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Patent Reforms Mustn't Undermine Traditional Patents


Patents

By heimdal31, Section IP Articles
Posted on Wed Dec 8th, 2004 at 05:30:32 EST

mikecwaslurker has an article up pointing out the idiocy of algorithm patents.  I certainly believe that Business Method Patents are a bad idea and should be abolished.  However, I would like to point out that it is not just these patents that are open to abuse.  I do this not to suggest that all patents should be abolished.  I do think that there are many examples of new manufacturing processes or new gadgets that represent a major investment in time and research that deserve a limited, government granted monopoly.  I point this out so that as we suggest abolishing or revising BM patents, we keep in mind the potentials for abuse in the existing system in order that our arguments aren't undermined by people pointing out the analogy to non-BM patents.  Because, even if you believe all patents should be abolished, you are going to convince no one with the power to change things of that.

So, a true story with the products changed to protect the guilty.  The lesson of this story is not that patents are bad, but that capitalism is cutthroat and anyone who forgets that is doomed to painful failure.  We have some people in our company that came from another manufacturing firm.  I do not want to explain what they manufacture, because it would be easy to identify the companies involved.  Instead, I want you to imagine that they manufacture printer cartridges in a world that does not exist.  In this world, there are only about four or five different types of printer cartridges.  Each printer created will only work with one of the types, but for each type of cartridge, there are many, interchangeable suppliers.  In other words, imagine a world where printer cartridges are an off the shelf commodity and printers aren't sold under cost to get you hooked on the printer manufacturers supply of cartridges.

Also imagine in this world that the generic printer cartridge designs have been around so long that none of their base technology is patented.  Sure, there are some innovations in packaging or other things that may be patented, but it is quite easy for anyone who can raise the capital to start making printer cartridges and selling them at WalMart.  Think light bulbs--though the printer cartridge is a bit closer to the actual product.

The company I'm thinking of made these printer cartridges, and many were sold at WalMart.  Now, the company's name was not on any of the ones sold at WalMart.  Instead, the company manufactured and branded cartridges for a couple of different other companies.  Some were well-known brands that even advertised on TV.  Others may have been generics.

Now, this company that made the cartridges, did not simply rest on its laurels.  It was actively involved in doing research on improving the technology.  As it was working with a new "toner" formulation that would extend the life of the cartridge, one of the major cartridge brands got wind of the project.  The manufacturing company patented their new way of formulating toner, and the major cartridge brand company signed an exclusive contract for a huge number of cartridges to be manufactured using the new technology.  To pick a number out of the air, they asked for 500,000 cartridges a year.  The contract did allow the major brand to pull out if demand was not there--in which case the manufacturer would not be bound by the contract.

500,000 cartridges represented close to 75% of their annual sales.  They stockpiled some of the old versions, and then began converting three of their four manufacturing lines over to the new process.  Once converted, they started churning out the new cartridges.  The major brand then cited clauses in the contract and pulled out of the deal.  When the manufacturer approached another major brand with the technology, the first major brand's lawyers informed the manufacturer that they owned the patent on using the newly formulated toner in a printer cartridge.  You see, using the toner in a printer cartridge was the only possible way of actually using the toner, but the manufacturer had only patented the process of formulating the new toner--they did not patent using the new toner in a cartridge.  

The major brand offered to buy them out for a small sum.  The manufacturer refused.  They stockpiled their new cartridges--thinking they might eventually be able to sell them, and started converting their product lines back to the old system.  The major brand canceled their contract for the old cartrdges and began dropping hints that they had quality control issues with the manufacturer.  The manufacturer tried to stay in business, but eventually went bankrupt.  The major brand bought the patent at the bankruptcy sale for pennies on their initial offer.

Yes, the manufacturer had a clear civil lawsuit.  But, they were one of many relatively small manufacturers that made these commodity cartridges.  They were not awash in cash--particularly after going through bankruptcy--and the principals ultimately decided their chances of finding a lawyer willing to take the case on contingency and win against the mega-corp was nil.  They never pursued anything

The actions of the mega-corp was morally repugnant, but the manufacturer also should have had the foresight to patent everything they needed to patent.  I do think that their toner patent was something that deserved a limited monopoly.  I'm not sure that a civil case against the mega-corp would even be winnable.

I'm not even suggesting that any reform of the patent system has to deal with a situation like this.  But, what I'm saying is that any suggested reform has to take into account the reality that the situation described here is business as usual in the US and that attempting to fix this will likely lead nowhere.

The real question is how do you change government stupidity?  The traditional answer is to write your representatives, and it isn't a wrong suggestion, but it is also not one likely to ever gain enough critical mass to actually result in a change.

A better way is to support the existing fight in Europe.  If Europe doesn't have BM patents, then competition and innovation will move out of the US to other countries.  That will eventually get the attention of the US Congress.

Yet another way is to help the companies that are fighting it.  Because they are more likely to get the ear of someone who can make a difference.  Any argument that is going to convince those who can change it will need to include more than the idea that the system is stupid or broken.  You will need to include the economic damage it will do--and there is already economic damage from the barrier to entry created by Business Method patents.  As these idiotic patents began to create further and further barriers, the increased drag on the overall economy will begin to have a noticeable effect.

MS has already spent loads of cash with their "Freedom to Innovate" meme.  Hijack it.  Talk about how the US patent system unfairly blocks innovation by providing patents on the obvious thus providing inequitable protections that will make it harder for anyone attempting to create real wealth in the economy.

These are the types of arguments that need to be used, without ignoring arguments pointing out how stupid the system is, but the stupidity arguments should not be the focus.

< Patentability of Algorithms (8 comments) | IBM and Apple? (29 comments) >
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Patent Reforms Mustn't Undermine Traditional Patents | 54 comments (48 topical, 6 editorial, 2 hidden)
Re: Patent Reforms Mustn't Undermine Traditional P (4.00 / 6) (#7)
by pgk (PG_King zzzzzzz (yahoo.com)) on Wed Dec 8th, 2004 at 09:24:04 EST
(User Info)
I agree, patents do perform a valuable role. The real problems in the software world are the difference it an the physcial world and other IP worlds.

    * Broad scope of patents issued, depite much being obvious. Coupled with the expense of defending patent infringement

Fairly obvious this and widely discussed.

    * Mismatch between the cost of R&D of software patents and the reward granted through the monopoly status

Generally speaking software is pretty cheap to produce, compare to say the time and money going into research on IC manufacturing techniques. A one man band can easily do much of the R&D on a crippling software patent within their spare time and with little cost beyond the cost of registering the patents.

    * Mismatch between the risk element of software production and "real" world patents

Software production and distribution costs are very low, so there is a comparitvely low capital risk in software development/R&D, compare to the physical world. Consider Dyson vacuum cleaners (the cyclone based ones). Not only did it take a fair cost in developing the technology behind the cleaners there is a fair capital risk in production and distribution. If no one buys the cleaners then Dyson is out of pocket quite substantially, this gives Dyson a few options once the R&D is completed, do I set up the manufacturing etc. and take on the capital risk, or do I settle for a smaller cut and license the technology letting others take on the capital risk? Contrast that to the software world, at the same point (i.e. all R&D costs paid), the choice to produce your own product or license others is quite a different dynamic. Online distribution has virtually no capital risk, physical distribution is relatively cheap, the cost per CD etc is low and CD pressing is effectively a commodity market.

    * Mismatch between the lifetime of patents in software and the speed of software industry progress

This has two facets realy, one is the obvious speed of technology development which is potentially cripped by patent ownership of what were maybe once "clever" technologies but have rapidly become very basic technologies. The second is the timeframe from patent to market. In the software world this can be virtually none, in the physical world it can be quite lengthy, it's common for inventors to spend years from initial patent application to actually having finished the product and got production/distribution going.

Even in the other (mainly) IP world of the drug companies there is an enormous difference. Drug companies cannot patent generic ideas ("Cure for cancer").
Drug companies spend years doing R&D, come up with a "possible", expending potentially vast quantities of resource doing so.
They then spend lots of money patenting the drug.
Then they spend years going through clinical trials and drug authority approvals.
They then probably have half the patent lifetime left to profit from that previous expenditure of resource, not to mention the many "possibles" which fail at some point during the above process.

Re: Patent Reforms Mustn't Undermine Traditional P (3.77 / 9) (#8)
by mikecwaslurker ("I mote gull"(seabird)@btconnect.com) on Wed Dec 8th, 2004 at 10:47:11 EST
(User Info)
I'm in a curious position.  I hold patents, yet think they're basically wrong.

My patents are for dramatically different sailing rigs for boats - they'll revolutionise the clipper ship industry some day, mark my words, but I don't intend to hold the industry to ransom for them - I'll licence them for nothing.  I really only patented the ideas so I could say I was a "real" inventor, and for the experience of going through the process - which believe me was an education.

But, patents are a government-granted monopoly.

Hang on, didn't governments decide monopolies were a Bad Thing?  Yes, Victoria; kings, queens, and other despotic rulers since have found that when they granted monopolies, Bad Things happened.

So why patents?  The argument is that the limited monopoly of the patent stimulates innovation, the open interchange of knowledge, and trade, and outweighs the evil effects.  It's an argument, though a poor one, in my view.

It's a poor one because all the arguments against monopolies remain; and it's also clear that inappropriate use of patents can in fact restrict innovation and trade.  It boils down to the big guy with deep pockets against the little guy with empty ones; the big guy always wins.  Too often, it's the little guy who's the innovator - but not always, of course.

I would argue that an unregulated monopoly is always bad, and patents are essentially unregulated.  To earn the privilege of a (limited) monopoly, the monopolist should, besides investing, innovating, and sharing his knowledge, submit to appropriate independent review and regulation of the monopoly.

There should be an independent patents ombudsman who has the power to order royalty or licencing regimes, revoke patents, or otherwise regulate the monopolistic behaviour of patent holders.  It is almost impossible to frame legislation or codes of practice which would appropriately limit rapacious behaviour, such is the inventive power of the human mind, so we shouldn't even try.  

The ombudsman should be given a simple, very limited set of rules. His touchstone should be, "What is the public interest?" Is the patent holder's behaviour reasonable?  Yes, he is entitled to reward for his efforts. I would suggest that few would disagree that a drug company who has spent hundreds of millions on getting a drug to market (and more on drugs that didn't, more to the point) is worthy of more royalties than a couple of shysters running a company that's bought up a few submarine patents from dying also-rans.  But if the patent holder is restricting trade or innovation, or otherwise acting against the public interest, it should be the duty of the ombudsman to order appropriate corrective action.

Also, so that the ombudsman is not bound and strangled by legal action, he should be beyond the scope of normal legal review.   The ombudsman should normally be appointed for a fixed term, and only be removable for gross offences against public order. The only appeal from the patent ombudsman's decision should be to the appropriate minister of state (Cabinet Minister in the UK, Secretary of Trade in the USA, you get the drift).  A patent, as a monopoly, is a privilege beyond the ordinary scope of property or civil rights; it is reasonable for it's regulation to be extraordinary.

Well, that's what I think.
Clear skies!

  • Re: Patent Reforms Mustn't Undermine Traditional P by rex007can, 12/08/2004 13:05:11 EST (3.85 / 7)
    • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/09/2004 08:42:39 EST (4.00 / 6)
      • Re: Patent Reforms Mustn't Undermine Traditional P by mircodot, 12/09/2004 17:27:38 EST (4.16 / 6)
      • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/09/2004 09:43:18 EST (3.25 / 4)
        • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/09/2004 18:42:36 EST (4.40 / 10)
          • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/09/2004 22:02:06 EST (4.00 / 9)
            • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/09/2004 23:54:23 EST (4.00 / 9)
              • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/10/2004 00:15:12 EST (4.00 / 7)
                • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/10/2004 01:19:49 EST (4.00 / 7)
                  • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/10/2004 12:14:43 EST (3.50 / 6)
                    • Re: Patent Reforms Mustn't Undermine Traditional P by mircodot, 12/10/2004 16:45:15 EST (4.00 / 6)
                      • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/10/2004 22:24:50 EST (3.80 / 5)
                    • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/11/2004 00:37:50 EST (3.66 / 6)
                      • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/11/2004 10:35:17 EST (4.00 / 5)
                        • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/13/2004 08:23:55 EST (3.50 / 4)
                          • Re: Patent Reforms Mustn't Undermine Traditional P by mircodot, 12/13/2004 14:32:19 EST (4.20 / 5)
                            • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/13/2004 16:22:46 EST (3.00 / 3)
                              • Re: Patent Reforms Mustn't Undermine Traditional P by mircodot, 12/13/2004 16:37:11 EST (3.80 / 5)
                                • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/13/2004 19:42:21 EST (4.33 / 3)
                                  • Re: Patent Reforms Mustn't Undermine Traditional P by nono2sco, 12/13/2004 21:30:15 EST (4.00 / 3)
                              • Re: Patent Reforms Mustn't Undermine Traditional P by codswallet, 12/13/2004 20:00:18 EST (3.33 / 3)
                                • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/14/2004 00:55:04 EST (4.75 / 4)
                                  • Re: Patent Reforms Mustn't Undermine Traditional P by codswallet, 12/14/2004 15:52:03 EST (5.00 / 6)
                                    • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/14/2004 22:05:21 EST (4.80 / 5)
                                      • Re: Patent Reforms Mustn't Undermine Traditional P by codswallet, 12/14/2004 23:00:56 EST (4.00 / 6)
                                        • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/15/2004 06:49:30 EST (5.00 / 4)
                                • Re: Patent Reforms Mustn't Undermine Traditional P by mck9, 12/13/2004 22:26:54 EST (4.00 / 4)
                                  • Re: Patent Reforms Mustn't Undermine Traditional P by harlan wilkerson, 12/14/2004 01:29:56 EST (4.00 / 3)
                                • P.S. by harlan wilkerson, 12/14/2004 01:48:03 EST (3.50 / 4)
                          • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/13/2004 11:29:35 EST (3.33 / 3)
                  • Re: Patent Reforms Mustn't Undermine Traditional P by br3n, 12/10/2004 09:15:37 EST (3.42 / 7)
    • Re: Patent Reforms Mustn't Undermine Traditional P by mikecwaslurker, 12/09/2004 09:14:00 EST (3.42 / 7)
  • Re: Patent Reforms Mustn't Undermine Traditional P by heimdal31, 12/08/2004 11:15:02 EST (3.50 / 6)
    • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/08/2004 12:56:05 EST (3.60 / 5)
      • Re: Patent Reforms Mustn't Undermine Traditional P by mikecwaslurker, 12/09/2004 09:42:25 EST (3.83 / 6)
        • Re: Patent Reforms Mustn't Undermine Traditional P by mikey, 12/09/2004 10:08:02 EST (4.00 / 5)
      • Re: Patent Reforms Mustn't Undermine Traditional P by anadromous cowherd, 12/08/2004 14:46:14 EST (3.42 / 7)
      • Re: Patent Reforms Mustn't Undermine Traditional P by heimdal31, 12/08/2004 14:11:38 EST (3.33 / 6)
    • Re: Patent Reforms Mustn't Undermine Traditional P by mikecwaslurker, 12/09/2004 09:22:58 EST (3.60 / 5)
Re: Patent Reforms Mustn't Undermine Traditional P (3.71 / 7) (#10)
by ColonelZen (tzellers lieth within pobox of thy kingdom com) on Wed Dec 8th, 2004 at 11:53:31 EST
(User Info)
Two broad and not deeply considered thoughts on patent reform.

First I think there needs to be a use-it-or-lose-it clause to patents.  That is if the patent is not being used in commerce, meaning as part of a marketed product licensed from your patent,  within a relatively short period of time, say three to five years, that it is null and void.   The dual advantage here is that you can't sit upon an idea and torpedo someone for using it ten years out, and second, if it is not used in that time, then it is obviously more an intellectual toy than something of real "benefit to society".

Second, I think the ability to sue based upon the broad claims should be eliminated.  Actually the "claims" portion of the patent should be eliminated.  If you sue you make your claims in your court filing, not from the patent but upon the specific infringement.   The "claims" part of a patent is being used as an intimidation tactic rather than having any real value.

(Of course I have better odds of winning the lottery [though I only pay my 'fantasy tax' two or three times a year, usually at my wife's insistance] than I do of having congress listen to me)

-- TWZ

  • Re: Patent Reforms Mustn't Undermine Traditional P by mikecwaslurker, 12/09/2004 09:58:58 EST (3.66 / 3)
Re: Patent Reforms Mustn't Undermine Traditional P (3.50 / 6) (#16)
by tubby on Wed Dec 8th, 2004 at 22:07:24 EST
(User Info) http://www.sharedserver.org/tubby/limericks.html
>MS has already spent loads of cash with their
>"Freedom to Innovate" meme.  Hijack it.

I like your thinking here. Short, interesting-sounding memes are a good way to hook public interest for long enough to educate a few people who would otherwise never wade into such issues. We see this kind of marking tried all the time. It isn't fool-proof though -- witness Darl's   frustration when his attempts at different Jedi Mind Tricks have failed on the more sophisticated part of the audience.

Personally, I think this one should be called "Freedom to Immolate" but there are probably memes out there with wider appeal.
--
:) 2004, The Tubby Nuisance Network
"All Wrongs Preserved."

Re: Patent Reforms Mustn't Undermine Traditional P (3.14 / 7) (#15)
by ot hstoop on Wed Dec 8th, 2004 at 15:37:41 EST
(User Info)
I admit that I don't know much about it, so I can make some stupid remarks.

The patents I remember always patent a solution. I never see the description of the specific problem that is solved by a patent. It should be a requiremnent to state the problem that is solved.

Patents are very broad. Therefore if prior art or common knowledge exists that fullfills (should be another word) the description in the patent application, the whole patent should be rendered worthless and not only the part that is attacked. If you make the patent claims to broad, it is your own risk and you should suffer from your own mistake.

Bye bye spambot (none / 0) (#54)
by Potential Recruit on Tue Nov 28th, 2006 at 12:52:38 EST
This used to be a spambot post that is flooding the site. Due to volume, I had to resort to this while I work to block access by these bots. My apologies - thanks for your patience.

Jeff

Patent Reforms Mustn't Undermine Traditional Patents | 54 comments (48 topical, 6 editorial, 2 hidden)
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