and 6):

      http://www.bbc.co.uk/blogs/thereporters/evandavis/ 2007/04/the_state_of_trade.html [bbc.co.uk]

      Note that the US is the largest exporter overall. Even foreign companies build many of their cars here:

      http://www.time.com/time/printout/0,8816,1004876,0 0.html [time.com]
      http://www.usatoday.com/money/autos/2007-03-22-ame rican-usat_N.htm [usatoday.com]
    • Last I checked, those countries also make plenty of manufactured crap with little to no intrinsic value.
    • The US economy is moving towards the only area which has longterm viability - IP.

      With the inevitable invention of machines capable of fabricating any item at a molecular scale, the US is fortunate that its economy has already started to transition away from the soon-to-be-obsolete area of manufacturing.

      Not going to happen quite yet, but I bet we have Diamond Age type manufacturing long before we ever see an end to IP law.
    • by ces (119879)

      A drive through Detroit, Buffalo, or most of the US midwest clearly shows how the manufacturing capacity of the United States is essentially gone.
      Not true. Plenty of manufacturing still happens in the US it just mostly isn't in places like Detroit or Buffalo anymore. Also whats left tends not to be vertically integrated for reasons of flexibility and cost.
  • Lovely (Score:3, Funny)

    by iminplaya (723125) <iminplaya.gmail@com> on Tuesday April 24, 2007 @08:44PM (#18863851) Journal
    I'm surprised this hasn't become a Vegas sporting event. It's got to be better than off track betting. I can see the old farts waiting in the Kino lounge for three years for verdict, while the guards are carrying out the cadavers of those who couldn't hold out. What a country!
  • How is this news? (Score:5, Insightful)

    by dreamchaser (49529) on Tuesday April 24, 2007 @08:50PM (#18863895) Homepage Journal
    Newsflash: investments flow to companies that stand a chance at making money.

    The problem is with current patent laws and the incompetence of the Patent Office with regards to IP. Companies exist to make a profit within the bounds of the law. The law is what we should be focusing on here, not the obvious fact that investors want to...wait for it...get a return on their investment.
    • by wellingj (1030460)
      What happen to the importance of the intent of the law, instead of the law unjustly applied.....
      I'm so fucking tired of everyone (companies and people) trying to find loopholes so they
      don't have to work hard. Whatever happen to doing a good job? When did everyone start to screw
      eachother over? Maybe I just didn't notice it till now but it smells like poo.
      • It's been going on since before Hammurabi wrote down his laws. Maybe it's hard coded into our DNA at some level.
    • Newsflash: investments flow to companies that stand a chance at making money. The problem is with current patent laws and the incompetence of the Patent Office ...

      People who invest in greed are more often robbed than the intended victim.

  • Yes, a pure idea — without implementation?

    If it is worth anything, then it can be sold.

    And the more such companies there are, who compete for ideas, the higher the price...

    So, in principle, it is good news, that the buyers of ideas are well funded.

    It sucks, that, in practice, the patents are often too broad, but the principle is great. One can market a patented idea with possible implementors without fear of seeing it stolen, etc.

    • ... it is good news, that the buyers of ideas are well funded.

      Such is the confusion of Intellectual Property. You can't talk intelligently about all of the specific protections created by government for Trademarks, Patents and Copyright at the same time, though each embodies original "ideas". Each protection is created to encourage a specific part of the economy and each has strict limits.

      In the Patent case, what you are seeing is exactly the opposite of the intent of patent laws. Patents are granted

      • Ownership of ideas is a very dangerous and oppressive thing.

        Although I agree, that the current implementation of the Patent system in the US is buggy, the above-quoted statement is non-sense. Although buggy, the patent system works — and worked for centuries — driving innovation. As making things becomes easier and easier, designing becomes more and more valuable. An idea deserves no less protection, than physical goods or real estate.

        • To re-iterate the GP, patents are not there to protect ideas, but inventions. Patent law explicitly forbids the patenting of ideas, even though the USPTO seems to ignore the law (viz. one-click patent). As for ownership of ideas, try to think this one through. If one can patent ideas, any random thought can be owned. So I can patent time-travel, more fuel-efficient cars than currently exist, mi's next twenty comments on slashdot, the cure for cancer, etc., etc. As I would own these ideas, anybody that actua
  • If too much money from institutional investors or hedge funds gets tied up here, it could be really, really bad. The sort of thing that can make economies collapse. The LTCM mess in 1998 is a good example - there was a massive bailout organized. It couldn't be allowed to fail - it would've taken too many things with it. So, why not? If you're a big enough fund, you get bailed out. If you're not, you're never on the hook for more than a small percentage of what you grabbed. So when I hear about this stuff, i
  • Seriously. Investing in these kinds of companies versus millions of dollars in lottery tickets. What's the difference? About the same odds and the same payout.

    Save yourself the trouble and the time in court and the lawyers fees - and just buy lottery tickets.

  • Keep at it, USA! (Score:4, Insightful)

    by FFFish (7567) on Tuesday April 24, 2007 @09:14PM (#18864103) Homepage
    Soon you'll be an IP wasteland, completely bereft of innovation as those with ideas seek other countries in which to make their money, out of desire to avoid US patent litigation.

    First you export your manufacturing labour. Now you're exporting your brains. WTF do you think you're going to do for business in the future?
    • WTF do you think you're going to do for business in the future?
      Export our lawyers.
    • we'll export our bombs (grim i know), but once we run out of those (and we will), we'll do what the mexicans do to us, we'll jump your borders, marry your women, and take your jerrbs : )
    • Very shortly there will not be much business done in the United States. Most Americans will be absorbed into the Matrix very soon. The energy that our tubed bodies produce will be used to run the eternal server that Bill Gates consciousness has been transferred to. By that time the whole country will be painted the color of Windows 98 because Vista was not a hit and they had lots of grey and blue lying around.
    • First [you, the USA] export your manufacturing labour. Now you're exporting your brains. WTF do you think you're going to do for business in the future?

      Easy question. There is one industry that is extremely successful and has no current risk of being outsourced. I am speaking of course of the entertainment industry, mainly hollywood (music has more overseas competition, for what hollywood produces, there isn't much). The Chinese may build the TVs, but US actors will be appearing on many of them.

    • by murph (16036)
      > First you export your manufacturing labour. Now you're exporting your brains. WTF do you think you're going to do for business in the future?

      Brawndo.

    • by wellingj (1030460)
      I work in agriculture, and no mater what happens with any other line of business,
      I'm pretty sure people will still need to eat. I'm not to worried.
  • Since I have a single device, a linux box, running tripwire and iptables...
  • Wouldn't it be funny (Score:3, Interesting)

    by grasshoppa (657393) <skennedy AT tpno-co DOT org> on Tuesday April 24, 2007 @10:20PM (#18864709) Homepage
    Wouldn't it be funny if it turned out that China & Co were actually waging economic terrorism on the states via these investment firm's taste for litigation?

    The irony would be delectable.
  • These absurd IP Laws and Congresses unwillingness to do anything about it will come back to haunt the What is the status of US IP Laws in China and India and other countries? Copyright is one thing, but US patent law has got completely out of control. If these countries don't sign on to US IP law (the way US client states like Australia have), they will make themselves more attractive centers for IT industry and investment.
    • "will make themselves"?

      how about have made themselves..

      the cs programs in the us have been gutted by outsourcing to those nations faster than inner cities were gutted by interstates.

      now we have stories of "shortages" of it labor (with the unstated qualifier of 'willing to work at chinese/indian wages').
  • One example is DeepNines, who is suing McAfee over a patent that covers combining an IDS and firewall in a single device. The patent was filed on May 17, 2000 and issued on June 6, 2006. No prior art for that, no siree.

    Is there? I've never seen a combination device like this prior to 2000. Can anybody cite an actual example instead of just saying "no siree" and assuming we'd all just get in the mob and believe there's prior art?
    • by Tablizer (95088)
      Just make them two different devices that plug into each other really really easily. Thus, get around the "combining" patent. Silly patents require silly solutions.
    • by eli pabst (948845)
      Portsentry (an IDS) version Beta 0.61 was released at least prior to May 8 1999 (according to wayback) and although ipchains wasn't yet released, ipfw was still the linux firewall. So any one who ran PortSentry on Linux (or BSD) was running a "a single device that combined a firewall and IDS". I would bet there were prior IDS's that predate that as well.
    • by eli pabst (948845)
      I've never used it, but I believe the NetRanger device (now owned Cisco) did IDS monitoring and had firewall capability as well.

      Here is a review dated 1999 talking a 2nd gen version and mentions both firewall and IDS capability and is truly a dedicated device:
      http://www.networkcomputing.com/1023/1023f14.html? ls=NCJS_1023bt [networkcomputing.com]
    • by Anonymous Coward
      A company called Alteon Websystems Inc (acquired by Nortel in 2000) had a capability called WCR (Web Cache Redirection) which could be applied with a filter, that does EXACTLY what this patent claims. The feature had been in the product since 1998, maybe early 1999 at the latest. I deployed several web farms with this technology in early 1999, so I know its valid prior art. The WCR feature could be used to redirect ANY traffic, after it was passed through a set of firewall rules, a final firewall rule would
    • by ces (119879)
      I set up a machine with snort, tripwire, portsentry, ipchains, and a squid proxy in late 1999, it even had the ability to make some changes to the ipchains configuration based on what the IDS was seeing. I believe there were also commercial products with such capabilities prior to May 17, 2000.
  • by Ungrounded Lightning (62228) on Tuesday April 24, 2007 @10:53PM (#18864999) Journal
    Up to now only the big guys could enforce patents. Patents were ignored in new designs. Portfolios of patents were accumulated to use as cross-licensing bargaining chips when another big player squalked.

    This innovation - financing the suit for a cut of the potential payment via a bond - lets anybody with a patent play in the enforcement game without putting the rest of their operations at risk. A little guy can enforce a patent on a big guy. The investors take the loss if he loses, a cut if he wins. Meanwhile his capital is safe and his ongoing operations (if any) can continue. Risk is assumed by people with enough money to survive losses and experience in spreading it appropriately and balancing risk and reward to achieve reasonable investment income and security.

    Of course that will change the game entirely: A player financing his suit this way has little incentive to agree to a payoff in the form of a cross-license. And the less operation he has for a counter-suit to disrupt the less opportunity there is for counter-blackmail. (Limiting case is for a "patent troll", of course. But for a small enough operation taking on a big enough opponent it might be a better deal to respond to a counter-claim by folding the actual operation and living off the proceeds of the patent suit.)

    The result, of course, is that a large number of patents held by little guys that are being blatantly infringed by big guys will now become enforcible and trigger an explosion of such suits.

    Possible fallout:
      - The big guys have to pay all the little guys for all the patents they've been blatantly infringing for years.
      - Companies (ESPECIALLY large ones) will have to start paying attention to patented prior art.
      - IP law gets rewritten to abort this scenario.

    All of these - except SOME forms of the last - seem like they might end up being a good deal for the little guys.

    Meanwhile the little guys have shallow pockets and aren't at significantly more risk from this than they already were from the big guys and the existing patent trolls.
    • This leaves a field in which no idea is used until the patent expires, significantly slowing innovation. It actually hurts the little guy a lot more than the big guy.

      I watch this happen in the CS field all the time. For example, I have some ideas that might possibly build on arithmetic compression. But I'm not bothering to develop them because arithmetic compression is patented, and I know it. Not only that, but people keep on patenting wider and wider circles of ideas around it. It's likely that the

      • This leaves a field in which no idea is used until the patent expires, significantly slowing innovation.

        I hear 'ya. (Perhaps "levels the mine field" would be a better analogy.)

        I agree that it leads to serious paralysis of innovation. I'd be willing to discuss whether it's harder on little or big guys but don't have the time at the moment. But I think we're on the same page about it being another brick in the wall for everybody.

        Let us hope it also leads to significant reform - and not another ratchet-clic
  • Trolls with a high gloss, shiny finish? I thought of that years ago ! !
  • Despite enormous international pressure, software patents aren't enforceable in most countries and (cue gasps of astonishment from US slashdotters) there's actually a huge IT industry outside North America. Unless the whole world introduces software legislation, this is how I see the future:

    In the next decade, a huge tranche of software will be developed that can't legally be used in the USA. Meanwhile, US software will become less innovative (due to fear of legal reprisals) and more expensive (due to l

  • IP law is a sham (Score:2, Insightful)

    by kinglitho (879478)
    Imagine if Henry Ford could have patented the concept of a 4-wheeled vehicle powered by an internal combustion engine. How about if Sam Morse owned the rights to the concept of sending intelligible messages over a wire? GM wouldn't exist and we wouldn't have had telephones until the 1930s.

    Patents exist for the protection of innovation. Putting two programs on the same machine is not an innovation.
  • For example. Lets say I were a really damn good Theoretical Mathematician.

    Lets say I come up with a Compression Algorithm that just screams. I mean its blazingly fast and can compress a 10 gig JPEG file down to say 10K in about 1 minute and on top of all that its lossless. Hand it an Oracle or MS SQL database and it can achieve 99% compression in mere seconds.

    Now I have spent the last 10 years perfecting it, in utter and complete secrecy. My wife and kids barely see me because I am devoted every spare

    • Re: (Score:3, Insightful)

      If the likes of MS or Adobe are the ones doing the reverse engineering, the answer is "not much". A patent only gives you the ability to sue others for using your invention. It doesn't mean you are going to prevail when the large corporate drags things out for years. Don Lancaster has a different take on being anti-patent than the typical slashdotter. He basically maintains that for most inventions it isn't worth it. Because of the legal costs of defending it even a "million dollar idea" isn't worth pat
    • by kinglitho (879478)
      Leave out a key portion of the code on the distribution disk. Set up a registration server that will only download the code to a legitimate serial number. Then sell the disks for a reasonable price, say $10.00.

      Being first to market counts for a lot these days, and by selling a the right price you will
      (a) move a ton of product before anyone can reverse-engineer your code
      (b) make it difficult if not impossible for a big company to compete -- they can't recoup their investment + overhead at that
    • by arevos (659374)
      If you had such an algorithm, I'd suggest starting a remote storage business, as such a reduction in space could save an awful lot of money.

      Or sell it to a company like Google under some agreement where they are the sole recipients of the algorithm. You'd probably make more money that way than you ever could on your own.
      • by FlyingGuy (989135)

        Nope no algorithm here.

        This is a pure hypothetical. What I am trying to illicit from the /. folks is an alternative or modification to the current system.

        In principle I agree that most every software patent issued in the last 20 years is more then likely just trash. So the question is, How or What is a more appropriate method, device etc. to protect truly novel and unique work?

        • by arevos (659374)

          This is a pure hypothetical. What I am trying to illicit from the /. folks is an alternative or modification to the current system.

          In principle I agree that most every software patent issued in the last 20 years is more then likely just trash. So the question is, How or What is a more appropriate method, device etc. to protect truly novel and unique work?

          I'd gathered that it was hypothetical ;)

          My point was that your example of a pure algorithm could still make considerable money even in absence of a patent system, so perhaps patents aren't necessary at all.

  • promising in return a cut of any winnings stemming from the lawsuit

    I really have to wonder how this is legal. Yes, I'm sure it is (lots of stupid things are), but a business based entirely on the principal of suing others seems to be a flagrant abuse of the court system. In fact, I wonder if that would be strong grounds for having cases dismissed, as defendants could argue that the plaintiff and it's patents exist not for any purpose of enriching society, but strictly for the purpose of restricting the g
  • don funding a hijacking operation?

    "promising in return a cut of any winnings stemming from the lawsuit. The payout is based on a formula that grants Altitude a percentage that decreases with a bigger award."

    This sort of thing - creating "nuisance patents" and bringing nuisance lawsuits for a cut of the winnings - should be illegal.

Whenever people agree with me, I always think I must be wrong. - Oscar Wilde

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