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FTC Defends Ethernet From Patent Troll 59

Posted by Zonk
from the much-appreciated-folks dept.
I Don't Believe in Imaginary Property writes "The FTC has put a stop to Negotiated Data Solutions, a patent troll that bought a patent on an important part of the Ethernet networking standard and tried to jack up the royalties for licensing it. In a consent decree (pdf), N-Data agreed to continue licensing the patent at the formerly promised rates. 'Whatever the merits of the decision, it shows that the FTC sees the value of standards and will be on the lookout for any behavior that could undermine these standards-setting process. That alone could keep companies honest when they enter the standards process. Standards-setting bodies have also become more sophisticated over the years (after being burned in several high-profile cases), and now do a better job at forcing involved companies to disclose and license patents.' The IEEE voted back in 2002 to make patent letters irrevocable, which could have prevented this, but neglected to make that clause retroactive."
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FTC Defends Ethernet From Patent Troll

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  • But wait (Score:5, Funny)

    by moogied (1175879) on Thursday January 24, 2008 @11:47AM (#22167784)
    I already have a patent pending on using eletrical signals for any kind of communication!! How dare he steal my thunder!
    • Re: (Score:3, Funny)

      by GreyWolf3000 (468618)
      But I have a patent pending on using electrical signals for any kind of communication...in bed. I don't cross license with strangers, though...
  • A small victory (Score:4, Insightful)

    by dk90406 (797452) on Thursday January 24, 2008 @11:49AM (#22167818)
    Nice to see the FTC moving in a sensible direction. Of course the only reason they did it, was because we are talking Ethernet. If it was some less known standard that a troll way trying to attack, they would let it slide.
    • That, and from my understanding this doesn't really set any precedent like it would if it was a court case. So the next time, they'll probably look at it as if this last situation never happened.
    • I'm confused. The government appears to be both reasonable, and on the side of the populace. I've never seen that from them before.
      • by Duhavid (677874)
        Perhaps the head of the FTC was unhappy with his / her cut of the licensing fees
        from the patent troll, and this is just showing the patent troll who is really boss.
      • by focoma (865351)

        Thank you sir for your funny signature. I enjoyed it so much, I almost spit out the water I was drinking from a Gatorade bottle.

        I have patent rights on using sports-drink bottles as distilled water containers, by the way. There! I'm no longer off-topic!

  • by arivanov (12034) on Thursday January 24, 2008 @11:51AM (#22167864) Homepage
    Sorry, this was a no contest situation.

    With 100M worth of capital you do not go against an industry with turnover in excess of 100s of Billions per year. Most networking gear all the way to 10G is Ethernet now and that industry as the chairman of FTC noted can fend for itself. In fact, based on the FTC decision it surely did.
    • by DarrenR114 (6724)
      Are you referring to 802.10g ?? Thats not Ethernet - thats WiFi (well, one of them anyway) ...

      802.3 is Ethernet ... and it only applies one sort of standard ... theres also Token Ring (802.5) ...

      • by Mariner28 (814350)
        No - arivanov's referring to 10Gigabit Ethernet (10GbE) - IEEE 802.3an (among others) 100GbE is just around the pike (IEEE 802.3ba - in development)
  • GPL? (Score:1, Interesting)

    by WaHooCrazy7 (1220464)
    Why wasnt this patent written so that in X number of years in became extinct and the contents of it went out under the GPL? This is done with other things such as prescription drugs, for so long after the drug is discovered only one company can make it, but then the patent expires so to say and other companies can produce generic versions of the drug. Why hasnt this been the case with ethernet?
    • Re:GPL? (Score:4, Informative)

      by IndustrialComplex (975015) on Thursday January 24, 2008 @11:58AM (#22167966)
      The patent was written so that it would be a one time fee of $1000. In terms of business costs and licensing fees, that's peanuts.
    • Re:GPL? (Score:5, Informative)

      by kellyb9 (954229) on Thursday January 24, 2008 @12:05PM (#22168070)
      I think it's about 20 years and then it goes into the public domain, but that isn't the case here. The patent is on one particular part of Ethernet, particularly it's use of autonegotiation of speed and capabilities between different devices. It was adopted in 1994 into the Ethernet standard. Initially the patent deal was set up in such a way that every manufacteurer of Ethernet products had to pay a one time royality fee of 1,000 dollars which is pretty weak.
      • Re: (Score:2, Interesting)

        by nexuspal (720736)
        "every manufacteurer of Ethernet products had to pay a one time royality fee of 1,000 dollars which is pretty weak." Expanding on this, why shouldn't they at least be allowed to increase the original cost of the patent inline with inflation? Measuringworth.com estimates the current value of $1,000 1994 dollars at between $1,290 to $1,865. They have the patent, what value is it if they can't they can't set the royalty fee to whatever they want (within reason)?
        • by dvdungeon (761065)
          Well they knew about the agreement and license fee when they bought the patent... tough luck to them.
        • by jedidiah (1196)
          It wasn't a part of the original agreement.

          The patent like any other property comes along with it's
          own baggage. If they didn't want the baggage, they shouldn't
          have bought the property. Attempting to have it both ways
          is a problem in terms of just basic business that is far
          more fundemental than patent trolling.
        • Re: (Score:3, Informative)

          by russotto (537200)

          Expanding on this, why shouldn't they at least be allowed to increase the original cost of the patent inline with inflation?


          Because their predecessor in interest, National Semiconductor, agreed to a $1000 license, with no consideration for inflation. Which Negotiated Data Solutions should have known when they bought the parent.

          (Geez, "Negotiated Data Solutions" even sounds like the name of a shakedown organization)

      • by cthulhu11 (842924)
        Well, heck, it's not like autonegotiation actually *works* anyway. I wouldn't miss it.
    • by MBGMorden (803437)

      This is done with other things such as prescription drugs,
      It is, but shortly expiring a drug company will often release a new very minor improvement and do everything it can to discredit it's older product while pumping up the new one. Witness the advent of Nexium after the patents on Prilosec expired.
      • Re:GPL? (Score:5, Informative)

        by timbck2 (233967) <<moc.liamg> <ta> <2kcbmit>> on Thursday January 24, 2008 @12:27PM (#22168470) Homepage

        It is, but shortly expiring a drug company will often release a new very minor improvement and do everything it can to discredit it's older product while pumping up the new one.


        Many times it isn't even a true "improvement", just a minor tweak; like dextro-rotating (or levo-rotating) the molecule, or producing a racemic mixture (e.g. Adderal vs. Dexadrine, the aforementioned Prilosec vs. Nexium), or making an extended-release version.
        • Patenting extended release I never got. At least, to my understanding extended release is the same procedure every time. IE, binding the drug into a substance that dissolves slowly. But then, the pharmaceuticals make software patent abuse look downright wholesome.
          • by tepples (727027)

            Patenting extended release I never got. At least, to my understanding extended release is the same procedure every time. IE, binding the drug into a substance that dissolves slowly.
            The selection of the safest, most effective slowly dissolving substance to bind to a given active ingredient is not always obvious.
      • From what I understand, they do not even have to make any changes, just re purpose the drug, this will allow them to extend the patent. Think heart allergy medication (Allegra or whatever) that is found to also reduce cholesterol (this is a pure fictional example). I could be wrong, IANAL, but that is how someone once explained it to me.
    • by LWATCDR (28044) on Thursday January 24, 2008 @12:22PM (#22168368) Homepage Journal
      "Why wasnt this patent written so that in X number of years in became extinct and the contents of it went out under the GPL? "
      All I can say Wow...
      1 A patent is not a software license or a copyright. A patent does have a limited life span.
      2. When a patent expires then it becomes totally free. Not free as beer, speech, or the GPL. Free as in public domain free. You can do anything you want with it after it expires.
      So all I can say is WOW.....
      • Re: (Score:3, Funny)

        by mcmonkey (96054)

        So all I can say is WOW.....


        A /. post displays an ignorance of property law and/or confuses patents, copyright, and trademarks, and you're surprised?


        You must be new here.

        • by LWATCDR (28044)
          'A /. post displays an ignorance of property law and/or confuses patents, copyright, and trademarks, and you're surprised?

          You must be new here."

          I was just in one of my optimistic moods. Don't worry it is long gone now.
          • by mcmonkey (96054)

            I was just in one of my optimistic moods. Don't worry it is long gone now.

            No worries, mate. Happens to the best of us (and me too).

            I'm no expert on intellectual property and patent/trademark/copyright law, but I know enough to know 97% of the /. posts the those subjects are complete bullocks. Think of how we mock PHBs and fossilized bureaucrats who compare the internet to a series of tubes. I imagine anyone with any actual knowledge of IP law would have the same regard for us.

            • by LWATCDR (28044)
              "imagine anyone with any actual knowledge of IP law would have the same regard for us."
              Probably worse. Let's face it calling the Internet "tubes" really wasn't all that stupid. I have often heard knowledgeable people talk about Internet connections as "pipes". On Slashdot people speak with so much arrogance about IP law and at the same time are so clueless that it is like a bad Holiday Inn Express commercial.
    • Why wasnt this patent written so that in X number of years in became extinct

      ALL patents and in fact all the temporary monopolies known in layman's terms as "intellectual property" are already term-limited. The problem is that the terms have been progressively extended over the decades since they were introduced so that, for all practical purposes, they might as well be permanent.

      That is, "year X" just plain takes too long to get here.

      A secondary issue that is closer to what you're thinking of is the terms o
  • by dpilot (134227) on Thursday January 24, 2008 @12:10PM (#22168178) Homepage Journal
    Why not limit the number of times patent rights can be reassigned?

    As set forth in the US Constitution, the purpose of patents is twofold:
    1: The temporary monopoly on the invention gives the inventor recompense for the investment made in the invention. In other words, it keeps him/her inventing instead of waiting tables.
    2: The limited term of the patent brings the invention into the public domain, to be used as fodder for future inventions.

    The whole idea of assignment of your invention rights is simply another way of getting recompense. It's a good idea, because it means you don't have to be a manufacturer and marketer, as well as an inventor. Assignment of rights lets you focus on inventing and not on those other things, if that's your bent.

    And maybe reassignment by the first assignee might make sense, too. But by the time patent rights have been sold multiple times, the link back to one of the original functions - to keep the inventors inventing - is so diffuse that it has been lost, IMHO.

    The Constitution never intended the patent as a revenue source beyond spurring invention. (Same with copyrights)
    • by s20451 (410424) on Thursday January 24, 2008 @12:24PM (#22168412) Journal
      I think that would feed rather than quash the patent trolls. What if a patent can only be transferred n times, and you are the nth guy in the chain? Then your only way to make money from that patent is to license and litigate. So, when the (n-1)th guy gets tired of owning the patent, off to the patent troll it goes, who gets the patent at a nice discount since nobody else is interested in buying it.
    • by samkass (174571)
      Anything that lowers the value of the patent (ie. limiting the buyers' rights) will mean less money for the inventor on the original sale.

      A higher standard for obviousness, use of science fiction as prior art (as in the geostationary satellite), and a better pre-granting discussion process (which is already being experimented with) is really all the system needs.
      • use of science fiction as prior art (as in the geostationary satellite),

        Made of bricks and powered by a waterfall? Please tell me you're joking. Read a few patents before saying something this silly.

        and a better pre-granting discussion process (which is already being experimented with)

        This would be a terrible idea as well, unless you want patent applications to cost hundreds of thousands if not millions of dollars (per country, no less). Perhaps the presumption of validity should be relaxed a bit, but

        • by samkass (174571)
          I'm baffled by your response. My example of a geostationary satellite is one example where someone tried to patent an idea and the patent was rejected on the grounds that Arthur C. Clarke had fully described the invention in a previous story. The pre-granting discussion/prior art system I was referring to is http://www.peertopatent.org/ [peertopatent.org], which is being done in cooperation with the USPTO and seems to so far be doing a reasonably good job.
          • Re: (Score:3, Interesting)

            by Free_Meson (706323)

            My example of a geostationary satellite is one example where someone tried to patent an idea and the patent was rejected on the grounds that Arthur C. Clarke had fully described the invention in a previous story.

            What exactly was this geostationary satellite patent trying to claim? For anything I've ever read about in science fiction, using the description provided by the author would make very poor prior art material. Generally the disclosure necessary to support useful claims requires a level of detail t

    • Why not limit the number of times patent rights can be reassigned?

      Sure. And why not limit the number of times rights can be reassigned on something like music files? Why not have the number be 1, for the original sale? I'm sure the RIAA would like that. And why not apply the same standard to software? Or anything else?

      You're right in the dual purposes of patents, but allowing the holder of a patent to sell rights does not counter the letter or spirit of either purpose.

    • by DerekLyons (302214) <fairwater@@@gmail...com> on Thursday January 24, 2008 @02:37PM (#22170678) Homepage
      It doesn't matter how many times the patent has been assigned - because assignment doesn't change the duration of the patent. What you have here is a solution in search of a problem and a potential enforcement nightmare.
       
      Am I the only one that notices Slashdot's propensity to propose/applaud the limitations of others rights, while screaming loudly at any percieved limitation of their own?
      • Re: (Score:3, Funny)

        by ColdWetDog (752185)

        Am I the only one that notices Slashdot's propensity to propose/applaud the limitations of others rights, while screaming loudly at any percieved limitation of their own?

        Nope, we're here. It's just that there is a current Scientology thread so we're busy pounding Xenu to shreds. Be back momentarily. Until then, keep up the good fight.

      • Re: (Score:3, Interesting)

        by mcmonkey (96054)

        Am I the only one that notices Slashdot's propensity to propose/applaud the limitations of others rights, while screaming loudly at any percieved limitation of their own?

        I already posted in this thread, so I can't use my mod points on your post, so I'll just say, you are not the only one.

      • Re: (Score:3, Informative)

        by dpilot (134227)
        Last I checked, I held 19 patents, so I'm not simply an uninterested party foisting problems off on someone else. The system is currently broken, though as others have suggested, there are new improvements in the prior art process that may help. I was just coming up with another idea, aimed at the trolls.
        • Again, you have a solution is search of a problem - because this doesn't stop, or even slow down, the process of 'trolling'. ('Trolling' of course is a code for 'a patent holder enforcing his rights in a way I don't happen to care for'.)
    • how about this. if a patent is sold, the buyer has a short time limit (say 2-3 years) to get a product to market that utilises the patent, other wise the patent expires and the implementation becomes public domain. if you're not the original inventor and you have no product, then you shouldn't be allowed to sell licences to use the patent either.
      • by dpilot (134227)
        I find the idea interesting. It focuses on parties who neither invented nor manufactured. My suggestion wasn't well liked, maybe yours would be better received. Of course the worlds problems will be solved, here.
  • Neglect? (Score:5, Insightful)

    by Eunuchswear (210685) on Thursday January 24, 2008 @12:22PM (#22168362) Journal

    The IEEE voted back in 2002 to make patent letters irrevocable, which could have prevented this, but neglected to make that clause retroactive.
    I doubt they "neglected" to make the cause retroactive, I suspect that not being brain dead they knew that they had no such power.

  • This isn't a submarine patent. [wikipedia.org] In that case, the patent holder sneaks into the marketplace with a hidden patent and then springs it full-fledged upon businesses using the patented technology.

    This case is a bit different. The patent was licensed to the current users of the patented technology--the "bad guy" ship wasn't a submarine sneaking into the middle of a convoy, it was one of the ships already part of the convoy. But then the ship is taken over by another entity... say, a crew of pirates... and they to

    • by Shakrai (717556) *

      The only real problem with this analogy is that it doesn't involve cars....

      Sure it does. One of the ships in the convey was a car carrier [wikipedia.org].

      You'd think I have to come up with all of the original ideas around here? ;) *duck*

  • My inner cynic is thinking, "I wonder what official they forgot to pay off at the FTC."
  • Surely the existence of the original letter would allow a defence of promissory estoppel against the patent troll?

    http://en.wikipedia.org/wiki/Estoppel#Promissory_estoppel [wikipedia.org]

    I wonder if that's why the troll caved so easily? (badum tish!)
  • Slap em' Danno! Then put the cuffs on them.

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