6 ms·

Almost a third of our portfolio is under attack by patent trolls.

137 points by figured 17y ago

figured 17y ago
"Almost a third of our portfolio is under attack by patent trolls." That quote astonished me, I never really knew the extent of the problem.
- algorias 17y ago
  Depends on what the meaning of "is" is, actually. What falls into the category "under attack"? threat of litigation? actual litigation? in process of settling? having settled?
  - zaphar 17y ago
    Any one of those mentioned in your question are bad. If it's all of them it's still bad. No matter what meaning of the word "is" that you choose it's bad. That's kind of the point of the article really.
kschrader 17y ago
I'm curious, has anyone ever seen a software patent novel enough that it could be considered a "non-obvious" solution to the problem that the inventor is trying to attack?
- tptacek 17y ago
  Sure. Cryptography is littered with them.
  - argv_empty 17y ago
    Except then you're patenting math.
    - tptacek 17y ago
      Not true at all. Cryptography Research has patented most of the implementation techniques required to do hardware crypto without being susceptible to differential power analysis (btw: that? My favorite business model ever!). That was almost pure systems research.
      - Psyonic 17y ago
        What is the business model associated with differential power analysis? Why is it your favorite?
        tptacek 17y ago
        They discovered a horrible, systemic vulnerability and then patented most of the effective defenses for it. It's pure evil genius.
        JCLevesque 17y ago
        And that's why patents are broken.
        tptacek 17y ago
        Strong disagree. They found the vulnerability. It is a remarkably interesting attack. Without their work, we'd just be silently vulnerable to the problem. I think (for instance) the DPA patents are a decent example of good-faith patents. RSA was patent-encumbered for a long time too. You can formulate a similar argument about that. "RSA makes systems safer [ed: no it doesn't, but continuing...], so it's wrong to allow it to be patented".
        gjm11 17y ago
- mixmax 17y ago
  I'm sure that some of the patents I hold would be obvious to many people here. Just sayin'
- defen 17y ago
  Various data compression patents seem reasonable to this untrained eye - MP3 & LZW compression come to mind. Of course the duration of software patents is ridiculous, but let's not throw the baby out with the bathwater.
paulgb 17y ago
> They pick on startups because undercapitalized small companies cannot afford to be ideological. When faced with the prospect of extensive legal fees and a huge distraction, they do the pragmatic thing - they settle. Patent trolling reminds me of a game of chicken. I wonder whether chicken strategies have been tried to combat it. For example, if the start-up could position themselves so that it is profitable for them to defend themselves if they are sued by a patent troll, and the trolls were aware of this (and rational), the trolls may be scared to litigate. This could be in the form of "insurance" that pays out when the company successfully defends itself against a patent claim. Ideally, the fact that the company is insured would thwart off trolls, so the premiums could be lower than what companies currently pay out in settlements.
- dangoldin 17y ago
  That's an interesting idea for a company! An company that insures against patent lawsuits. It would have be staffed by lawyers who know whether there are any possible patent violations but it might work. As you said, the fact that you are even insured by this company may already signal to the troll to back off.
  - alain94040 17y ago
    Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible. So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is no business insuring against patent troll. Don't get me wrong, I wish there was.
    - lliiffee 17y ago
      The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?
justinsb 17y ago
Though perhaps there's a selection bias at work? Maybe 'competing' venture funds are doing more thorough IP due diligence?
thaumaturgy 17y ago
I would really like to see something along the lines of a TED talk in which the presenter stands up, spends a couple of minutes demonstrating some kind of really interesting new technology -- something that could really help people, either in their lives or in their jobs -- and then the presenter would pause for a moment and say, "...but none of you are going to get to use this", and continue the talk but on the subject of patents. I don't think people really understand the extent of the problem. I think they need to see exactly the damage that's being done before there will be any energy put into fixing it. I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development.
- zaphar 17y ago
  I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development. I hear people say this but they never give an example. Can you name an area of research and development where patents hold a valuable position? I myself have trouble coming up with any and I'm curious what others think.
  - alain94040 17y ago
    Conventional wisdom says that pharma qualifies. Labs wouldn't spend the resources if anyone could come up with generic drugs once the hard work of finding out which drug works is done.
    - mbrubeck 17y ago
      And yet even pharmaceutical companies are now facing problems caused by too many patents (though I'm sure none of them want to abolish patents completely the way many in software do). Michael Heller from Columbia Law School writes about new therapies that companies can't bring to market because they involve dozens or hundreds of different genes or compounds, each patented separately; he argues that this will become more common because of trends in medical science. He also cites some interesting examples like http://www.goldenrice.org/ http://www.goldenrice.org/ which actually did get produced, but only because they formed a non-profit foundation and basically shamed companies into licensing their patents as charity for the developing world. Many, many more details in Heller's book and in this Econtalk interview: http://www.gridlockeconomy.com/ http://www.gridlockeconomy.com/ http://www.econtalk.org/archives/2009/11/heller_on_gridl.html http://www.econtalk.org/archives/2009/11/heller_on_gridl.htm...
twohey 17y ago
I really feel for smaller companies here as I know people with great products who have been trolled out of existence. I wonder if there is a non-legislative fix available because I've heard about programmers wanting patent reform for as long as I've been programming and I believe almost no substantial progress has been made. Brad mentions that larger companies have more resources available for fighting patent trolls. What if VCs set aside a pool of capital for defending their investments from patent trolls as part of raising their funds? The idea would be to create a pool money whose size would ward off patent trolls. I'm sure it would take a few victories in court, but it could establish a precedent and change the game. It certainly seems easier than attempting to reform patents.
aristus 17y ago
I'm a little cautious about this post. He is exaggerating by stretching the definition of "patent troll", if I am reading correctly. A true patent troll is a company that produces nothing except lawsuits. With a company that produces something and also sues over patents, there is at least the possibility of a countersuit / crosslicense / armed truce. I assume their portfolio companies pool their patents together for the common defense. If not, that might be a good idea. Still, with 26 portfolio companies, he's claiming 8-ish concurrent lawsuit threats... that's alarming. On the other hand, their portfolio is pretty high-profile (Etsy, Twitter, Zynga, Foursquare, Indeed, etc). Also he doesn't put this claim in historical context: is this normal for a maturing (and very nice) portfolio? Are they going after the tender young startups or the bigger ones?
- decode 17y ago
  "With a company that produces something and also sues over patents, there is at least the possibility of a countersuit / crosslicense / armed truce." Unless you're a startup that just wants to make a good product and isn't interested in spending tens of thousands of dollars acquiring patents on software you think shouldn't even be patented in the first place. Then you have no defense. You also don't have the funds for a protracted legal battle, since you're living on investment capital, or are barely profitable.
  - aristus 17y ago
    I'm not arguing anything about the validity or wisdom of patents. I'm saying the poster (a VC) left out a lot of pertinent information and using the term "patent troll" incorrectly. It's an interesting item but wrapped in self-serving omission and linkbaity style.
larsberg 17y ago
Somebody should patent the process of patent trolling. Then, at least, there would just be one doing it...
- Hoff 17y ago
  "Halliburton Tries To Patent Form Of Patent Trolling" http://www.techdirt.com/articles/20081107/0118162765.shtml http://www.techdirt.com/articles/20081107/0118162765.shtml
cwan 17y ago
An addendum from Fred Wilson (another one of the partners at USV): http://www.avc.com/a_vc/2010/01/why-we-need-an-independent-invention-defense.html http://www.avc.com/a_vc/2010/01/why-we-need-an-independent-i... - "But anyone who has spent a significant time in technology based businesses will understand that two groups working completely independently from each other will often solve a problem similarly. One group is not copying or ripping off the other group. They are simply coming to similar conclusions about how to get something done. In these cases, it makes no sense to protect one group from the other. Nobody has taken anyone's "intellectual property." Both groups should own their inventions outright without having to license technology from the other."
schammy 17y ago
God damn I hate nothing more than patent trolls. I'm positive that Lucifer is reserving a special place in hell for them, because there's no question they're going to burn.
chrischen 17y ago
The fundamental problem with patents is that it rewards the first person to file a patent, disregarding the possibility that two people can synchronously, or asynchronously come to the same idea independently of each other. I guess the "American" (assuming you're in America) course of action is to speak to your senator to push for reform and help evolve our government. If that fails, ditch the government altogether and either start or move to another country.
- deleted 17y ago
  [deleted]
- Daniel_Newby 17y ago
  U.S. patents go to the first inventor, regardless of filing order.
  - JCLevesque 17y ago
    Yeah but you have to prove it.
  - chrischen 17y ago
    In any case first doesn't mean the only, or the only one deserving.
manbearpig 17y ago
I hate software patents and don't think they should be issued at all, but the idea that "if, on the other hand, the troll was required to show the startup had some prior knowledge of their technology, the burden would be shifted to the attacker, and this blatant abuse would come to a grinding halt" flies in the face of what the patent system is intended to achieve. "Patent" means open. When you file a patent for a new innovation, you disclose the underlying technology to the general public and open it for all to see. In exchange, you receive legal protection that nobody can use your innovation without your consent. It doesn't matter whether they stumble upon your technology completely independently. The technology is yours. The alternative to disclosing your technology in a patent is to keep it a trade secret. You don't own the rights to the technology itself, so anybody who develops it independently will be able to be able to use it as well. However, other companies still cannot explicitly steal the innovation from you. This is how Coke has guard its formula for decades. Just because multiple groups can arrive at the same innovation in a similar time-frame doesn't mean that that innovation was obvious. In fact, this has happened with many great innovations. The telephone and the integrated circuit are prime examples. And how can you guys not understand the importance of patents to the development pharmaceuticals? A group cannot invest a billion dollars into the development of a compound without guarding it from competitors. Once these patents expire, generic companies are able to significantly undercut the creators. The generic makers are aided by the openness of the patent system, but this is not necessary to copy a medication. It's structure can be easily deduced, and even extremely complicated medications such as taxol have been synthesized using several different pathways.
trunnell 17y ago
Check out this patent. It appears to be for storing web page state in the web page itself and transmitting that state using HTTP POST. I'm not even kidding. http://www.google.com/patents/about?id=wIEoAAAAEBAJ&dq=5623656 http://www.google.com/patents/about?id=wIEoAAAAEBAJ&dq=5... It's especially interesting to read the "referenced by" list on that page. "Incorporating state information into a URL" ... "Method for transmitting images over a network" ... "System for tracking the purchase of a product over the internet." Seriously, what are we going to do about this?
scottdw2 17y ago
Personally, I don't value software parents much. I think they are a giant waste of money. You spend $20K on lawyers, to get nothing more than the right to spend more money on lawyers in the future. That $20K could be better invested elsewhere (like on product improvement). I think it would be worth considering eliminating software patents. However, I don't think an "independent invention defense" is a good idea. It would essentially eliminate all patent protection. Basically, the absence of proof that you knew a patent existed, would get you off the hook for infringing on it. This means that as long as you had the right set of rigorous policies in place, you could operate with complete immunity from patent infringement claims. If all employees were trained (by mandatory corporate training) that "under no circumstances should you ever read any patents, ever", and "if you ever have any doubts about anything being patentable, direct the question to our lawyer", and you were very strict about enforcing it, you could make a case that pretty much every invention was discovered independently. That would defeat the whole purpose of patent protection. The idea is that by getting inventors to disclose details of their invention (which benefits society), that they get a monopoly on its use. Without the monopoly, there is no point in having a patent. If software patents pose a fundamental problem, then I think the best course of action is to eliminate software parents, not to undermine the entire patent system.
- noonespecial 17y ago
  If all employees were trained (by mandatory corporate training) that "under no circumstances should you ever read any patents, ever", and "if you ever have any doubts about anything being patentable, direct the question to our lawyer", and you were very strict about enforcing it, you could make a case that pretty much every invention was discovered independently. Thanks to the "treble damages" part, this is exactly how it operates right now, right down to the corporate training. Unless you're a patent attorney, "never ever read a patent" is pretty good advice for any technical professional.

137 points by figured 17y ago

"Almost a third of our portfolio is under attack by patent trolls." That quote astonished me, I never really knew the extent of the problem.

algorias 17y ago
Depends on what the meaning of "is" is, actually. What falls into the category "under attack"? threat of litigation? actual litigation? in process of settling? having settled?
- zaphar 17y ago
  Any one of those mentioned in your question are bad. If it's all of them it's still bad. No matter what meaning of the word "is" that you choose it's bad. That's kind of the point of the article really.

kschrader 17y ago

I'm curious, has anyone ever seen a software patent novel enough that it could be considered a "non-obvious" solution to the problem that the inventor is trying to attack?

tptacek 17y ago
Sure. Cryptography is littered with them.
- argv_empty 17y ago
  Except then you're patenting math.
  - tptacek 17y ago
    Not true at all. Cryptography Research has patented most of the implementation techniques required to do hardware crypto without being susceptible to differential power analysis (btw: that? My favorite business model ever!). That was almost pure systems research.
    - Psyonic 17y ago
      What is the business model associated with differential power analysis? Why is it your favorite?
      - tptacek 17y ago
        They discovered a horrible, systemic vulnerability and then patented most of the effective defenses for it. It's pure evil genius.
        JCLevesque 17y ago
        And that's why patents are broken.
        tptacek 17y ago
        Strong disagree. They found the vulnerability. It is a remarkably interesting attack. Without their work, we'd just be silently vulnerable to the problem. I think (for instance) the DPA patents are a decent example of good-faith patents. RSA was patent-encumbered for a long time too. You can formulate a similar argument about that. "RSA makes systems safer [ed: no it doesn't, but continuing...], so it's wrong to allow it to be patented".
        gjm11 17y ago
mixmax 17y ago
I'm sure that some of the patents I hold would be obvious to many people here. Just sayin'
defen 17y ago
Various data compression patents seem reasonable to this untrained eye - MP3 & LZW compression come to mind. Of course the duration of software patents is ridiculous, but let's not throw the baby out with the bathwater.

paulgb 17y ago

> They pick on startups because undercapitalized small companies cannot afford to be ideological. When faced with the prospect of extensive legal fees and a huge distraction, they do the pragmatic thing - they settle. Patent trolling reminds me of a game of chicken. I wonder whether chicken strategies have been tried to combat it. For example, if the start-up could position themselves so that it is profitable for them to defend themselves if they are sued by a patent troll, and the trolls were aware of this (and rational), the trolls may be scared to litigate. This could be in the form of "insurance" that pays out when the company successfully defends itself against a patent claim. Ideally, the fact that the company is insured would thwart off trolls, so the premiums could be lower than what companies currently pay out in settlements.

dangoldin 17y ago
That's an interesting idea for a company! An company that insures against patent lawsuits. It would have be staffed by lawyers who know whether there are any possible patent violations but it might work. As you said, the fact that you are even insured by this company may already signal to the troll to back off.
- alain94040 17y ago
  Nice idea but it doesn't work because when I sue you with a bogus patent troll, you can't make money out of it. All you can do is make the lawsuit go away and lose as little money as possible. So it's a win-lose scenario. So there is no insurance possible. The best lawyers in your hypothetical insurance company, at best could convince the judge that you are not infringing. But it won't make you any money. So there is no business insuring against patent troll. Don't get me wrong, I wish there was.
  - lliiffee 17y ago
    The good guys pay me money for insurance, I promise to release my team of ruthless lawyers on anyone that sue them, the patent trolls see my scary lawyers and don't sue. Doesn't that work?

justinsb 17y ago

Though perhaps there's a selection bias at work? Maybe 'competing' venture funds are doing more thorough IP due diligence?

thaumaturgy 17y ago

I would really like to see something along the lines of a TED talk in which the presenter stands up, spends a couple of minutes demonstrating some kind of really interesting new technology -- something that could really help people, either in their lives or in their jobs -- and then the presenter would pause for a moment and say, "...but none of you are going to get to use this", and continue the talk but on the subject of patents. I don't think people really understand the extent of the problem. I think they need to see exactly the damage that's being done before there will be any energy put into fixing it. I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development.

zaphar 17y ago
I do think that patents hold a valuable place in certain areas of research and development, but there are also areas in which patents are crippling development. I hear people say this but they never give an example. Can you name an area of research and development where patents hold a valuable position? I myself have trouble coming up with any and I'm curious what others think.
- alain94040 17y ago
  Conventional wisdom says that pharma qualifies. Labs wouldn't spend the resources if anyone could come up with generic drugs once the hard work of finding out which drug works is done.
  - mbrubeck 17y ago
    And yet even pharmaceutical companies are now facing problems caused by too many patents (though I'm sure none of them want to abolish patents completely the way many in software do). Michael Heller from Columbia Law School writes about new therapies that companies can't bring to market because they involve dozens or hundreds of different genes or compounds, each patented separately; he argues that this will become more common because of trends in medical science. He also cites some interesting examples like http://www.goldenrice.org/ http://www.goldenrice.org/ which actually did get produced, but only because they formed a non-profit foundation and basically shamed companies into licensing their patents as charity for the developing world. Many, many more details in Heller's book and in this Econtalk interview: http://www.gridlockeconomy.com/ http://www.gridlockeconomy.com/ http://www.econtalk.org/archives/2009/11/heller_on_gridl.html http://www.econtalk.org/archives/2009/11/heller_on_gridl.htm...

twohey 17y ago

I really feel for smaller companies here as I know people with great products who have been trolled out of existence. I wonder if there is a non-legislative fix available because I've heard about programmers wanting patent reform for as long as I've been programming and I believe almost no substantial progress has been made. Brad mentions that larger companies have more resources available for fighting patent trolls. What if VCs set aside a pool of capital for defending their investments from patent trolls as part of raising their funds? The idea would be to create a pool money whose size would ward off patent trolls. I'm sure it would take a few victories in court, but it could establish a precedent and change the game. It certainly seems easier than attempting to reform patents.

aristus 17y ago

I'm a little cautious about this post. He is exaggerating by stretching the definition of "patent troll", if I am reading correctly. A true patent troll is a company that produces nothing except lawsuits. With a company that produces something and also sues over patents, there is at least the possibility of a countersuit / crosslicense / armed truce. I assume their portfolio companies pool their patents together for the common defense. If not, that might be a good idea. Still, with 26 portfolio companies, he's claiming 8-ish concurrent lawsuit threats... that's alarming. On the other hand, their portfolio is pretty high-profile (Etsy, Twitter, Zynga, Foursquare, Indeed, etc). Also he doesn't put this claim in historical context: is this normal for a maturing (and very nice) portfolio? Are they going after the tender young startups or the bigger ones?

decode 17y ago
"With a company that produces something and also sues over patents, there is at least the possibility of a countersuit / crosslicense / armed truce." Unless you're a startup that just wants to make a good product and isn't interested in spending tens of thousands of dollars acquiring patents on software you think shouldn't even be patented in the first place. Then you have no defense. You also don't have the funds for a protracted legal battle, since you're living on investment capital, or are barely profitable.
- aristus 17y ago
  I'm not arguing anything about the validity or wisdom of patents. I'm saying the poster (a VC) left out a lot of pertinent information and using the term "patent troll" incorrectly. It's an interesting item but wrapped in self-serving omission and linkbaity style.

larsberg 17y ago

Somebody should patent the process of patent trolling. Then, at least, there would just be one doing it...

Hoff 17y ago
"Halliburton Tries To Patent Form Of Patent Trolling" http://www.techdirt.com/articles/20081107/0118162765.shtml http://www.techdirt.com/articles/20081107/0118162765.shtml

cwan 17y ago

An addendum from Fred Wilson (another one of the partners at USV): http://www.avc.com/a_vc/2010/01/why-we-need-an-independent-invention-defense.html http://www.avc.com/a_vc/2010/01/why-we-need-an-independent-i... - "But anyone who has spent a significant time in technology based businesses will understand that two groups working completely independently from each other will often solve a problem similarly. One group is not copying or ripping off the other group. They are simply coming to similar conclusions about how to get something done. In these cases, it makes no sense to protect one group from the other. Nobody has taken anyone's "intellectual property." Both groups should own their inventions outright without having to license technology from the other."

schammy 17y ago

God damn I hate nothing more than patent trolls. I'm positive that Lucifer is reserving a special place in hell for them, because there's no question they're going to burn.

chrischen 17y ago

The fundamental problem with patents is that it rewards the first person to file a patent, disregarding the possibility that two people can synchronously, or asynchronously come to the same idea independently of each other. I guess the "American" (assuming you're in America) course of action is to speak to your senator to push for reform and help evolve our government. If that fails, ditch the government altogether and either start or move to another country.

deleted 17y ago
[deleted]
Daniel_Newby 17y ago
U.S. patents go to the first inventor, regardless of filing order.
- JCLevesque 17y ago
  Yeah but you have to prove it.
- chrischen 17y ago
  In any case first doesn't mean the only, or the only one deserving.

manbearpig 17y ago

I hate software patents and don't think they should be issued at all, but the idea that "if, on the other hand, the troll was required to show the startup had some prior knowledge of their technology, the burden would be shifted to the attacker, and this blatant abuse would come to a grinding halt" flies in the face of what the patent system is intended to achieve. "Patent" means open. When you file a patent for a new innovation, you disclose the underlying technology to the general public and open it for all to see. In exchange, you receive legal protection that nobody can use your innovation without your consent. It doesn't matter whether they stumble upon your technology completely independently. The technology is yours. The alternative to disclosing your technology in a patent is to keep it a trade secret. You don't own the rights to the technology itself, so anybody who develops it independently will be able to be able to use it as well. However, other companies still cannot explicitly steal the innovation from you. This is how Coke has guard its formula for decades. Just because multiple groups can arrive at the same innovation in a similar time-frame doesn't mean that that innovation was obvious. In fact, this has happened with many great innovations. The telephone and the integrated circuit are prime examples. And how can you guys not understand the importance of patents to the development pharmaceuticals? A group cannot invest a billion dollars into the development of a compound without guarding it from competitors. Once these patents expire, generic companies are able to significantly undercut the creators. The generic makers are aided by the openness of the patent system, but this is not necessary to copy a medication. It's structure can be easily deduced, and even extremely complicated medications such as taxol have been synthesized using several different pathways.

trunnell 17y ago

Check out this patent. It appears to be for storing web page state in the web page itself and transmitting that state using HTTP POST. I'm not even kidding. http://www.google.com/patents/about?id=wIEoAAAAEBAJ&dq=5623656 http://www.google.com/patents/about?id=wIEoAAAAEBAJ&dq=5... It's especially interesting to read the "referenced by" list on that page. "Incorporating state information into a URL" ... "Method for transmitting images over a network" ... "System for tracking the purchase of a product over the internet." Seriously, what are we going to do about this?

scottdw2 17y ago

Personally, I don't value software parents much. I think they are a giant waste of money. You spend $20K on lawyers, to get nothing more than the right to spend more money on lawyers in the future. That $20K could be better invested elsewhere (like on product improvement). I think it would be worth considering eliminating software patents. However, I don't think an "independent invention defense" is a good idea. It would essentially eliminate all patent protection. Basically, the absence of proof that you knew a patent existed, would get you off the hook for infringing on it. This means that as long as you had the right set of rigorous policies in place, you could operate with complete immunity from patent infringement claims. If all employees were trained (by mandatory corporate training) that "under no circumstances should you ever read any patents, ever", and "if you ever have any doubts about anything being patentable, direct the question to our lawyer", and you were very strict about enforcing it, you could make a case that pretty much every invention was discovered independently. That would defeat the whole purpose of patent protection. The idea is that by getting inventors to disclose details of their invention (which benefits society), that they get a monopoly on its use. Without the monopoly, there is no point in having a patent. If software patents pose a fundamental problem, then I think the best course of action is to eliminate software parents, not to undermine the entire patent system.

noonespecial 17y ago
If all employees were trained (by mandatory corporate training) that "under no circumstances should you ever read any patents, ever", and "if you ever have any doubts about anything being patentable, direct the question to our lawyer", and you were very strict about enforcing it, you could make a case that pretty much every invention was discovered independently. Thanks to the "treble damages" part, this is exactly how it operates right now, right down to the corporate training. Unless you're a patent attorney, "never ever read a patent" is pretty good advice for any technical professional.