

FTC Puts Patent Trolls on Notice - grellas
http://www.techdirt.com/articles/20110308/01101513393/ftc-puts-patent-trolls-notice.shtml

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anigbrowl
I posted this last night as well. I thought people on HN would be popping
champagne corks, the FTC proposals seem extremely sensible and entrepreneur
friendly. I was surprised at how strongly they came down on the side of
innovation rather than IP litigants. The report is long but very well written
- it makes a complex subject accessible and shows that the FTC were willing to
learn from the public. Everyone here ought to read it.

~~~
Confusion
Direct link to the FTC report that anigbrowl posted:
<http://www.ftc.gov/os/2011/03/110307patentreport.pdf>

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cduan
I find it interesting that now both the FTC and a good chunk of the Supreme
Court* have warned against vague patents. So far it has been generally hard to
challenge patents on grounds of vagueness, as it can only be done in court
during an infringement lawsuit. The new patent reform bill provides a
mechanism for doing so through the Patent Office, and if it is enacted, it
will be interesting to see how it plays out.

*In the recent Bilski case, four justices noted the "potential vagueness of business method patents." Four more justices thought that business methods were unpatentable outright.

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shii
Curious how this affects the ugly behemoth that is Blackboard...any insights
from those more familiar with the topic like the wise grellas?

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grellas
This report constitutes a policy statement that is heartening to those seeking
reform of patent abuses in that its recommendations might prove influential
with the USPTO (which is at the front lines of dealing with such practical
issues as how to deal with indefinite claims), with courts (which ultimately
interpret challenged claims in the context of infringement fights), or with
Congress (which ultimately sets standards in this area). Among its several
recommendations, the report calls out the activities of "patent assertion"
entities (i.e., trolls) for the adverse effects their activities have on
innovation. The long-term hope is that such a report, in so persuasively
highlighting the problems caused by trolling activities, will influence the
USPTO, the courts, and the Congress to implement real reforms to curb the
abuses.

The immediate impact on any party that is highly litigious in this area (troll
or not) will be negligible, in my view. The courts will apply existing law to
the pending fights and will decide the cases one way or the other without
regard to longer-term policy principles. This does not mean that aggressive
litigants will always win (Blackboard didn't) but it does mean they will pose
difficult problems for those who have to endure their bullying tactics.

Still, it is nice to see some of the major problems truly identified and dealt
with in a sharp way, as this report does. A real surprise, coming from the
FTC.

~~~
shii
Thank you for your great insight on the matter, appreciated.

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extension
I didn't realize that legally recognizing independent invention was even on
the table. How could such a thing ever be proven or disproven?

~~~
JoeAltmaier
That's why you date and initial every page in your lab notebook. Don't have a
lab notebook you say? That counts you out.

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barista
What happens to companies like Intellectual Ventures which actualy has a great
portfolio but no real products?

~~~
anigbrowl
My untutored impression is that their business model is more about licensing
than litigation, though of course the threat of the latter affects the price
negotiable for the former.

But it might not be a negative; one thing that really impressed me about the
FTC report was in chapter 7 where they take an example case and examine
different approaches to calculating damages. Although I'm not a lawyer or
economist, I am very interested in this branch of legal theory and this seems
to reflect many of the ideas that have influenced the law of antitrust and
property damages in recent years.

Up to now the prevailing approach to estimating damages has been set by a case
known as _Georgia Pacific_ , where the plaintiff offers evidence about 15
different economic and legal factors of economic loss. That's fair on one
level, but the problem is that the jury gets overwhelmed and tends to award
enough damages to compensate for multiple injuries, not all of which
necessarily happened - thus huge awards followed by expensive appeals and so
on and on. The FTC report seems to favor a much more methodical approach to
calculating the true economic costs of patent infringement, without worrying
so much about questions of fault during this process. An economic idea known
as the Coase theorem (basically) says that whether A pays B not to do
something, or B does something and has to pay damages to A afterwards, the
total economic costs tend to be the same in both cases, and suggests objective
methods for working out what those costs are. Then the verdict is just a
matter of apportioning them appropriately.

Of course I am _drastically_ oversimplifying here. But the basic idea is to
make patent litigation less of a morality play and more of a problem-solving
exercise, in which the public's interest is considered along with those of the
parties at suit. Although this may seem cold and mechanical, 'justice is the
tolerable accommodation of the conflicting interests of society.' Addressing
these problems systematically usually leads fairer results, and more
predictable ones too - a big plus for any business.

The recommendations in this report are just recommendations, but they're so
comprehensive and well-presented that they may be adopted and refined into a
standard very quickly. Everyone is sick of the current situation and patents
don't mix well with politics, so a consensus is distinctly possible.

~~~
bfe
Regarding Intellectual Ventures's business model, ultimately, seeking to
license patents out loses steam unless you eventually bring litigation against
unwilling parties, which Intellectual Ventures did in December, when it filed
three different patent infringement suits against a total of nine companies
for infringing a total of 16 different patents.

