

The Unfortunate Rise of Patents in the Startup World - immad
http://immad.me/post/55609778589/the-unfortunate-rise-of-patents-in-the-startup-world

======
rayiner
I don't know if its unfortunate or a change in the kind of startups being
created. I worked at a startup that patented its technology. We were (and the
company still is) competing in the wireless sector, specifically military
radio technology. Our competitors were Raytheon, Rockwell, etc, companies we
could never compete against as a product company, because of their
manufacturing prowess, deep industry network, etc. So we developed technology
and patented it for licensing. A lot of the market dynamics that makes patents
of questionable value for software startups were not present. Our technology
cost millions of dollars and took years to develop. We had a fairly large
(couple of dozen engineers) interdisciplinary team. Capital costs were high
(hardware spins are not cheap, equipment is not cheap, testing was not cheap).
There was no opportunity to "pivot." It was impractical to protect our IP with
copyrights (we delivered firmware source).

I think at the end of the day, there has to be some protection against unfair
competition, even if its not the existing patent regime. On the recent story
about SpaceX, someone mentioned that SpaceX keeps trade secrets instead of
patents because the Chinese would copy the technology via the patents. That's
a form of IP and the concern of copying is the same concern patents address.
Even if Elon Musk dislikes patents, he also dislikes Chinese companies ripping
them off.

As VC moves into more areas, like life sciences, medical technology, energy,
etc, you will see more patents. It's unfortunate if it leads to meritless
patent litigation, but the VC's aren't interested in people ripping off their
portfolio companies either, so I doubt you'll get strong push back from them
on the subject of reducing the amount of patenting within the industry.

That said, the amount of litigation has clearly gotten out of hand. Patent
litigation shouldn't be more common than say shareholder litigation or
antitrust litigation, etc.

~~~
dave20fold
I'm in a somewhat similar situation (patented wireless technology startup), so
I have to ask: were you actually able to get the big companies to license your
technology? Did you need to get market penetration to get them to listen to
you, or did they never listen at all? I'd love to be able to license our
technology to a larger company instead of doing things the hard way. Putting
together a startup is not the easy way, although it seems to be easier than
trying to navigate the inside of a large company to find the right person to
be an internal champion for your product.

Basically, I'm asking, "what does a successful wireless licensing path look
like?".

My experience with trying to find the right decision-maker at large companies
has been daunting. I mean, I play soccer with about 10 engineers & managers
from a large military radio company (rhymes with Paris) and not one of them
could even point me to the right division to talk to, much less the correct
decision-maker. With companies where I don't know anyone, I don't even know
where to start.

So, our startup is aiming to hit niche markets, like amateur radio, just to
get a product out there and start some buzz. How did you do it?

~~~
rayiner
Why don't you shoot me an email (in profile)?

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epistasis
This is not the first time that Silicon Valley has dealt with patents. Gordon
Moore:

>Ah, one of the questions that has come out of a number of lawsuits as of
recently, that here on the west coast, in silicon valley, we didn't patent
circuit designs or Computer Aided Design for that matter. And as a result, we
never patented at Fairchild the ROM and the RAM. Intel never patented the
microprocessor... and others did. East coast companies or TI in particular,
took our work and patented it. How come we never recognized the importance of
that... circuit development?

>Well, it was probably a different attitude about patents. One thing that
happened in the semiconductor industry... semiconductor processes are a long
series of steps and the patents had gotten pretty broadly spread because all
of the people working on the technology had some of them. And the net result
was in order for any of us to operate we had to be cross licensed so the
participants tended to all cross, license one another. So, there was not a
tremendous advantage to having more patents... with a couple of exceptions,
there wasn't much net benefit from it.

>What we never anticipated, I guess, was a lot of other participants were
going to enter the business later on. So, at Fairchild we tended to patent
relatively few things, typically the ones that we thought we could police most
easily and were the most difficult to get around, you know, the more
fundamental things. But, I was responsible for a lot of those decisions. I
remember one in particular that, in retrospect, is kind of funny. In the early
days of the integrated circuit, Bob Norman, one of the people who were
involved there, suggested the idea of semiconductor memory... the whole idea
of how semiconductorflip- flops could be used as a memory structure, and I
decided it was so economically ridiculous, it didn't make any sense to file a
patent on it.

>You recognize that a few years later, semiconductor memory was the basis
of...

>Of Intel.

[http://silicongenesis.stanford.edu/transcripts/chronicles.ht...](http://silicongenesis.stanford.edu/transcripts/chronicles.htm)

------
mjn
This can be dangerous for company founders, depending on how exactly it plays
out. I know of at least one case where a company based on its founders'
research went bust, its patents ended up sold off in bankruptcy liquidation,
and the founders themselves now have a potential patent problem if they were
to use their own inventions in any future endeavors. Whereas in a normal case
where your startup fails, it doesn't take your ideas down with it, and you're
free to try them again elsewhere.

~~~
amirmc
> "Whereas in a normal case where your startup fails, it doesn't take your
> ideas down with it, and you're free to try them again elsewhere."

That depends highly on your definition of 'normal'. In non-software startups,
there's a combination of patent, trade-secret and (probably) copyright to
balance. Part of the value you are creating is in the innovative
step/technical advance, which may make sense to write down, defend and assign
to the company. For some companies, having the patent is a critical piece not
only to _demonstrate_ an innovative step [1] but also for investors who are
putting money into the company because of that innovative step (that they know
it's part of the company and you can't simply make off with it). It's a
tangible asset so yes, it can be sold.

[1] assuming that the patent system is doing it's job properly (which many
would argue it's not)

------
natejenkins
One of my favorite podcasts, This American Life, has two excellent episodes
concerning patents:

Part 1: [http://www.thisamericanlife.org/radio-
archives/episode/441/w...](http://www.thisamericanlife.org/radio-
archives/episode/441/when-patents-attack)

Part 2: [http://www.thisamericanlife.org/radio-
archives/episode/496/w...](http://www.thisamericanlife.org/radio-
archives/episode/496/when-patents-attack-part-two)

I agree that hardware patents seem reasonable, as long as they are technical
patents and not design patents, but shortening their length to 5 years sounds
like a good idea.

As a programmer, I cannot think of one software patent that I've seen granted
which did not appear obvious. I'm sure they are out there, and there are many
innovations taking place in computer science, but the kind of programming
involved in developing most software-based startups does not warrant
protection.

Facebook didn't catch on due to amazing technology, it was amazing
implementation. Likewise with Airbnb.

~~~
jacques_chester
> _As a programmer, I cannot think of one software patent that I 've seen
> granted which did not appear obvious._

I think this is availability bias. Non-obvious patents don't receive wide
publicity for the same reason that "Grandma walks home safely from shops for
thousandth time" doesn't receive wide publicity.

------
cmdkeen
There's a big difference between innovation in the hardware space and the
software space. There's a long history of hardware innovations being ripped
off immediately by competitors, or even before you're able to bring your own
product to market. The number of cloned technologies springing from China
speaks to that.

Hardware patents still seem to work and reward innovation - things like FRAND
prevent lockout whilst rewarding the innovator.

Other parts of the world, well really everywhere that isn't the USA, manage to
get along fine without software patents but with hardware patents.

In fact a small hardware startup is exactly the kind of company that the
patent system is designed to protect.

------
smitec
In general I agree with the author. I used to be a patent free advocate but
when we started our medical hardware startup that dream sort of came crashing
down. In the medical space it is almost impossible to work without patents,
there are huge giants who would not hesitate to snap up your idea. I've heard
similar stories from others in the hardware space around Brisbane. This
coupled with the face that any sort of large scale manufacturing takes a large
amount of time and capital makes it very difficult to continue in the hardware
(and medical) space without some sort of protection on your idea. Perhaps yes
20 years is too long but I think for now patents still have a place in
startups.

------
ericHosick
We are a relatively new company that has technology that is patent pending.
The patent has taken a bit of time and may have held us back some. On the
other hand, we do have enabling technology and it seems like prior art doesn't
hold up too well in this broken patent system. So, being taken down by someone
using our own technology would be a horrible feeling.

In the end, I guess only time will tell if our worries were founded.

~~~
GuiA
Why did you feel the need to patent your technology?

~~~
ericHosick
For a lot of different reasons: most of them probably not that good.

To be able to work within the "system". That is, to stop someone from
patenting prior art (our technology being only prior art if we didn't patent
it) and use that against us. I've personally known of people who have done
things like this (find a new usage for an existing very specific technology,
patent it and notify the creators of the technology).

To give us the option to open source the technology and not have problems
within the (broken) system: specifically intellectual property (Java with Sun
Microsystems and Microsoft come to mind though that was resolved through
Trademarks).

I was raised in the USA and, at the time we started the patent process, it
"felt" like the thing we were supposed to do.

I've invested a lot in R&D and somehow felt that I needed to protect that
investment. It took four years to figure out all the kinks in the technology.

~~~
dnautics
For number one, and number two, the "Statutory Invention Registration" should
do.

~~~
prutschman
It looks as though Statutory Invention Registrations were eliminated by
"America Invents Act." [http://www.aiarulemaking.com/rulemaking-
topics/group-3/repea...](http://www.aiarulemaking.com/rulemaking-
topics/group-3/repeal-statutory-invention-registration.php)

~~~
dnautics
AGH. I was going to use this to make IP-free drugs.

------
theltrj
It is interesting to see the electronics/computer science side of the patent
debate. On this side of the argument there is a desire for a short duration,
very narrowly tailored patents (for some that is even too much) because
technology moves so fast. On the biomedical/genetics research side of the
argument there is a desire for long lasting, broadly tailored patents because
it takes so long to develop medicine, do clinical trials, get FDA approval,
etc.

What I find most interesting is that I believe most (not all) members of this
side of the debate 1) don't know there is another side and/or 2) don't care
about the needs of the other side. This author makes good points, but lacks
proper context I believe.

Statements like '20 years was set in the days of horse and carts, does it make
sense in the modern age?' are great for pandering to an already complicit
audience. However, the point is that for some industries 20 years makes sense,
and for some of them 20 years isn't long enough.

I'd be willing to bet Myriad Genetics or Monsanto thinks 20 years is not
enough.

------
pan69
In my opinion, in the start up world, patents are just another way of "cashing
in". I.e, your product might fail but your patent might prevail.

~~~
bdcravens
This position results from confirmation bias. You know of the big sales of
patents, but everyday there are patents filed, generally costing $10,000+ to
the filers, that may not even sell at a profit to acquire. Everyday startups
fail with ideas that noone really cares about.

------
robomartin
I've had to navigate these waters while doing hardware development. A long
time ago I made the mistake of going to engineering first rather than filing
for a patent. As a less experienced engineer I wanted to get a (hardware +
software) product built and into the market. It still took over a year's worth
of a serious effort to get it done. To me, at the time, filing for a patent
seemed like both a waste of money and valuable time. I despised the idea of
having to translate my technology into bullshit-ease. Like I said, I just
didn't have a lot of experience in that domain at the time.

I finally got the product to market. It hit a nerve and went like gangbusters,
selling several hundred thousand dollars in product in the very first quarter.
Not a bad launch. Six months later a competitor comes out of the woodwork with
a product that was 60% of mine at 50% of the list price. A friend of mine
called me thinking that I had licensed the technology because the competing
company had even copied my marketing language verbatim. What a shock.

You see, hardware R&D is very expensive. The "R" part can take months, even
years. Depending on the field of application and the problem being solved
costs can be staggering. One example of this are medical products. If you can
bypass the "R" and go straight to "D" you can put out a product for a lot less
money. that's exactly what happened to me. Not only did my competitors bypass
"R" but they also benefited from the work and expense I went through to
identify a market.

That's when you look back and want to kick yourself in the ass for not having
taken the time to file for a patent. Lesson learned the hard way.

Many years and lots of mistakes later I emerged with far more wisdom about
both engineering and business. One of my observations was that patents are
nothing more than necessary weapons of war. Business is war. No question about
it. And so, whether you like it or not, if your opponent is using guns you
have to have guns as well. Not having patents exposes you to an indeterminate
level of danger. As we have seen over the years, both legitimate patent
holders and trolls can surface out of nowhere and almost shut you down. Having
a granted patent you can point to gives you the ability to say "go away" with
some authority.

Years ago I viewed the open culture of web startups with a degree of
incredulity. Based on my experiences, I simply could not believe entrepreneurs
would put it all on the table for anyone to see. That goes counter what you
want to do in the hardware world. Keep it quiet and get it patented or you'll
get screwed. That's the winning model.

While small software startups continue with the open philosophy, larger
companies like Apple and others file patents at a furious rate. Interesting.
Patents are expensive and very time consuming. Perhaps the disparity between
small and large companies and what they can do with regards to filing software
patents should be reason enough to abolish software patents. The little guys
simply can't play the same game.

While I am decidedly anti-patent when it comes to software-only products I
have trouble finding fault in the idea of patents for physical or hardware
inventions. Don't get me wrong, I still want to see patents only be granted
for real inventions. What constitutes a real invention? That's a whole new
discussion. That said, the standard of proof should be harder and harder to
meet as the years go by. Today it should be nearly impossible to get any kind
of patent. Why? Because it is harder to actually invent anything new. Almost
every patent I've reviewed (hundreds) are implementations or regurgitations of
implementations obfuscated enough to make them look like an invention.

~~~
noonespecial
If you had gotten the patent, would you have had the $500,000 to take your
competitor to court? (The only upside of victory being that they would no
longer make the clone?)

Patents don't keep competitors from stealing your work, they just give you
access to a (expensive) right to sue them to get them to stop.

~~~
jacques_chester
To sue? Maybe, maybe not. There are companies who finance patent lawsuits.

To negotiate a settlement? Ahhhh, now we're talking. It's the flipside of
patent trolling.

------
amirmc
This post feels unfinished. There a number of places where sentences hang and
thoughts don't feel completed. Is it just me?

In general your article seems to be more about _software_ patents and
_software_ startups but by omitting those words it comes across an over-
generalising (e.g so what if 6% of AngelList companies mention patents? What
am I meant to take from that?).

Sure, you do mention 'hardware' startups but you talk about them as though
this is something new. The 20 year time period only looks like overkill when
your experience is in shipping code on a daily basis. If hardware startups
only had 5 years to run, the only innovation created would be large incumbents
copying the tech 5yrs after launch (instead of, say, trying to buy the
company).

I think software patents stifle innovation but I also see that there are
benefits to patents as a whole.

------
danmaz74
The problem is not patents per se. It's patents that cover obvious solutions
or even the problem itself, like the famous "one click" Amazon patent. The
solution would be change the obviousness test.

~~~
RogerL
Okay, I name you Patent Examiner Potentate. Just a few simple questions.

Are wheels obvious? How about a wheel attached to two logs (a cart)? How about
fire? woven grass to catch fish in a stream? Taking some seeds from a plant
and planting them?

Those completely transformed our lives, yet, for a very long time, were
anything but obvious. My point is not to bicker about fire and how a patent
process might have treated it, per se, but to illustrate how hard it is to
recognize what is obvious or not. If no one else is doing something, in the
tech field, is it because it wasn't obvious, or because the tech wasn't quite
there yet? I've talked with quite a few (US) patent examiners and they are
smart people, and find it anything but trivial to rule on obviousness. I'll
say more about that in relation to "one click" below.

The bigger issue, to my mind, is the ease of research and implementation. It
doesn't cost years of research to devise 'one click'. After you have thought
of it, you can hand it off to a mid-level programmer and it'll be added to
your stack in a few days - and a junior programmer could've had a prototype
going in 15 minutes. Contrast that to the people rightly lamenting about
investing years of work into medical device, only to have it stolen from them
by a bigger (or just different) company.

I haven't studied the history of one click, so I could be wrong about its
details. If so, please focus on the broader ideas. The argument is simply that
if no one else does something for several years when it was possible, then
that idea is not 'obvious', except in hindsight.

With that said, I'm not crazy about extending 20 years of protection to such a
trivial implementation. But how do we do that without punishing people with
years of research, or just a brilliant flash of insight? I'm sure we can come
up with a straw man patent (and perhaps one click is that straw man, though I
don't think so), but the difficulty is in ruling on non-strawman patents.

~~~
danmaz74
I'm quite interested in the subject of patents, and read enough about that.
From what I've read about US patents examiners, it's not a problem of them not
being smart. The problem is that they aren't tasked with assessing if a patent
claim is "obvious to a person skilled in the art" \- like they should be - but
only with finding out if there is published prior art.

So, to use your example: Fire shouldn't have been patentable, because it's a
natural phenomenon. But if you're the first one to discover how to light a
fire faster, using a bow, then definitely you should be able to patent that.

In this context, one-click is neither fire nor a new way to light it. It's
more like a situation where everybody is already using fire to cook freshwater
fish, but nobody wrote in a recognized publication that you can also use it to
cook seawater fish; and now you come and patent that.

------
ecesena
Patents (and, before that, provisional patents, i.e. "patent pending") are
also a ways to capitalize IP, that for a startup represents most of its
initial value. The only other way I'm aware of is having research
publications, that IMHO is way harder (at least compared to provisional
patents).

------
j_s
[http://www.contrastrebellion.com/](http://www.contrastrebellion.com/)

    
    
       Low-contrast font color and unreadable texts?
       To hell with them!

~~~
immad
I agree, its the first post on my new blog. I have changed the contrast and
its much better now. Let me know if you have any other feedback.

------
cpursley
Read this first as 'parents'

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seiji
gotta jump on that shit: [http://img.gawkerassets.com/img/18tg6h0u2nds4png/ku-
xlarge.p...](http://img.gawkerassets.com/img/18tg6h0u2nds4png/ku-xlarge.png)

(from [http://valleywag.gawker.com/snapchat-had-the-frattiest-
creat...](http://valleywag.gawker.com/snapchat-had-the-frattiest-creation-in-
startup-history-639615051))

