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."
This will most certainly get more interesting... (Score:3, Interesting)
As time goes on. Ultimately, I'm hoping that software patents go away completely, since there is no clean way to define anything code a computer executes in a tangible way like actual physical products. If they survive in some form we will, eventually, end up with a completely unenforceable mess of lawyer bait (yes, worse than it is already).
Re:Absurdly obvious (Score:5, Interesting)
Now if those little firms did not hold patents would the large companies just copy the little guy?
No, because the vast majority of patent cases are where there is little to no "innovation" or when the innovation is so generalized no one really knows what exactly they were trying to patent.
Apple, Microsoft, Google, Amazon, etc. don't go searching for patents to violate, they usually create innovations independently then pay protection money to the trolls and the small firms who sell unknown products.
Also: venture investors of eBay, Twitter, Skype (Score:3, Interesting)
In 2005, venture capital investors who had backed (among others) eBay and Skype - and meanwhile also Twitter - supported my last-minute lobbying effort in the European Parliament against the EU software patent directive. The related press release mentioning Benchmark Capital (eBay, and more recently Twitter) and Danny Rimer of Index Ventures (Skype) is still online on the MySQL website [mysql.com] although Oracle and Sun certainly do favor software patents. Guess they forgot to delete it. Other references to MySQL's position on software patents disappeared after Sun bought the company in 2008.
Those venture investors had previously supported an open letter to EU decision-makers warning against the possible consequences of an adoption of the proposed bill (which ultmately got thrown out, fortunately).
However, I also got turned down by many venture investors whom I asked to support such initiatives against software patents. I don't think the resistance movement is strong enough in economic and political terms to achieve the abolition of software patents anytime soon. I regret to say so but the hurdle is high and politicians won't be convinced if it's basically just the Free and Open Source Software movement [blogspot.com] that takes political action against software patents. A few venture capitalists won't tilt the scales either. There would have to be broadbased support. In Europe, the leading venture capital organization (EVCA) actually lobbied for the legislative proposal we fought against. I guess the major American venture capital associations would take similar positions.
In the near to mid term, I believe the Defensive Patent License (DPL) [slashdot.org] could have a very positive effect.
Tax it (Score:5, Interesting)
Re:Software patents will be irrelevant... somehow (Score:3, Interesting)
And what if the US keeps software patents and then forces it on the world or a significant part thereof a la TRIPS?
These Venture Capitalists get it wrong (Score:2, Interesting)
Re:stop misusing "refute" (Score:3, Interesting)
Refute can also means to argue against the truth or correctness of something, not always proving it's erroneous. In other words, like most English words it has multiple meanings. I do see your point though. It's a strong word.
Re:Tax it (Score:4, Interesting)
Aside from narrowly conceived examples where the state is low-tech and a given patent law improves the inflow of inventors and craftsmen from abroad, the public does not benefit from any kind of patent. The monopolies on the best ideas are just a tax on everyone besides the patent holders, and they do absolutely nothing good in the Internet society, where the rate of innovation is capped only by our ability to find and comprehend thousands of great new ideas arising naturally every day. This is true for software most of all, as most professional programmers know. But it is also true for other products, even as expensive-to-develop as pharmaceuticals. One glance at the costs of marketing drugs in US should be enough to convince everyone that the research would be a lot cheaper if we simply paid for it in advance, from taxes; as a bonus, the competition in manufacturing will fierce and the life-saving drugs will be available to everyone in the freaking world at the same low price. Holding on to the patents is very expensive and in most cases immoral.
Re:Bad assumption (Score:4, Interesting)
They will simply steal your idea anyway, then if you try to sue them, they will keep the case tied up in court long enough for the legal costs to drive you out of business.
I know a guy (well, my niece is dating him, although I wish she wouldn't) who is a real asshole. He's made millions of dollars by taking some poor schmuck's copyrighted and/or trademarked designs & artwork and putting them on the clothes he sells. He knows what he's doing, he even brags about it. The way he's made so much money at it is that by the time the owner of a design is able to sue him and the court system finally rolls around to awarding the poor schmuck the damages, this asshole has raked in way more money than he has to pay out in damages. He'll then just turn around with a new shell company and do the same thing to some other schmuck.
The guy is in his 40s but he has a set of ethics, and general social behavior level, of a frat-boy. I see him as a paragon of modern corporate management in America today.
So, I can personally attest that what you describe happens with copyrights and trademarks, it should be no surprise it happens with patents too. Since I believe we will never rid the world of assholes like that guy, I think the only solution is to stop promoting systems that enable them in the first place.
Re:"Judicial Activism"? (Score:3, Interesting)
I think I understand and in part agree with your logic, however, your conclusion is wrong for two reasons. First there had to be a starting point where software was considered by the courts for patent-ability. Since there was no precedence the conclusions by the court were not activism as the courts were not trying to bring about change. And second, in reading some of the early cases that concerned software patents [bitlaw.com] and the conclusions it becomes readily obvious that the decisions were in fact based on previous case law and 35 USC 100 through 35 USC 104 [uspto.gov]. It was in no way judicial activism.
In the case Diamond_v_Diehr where the tide turned and lawyers started to find ways of patenting software it may very well be judicial activism and there was a very strong and well reasoned dissenting opinion [bitlaw.com]. I cannot say without a doubt that it is judicial activism as that type of conclusion would require more research to understand how the the justice's came to their conclusions that seemed to change several years and cases of precedence. I will only say it is a possibility and that I believe the dissenting opinion was correct in pointing out the flaws and errors in the majority opinion.
Re:American regulation. (Score:2, Interesting)
There is a commonly-held assumption - at least by pimply-faced 15-year-old "experts" - that the government has nothing better to do with its time than think up new regulations out of the air. Because Government is Bad, Regulations are Bad, and Taxes are Stealing.
Our government is much too busy talking with lobbyists, pocketing bribes and planning junkets to do that.
At one time everything was unregulated. However, enough people got hurt, scammed, or otherwise offended that they demanded that certain activities be regulated, even if if meant that they had to hire lobbyists to pay bribes in order to distract our government officials from their junket-planning. And sometimes even if it meant paying Taxes to hire enforcement officials.
It is, unfortunately, true that once you get rolling on a Good Thing, it's hard to stop, but we live in an age where a lot of times, letting one person go to Hell like they deserve would punish so many more-or-less innocent people that entire systems would collapse. Such as The Too Big To Fail effect, where if the fundamental faith in institutions is allowed to be undermined, even good investments will be impossible because you can never be 100% sure what's a good investment to begin with. Just ask Bernie Madoff's customers.
Re:Absurdly obvious (Score:3, Interesting)
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.
What this chart ignores is what has happened to the IPO market overall. That is, companies are choosing to list in overseas markets instead of the US [bloomberg.com], where they don't have SOX to contend with. Imagine how many more IPOs you would be seeing on NYSE and NASDAQ without this regulation driving them to overseas markets.
Re:Absurdly obvious (Score:3, Interesting)
Considering the market value alone that Enron wiped out it will take 680 years of Peach Holdings revenue to replace the destruction of the Enron accounting shenanigans. I say screw Peach Holdings, let them do their IPO over seas and we'll keep our regulations here in the States to prevent another Enron.
You're assuming that there is something about SOX that would actually prevent those kinds of things. Recent failures and shady dealings of AIG, Bears-Sterns, Bernie Madoff & co., Freddie and Fannie, etc., etc. seem to provide evidence that all those extra costs do nothing to improve market stability or accountability, but only help the big companies get bigger as smaller companies are kept out of the game.
Re:Absurdly obvious (Score:2, Interesting)
Is it? Patents protect profits. If a VC invests in a company that has patented their tech and the product is a hit, the patents would definitely prevent predatory competitors (like MS) from eating a big, fat slice of the profits. So it is illogical for a VC to not support patents unless he is investing in a product that is not very innovative.
To make a car analogy of the ridiculous suggestions of these VCs: "car accidents cause death and injury. Therefore cars should be banned." Software patents should not be banned. Instead they should be made more stringent to prevent creation of "junk patents" and accidental infringement that the VCs are complaining about.
Software patents are a vital requirement to allow for the survival of startups from predatory competitors and as such must be allowed as they are allowed in other fields of technology. Why the heck should software companies not get the same protection as hardware companies?