
Notorious patent enforcement entity values its entire portfolio at $2, folds - bovermyer
https://arstechnica.com/tech-policy/2018/11/most-litigious-patent-enforcer-in-us-calls-it-quits-files-bankruptcy/
======
Kaveren
The patent system needs to be changed in some way. When people talk about
monopolies, they seem to rarely mention that the government enforces awful
patents. And you don't even need to make the thing, just patent it!

I'm not sure if it's fair to R&D costs to gut patents entirely, but I'd like
to see them weakened considerably. Patent trolls should not exist.

Glad to see justice in this case.

 _Edit: Watched Shenzhen: The Silicon Valley of Hardware, was interesting in
regards to loose IP rights.

[1]
[https://www.youtube.com/watch?v=SGJ5cZnoodY](https://www.youtube.com/watch?v=SGJ5cZnoodY)
_

~~~
baybal2
Patent == monopoly

Monopoly == bad

Prohibit patents

~~~
thrmsforbfast
_> Patent == monopoly_

For a very specific definition of monopoly (in particular, monopoly over use
of a specific resource, not monopoly in the market sense).

In that same sense of the word "monopoly", private property == monopoly.

~~~
baybal2
Can you sell your house 20 times while still living in it?

~~~
dragonwriter
No,and you can't sell a patent 20 times and still own it.

You can rent your house out an AirBnB 20 times while still living in it, and
you can non-exclusively license your patent 20 times.

~~~
tracker1
I'm pretty sure if I gave 20 concurrent AirBnB renters non-exclusive use of my
house, they'd be pretty pissed off.

~~~
thrmsforbfast
That's called an apartment building. Or a large house with many bedrooms. Both
happen all the time.

In fact, just last weekend I let 20+ people into my house for a party. The
notion of privately owned property didn't suddenly become absurd at the
beginning of that party...

"Exclusive right to use" is not unique to intellectual property, nor is the
ability to scale a piece of private property from 1 user to N concurrent
users.

~~~
pixl97
At the same time you cannot tell your neighbor that they are not allowed to
build apartments.

~~~
dragonwriter
And you can't tell people not to develop new patentable inventions, either.

You can stop them from infringing your patent, just as you can prevent your
neighbor from building an apartment building on your real estate.

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Scoundreller
So how much did they squeeze out and pay out to its principals?

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j45
Patent entities like this had a direct influence over transit tracking apps
(many free and meant to help people recover some of their time each day).

I hope this unlocks the many small guys who were sitting on the sidelines
after seeing other smaller entities be chased with a demand letter.

------
trhway
Patent is a monopoly in exchange for public disclosure. There is no societal
benefit today from such a disclosure, so there is no point in granting the
monopoly.

~~~
john_moscow
One valid use case for patents is medical research, where you do invest
considerable resources in finding a drug formula that works. That said, it
could be handled on the FDA certification level instead.

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adamc
Good. It's not a useful business model for society.

~~~
jjeaff
I think it's an excellent business model and even has the incentive to help
and encourage small time inventors who do not otherwise have the budget or
know-how to implement or protect something the invent.

Otherwise, corporations with huge budgets are the only ones that benefit from
the patent system.

But this comes with a big "if".

IF the patents were actually novel. IF the patent office was actually doing
its job and enforcing its own rules that a patent should be for something
novel and non-obvious to people in the applicable industry.

~~~
Kaveren
Companies should not be going around offering bonuses to employees for ideas
of things to patent. This is a flaw in the system.

If you don't have the know-how to implement something, can you really call
yourself the inventor of that thing?

Inventors should be able to create prototypes, and if they're small-time maybe
they can form a startup and gain investments.

------
monochromatic
What’s the strategy here for valuing the patents so low? I don’t see the
point.

~~~
hobofan
Insolvency fraud.

~~~
monochromatic
Please explain.

~~~
PeterisP
Assets get sold off at an auction. Some company controlled by the same owners
bids $2 or $2000 or something comparably irrelevant for the patent portfolio,
because only a patent troll needs these trash patents, and all the other
patent trolls already have their packs. The creditors of the insolvent get
these pennies, but the previous owners continue their patent trolling business
under a new company and name with the same bad patents.

~~~
dwild
What's the alternative?

They value it at 423,000$ and they give that to their creditor instead? Can
they really do that and would it be better? How so?

~~~
thrmsforbfast
Well, no, generally they can't shove it off on their creditor and say "there
we're even", if that's what you mean.

There's a whole field of law about bankruptcy. In particular, questions about
how to value assets are obviously a big component of bankruptcy law.

I imagine "it's complicated" when it comes to intangible/intellectual property
like patents, brands, etc.

------
hedvig
Can HN visitors all chip and purchase the portfolio?

~~~
hexane360
Sure, if you cover the liabilities

------
eruci
Now, that's an innovative way to fold.

------
shmerl
Another troll bites the dust.

------
throwaway2048
Sell the patents to another shell company for $2, rinse, repeat every time you
lose a lawsuit.

~~~
Alex3917
That doesn't work, because if the next company won the case their winnings
would be effectively capped at $2. Judges look at the sale and licensing
history of patents to set damages.

~~~
ajnin
The point is that they don't want to go to court, they send demand letters and
ask for a license fee under explicit or implicit threat of litigation, hoping
that in a majority of cases their targets would pay because even if they have
a good chance of winning, or the damages would be low, the litigation itself
is too costly and risky.

------
ummonk
One plausible thing I've heard is that the weakening of software patents has
entrenched the position of the big tech monopolies. Quite simply, it's
difficult new startup to establish itself (without getting bought out by the
big companies) because it can't protect its product / ideas with patents, and
is thus going to get outcompeted by larger tech companies with better funding
and better brand recognition (the value of brand recognition cannot be
overstated, as it greatly reduces the need to engage in costly marketing).

~~~
EGreg
Quite the opposite. For every weapon X that is touted as helping the little
guy, consider how many X the large guys have stockpiled.

It is far more likely that you’re going to get sued by a large corporation or
troll and go out of business because your innovative idea “infringes” like a
whole lot of other things that you can’t afford to fight in court. They are
nice to let you pay a ransom fee — look up the story of IBM and Sun
Microsystems[1]. They could just bankrupt you using the legal system.

1\.
[https://www.forbes.com/sites/timothylee/2011/07/07/microsoft...](https://www.forbes.com/sites/timothylee/2011/07/07/microsofts-
android-shakedown/)

~~~
rayiner
MIPS and ARM were both founded or went from small players to big players based
on patent protection. Xerox, and everything it spawned (GUIs, email,
networking) was built on its copier patents. It was a fairly small photography
company before that.

~~~
EGreg
Ain’t it great they didn’t patent the GUI?

~~~
rayiner
Is it? I would answer that question by asking whether it would've been great
if Xerox hadn't patented the copier. I think the answer is no, because we
probably wouldn't have gotten Xerox PARC and everything it invented if Xerox
was immediately thrust into race-to-the-bottom competition with clone copiers.
(Note: Xerox and PARC rapidly went downhill after a DOJ antitrust lawsuit
forced Xerox to license its copier patents to Japanese competitors.)

What if Xerox had patented the GUI? Maybe Microsoft and Apple would've had to
pay to license it instead of just stealing it from Xerox. What innovations did
we miss out on because PARC never made any money off GUIs?

~~~
EGreg
PARC never made any money not because Xerox didn’t patent things but because
they didn’t value those things and shut it down.

In my opinion, patents slow down innovation in any fast moving field like
software. This isn’t the 1800s. If we abolished patents in pharma, we could
have cures developed for the long tail!

~~~
rayiner
Xerox shut down PARC because it lost its patent monopoly and had to start
competing with Japanese copier makers. Competition is awful for R&D-intensive
innovation. (When was the last time Lenovo or HP invented something? Who does
R&D now? It’s companies like Google that have moats in the form of network
effects around their users and data.)

If we abolished patents in pharma we wouldn’t have cures for anything. Nobody
will blow half a billion dollars on R&D for an easily copied drug without some
sort of moat.

~~~
EGreg
Exactly. We don’t need John Galts attracting a billion dollars when we have
tons of small collaborators contributing far less than a billion dollars. And
the results are freely available.

Isaac Newton said he stood on the shoulders of giants. What if had to rent
those shoulders, or worse had no access?

If what you say is true (“why would anyone do anything big”) how was science
done for years, in every field other than Pharma? How did Wikipedia beat
Britannica and the Web beat AOL if capitalism is better?

Look up Clay Shirky’s ted talk Institutions vs Collaboration

Competition and moats are a nice system but in the long run collaboration is
simply better!

~~~
rayiner
Innovation is more expensive than ever. For example, each new generation of
microprocessor costs exponentially more than it did back when Fairchild and
Intel were starting out. Physics has morphed from something Isaac Newton could
do with some relatively inexpensive tools to something that requires the
financial resources of nation states with supercomputers and particle
accelerators.

The things that make modern life, well modern: jet engines, AIDS cocktails,
micro-processors, electric cars, satellites, nuclear reactors, omnipresent
telecommunications, etc., are well outside the reach of "collaboration."
Collaboration among amateurs doesn't even move the needle. Genuine useful
progress is for the most part the province of big institutions with roomfuls
of PhDs. And those require billions upon billions of dollars. And that money
has to come from somewhere: defense contracts, irrational VCs, governments,
and yes, patent monopolies.

~~~
EGreg
The more expensive it is, the more I'd like to socialize the costs instead of
putting all the eggs in one basket and then having private ownership of
something huge

See this: [https://forum.intercoin.org/t/study-alaska-ubi-doesnt-
increa...](https://forum.intercoin.org/t/study-alaska-ubi-doesnt-increase-
unemployment/288/3)

I don't think roomful of PhDs always beats the a motivated crowd. Not even a
roomful of seasoned intelligence analysts
([https://www.npr.org/sections/parallels/2014/04/02/297839429/...](https://www.npr.org/sections/parallels/2014/04/02/297839429/-so-
you-think-youre-smarter-than-a-cia-agent))

Did a top-down Britannica being sold door to door, the pinnacle of capitalism
applied to encyclopedias, beat Wikipedia? Did encarta? Why did Wikipedia win?

