Venture Capitalists Lobby Against Software Patents 127
ciaran_o_riordan writes "No matter which side the US Supreme Court's Bilski decision pleases, it will be just the beginning of the software patent debate in the USA — the other side will start a legislative battle. The lobbying has already begun, with venture capitalist Brad Feld arguing against software patents, mailing a copy of Patent Absurdity to 200 patent policy setters. As Feld puts it, 'Specifically, I'm hoping the film will bring you to an understanding of why patents on software are a massive tax on and retardant of innovation in the US.' The patent lawyers and big patent holders often tell us that patents are needed to secure investment, so it's interesting to see now that venture capitalists are refuting that. And Brad Feld isn't the only vocal one; there's a growing list."
Obligatory link (Score:5, Informative)
"Against intellectual monopoly" by Boldrin and Levine:
http://levine.sscnet.ucla.edu/general/intellectual/againstnew.htm [ucla.edu]
This book nicely sums up the arguments against patents :-)
stop misusing "refute" (Score:2, Informative)
Re:Absurdly obvious (Score:2, Informative)
Re:American regulation. (Score:5, Informative)
Every now and again the United States does get it right.
Before the United States government forced aircraft manufacturers and patent holders into the Manufacturers Aircraft Association [wikipedia.org] there was a patent war that resulted in lots of litigation in the United States but no aircraft manufacturing or innovation once the patent war started.
When a real war broke out, WW1, the United States had to buy aircraft from France because the United States business ventures were more interested in lawsuits than making aircraft.
After ending the patent war by forcing everyone into a patent pool the aircraft industry in the United States took off.
There are other similar cases that plainly show how the patent system has been a failure from the beginning in serving the Constitutional requirements. To promote the Progress of Science and useful Arts. [wikipedia.org]
oh my.... (Score:4, Informative)
I am no fan of Michael Moore (well, i liked TV Nation)...but these dudes could learn a lot from his style of instigation-based film-making.
I watched the video all the way to the end....it only resonates with me cause i already agree with it. It's a film for the echo chamber. But it will fail to convince anyone in the middle...
Re:Absurdly obvious (Score:5, Informative)
Actually it works both ways.
While their primary function is not as a patent troll Apple [techcrunch.com], Microsoft [zdnet.com] and Amazon [dmwmedia.com] have in turn played the role of the frivilous patent litigant with the biggest difference being in their objective of halting the "Progress of Science and useful Arts" to the betterment of their bottom line.
Re:American regulation. (Score:5, Informative)
Depository Institutions Deregulation and Monetary Control Act of 1980 [msn.com]
Say hello to risky and out of control lending
Garn-St. Germain Depository Institutions Act, 1982 [wikipedia.org]
Enjoy the savings and loan crisis
Financial Services Modernization Act of 1999 [heritage.org] would do away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933
Welcome the age of "too big to fail"
Re:American regulation. (Score:2, Informative)
*Huge* Difference Between Copyright & Patents (Score:3, Informative)
So, after they succeed in getting all software patents nullified, I hope they'll willingly give up copyright on the software they're creating using all that free IP.
A copyright is a significantly and fundamentally different thing than a patent. Patents can conceivably cover any implementation of an invention. Copyrights apply only to the particular fixed expression of an invention or creative work. There's no inconsistency to simultaneously holding objections to wholesale appropriation and accepting multiple re-implementation of a given concept.
Otherwise their argument boils down to "I don't want anyone to steal my intellectual property, I'm just not smart enough to come up with anything truly innovative."
Or, more likely, they think it's more valuable to investors to safeguard implementations/applications of a given idea than the idea in abstract.
Re:The problem with regulation... (Score:3, Informative)
And to add some previous insult to injury we have the recent "Health Care Reform" bill that addresses the out of control cost of health care insurance premiums by forcing every United States citizen into paying those same premiums to the same corporations or end up paying a fine on their annual taxes.
And then there is the 2003 Medicare Modernization act with the "competition" clause that prevents the Medicare plan coordinator from getting involved in price negotiations for pharmaceuticals. Instead the costs are determined by the insurance carrier, manufacturer and the pharmacy. I'm sure many were paid very well for that piece of legislation which is comparable to having a car manufacturer, the dealership and the bank determine how much you will pay for a new car rather than haggling on the price yourself. I guess the passage of such an obvious corporate paid for bill explains why 14 congressional aides quit their jobs to work for the drug and medical lobbies immediately after the bill's passage [wikipedia.org], after all, there job was done.
Re:This will most certainly get more interesting.. (Score:3, Informative)
Unfortunately the dividing line between software and 'actual physical products' is becoming increasingly vague. Pretty much any nontrivial machine now has a microprocessor (or several). Currently, in (most of) the EU we have the ludicrous situation that you can write an implementation of an algorithm in C and not infringe any patents, then implement the same algorithm in VHDL and infringe a parent. Given that there are now compilers that can take C code and generate ASICs that implement the algorithm, you find that the mere act of compiling is what takes you from not-infringing to infringing - running does not.
Focussing to much on software patents hide the fact that the entire patent system has serious problems. Software patents aren't the problem, they just highlight the problems of the system as a whole.
Re:oh my.... (Score:2, Informative)
Re:Tax it (Score:3, Informative)
If you can't patent it, you are much more likely to hold on to the idea and never tell anyone about it.
The history, both recent and not so much, shows that just the opposite is true. As soon as one patents something truly novel and irreplaceable, one freezes the idea and sits on it for 40 years, all the while not letting anyone else to improve on it. Why would a patent holder do anything else? With a monopoly on something like a steam engine or a life-saving drug, one is set for life without a need to innovate any more, and one MUST prevent other people innovating as well, on pain of having to compete with a superior product. This is the story of Watt's engine (him and Boulton basically set back the innovation by 40 years by suing everyone in sight), and of many a modern drug.
Re:Bad assumption (Score:1, Informative)
Or start outing the assholes that drive companies that do this. Why help hide his behavior? What company is it so we can research and boycott/class action this kind of behavior into extinction?
Re:American regulation. (Score:3, Informative)
Had it not been for the fed, chances are we wouldn't have had either the current financial crisis or the great depression.
Like I said in an earlier post, markets work under -complete- deregulation, you can't half regulate and half deregulate something and expect it to work. Capitalism, communism, socialism and fascism can all work when -always- held to, when you mix them you get a complete mess.
The problem wasn't the lack of regulations but rather the presence of some regulations and the relaxation of others. Either have it be fully regulated and have it work 90% of the time, or have it be unregulated and have it work 100% of the time. When you mix them, you get disaster. Always.
Re:Absurdly obvious (Score:3, Informative)
Considering the massive financial impact investors endured from the likes of Enron, Worldcom, Tyco and others it is a tough sell to kill regulation like SOX. While it does introduce a cost burden there is a lot of that burden which should be in effect in the first place for any viable and reputable business. There is a lot of SOX costs that are blown out of proportion exactly because accounting costs that should have been in place are included with new requirements like audits.
Anyhow, costs aside the data does not agree with your assessment of the impact of SOX on IPOs.
Market pull backs and recessions that result in regulations like SOX are the cause of reduced IPOs not the regulation as can be seen in the charts in this article [seekingalpha.com] that clearly shows little or no impact to IPO trends from the passing of SOX in 2002. Once the market started to recover from the dot com bust the IPOs returned even though SOX was in place.
Re:Absurdly obvious (Score:5, Informative)
"The start-up is first to market (by definition)"
That's just wrong. A start-up is simply a new company.
Re:Absurdly obvious (Score:1, Informative)
The fact that you see these big software companies like Microsoft and Apple patenting everything under the sun regardless of vagueness, simplicity, obviousness, and outright prior art shows that while they may not follow every new idea under the sun, they're willing to patent it and try to lock up that idea so nobody ELSE follows those ideas before the large corporation that can't stop on a dime is finally able to make a big ass u-turn.
Re:Absurdly obvious (Score:3, Informative)
A start-up is the first to market because they are in the position to take the most risks. It is sort of implied by being new, as there is little to lose and much to gain by trying new things out. That sort of is in the definition of a "start-up".
The purpose of most for-profit companies is to "maximize profits and increase shareholder equity". By trying to be first to market, that is counter-productive to meeting this corporate charter for established companies as there are also a whole bunch of wrong guesses for what might be that hot new product idea. Being second, third, or in the second "wave" of a promising technology is certainly very useful for companies.
Apple was first to market with the Newton..... how did that work out for the company? On the other hand, when the technology matured and people like Rio established the legal precedence for portable music players, they came out with the iPod and made a fortune. That is an excellent example of why established companies usually don't make the first move on something like that. Also look at the Lisa.... something that almost sank Apple as a company too. If it wasn't for their Apple II product line at the time, they wouldn't even be around right now.
General Motors tried to be "first to market" with the EV-1.... and where did that get them? A bunch of heartache and grief, including documentaries about how GM screwed up and tons of negative publicity. Again, it generally is a very bad idea for an established company to try and be the first to market even when they try.
Re:Absurdly obvious (Score:3, Informative)
What's the problem with a gambit? It usually simplifies the battlefield in ways both contenders find adequate.
It keeps the legal profession employed and not much more. While most larger companies are able to afford full-time attorneys and perhaps even specialists such as patent and other "intellectual property" lawyers on staff, that is something which is much more difficult to do for smaller companies or even private individuals to do even on an occasional basis.
For the private innovator who is tinkering in their garage and trying to come up with something new, I argue that patents do absolutely nothing to protect that kind of "inventor" and in fact the whole patent system turns into a giant scam that takes millions of dollars out of the pockets of these would-be entrepreneurs and instead transfers that wealth into the hands of some of the least productive people on the planet.
Even the supposed benefit of patents to record "for posterity" what has been invented is largely a joke now. There is certainly zero benefit to actually reading a patent even for somebody "in the industry" (even expired patents), and indeed there may be some strong and compelling reasons to explicitly make company policies that forbid engineers and others in R&D settings from reading patents of competitors.
Back when patents required a working model of the device (perhaps in miniature) to be filed with the patent office there was some historical benefit to the practice. At least there was something to look at for historical research to find out what, exactly, was the patent all about. It also provided a threshold to keep the frivolous cruft out of the patent office... even if the patent office couldn't figure out what to do with the models when they were done with them (one of the reasons why the model submissions were halted). For example, I'd love to see a working model of an inter-stellar hyperdrive engine... even though the USPTO granted a patent on that crazy idea.
Re:American regulation. (Score:3, Informative)
I don't think it is so much a lack of regulations, but rather a lack of trust in democratic concepts and institutions. If anything, an open and free market is based upon the assumption that ordinary folks, when left to make their own choices and given freedom to innovate and come up with solutions to problems that they face, will tend on the whole to make the best choices possible to fill those needs, wants, and desires.
The issue isn't one of regulation vs. deregulation, but rather freedom vs. tyranny. Every time a regulation is written, the question ought to be asked "does this allow ultimately for more or less freedom... and is it worth the price for this kind of restriction if we lose some precious freedom?"
From a long view of human history, the pattern has usually been that tyrants have come into political power in some form or another to take the freedoms from others... sometimes for "the public good" and sometimes just for raw acquisition of power. Often it is hard to determine which is which. If you don't have a government that is actively trying to squash that tyrannical behavior, it becomes more a part of the problem than the solution.
Regulations can exist within democratic institutions... indeed they are necessary for a well-organized society. The American Constitution in fact was written under such a philosophy... one of limited government but acknowledged that a government of some kind still had to exist. Business regulations was one of the first orders of business in the First American Congress (just after passage of the Bill of Rights), and the fight to ignore those regulations created the first real test of the power of the U.S. Federal Government (with the Whiskey Rebellion). Having George Washington put on his general's uniform again and personally lead the U.S. Army into battle sort of helped to kill the opposition (the only time a U.S. President has ever lead a field army into battle).
Regulations do make some sense, but they really ought to be simple to comprehend and certainly shouldn't require a full time accountant, lawyer, or a whole team of them to be able to simply comply with those regulations. When congressmen who pass legislation that significantly alters the regulatory landscape have not even read the legislation they are making into law much less even tried to comprehend the long term consequences to that legislation, is it a wonder that the rest of us trying to actually follow those laws start to complain?
Re:American regulation. (Score:3, Informative)
The problem with a patent pool (see the MPEGLA for details on a current one) is the buy-in and cost to participate. These by their nature tend to be very monopolistic in nature and are also often rigged to drive out competition and certainly to set the barriers of entry for new start-ups from getting involved.
It is a real trick, too, in terms of trying to "divide the capital fairly". Organizations like ASCAP have been collecting money for years on behalf of individual song writers but almost without exception have never actually paid those royalties to anybody but the very largest organizations involved. In the end, it is the occasional and part-time innovator that gets screwed completely.
Of the three major "intellectual property law" branches, patents, copyright, and trademarks, I'd say patents are by far and away the most onerous in terms of the complications they provide to genuine market competition and the complete lack of protection "of the little guy" when somebody new to the system shows up. I've said repeatedly that patents are nothing more than a legal scam that screws over the private inventor and is just a way to part a fool from his money.... the fool in this case is the one who thinks that patents actually offer some sort of protection to their invention.
Repeatedly, as was mentioned with the aircraft industry and I should add the patent fight that Philo Farnsworth also had to go through in regards to the development of electronic television (he eventually won... but it literally took him a lifetime to collect and fight for credit that still is not properly given) there is very little productive that happens in regards to patents. If, as was done by both Philo Farnsworth and the Wright Brothers, you create your own factory and make your invention by putting some skin in the game.... there might be some value in terms of a defensive application of patents to keep competitors temporarily from completely copying your ideas. You will never make millions by coming up with a unique product, patenting the thing, and then trying to "sell" the invention to somebody else.