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Red Hat CEO On Patent Trolls: Just Pay Them Off 167

Posted by timothy
from the take-this-cash-and-shove-it dept.
jbrodkin writes "Although Red Hat fights patent lawsuits when it deems it necessary, CEO Jim Whitehurst says it's often just better to pay the trolls to make them go away. 'When it's so little money, at some point, bluntly, it's better to settle than fight these things out,' Whitehurst said. Red Hat has been forced to pay out claims to the likes of FireStar Software and Acacia, and Whitehurst indicated Red Hat has paid off various other companies behind closed doors. 'Some of them are [public] but we often seal them in settlement,' he said."
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Red Hat CEO On Patent Trolls: Just Pay Them Off

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  • This is (Score:5, Insightful)

    by Colourspace (563895) on Thursday May 05, 2011 @04:05PM (#36041128)
    The stupidest thing I have heard a CEO say in a long time. Welcome trolls, we'll pay you to shut the fuck up.
    • Re:This is (Score:5, Insightful)

      by betterunixthanunix (980855) on Thursday May 05, 2011 @04:07PM (#36041152)
      His job is to maximize shareholder value. If that means settling for a lower price than the cost of pursuing a court case, that is what he is going to do.
      • Re:This is (Score:5, Informative)

        by sqlrob (173498) on Thursday May 05, 2011 @04:09PM (#36041174)

        He just told trolls "Come and get it!", how is that maximizing value?

        • Re: (Score:3, Interesting)

          It's entirely possible that he, as the CEO, understands that his company is indeed in violation of these patents and sees this as a cheaper solution than trying to rewrite 200 years of law or fight a battle he knows he will lose.

          I don't know for certain, of course. I'm no more privy to his thought process than you are.

          • by MoonBuggy (611105)

            It's pretty much impossible to know that one is in violation of a software patent in a meaningful way, since most challenges don't revolve around "Our product doesn't come under those criteria", but instead go for "The patent is invalid and should never have been granted". The latter depends on subjective criteria like obviousness, which means going to court is a gamble every time - the policy to sometimes feed the trolls is probably just the product of a bit of statistical analysis on the outcomes of simil

          • Re:This is (Score:5, Insightful)

            by increment1 (1722312) on Thursday May 05, 2011 @04:30PM (#36041458)

            That is not the point that the original poster is referring to. What is being referred to is that if you pay off trolls, you probably shouldn't announce that you pay off trolls, or you will end up with more trolls coming at you.

            This is why the comment by the CEO is being referred to as stupid, since saying something like this can only lead to more patent trolls and nothing positive for the company.

            • by grantek (979387)

              This is why the comment by the CEO is being referred to as stupid, since saying something like this can only lead to more patent trolls and nothing positive for the company.

              Unless the REAL strategy is to patent-troll-troll, whereby the most profitable strategy is to attract trolls, get sued by them, then win and counter-sue for damages :)

            • by hedwards (940851)

              IIRC this is precisely why IBM doesn't settle patent suits ever. If they want their money they're going to have to prove in court that they have the goods. Granted, IBM has a huge patent portfolio and deep pockets, whereas Redhat is much less safe, but by publicly stating that they generally just pay all that's going to do is make them an even more attractive target.

              This is sort of like why the US typically doesn't negotiate with terrorists or pay ransom demands we really don't want to give those sorts of p

            • by akc (207721)

              Unless of course he is playing a double bluff.

          • by fritsd (924429)
            Software patents are 20 years old, that's hardly "200 years of law" or "the dawn of time" ffs.

            But it's probably the wisest decision, if you make software larger then "Hello World", like Red Hat, to assume as a legal precaution that your software will infringe on someones sofware patents.

            In the USA.

            Therefore there are many possible solutions (just a bit limited if you also want to keep your industry or customers in the USA).

            Politically, the situation will probably only be resolved once large comp
        • Re:This is (Score:4, Interesting)

          by d'fim (132296) on Thursday May 05, 2011 @04:50PM (#36041720)

          He just told trolls "Come and get it!", how is that maximizing value?

          It isn't.

          The strategy was smart; announcing it to the world was stupid.

          • no announcing it to the world was smart. It is the first step in ending this crap.

            It tells more people what the heck is going on.

            Along with patent trolls there are copyright trolls and the first step to bringing it to an end is to start telling the general public about it. He has the lawyers. If he gets a bunch of patent trolls it will make for a bigger and better article the next time.

            The ones who are trolling already know that companies such as Red Hat are fair game. It's not news to them. But
        • Re:This is (Score:4, Insightful)

          by eviljolly (411836) on Thursday May 05, 2011 @05:00PM (#36041796) Journal

          I have to agree. This is something you are supposed to think, but not say. Once you lose your intimidation factor, more people are likely to attack.

        • he's just letting them know it's not worth litigating, because he'll settle for reasonable amount. These are all businessmen...
          • What is a reasonable amount? It costs $100 to file a patent and under $50 to set up a company. If Red Hat will settle patent suits for under $1,000, then it's a good business strategy to file thousands of spurious patents (you don't even have to get them all of the way through, you can drop them after you have done the extortion), set up a shell company for each one, and send Red Hat a C&D letter. You probably get about a 100% ROI from each patent. If it's $10K, then you can put a bit more effort in
        • by Darinbob (1142669)

          Because the trolls already know this very well and don't need to be told. It's the general public who might not know this yet.

      • by jimpop (27817) *

        That only works the first few times. Once you become known as an ATM, the trolls will form a long line.

      • by bloodhawk (813939)
        Patent trolls like easy targets, As the CEO he has just announced that he will bend over for any patent troll as long as they aren't to greedy and only ram their fist in up to the elbow. Their is no possible way this can be explained as maximising value as every patent troll will now have Redhat at the top of their lists for viable targets as potential cash cow.
        • Maybe he's actually got a conscience, and this is his way of forcing his shareholders hand(s) into letting him start throwing Redhat's weight around in the general direction of patent trolls. If he becomes an 'easy target' he'll have to start fighting every case.
          Also, it's really hard for shareholders to actually go after the board for not making them maximum money.

          Finally, who are Redhat's main shareholders? maybe they're people who would rather see their investment not do so well in exchange for beating t

          • I'd imagine he'd happily attract the trolls early to negotiate a pyramid scheme settlement, i.e. ReadHat will publicly pay but RedHat takes a cut from any future settlements by other victims.

          • by hedwards (940851)

            That would be stupid. A move like this is mind blowingly stupid. He can explain why he's fighting suits rather than settling at the next shareholders' meeting if need be, making an announcement like this takes the matter completely off the table because now their going to have even more patent trolls trying to bleed them dry.

          • That's kind of a shitty conscience, though, if it requires him to manipulate and force the hands of the shareholders like that....

      • His job is to maximize shareholder value.

        Paying out extortion money, which guarantees that there will be more extortion demands in the future, does absolutely nothing to maximize shareholder value. Also, what amount of dividends does Redhat pay to it's stockholders? Answer -- zero. So much for "shareholder value".

        • by Nerdfest (867930)
          The job of a CEO these days is to maximize profits *while he's CEO*. People seem to have completely lost sight of any long term vision.
          • by jimicus (737525)

            He may not be CEO for very long if he makes a habit of making announcements like this.

          • The job of a CEO these days is to maximize HIS PERSONAL profits *while he's CEO*. People seem to have completely lost sight of any long term vision. FTFY
            • by Caerdwyn (829058)
              Unlike individual contributors, who work for free because it's the "right thing to do", and who exhibit amazing long-term planning?
              • /s I assume, because it may be a surprise to you, but most working employees are not out to screw their employers out of as much as they can as fast as they can
            • The job of a CEO these days is to maximize HIS PERSONAL profits *while he's CEO*

              No, the last part of the sentence is not true. His goal is to maximise his personal profits, even after he stops being CEO. This is why intelligent directors structure CEO compensation so that they get a load of shares and can't divest the majority of them until some time after they've stepped down.

      • Yes, but you don't say it out loud. Personally I think Spotify is worth double the monthly amount. Ooooooops....
      • Sure, and in the process he opens up his company and others for more trolling, meanwhile fattening the troll's war chest. Just like it's cheaper to pay off Guido instead of having him and his pal Vinnie come over to bust up your warehouse. In both cases, paying up might be the prudent choice, but it's still sad that these bullies get away with it.
        • by jbolden (176878)

          What broke the protection rackets was Robert Kennedy's war on the mob. Hopefully CEOs openly admitting they are paying a protection racket will get the Robert Kennedys involved.

      • by Red Storm (4772)

        >His job is to maximize shareholder value. If that means settling for a lower price than the cost of pursuing a court case, that is what he is going to do.

        f I had the points I'd mod your post up. :-)

        You actually understand what is going on better than most people responding to this thread. It comes down to simple economics. If you can pay someone to shut up (and perhaps get a license for Open Source in general) for a fraction of what it would cost to have your legal team peruse it then it makes more se

      • by Svartalf (2997)

        Heh... That's opposite thinking. When you "settle" with these jokers, it's typically a friggin' dogpile on you over time- they know you'll pay out so they'll come with their hands out and threatening to sue them. LOTS of them.

        Hardly "maximizing shareholder value", now is it?

        • 3 Steps Ahead? (Score:4, Insightful)

          by bill_mcgonigle (4333) * on Friday May 06, 2011 @12:25AM (#36044614) Homepage Journal

          Heh... That's opposite thinking. When you "settle" with these jokers, it's typically a friggin' dogpile on you over time- they know you'll pay out so they'll come with their hands out and threatening to sue them. LOTS of them.

          Hardly "maximizing shareholder value", now is it?

          Well, if it attracts hundreds or thousands of small-dollar patent gnats to Redhat, they can probably afford to absorb that blow, but they'll also be able to go to Congress and testify, "we currently have 1734 software patent lawsuits in litigation, none of which a dispassionate observer would feel have merit. This is what software patents really do, destroy innovation. It's time to end the practice."

          • by jbolden (176878)

            Exactly, this is a political strategy that makes a lot of sense. The industry is unified behind reducing or eliminating software patents. All that's needed now is congressional action.

      • Paying trolls to go away may or may not be a wise strategy (personally, I'd be against it--once you've paid him the Danegeld, you never get rid of the Dane). *Announcing to the world* that you'll pay trolls to go away is beyond stupid.

        • Maybe buying the patents outright, then having a war chest against larger foes?
          • by fritsd (924429)
            "windhandel"

            You are assuming that those patents are entities that will exist for a while longer so that they can deliver an increase in value to you.

            But what if software patents are abolished next year, then you've just spent your company's fortune on a small pile of toilet paper.

            Let me put it this way with a historical analogy: How much would you pay to buy a Semper Augustus tulip bulb? [wikipedia.org].

            There was a year (1636) where it made smart business sense to put *all* of your money into buying tulip bulbs
            • I would be interested in buying your crystal ball, where you can see the future. Following your logic, I shouldn't buy Pork futures because, what if flying pigs start flying out my ass?
      • Makes you wonder what SEAL Team 6 would charge to neutralize a patent troll case. I'm seriously surprised that people have not just disappeared over some of this silly bullshit.

      • by nedlohs (1335013)

        You don't maximise shareholder value by announcing to the world that anyone with a patent should go after your company, since you'll just pay them off. It's like handing out free money.

        Paying them off is fine. Announcing to the world that you do so, that's not so smart.

      • by Surt (22457)

        He's thinking with a short time horizon, as most bad CEOs do. In the long run, having every patent troll know they will go bankrupt fighting you in court will reduce your long-run costs to zero.

      • Integrity be damned! It's just business, right? Doing things because it's the right thing to do is so passé.

        This is the same mentality that ships the workforce overseas and in general does things that are bad for the country in the long run. Please stop encouraging spineless behavior.

    • by jimpop (27817) *

      Exactly! That same strategy failed with other leeches, like panhandlers.

    • by jedidiah (1196)

      As much as we might like this guy to play the role of Don Quixote, it just doesn't work out that way in real life.

      That's why we need guys like RMS.

    • by DdJ (10790)

      It's not necessarily stupid for this to be their policy.

      It may be stupid for them to admit this policy, if the main result is that patent trolls crawl out of the woodwork.

      However, it may not be stupid for them to admit this policy, if the main result is for the shareholders to direct them to no longer follow this policy even if the consequence is lower short-term profits. Or perhaps for them to direct "stop sealing the documents when you do this, so we can evaluate the choices made".

      It also may not be stup

      • by hedwards (940851)

        I'm pretty sure that this is a common policy. Apart from large corporations like IBM that have the pockets and patents to stand up to trolls, many companies just don't have the resources to fight it. Which is a lot like birds at the park, you might not be feeding the birds, but there's enough idiots that do feed the birds that you still end up dealing with the begging anyways.

    • by Svartalf (2997)

      All you're doing is paying economic terrorists off. You'll never be rid of them unless you deep-six them. I'd have thought the SCOX debacle would've taught them that lesson- but apparently not.

    • Jim Whitehurst, please give details. What is your cut-off point below which, if I were to make a merit-less claim, that you would just pay me to go away rather than bother to involve the lawyers?
      • I'd like to know too. I need a new car and want to know if I should ask them a Ford or a BMW worth of a claim.
    • Re:This is (Score:4, Informative)

      by Twinbee (767046) on Thursday May 05, 2011 @04:35PM (#36041542) Homepage

      Only to those cases where there's a a hint of honest IP defense. Standard troll crap gets fought (and presumably thrown out). I quote:

      "When we feel like people are really abusing the patent regimen, and we have a good case that the patent is invalid, that it should never have been issued, it's not a patentable thing, or there's a lot of prior art, then we fight those out," Whitehurst said during an interview with Network World at this week's Red Hat Summit in Boston.

    • Hey, if he wants to pay trolls, how about offering to pay every time a small independent open source programmer gets trolled? It's so little money, RH should offer to protect the entire OS community!
    • by migla (1099771)

      >The stupidest thing I have heard a CEO say in a long time. Welcome trolls, we'll pay you to shut the fuck up.

      It does seem that way. For the sake of wondering about it, let's pretend he knew what he was saying and said it on purpose. Could there come any benefit from telling the truth like this?

    • by Grygus (1143095)

      I don't understand this attitude. The entire raison d'etre of a patent troll is to get that settlement; if they have a legitimate patent claim that would win in court, then they're not a troll, right? So trolls are hardly going to go after Red Hat more often because of this; they were already coming with everything they had.

    • by yuhong (1378501)

      Personally I think it is not stupid to say it if it actually happens. It doesn't mean it isn't stupid to do it. BTW, on the FireStar patent Sun was able to get it invalidated:
      http://lwn.net/Articles/289747/ [lwn.net]

    • by jbolden (176878)

      I don't know about that. Once CEOs of computer companies are willing to say publicly that entities called "patent trolls" exist and that they are being paid off, essentially a tax congress or the courts may take action. Microsoft has had it with these guys and is doing the heavy lifting in the fight, I'm glad RedHat is helping.

    • So much for principles eh?

  • by joebok (457904) on Thursday May 05, 2011 @04:07PM (#36041154) Homepage Journal

    Phase 1: Collect Underpants
    Phase 2: Sue Red Hat for an amount not too big, but not too small and get paid to shut up and go away.
    Phase 3: Profit

  • Didn't work then, doesn't work now.
    • by Svartalf (2997)

      No... Whence you pay the Dane his Danegeld, he keeps coming back for more.

  • by ciaran_o_riordan (662132) on Thursday May 05, 2011 @04:08PM (#36041166) Homepage

    The discussion of software patents focusses way too much on court cases and big companies.

    Companies have all sorts of expenses, and trolls is another. Some companies (particularly big ones) can afford that.

    The real harm is when standards are ruined, or whole fiels (ex: video), or when SMEs and small developers are forced to stop distributing their software (or when they don't even start, since they know it would be doomed).

    http://en.swpat.org/wiki/More_than_trolls [swpat.org]

    http://en.swpat.org/wiki/Harm_to_standards_and_compatibility [swpat.org]

    http://en.swpat.org/wiki/Audio-video_patents [swpat.org]

  • Red Hat totally stole my patent on uh paying off patent trolls.

    I'll be taking my check now please.

  • Rudyard Kipling (Score:2, Interesting)

    by Anonymous Coward

    We never pay any-one Dane-geld,
    No matter how trifling the cost;
    For the end of that game is oppression and shame,
    And the nation that plays it is lost!

    • by jopsen (885607)

      And the nation that plays it is lost!

      Redhat is a company... It's responsibilities is with it shareholders not the public interest of America... That's what you get with capitalism... :)

  • Seriously. Does he really not understand that paying the troll only serves to perpetuate the troll and results in everyone having to continually pay out extortion settlements.

    WTF?

  • Or, you could actually have a spine and stand up for what's right. This is the same as companies that determine how much it costs to fix a product versus how much it costs to pay damages to the people it can injure. It's "good" business, but it's cowardly and only hurts everyone in the long run. And someday, it will come back to bite you in the ass. But hey, whatever works for you I guess.
    • by mlts (1038732) *

      There is choosing one's battles, to keep a company going versus going down like mp3.com.

      On one side, there is paying off a troll.

      The other side is if a troll managed to get a judge (likely in East Texas) to issue an injunction that no products can be sold, that will cause major revenue loss, even if the case has no merit. Same if the troll got the export regulators to prohibit export/import of the product.

      It is a game of poker. How good is the troll's law firm, and how valid their patents would be in the

      • If they win against a patent troll, they gain nada.

        It's actually even worse than that, because even if they win, they'll most likely still be on the hook for their own attorneys' fees.

        • even if they win, they'll most likely still be on the hook for their own attorneys' fees

          Changing that one thing would fix the frivolous/speculative lawsuit culture overnight.

          I wonder why somebody hasn't proposed it.

    • ... And this is the big problem here. CEOs have the sole responsibility of overeating value. If it is not illegal, and it increases value, he is obliged to do it. If the right thing to do costs value, then the ceo can be personally sued. Even imprisoned.

  • so he says that sometimes you should just settle so that when he fights he seems more reasonable..

  • Overheard in office at PatentTrolls Inc:

    TrollA: "Looks like Microsoft is kinda sorta infringing on one of our innovative patents haha!"
    TrollB: "Yeah, but they got lots of cash and rabid lawyers. And a reputation of fighting back."
    TrollA: "And Google..."
    TrollB: "Those are even worse."
    TrollA: "Well, there's always Redhat for a quicky"
    TrollB: "Yeah, let's do Redhat. Also known as Open Legs, hahah!"

  • by Oriumpor (446718) on Thursday May 05, 2011 @04:52PM (#36041730) Homepage Journal

    It is always a temptation to an armed and agile nation
        To call upon a neighbour and to say: --
    "We invaded you last night--we are quite prepared to fight,
        Unless you pay us cash to go away."

    And that is called asking for Dane-geld,
        And the people who ask it explain
    That you've only to pay 'em the Dane-geld
        And then you'll get rid of the Dane!

    It is always a temptation for a rich and lazy nation,
        To puff and look important and to say: --
    "Though we know we should defeat you, we have not the time to meet you.
        We will therefore pay you cash to go away."

    And that is called paying the Dane-geld;
        But we've proved it again and again,
    That if once you have paid him the Dane-geld
        You never get rid of the Dane.

    It is wrong to put temptation in the path of any nation,
        For fear they should succumb and go astray;
    So when you are requested to pay up or be molested,
        You will find it better policy to say: --

    "We never pay any-one Dane-geld,
        No matter how trifling the cost;
    For the end of that game is oppression and shame,
        And the nation that pays it is lost!"

    • That was a fairly round-about way of saying "We don't negotiate with terrorists."

      • by russotto (537200)
        Before there was Kipling, before there was "We don't negotiate with terrorists.", there was "Millions for defense, not one cent for tribute." (US Rep. Robert Goodloe Harper, in 1798). I'm sure the idea is older than that.
  • by shentino (1139071)

    Paying a patent troll to go away is like paying a ransom to kidnappers.

    All it does is ring the dinner bell and attract more sharks.

  • Mr. Whitehurst, CEO, Redhat, Inc:

    You are infringing on my client's patent 2938562906716 relating to a method by which CEOs can maximize shareholder value by settling frivolous patent lawsuits for less than the cost of a full legal defense.

    We are prepared prepared to defend our patent all the way to the Supreme Court if necessary.

    My client wishes to advise you that in order to settle this lawsuit, you will have to pay an additional $500,000 in royalties for using his patent.

    I trust we will be receiving a che

  • I figure, it's only a dollar, it's not much.

    But then, the next day, dude was there, begging for money again.

    So what the hell, i give him another dollar.

    Now he's camped out on my door, asking for money every time i go out.

    When will it stop?

    (for the record, I don't give homeless shit. This is why you don't give homeless money, nor do you give trolls.)

  • by Nick Ives (317) on Thursday May 05, 2011 @06:19PM (#36042558)

    My understanding is that the GPL carries with it patent licenses. Red Hat can't license patents for just its own customers.

    Reading section 11 of GPLv3 and section 7 of GPLv2 it seems fairly clear that unless Red Hat is licensing for all downstream recipients (which would essentially mean the entire GPL ecosystem, as anyone who wants a particular patent license would just have to make a derivative from the Red Hat code) they can't distribute.

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