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Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Software patents: Lots of whining, but reform unlikely

By | August 8, 2011, 5:24am PDT

Summary: Software patents are being acquired like they are tactical nukes as companies look to build their arsenals.

The whine-a-thon over software patents—especially in the wireless industry—has reached a fever pitch, but there’s little chance of anything actually being reformed any time soon.

Let’s recap a few data points over the last week.

It’s fairly obvious that patents are the new tactical nukes in the technology industry. Companies want to grab patents largely to defend lawsuits than actually create anything. The companies with the most patents win.

Short of some cross industry disarmament policy—something that won’t happen—there will have to be some reform on the patent front.

Among the options:

  • Ban software patents completely. Some folks will argue that software patents are bunk. Cuban argues that software and process patents should be banned. The whole ban software patents thing is a tad unrealistic.
  • Reform the system. Patent reform has been on the radar for years. Nothing meaningful happens. Cuban noted:

It’s bad for my little companies. It’s horrific for bigger companies. It’s so bad that major tech companies are buying big collections of patents not because they want to own the intellectual property but rather because they want the ability to respond to patent lawsuits with a lawsuit of their own. It’s like playing a game of thermo nuclear war. If all sides have “nuclear patents” they can respond to patent litigation with equal force. In other words, if you have enough “nuclear patents” no one will sue you for patent infringement because you have enough power to respond in kind. It’s crazy and costing this country jobs.

Google just bid $900mm to buy a patent collection. Those patents ended up being sold for $4.5BILLION dollars. That is money that for could have gone to job creation.

And now the reality: Nothing is going to happen. Congress is a mess. Patents will always take a back seat to things like making interest payments, debt downgrades, elections and an economy that is sucking wind.

As a result, the thermo nuclear patent game will continue. Companies can whine about lawsuits and sky-high bids for patent portfolios all they want. Their time may be better spent acquiring patents.

See also:

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Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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RE: Software patents: Lots of whining, but reform unlikely
Nashman2222 22nd Aug
New hardware normally requires software in today's world.
There is no way to separate this because software is basic to equipment operation.
Get rid of patents genereally and then forget about innovation. Innovation is difficult and time consuming.
Forget about R&D departments and their employees. There would be no profit in R&D.
You can also forget about a large number of capital investors.
No more new iphones. Who is going to pay when anyone can copy.
Why have R&D when it is no longer a profit maker as it is now.
More things will be made in China where low costs and high expertise in backward engineering is better available.
It will have to be addressed in the courts but unfortunately it will be on a case by case basis for some time to come.

Fastboot likely won't stick and neither will Apple's process patent from the HTC case but others might.

As for Android, the only company to go after Google has been Oracle and there is evidence that Sun did know and Approve of Google's use of Java.
@Peter Perry
Problem with patents & courts is that it cost moneys! Lots of them. So it may be more expensive to prove that patent is stupid & obvious & had prior art, and paying license fees may be cheaper.

This way lots of unlawful patents can circulate.
@Peter Perry
Sun of course knew and welcomed the use of Java by Google as they expected to get money from that. They even offered Google java IP licensing for 100M but Google refused Suns licensing offer even though their Android executives said in internal mails that they needed the license or they would make enemies.
0 Votes
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Patent Hit Man
General C# 8th Aug
I propose a "Patent Hit Man", protector of all developers. Let's face it, development is the one area where the small guy can take on the big guy, but not when patents are involved. Whenever a company like Lodsys sues indie devs, then Lodsys attorneys should go onto a hit list and be taken out. Eventually indie devs will be left alone + less lawyers is always better happy
@General C#

Yeah, murder. Always a good idea. And it's not like a small developer would ever steal something from a bigger company, so why bother with the courts anyway, right? Only large companies can steal patents, so let's just murder their lawyers, right?

Your post was silly. Even by ZDNet standards.
@General C#
Great! Lets help the little dev of Wifi sync sue apple for denying him and stealing his creation. Lets help google sue apple for stealing the pull down status bar that's been a part of android since the beginning that apple now is also placing in ios5. Lets sue apple for Price Fixing consumer equipment they can purchase themselves for a fraction of the cost elsewhere. There is also apple's ability to handle links in apps and messages. This has been around for a long, long time with pc software.

Apple is the big little infant throwing a tantrum because they have no more innovations and do not want to play fair with competition.
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Doesn't need reform
guihombre Updated - 8th Aug
It needs the USPTO to do its job. An inventor needs to prove it's an invention and non obvious. USPTO is interpreting that as 'can we prove it ISN'T an invention and ISN'T non obvious'.

The problems USA faces today are entirely created by misinterpretation of basic patents rules and it's not restricted to software patents, it's a problem right through the patent system.

The only reason it's so bad in software is because the gap between "proof of invention" and "failure to prove NON invention" is so huge because most of software is never revealed.

The problem is far far wider and it's crippling US businesses.
@guihombre
Add inability to cheaply disable patents, and cash USPTO brings each year to USA budget (which recently have troubles).
0 Votes
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It all costs money
Richard Flude 8th Aug
More money is directed to legal preparation and defense of patents than developing them. Use to restrict competition by larger companies.

"It?s fairly obvious that patents are the new tactical nukes in the technology industry"

Yet those of us saying this have been mocked by the likes of Will Pharaoh and friends;-)
0 Votes
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and I say that as someone who's done a few patentable things. Software code, since it is written in languages and usually not assembler, is as much like speech as it is like architecture, particularly in messaging oriented systems: eventually you're going to have the same conversation someone else has had.

Practically, it eventually becomes a problem when there is nothing new under the sun to talk about. How do you patent search every process you put into your system to ensure that hasn't happened?

Software in and of itself doesn't make anything or do anything, and as such is unlike patents for pharmaceuticals or gadgets. Software can enable those things, in that it gives instructions to a computer that makes them happen; but it isn't itself these things. Like I said, software is like conversation, or more accurately, dialog. Some leeway must come into play so those "conversations" do not stop with each new patent.
@rbethell This. There's a reason we call them languages. It's like having to pay a fee every time you say a colloquialism.
@Aerowind

No, it's like paying a fee every time you use a trademark or copyright. Those are not the same as just saying words as they mean something.
@aaronc0027
No, Aerowind's analogy was much more accurate. Copyrights and trademarks already exist in the software world (one more reason that patents shouldn't), so you already can't use them.
@rbethell Exactly! This explanation is a good one. Add onto that the fact that most software patents are on something like "Method of clicking a button to buy something" and not the actual implementation.
The REAL reason that there would be no reform to the patent system is really quite simple - there is way too much revenue coming into the fed govt for all those bogus "inventions". To fix the system would mean cutting off that $$$ supply, and that just plain ain't gonna happen.
Geez, I hate it when people label legitimate concerns and discussion of the stupidity of some/all software patents as whining! It's a serious problem that needs to be addressed. Not discussing it because knuckleheads like you label it whining would be counterproductive. I hope those companies ignore labels like yours and continue to push Congress and the USPTO to reform the process.
@GTGeek88 Read who wrote this. It's classic Dignan. Inflammatory headlines, little/misleading substance. His blog is like scraping the bottom of the ZDnet barrel.
0 Votes
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Time will save us
wilback 8th Aug
The only thing that will save us (eventually) from all this patent folly is time. Unlike copyrights, which just keep getting extended, patents still have a finite length of 20 years. Today patents exist on some very basic and simple software concepts (which were obvious to most developers but not the patent office...). Many of these patents are mid-life, and after they expire nobody can patent them again. They will officially become "open-source".

This is a dumb and inefficient way to address this problem, but given the tens and hundreds of billions of "value" that companies have invested in them, it's the only option we have.
0 Votes
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Nice
bezoeker 8th Aug
I suppose you would sell stock of those big technology companies and surely are not buying?
"serious risks in Oracle lawsuit" link goes to...Florian Mueller. Bestill my beating heart. Can you come up with a non-Florian-Mueller source saying these things?

And while we're on topic, are you guys gonna own up to letting this guy basically do your job and thus control your editorial slant for you? You're getting to be as bad as the political media.
It is sad how much money is being gained and lost in courts - that money would be greater used for jobs - I like this article - A better use of money is needed in this economy!

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When you look at the players in a particular market, you will often observe two extremes. At one end are the ?innovators?. They invest a (relatively) large amount in R&D. They have research labs or centres, which employ lots of smart and (often) very highly-qualified people to be creative, and come up with great new ideas that make better, more attractive, more functional, more desirable and more usuable products. Think Apple, for example.

At the other extreme are the ?imitators?. They mainly want to cash in on the market created by the innovators, by doing pretty much the same things more cheaply. (You know who you are!)

The ?software patents? debate often focusses too much on individual patents. People say that a patent is ?too broad?, or that it covers some ?trivial? feature. But, in many cases, those patents came out of environments that cost real money to maintain, and you cannot do that if you cannot charge enough for the resulting products. And you cannot charge more, and stay in business, if some Chinese imitator, or other upstart in your industry (again, you know who you are) can do just as much using fewer resources by copying you innovations.

So, of course license fees push up the price of competing products. HTC pays Microsoft to use its patents, pushing up the price of HTC smartphones to the point where they are more comparable to Windows Phone 7 products. Just as importantly, Microsoft collects that money, and keeps up its own R&D.

Imitators can become innovators. Sometimes the ?imitation? period is just a ?catch up? phase. Patents are not a perfect machanism, but they do mediate this market for innovation. Google can whine all it likes, but the simple fact is that Android is an ?imitator? technology, piggybacking on Java and other innovations, and it is clear to anyone with a brain that this is all part of Google?s ?catch up? strategy. They should pay the license fees, until the day comes when they have done enough innovating (and patenting) of their own to sit around the table with the big boys!

With the demise of Bell Labs, amongst others, there are already fewer great industrial research organisations left in the world. Where, and how, will tomorrow?s ?transistor? be invented, or the next discovery comparable to the background radiation from the big bang be discovered? Private money paid for those, folks. Profits from a monopoly, of all things! Patents and licensing are the only real chance of survival for those institutions that remain, and the only possible mechanism for new ones arising.

A patent reform bill is currently before the US Congress, and will almost certainly pass. So something is going to happen, and patents are not considered unworthy of attention. The fact that the reforms do not happen to address the concerns of one interest group that is, in the scheme of things, pretty insignificant, does not mean that nobody is trying to make things better. If a pack of eight-hundred pound gorillas want to beat each other around the head in courts across the world, who are we to tell them not to?
@Patentology Apple doesn't so much innovate as it ignores problems it doesn't want to solve, leaves the resultant limitation in the product, and thus creates products that have wide- but not universal- appeal.

And the idea that the motivations behind Microsoft's patent machinations is funding R&D is as precious as it is clueless.
Patents stifle innovation, competition and is a job inhibitor/killer. Money is wasted on lawsuits instead of investing in jobs. Companies could be hiring more developers to make a better software/hardware. If we must have software/hardware patents then make it have a 2 year limit, and non-renewable. That should be enough head start for an original idea. Something similar could be applied for pharmaceuticals. If the government wants to stimulate the economy then reform the patent process.
Notice that the result of the "Nuclear Patent" era is the exact opposite of what the patent system was designed to do. Instead of defending the small creative inventors from being run over by large better-funded corporate copycats, in today's game the only folks who can even function in major sectors of technology are the huge outfits with large enough patent arsenals to give them freedom to operate.
New hardware normally requires software in today's world.
There is no way to separate this because software is basic to equipment operation.
Get rid of patents genereally and then forget about innovation. Innovation is difficult and time consuming.
Forget about R&D departments and their employees. There would be no profit in R&D.
You can also forget about a large number of capital investors.
No more new iphones. Who is going to pay when anyone can copy.
Why have R&D when it is no longer a profit maker as it is now.
More things will be made in China where low costs and high expertise in backward engineering is better available.

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