
Nathan Myhrvold’s Patent Extortion Fund Is Reaping Hundreds Of Millions of Dollars - jkopelman
http://www.techcrunch.com/2008/09/17/nathan-myhrvolds-patent-extortion-fund-is-reaping-hundreds-of-millions-of-dollars/
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biohacker42
Perfect. The system won't get fixed until someone uses it to the full extent.

Lets remember that it is big corporations that lobby for the kind of patent
and IP law that makes this possible.

On top of that, you have the over loaded patent office assuming bad patents
will get sorted out in court. While at the same time judges assume that if a
patent was granted it was legit.

To fix the system, you have to break it first.

Perfect.

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rudyfink
I hope your logic does not also apply to representative government :-/

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biohacker42
Sadly it kind of does. It's surprising just how many governments have followed
the same pattern.

First they grow and grow and grow. Reform is occasional and minor (at best),
eventually they get so big and bad that a crisis forces real change.

The state is then transformed into a lean mean productive machine. Which
starts to grow slowly and the process repeats.

Of the top of my head I can think of Sweden, where a crisis forced massive
reform and now it's almost ready for a crisis again.

And Great Britain in the 1970, crisis -> Thatcher -> prosperity -> growing
government -> less prosperity -> coming crisis.

Guess where the US is in that cycle.

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andyjenn
Interesting to see how that follows the cost of a barrel of crude oil..
roughly

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aston
I met Nathan Myhrvold while giving his son a tour of my school. He struck me
as a much nicer guy than what all of these articles play him up as. Extortion
is almost certainly too bold of a term for what his company does.

The patent system was set up to be taken advantage of in this exact way. If
someone comes up with/legally documents an idea before you do, you have to get
them to let you use it (via licensing fees). I don't see how that's tantamount
to protection money. If you're one of the companies involved, there's pretty
clear net gain for you since you're essentially outsourcing R&D to some smart
people and virtually extending your patent portfolio at the same time, which
is an asset on its own.

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harshavr
>> The patent system was set up to be taken advantage of in this exact way

Pheraps, but the question is should it be set up this way? Two justifications
of the patent system are

\- inventors have more incentives, hence new ideas will emerge faster

\- when these new ideas/inventions emerge, the patent ensures that it is
openly documented and hence, can be used by everyone after the patent expires.

And the price that one pays for this is that noone can use the idea without a
deal with the patent owner. Is the price worth the benefit? This depends on
things like a) how easy it is to discover the idea

Two extreme cases would be say , a cure for AIDS vs. one-click patent

b) the existence and the power of non-patent incentives for the discovery of
the idea

Would the idea be discovered without patents? Ideas/inventions are discovered
all the time simply because one is working on some problem and one needs new
tools to solve it. The university system is also a strong alternative system
of incentives. But, there will be holes in what these systems incentivize.

c) how many things depend on the thing being patented?

This is a kind of an amplifying factor. Say, there a huge number of systems
which depend on an idea. If the idea could be discovered without the patent
system, the economy loses a lot of value and on the other side if patents were
what made the discovery possible, then the patent system has caused great
gain. Software, where ideas are built upon each other at great speed is full
of these amplifying factors. A patent on say, garbage collection or oop, if
granted, would affect a huge number of systems.(though, probably this would
have expired before the 90's, but consider more recent ideas like say, stm.)
the the rapid growth of the computer industry in the current phase increases
this amplifying factor.

d) The negative effect of patents on the culture of open sharing of ideas.
Precisely, because people are doing this without making money, there is little
scope for licensing from the patent holder. And this culture has a lot of
value, intrinsic, educational and economic.

Abolishing patents would probably be bad,(unless we can make alternative
systems of incentives work. prizes?) But the important point here, is that
there are a lot of free parameters - the length of patent, limitations on
licensing fees, the nature of things which could be patented(i have used
ideas/inventions interchangeably, but this is a controversial issue)

Deciding optimal values for these parameters is a complex task and it isn't
clear how one should be doing this. For instance, the length of the patent, if
decided in a market would probably vary with the field in which the idea
applies. For some fields, the optimal parameter might well be 0.

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mattmaroon
Well thought-out. I agree almost entirely.

Our current patent system clearly needs much improvement, but almost certainly
encourages progress far beyond none at all.

I don't see prizes as being too effective. The nice thing about the market is
it decides what problems are worth solving. Prizes put that decision in the
hands of whoever organizes them.

There would clearly be prizes for fighting cancer, aids, lack of potable
water, etc. I'm not sure there ever would have been a prize for a pot with a
tight fitting lid and holes in it, but the Pasta Pot, simple as it is, is a
miracle. Same with wheels on luggage, the SpinBrush, etc.

But our current patent system has a solid prize that encourages innovation
from products as small as those all the way up to nanotech.

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mindslight
It's surprising how many people (in the comments) are outraged over what is
basically a way for someone who is not a big company to outsource the
inevitable legal wrangling of commercializing their invention.

What _is_ broken is that the patent office and courts have completely ignored
that whole "obvious to a practitioner of the art" thing. Patents are supposed
to protect novel inventions. Instead people get patents for deciding to enter
a market first.

Invalidating Amazon's "1-click shopping" patent shouldn't require prior art,
but just a simple poll of the tech community saying "duh, that's what cookies
were designed for".

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noonespecial
_It's surprising how many people (in the comments) are outraged over what is
basically a way for someone who is not a big company to outsource the
inevitable legal wrangling of commercializing their invention._

What most people miss about rackets like this is that even after you pay off
vultures like these they almost never offer you _indemnity_. That means some
one else can sue you for _exactly the same technology_ with a similar vague
patent claim. In fact, they probably will, since you seem willing to pay.

~~~
mindslight
Their (new) client's implementation could very well independently violate
another patent or an unknown extension of the licensed patent. What would they
gain from taking on this risk?

The broken patent system has bumbled along precisely because large companies
generally have cross licensing deals with each other, leaving only the little
guy subject to vague infringement claims. Now that there's a well-funded
company which doesn't require 'incoming' licenses (by not making anything),
there's real money involved for the big guys.

On another day I might be arguing for abolishing patents, but I just don't see
how this is an abuse of the current system.

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fusionman
I have to give him credit for being clever. Broken system? yes. Clever? yes.

It seems as if these big companies simply invest in his fund as a hedge to the
licensing fees they are going to have to pay.

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chaostheory
I love how the spirit of MS lives on strong in their alumni...

~~~
edw519
You mean, "If you don't feel like providing value, then find a work-around."

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blogimus
That would be a "feature."

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awt
It's broken in the same sense that the domain name registration system is
broken. Spend a little money and you can roadblock a lot of ideas.

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ryanwaggoner
Very few good ideas are dependent on getting a certain domain name.

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eru
But you can roadblock a lot of good domain names with a little money.

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jcromartie
Have any small or medium-sized businesses stood up to this bullshit in court?
I would like to imagine that if I were in the situation of being sued by one
of these patent-wielding cowards I would say no to licensing and the
inevitable attempt at settlement.

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MaysonL
...and he hasn't even had to sue anybody yet.

With Danny Hillis, Neal Stephenson, and Sanjay Prasad (former chief patent
attorney at Oracle, and an ouspoken proponent of patent reform) on board, I
doubt that it's your garden-variety patent troll.

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sfamiliar
if person.has_idea? && person.can_afford?(patent_attorney) { business.start! }

makes an entrepreneur hope that his idea stays under the radar.

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mattmcknight
How can we stop it?

