A derivative is an investment based on the value of an underlying instrument. In essence, what is emerging is a derivative market based on intellectual property, and it is exhibiting all the same ill traits that one sees with "swaptions" and the other exotic derivatives that have made the international trading world a house of cards, an emperor with no clothes.
This is not what patents were designed to do, and it must stop before it undermines the innovation needed to drive new companies forward, to bring new ideas to the marketplace, and to deliver value to those who build the better mousetrap.
"We can build a full, robust IP strategy on a startup's budget and still have some of the same things we had at Apple," said Richard "Chip" Lutton, general counsel at startup Nest Labs and former chief patent counsel at Apple.
I don't quite understand how you can do that. Can you elaborate on this?
I take Lutton's point to be that companies such as RPX, Intellectual ventures and many others like them have created a virtual patent marketplace where a startup can go shopping for patents.
He is clear that a startup can't afford the same size portfolio as an established company such as Apple. However if it defines its landscape carefully it can have similar coverage in its limited markets as bigger companies that span broader markets.
I agree with Tom Murphy 100%. The easiest way to save the patent system is to pass a simple law that restricts the royalties when the patent holder does not design, build, manufacture or sell a product which competes with the product on which the lawsuit was brought on. I suggest a royalty cap of 0.01% of the sales. This cap should have no effect if the patent holder has a competing product in the market place. Then the existing patent laws would apply as usual.
You have captured exactly the same thoughts I had when I saw the headline of this story. IMO, this is the inevitable and foreseeable result of the last two "reform" initiatives re the US patent system. It wasn't broke, so why the attempt to "fix" it! A large portion of the "inventions" recently issued patents are trash pure and simple, issued because the Patent Office is completely overwhelmed now as indicated by the "hockey stick" curves in the story. What hath Congress wrought?
Fundamentals: And I like your idea for a royalty cap of 0.01% for non-producing patent holders.
You know, I've been following this debate over technology patents for something like 20 years, when I first attended a USPTO public hearing in San Jose. Little new thinking has emerged in those two decades that would compare well with the good ideas that have surfaced on our message boards over the past two days.
What other ideas should we add to the patent laws to make them more equitable and reduce the trend of patent trolling?
Mhrackin: Hmmmm....you're blaming Congress for creating this mess and oppose new laws (Quote: "It wasn't broke, so why attempt to fix it?"). I would tend to blame the trolls and others who are abusing the system. And I think Congress needs guidance from the true inventors of the world on what new laws are needed to thwart abuse.
And if the USPTO is overwhelmed by a flood of inventions, or ill-equipped to handle the sophistication of new devices, would you recommend expansion of the agency? And how would that be financed?
Two of the primary culprits: making both software and business practices eligible for patents. The traditional view (explicit in the previous patent laws) was that both of these were essentially algorithms that were intangible and thus not eligible for patents. They were considered to be equivalent to artistic expressions, and like those eligible for copyright protection, not patent protection. This change also broadened the category of "design patents" (as opposed to "utility patents"). A HUGE proportion of the deluge of applications fall into those categories: the typical smartphone app can have a separate "design patent" for each screen!
January 2016 Cartoon Caption ContestBob's punishment for missing his deadline was to be tied to his chair tantalizingly close to a disconnected cable, with one hand superglued to his desk and another to his chin, while the pages from his wall calendar were slowly torn away.122 comments