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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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  • GPL? (Score:1, Interesting)

    by WaHooCrazy7 (1220464) on Thursday January 24, 2008 @11:56AM (#22167946)
    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:2, Interesting)

    by nexuspal (720736) on Thursday January 24, 2008 @01:04PM (#22169122)
    "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 mcmonkey (96054) on Thursday January 24, 2008 @03:01PM (#22171080) Homepage

    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.

  • by Free_Meson (706323) on Friday January 25, 2008 @01:13AM (#22178122)

    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 that far exceeds anything you'd find in a work of fiction. Working out all the details and disclosing them, provided they were new, useful, and nonobvious, is what earns you the patent. Merely propounding on the possibility of geostationary satellites without providing the necessary information to reduce them to practice would not constitute prior art for an otherwise valid patent application.

    I was referring to a different writer (forgot his name) who around the end of the 19th century said we would communicate using a network of satellites made of bricks and powered by water.

    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.

    Effort put into the pre-granting review process is wasted. Simply, it's not where our system has problems. The particular site you link to is garbage (no offense). Very few comments I've seen there demonstrate understanding of the legal concepts involved and many misunderstand the technical subject matter. There are several companies looking at methods for automated rating of patents which, if applied to patent applications, could flag some for additional scrutiny. Beyond that, though, having an army of people who don't understand prior art, novelty, or obviousness and who can't properly read a patent review applications is just going to create more work for the already overburdened PTO.

    There's also a legislative effort underway to greatly expand the pre-granting review process within the PTO, which is what I was referring to. It's a waste of resources because the problem isn't bad patents being granted, but bad patents being used in litigation (and good patents being misused in litigation).

    Patents are just pieces of paper until litigated, when they give the patent holder the ability to impose huge costs on their party opponent with very little exposure. This allows a patent holder to extract millions of dollars in rents using patents that, even when valid, don't read on the target subject matter. Bluntly, a perfect system that granted only valid patents would have very little effect on troll activity.

    Before a troll can prevail at trial, his patent will have to survive a challenge to validity several million dollars in the making, brought by an interested party who has focused those resources on the specific nuance of the patent that covers his accused product. That's where review really happens in our system, and it's an incredibly efficient method for focusing the overwhelming majority of our review resources on those few points of disagreement that actually matter. I'd guess that every patent on that website combined gets less effective scrutiny in a month than any one claim gets during litigation.

    The problem with the current system is that people can take advantage of these high defensive litigation costs to engage in rent seeking. A true "troll" very rarely goes to trial, as he knows his case is garbage and that the real value is in allowing the other side to dig themselves out for less than their anticipated defense costs. The way to fix this inefficiency is to expose patent plaintiffs to risk of loss while giving incentive to patent defendants to invalidate or otherwise defeat bad faith claims in litigation. An appropriately written bonding statute would make current pre-gr

"And do you think (fop that I am) that I could be the Scarlet Pumpernickel?" -- Looney Tunes, The Scarlet Pumpernickel (1950, Chuck Jones)

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