
Court: Google infringed patents, must pay 1.36 percent of AdWords revenue - kjhughes
http://arstechnica.com/tech-policy/2014/01/court-orders-google-to-pay-1-36-of-adwords-revenue-for-infringing-patents/
======
dangrossman
> Even though there was no evidence of copying—Vringo admitted as much

What a ridiculous system we all operate under. You come up with a mathematical
formula for ranking some text on a page (in this case, what ads to show
first), and you could now owe $250M/year to some company you've never heard of
because they already bought the rights to that formula. It turns my stomach;
sorry that I have nothing of more substance to add to this story.

~~~
andrewfong
The lack of an independent invention defense (or some variation of this) is
pretty much 80% of what's wrong with patent law in my opinion. A sampling of
the issues an independent invention addresses:

* Obviousness. Patents are required to be non-obvious to a "person holding ordinary skill in the art", but obviousness is highly subjective and difficult to assess (especially for a non-technical jury). In contrast, evaluating whether something was independently invented, while not necessarily simple, is a more objective test.

* Utility. One of the rationales behind the patent system is that we want to encourage inventors to share their ideas with the world instead of just keeping them secret for as long as possible. While the patent system requires publication of the invention, it doesn't require publication in a manner that's particularly useful. If you could only assert patents against people actually using them, then you would have a strong incentive to make them useful (e.g. source code).

* Supply and Demand. The current system grants a flat 20 years to each patented invention, regardless of how difficult or expensive it was to invent. Recognizing independent invention creates the opportunity for a more flexible system. Inventions that are hard to reproduce independently are more valuable to society and should enjoy a longer term than easier ones.

The obvious problem with all of the above of course is how feasible it is to
assess whether something was invented "independently". I've addressed that to
some degree in this blog post
([http://www.techdirt.com/articles/20121011/14171220681/yes-
in...](http://www.techdirt.com/articles/20121011/14171220681/yes-independent-
invention-defense-patents-is-completely-feasible.shtml)), but I admit it's a
hard problem.

EDIT: Typos

~~~
zanny
I'd argue you'd get more economic benefit abolishing patents entirely (not
just the software ones, I mean the ones on reproducing someone elses car or
gas furnace). You pay a cost in a loss of investment valuation towards
invention because it is less economically beneficial if you can't have a
monopoly on your patented good, but you benefit economically by letting new
inventions reach natural price equilibrium immediately, and the spread of new
inventions would propagate more inventions, even without a major profit motive
- you still benefit being "first out the door" on a new idea. Which we see all
the time in software, and then run into this problem where first out the door
has already made a bunch but is now suing me for trying to do something even
remotely in the same problem domain because I see demand there, but I won't be
able to meet it because I'm artificially locked out of that market.

That applies to all economic domains. Patents worked back when it was
extremely hard to sell your goods to its entire market, because you were
either distance limited, communication limited, or production rate limited. In
the first two situations someone could just take your idea, set up half way
across the country, and made all the returns.

Today, I can invent anything I want and have it on ebay overnight and ship it
anywhere in the world. I can advertise on most major ad services if I want,
with an audience of the entire first world. The only limiting factor for me is
demand, but that just means I have to be safe when bringing inventions to
market, but it is good for the economy overall because it means if I can't
meet demand, someone else will pick up the slack.

It is still, like I said, advantageous to the first to market with an idea,
enough so that I wouldn't predict much of a drop in novel ideas. Like I said,
I would expect more if technology and designs were more open and people could
cheaply iterate and extend past concepts more readily.

~~~
rayiner
Being "first to market" only matters when you're building things like Facebook
or Windows, where network effects are relevant. If you're making consumable or
durable goods, being first to market is irrelevant. India will clone your drug
within a few months of its release, but there is no way you'll make up all
that capital investment by then.

Without patents, the rational thing to do is not invest any more in an
invention than you can recoup in the short window before someone clones it and
undercuts you on price. Moreover, it diminishes inventors and elevates
manufacturers. The smart strategy in a world without patents is to build up
massive overseas manufacturing capacity, because you can always quickly copy
designs and then undercut the original designer with your manufacturing
muscle.

'Andrewfong has a good point about independent invention being a defense. The
idea of inventing something on your own only to have someone else claim they
patented it is most of what bugs people about patents. In engineering circles
where that is much less common, you don't have an anti-patent sentiment. When
I was studying aerospace engineering in college, nobody I encountered
perceived patents as anything but a good thing.

~~~
mmorris
Not disagreeing with your point, but I chuckled a bit at your examples. I
wouldn't qualify either Facebook or Windows as being "first to market".

Though I think this mainly just points out the squishiness of the term.

~~~
humanrebar
Mentioning the term "first to market" was unfortunate, but the key phrase in
that sentence was "network effects", and Windows, Office, and Facebook all
great examples of the advantage of network effects.

~~~
mmorris
Agreed!

------
thrownaway2424
Wow the Microsoft angle is pretty corrupt. They paid the plaintiff a million
bucks plus 5% of the judgement they get against Google, effectively
bankrolling their lawsuit and putting a patent troll on commission.

There's near-endless bitching and whining about Google being evil these days,
but even today nobody sinks as low as Microsoft.

~~~
arunabha
I read it as Microsoft paid a million dollars and will pay 5% of what Google
pays. I dislike Microsoft as much as the next guy, but it seems like they
believed the patent would win in court and wanted the cheapest way out.

~~~
SilkRoadie
This is it, not sure how you could read this another way. When reading the
article it hit me that this was a great bit of business from Microsoft.

A million dollars isn't much for MS to pay to make this go away... and then
only paying 5% of Google will be forced to pay if they lose in court..
Microsoft's legal advisor must be happy with himself today

~~~
pavanky
Well I don't see how it is a Win for MS when their ad revenue is ~3% that of
Google. In a sense, aren't they paying more ?

~~~
tanzam75
> _Well I don 't see how it is a Win for MS when their ad revenue is ~3% that
> of Google. In a sense, aren't they paying more ?_

How do you figure?

Microsoft earned $3.2 billion in the Online Services division in fiscal year
2013. According to Microsoft's annual report, advertising accounted for
"nearly all of" that division's revenues.

$3.2 billion is about 5.6% of Google's trailing 12 months revenues of $57
billion. Subtract out Motorola, and it's about 6% of Google's ad revenues.

What's more, the settlement _locks in_ Microsoft's liability at 5% of
Google's. If Microsoft were to grow its share vs. Google, then it would get to
pay less than the proportional amount.

~~~
pavanky
I was using these([http://www.emarketer.com/Article/Microsoft-Takes-Small-
Share...](http://www.emarketer.com/Article/Microsoft-Takes-Small-Share-of-US-
Search-Ad-Revenues/1009939)) numbers for reference. More specifically the
second table.

------
cromwellian
One thing to consider is if Vringo is bankrolled by a steady $200+million
revenue stream, they are most likely going to turn around and use that money
to buy up patents all over the place. I doubt the money will be used to create
any products. We'd be looking at the next Intellectual Ventures, backed by a
massive hundred million dollar guaranteed revenue stream.

Even if you hate Google, this is a pretty raw deal for the industry.

------
PythonicAlpha
So called "intellectual property" is an other way to decrease the value of
manual work and increase the income of pure "possessions".

By making creative work "property" that can be owned and making minimal
creative acts "possessable" in a way, that other creativity is inhibited or at
least "billed", actual work is diminished for pure "property" holding.

The only way, non-possessing people can climb up "from rags to riches" is by
their work. But working is less and less valued in this system.

And with the patent system, the true inventors are getting very limited money
(in big companies, it is most often just a fixed amount per patent) -- the
rest of the value goes to lawyers, the companies investors and the buyers of
the patents when the company goes bankrupt or looses interest. Thus creating a
system, where part of the mobile phone or the software or whatever gadgets
price must pay the royalties for the patent owner (not the inventor!). Thus
this amount goes away from the money that can be paid to workers and
inventors. The whole system improves income generated by possessions, but
reduces income possibilities for workers and creative people.

~~~
SpaceRaccoon
What if manual work is required to produce this intellectual property? And
isn't the intent that the rights belong to the inventor or creator?

~~~
PythonicAlpha
Yes, it is.

But that is not the point. The point is, that the manual labor gets less and
less earnings, but the possession of the properties. How many creative
products with high value are in the hands of their creators?

In reality, the high earnings are not made by the inventors or creators of
things, but by those that have acquired them in any way. In corporations, it
is normal, that inventors just get some small fixed amounts for their
inventions. Even in the music business, the musicians have the smallest part
of the earnings. Often time, the musicians have to sell the rights to the
companies, so the companies are earning most of the money. Only very few
musicians can make extra-deals and get rich.

To answer your second question: No, it is absolutely not the intent! By making
"intellectual property" the same level as other property, the intent is not,
that the inventors should have them (as normal copyright once was intended),
but the intention is, that it is a trade-able good, that can be accumulated by
the wealthy and used against those that are creative (something, that money is
not, so creativity must kept cheap).

~~~
SpaceRaccoon
Makes sense.

So what is the alternative? Reformation of patent laws, or no patent laws in
general?

------
colechristensen
Good.

There are few things which can effect change better than billionaires in fear
of losing hundreds of millions of dollars a year. When it happens to small fry
you lament because they can't do anything to change and end up settling to
save themselves or losing and losing everything. When it happens to the 55th
largest company you rejoice because they have the power and motivation to
change the rules.

~~~
CamperBob2
I remember thinking exactly that, when Microsoft was hit by the $100M Stac
Electronics judgement in 1993. "Surely large companies will understand now
that they have a lot more to lose from software patents than they could
possibly have to gain," I said to myself. "I'll bet they're calling their pet
Congressmen and writing checks this very minute."

I've been wrong before, but not usually _that_ wrong.

~~~
devcpp
Instead they played that same game and are now part of the big software patent
companies. In a selfish perspective, it does make sense.

I fear Google one day understands that they should join this mafia and start
suing for their patents, under the pressure of their shareholders.

~~~
skj
The Googlers would revolt.

~~~
shadowfox
You may be overestimating a lot of googlers

~~~
skj
I'm sure there are a lot who wouldn't care, but MANY would leave (including
myself), and recruitment would dry up. It would be a disaster.

Despite what hacker news comments would have you believe, Google is (in my
strongly held opinion) a force for good in the tech world, and very genuine in
what it tries to accomplish.

Becoming a patent troll would undermine that sentiment.

------
WalterBright
What's also terrible about the patent system is there is simply no way for any
of us to tell, when we develop something, if we're infringing on patents or
not. We're all subject, at any time, to being subject to some massive
infringement lawsuit.

What I do not understand is why the big companies do not all get together and
lobby to abolish software patents. Do they think that if they acquire enough
patents, they will win? They all seem to be losing as many patent suits as
they win. Pyrrhic victories all around.

~~~
zyrthofar
As a programmer, this is exactly what I fear.

It is also why I will not create a startup company, and have my dream crash
because of a failed and corrupt system.

~~~
josephlord
Assuming this goes through with no successful appeal Google will have to pay
1.36% of their revenue related to a particular infringing product to Vringo
for a period for which they were well aware of this patent until it expires in
2016. This example gives nothing to indicate that any business you start will
be crippled by patent issues.

Now legal costs and/or Lodsys like trolls might be a real threat to a
fledgling business but they seem to have gone quite quiet for the moment.

~~~
zyrthofar
Good point.

It's no indication, but it would generate fear and doubt when I code. What if
the code I'm writing right now is patented by some company taking advantage of
a system, with resources searching everywhere just to sue? I probably
wouldn't, but I could become paranoiac because of this, looking on the
internet to find if I am infringing patents, instead of being productive.

It's true 1.36% seems like nothing, but for a small company, it could mean a
lot. Plus, it would be heart-breaking (or even outraging) to know that a
program I made on my own, with no knowledge about some software patent, nor
ill intention, gives money to someone that has nothing to do with it.

And, as you mention, legal costs, time wasted and stress could easily be real
threats to a startup.

~~~
josephlord
I really wouldn't let it worry you, there are many more things likely to make
you fail than patents unless you are going into an especially patent heavy
field (such as video codecs).

Patent holders generally need to target big players to get worthwhile payoffs
so unless you are big (in which case you have already won) then it is only the
Lodsys type scum you need to worry about trying to extort you (in which case
your paranoia and research won't have helped because the accusation doesn't
have to be valid to cause you problems). Lodsys and their ilk seem to have
gone quiet (I don't know why) but I suspect that if you don't look like an
easy target they may ignore you.

You also fear your emotions, try to look logically at the situation. Making
$1M and having to pay out $13K to someone you feel is unworthy is annoying not
heartbreaking. Making much less and you are hardly worth targeting.

I'm not saying that you have to like the current situation but that it isn't
bad enough that it should be a major driver of your life. There are many
reasons not to do a startup but I wouldn't let this be one if I were you.

~~~
magicalist
> _Patent holders generally need to target big players to get worthwhile
> payoffs so unless you are big (in which case you have already won) then it
> is only the Lodsys type scum you need to worry about trying to extort you_

Uh, yeah, exactly. I don't know what you think Lodsys is that's not a "patent
holder", but that's exactly what they are, and they're a great example of
patent trolls going after small businesses. This happens all the time.

In this whole thread you've also ignored the fact that this is 1.36% of
revenue _for one small aspect of a product_. Now consider the fact that your
product is also highlighting certain parts of data returned from a database,
or you have a a certain type of UI interaction when you scroll past the bottom
of a widget, etc etc etc and you have a whole lot of companies ready to claim
their 1.36%.

I don't know if it's enough that it should stop people from wanting to start
at all, but it is a very real problem that is very much affecting real people.
For instance:

The Patent, Used as a Sword

[http://www.nytimes.com/2012/10/08/technology/patent-wars-
amo...](http://www.nytimes.com/2012/10/08/technology/patent-wars-among-tech-
giants-can-stifle-competition.html?pagewanted=all)

~~~
josephlord
Fair points although I didn't say Lodsys wasn't a patent holder ('generally'
meant 'mostly' not 'universally') I think you overstate the density of patents
in general software (at least of valid ones without prior art).

I agree expense of the US legal system that makes settling vexatious (Lodsys
etc.) suits financially attractive is a real problem.

The 1.36% of revenue is for an aspect of the product that Google were not
happy to remove or change sufficiently following a loss in court and includes
an increase for willfulness. If I understand correctly it includes the key
revenue maximisation process. It is not just for a minor UI feature and that
is presumably why Google didn't just work round it. Yes the stacking of
percentage royalties could be a real problem but that would mostly happen on
standards if FRAND wasn't enforced and everyone stayed outside patent pools
and claimed 2.4% of final retail price (Motorola/Google).

Regarding your article that does sound troubling although a large part of the
problem seems to have been a dependence on winning some big deals. I do
suspect that speech recognition is one of the patent heavy areas along with
codecs as I mentioned, probably autonomous cars, audio and video tagging,
watermarking and recognition. In these areas I would definitely want to be
careful and perhaps apply for patents before proceeding too far (this would
both mean patent searches were conducted and give something to defend attacks
with). Alternatively I would be studying the literature and material that was
20 years old and documenting the process of obvious steps when combing
approaches. Most software is not in these patent thick areas.

A proper list of dangerous areas for patents would be really quite
useful...maybe an Ask HN topic?

------
Gustomaximus
The Microsoft settlement for the same was interesting:

"Vringo also sued Microsoft over ads in its Bing search engine. Microsoft
settled that case in May, agreeing to pay $1 million plus 5 percent of
whatever Google ultimately pays."

It's strange agreeing to pay 5% of Google outcome on the same and quite clever
the more I consider the pros/cons.

~~~
iribe
They're arming patent trolls and aiming them at google. This isn't the first
one (rockstar).

~~~
badman_ting
I don't understand why people keep coming to this conclusion. To me it just
sounds like MS ducked faster.

------
x0054
I tried really hard to understand the 2 patents in question in this case. I
can see that both patents relate to a method of assigning value to search
results based on how long a user spends looking at the result, or number of
clicks, etc. But I am sure I am missing a bunch of nuances. Could someone with
Patent background explain these to patents:

[http://www.google.com/patents/US6314420](http://www.google.com/patents/US6314420)
and
[http://www.google.com/patents/US6775664](http://www.google.com/patents/US6775664)

Or maybe link me to the explanation. I am interested because from what I have
understood this sounds really obvious, just application of good business
practices to the internet. If customers like a particular product (click on
one link a lot), you get more of that product (show the link more often), so
you can sell more. Is there more to it? There has to be, right?

~~~
noonespecial
_> just application of good business practices to the internet..._

That's the foundation of nearly _all_ software patents these days. Its
business, but _on the internet_.

It seems to work because of the built in novelty factor. When there was no
internet, it was impossible to do business on it, now that there is, its
suddenly possible and so seems novel. It _feels_ like a new invention when in
fact, its really just an application of the technology to the same old same
old.

~~~
x0054
I wish I could travel back in time to the early 1990 and patent "a method for
making profit by buying and/or producing products and selling them at a higher
price.... on the internet."

~~~
klipt
"A method for taking existing existing techniques and patenting their usage on
the internet."

I call it "the meta patent troll".

------
zaroth
The money is going to the guy who patented a crucial part of Google's AdWords
algorithm which neither they nor Bing can apparently design around.

The guy got crushed in the market, being just a little fish, he was gobbled
right up. But he bought back his patent, and took the fight to Google and Bing
and won.

You can argue the percentage calculation is a too rich by an order of
magnitude or two (and I think it is), but you can't argue whether the patent
is valid or whether they infringe. A judge and jury said it is, and they did,
and that will stand until a higher court says otherwise.

Did Google invent it first? Nope. Did Google find any prior art? Nope. Was the
patent obvious? Nope.

I don't have a problem with large companies paying large sums to inventors who
actually produce a product, patent their invention, but get crushed by the
market a few years later.

This is actually kinda how it's supposed to work. If this is an example of
what is "wrong" then there there must be no patent that is "right".

~~~
Goronmon
_The money is going to the guy who patented a crucial part of Google 's
AdWords algorithm which neither they nor Bing can apparently design around._

 _Was the patent obvious? Nope._

These comments seem to be at odds with on another. If the patent covers an
algorithm that is a natural solution to the problem multiple companies are
trying to solve, doesn't that mean the solution is 'obvious'?

Is that how we want software development to work? I solve a technical problem
in an application, but because someone I've never heard of on the other side
of the country happened to patent that solution first, I can be sued for
money? Sure, it benefits the people who file patents, but I don't think
patents should exist solely because they can profit a revenue stream to the
people who file them.

~~~
zaroth
I think 'natural solution' is a play on words. My understanding is that all
the search engines (including Google) spent many years figuring this out,
failing many times along the way. PG's patent on Bayesian anti-spam is another
example of something which seems obvious in retrospect, and now everyone does
it.

'Natural' to me means a product or feature which just fits perfectly within
the system. A natural solution is the most valuable and often hardest to come
by. They also tend to seem incredibly obvious in retrospect, and yet examining
history will demonstrate that others suffered for years for lack of that exact
functionality.

For example, the intermittent wiper, or the teleprompter, or maybe even the
paper clip. It's the ideas that seem the _most_ obvious in retrospect which
need the strongest patent protection. But only if you can show it's novel.

One way the patent office will let you demonstrate something is 'non-obvious'
is if you can show something is both novel and actually solves a large
existing problem in the market. The novel, simple, elegant solution to a large
problem is by definition non-obvious, or else someone else would already be
doing it.

------
cycrutchfield
Disgusting, what a broken system. Can anybody actually defend such a system
and explain how it promotes innovation?

~~~
linuxhansl
It seems to be pretty well established now that this system does not support
innovation (at least not in the software business.

If the benefit of society as a whole is the objective then inventions are only
worth protecting if they would not have occurred without such protection. An
idea clearly does not fall into that category, it's worth is in the execution
and not in "having it".

~~~
saraid216
> It seems to be pretty well established now that this system does not support
> innovation (at least not in the software business.

Back when I was actively studying this stuff, it was noted that there are four
specific industries where intellectual property just doesn't work as intended.
Software was one, pharma was another, and I forget the other two but a quick
Google ought to surface them with more credibility than I can drop here.

That's not to say it works much better outside those industries, but it's not
_completely_ pointless.

~~~
omegaworks
> pharma was another

I thought pharma relied on patents to offset the massive cost of regulatory
control over the product. (FDA fees, cost of running patient trials, etc)

~~~
magicalist
Yeah, Judge Posner wrote an excellent post about how pharmaceuticals and
software were basically polar opposites in their needs for patent protection:

[http://www.becker-posner-blog.com/2012/09/do-patent-and-
copy...](http://www.becker-posner-blog.com/2012/09/do-patent-and-copyright-
law-restrict-competition-and-creativity-excessively-posner.html)

------
shadowmint
I agree with the comments on Ars.

This sort of 'litle parent that could' story are the post child for pro patent
folk.

No, that's not how it works. No, small one-time inventors to not benefit from
the current parent system. Irritating as anything seeing it being played out
this way.

This is a commercial patent trolling company, from the inception it was so,
and it remains so now. These are the people who the current patent system
benefits.

------
mwally
FUCK PATENTS. The old system (copyright, IP, etc) needs to BURN TO THE GROUND.

~~~
linuxhansl
Let's not throw out the baby with the bathwater. Fuck software patents...
Absolutely. Copyright... Not so much. That is actually useful. Open source and
free software would not work without copyright law. Copyright only triggers
when you copy somebody else's work, I.e. a specific expression of an idea.
Patents trigger when you merely happen to have the same idea.

~~~
JoshTriplett
> Copyright... Not so much. That is actually useful. Open source and free
> software would not work without copyright law.

Not true at all. Copyleft licenses as currently written wouldn't work without
copyright law; all-permissive licenses like MIT and BSD would become the
default state. I'll happily take that trade, and several folks at the FSF and
other FOSS organizations are on record saying the same.

~~~
linuxhansl
I am not a lawyer, but even even MIT/BSD licenses only work because of
copyright granting the originators the right to release under any license and
restrict certain things, such as liability, usage of the originators name,
etc.

------
yalogin
So is the tech industry as such not interested in changing this system? I find
it inconceivable that the entire tech industry is not able to change the law
about just software patents, not all patents, but just software patents. All
the old laggard companies have invested a lot of time and money and hoarded a
bunch of patents and so they do not care enough. Eventually the companies that
are hurt in this are the small ones.

------
arunabha
Google is already appealing, but what happens if Google loses ? Would the
supreme court agree to hear this case ? If so, the silver lining might be that
the supreme court overturns this decision and in doing to comes up with
something useful like the 2007 decision which limits a patent troll's ability
to get an injunction to knock out a product.

------
vinhboy
Sometimes I wonder if I am witnessing America's greatness in action, or the
unraveling of it.

~~~
PythonicAlpha
It is clearly America's downfall -- and America is pulling the world with
itself.

~~~
doktrin
Oh come now. Patent trolls are a massive nuisance, but they don't represent an
existential threat to this country - let alone all of human civilization.

~~~
victorhooi
Lol, it's probably hyperbole.

But think about it - what exactly does American produce these days?

Yes, they still have a heavy manufacturing base - but that's declining and
fast.

If you stifle innovation, you've basically shot yourself in the foot.

~~~
1stop
Hollywood, Wall St, Apple, Boeing... Yeah the US doesn't produce anything...
they just make up that 15 trillion dollars of GDP (double what the next
biggest economy makes - China).

~~~
dTal
Firstly GDP is not a measure of what an economy "makes", it is a measure of
its throughput. Remember that every dollar the US government "borrows" out of
thin air and spends on military hardware adds to that total, so I wouldn't
regard a high GDP as necessarily a sign of economic health.

Secondly, of your haphazard list, only Boeing does any manufacturing. Maybe
instead of knee-jerking with "America is great" you should read a bit more
carefully?

~~~
1stop
I was responding to "America doesn't _produce_ anything"...

All of those industries produce, and all of them make significant money, and
the GDP backs that up. Producing stuff while going into debt, is still
producing stuff, so your reasoning about debt has no relevance.

So maybe you should take your own advice?

Just for the record: I think America is a shit hole, and I'm generally anti-
capitalist. But it's nonsense to pretend they don't produce anything.

------
moca
This is largely a showcase of stupid economy in United States. If you look
back past 20 years, there really isn't any meaningful economy growth except
the high tech industry. In most cases, you simply higher price for the same
house, transportation, education, healthcare, food, lawsuit, and other BS.
Instead of encouraging people and companies to do great things that actually
improve living quality, the current economic and political system simply drags
everything down.

American voters stuck too much with personal values and elect a congress that
does not do anything and gets 10% approval rate. Now we have to deal with this
kind of stupidity. #thanksobama

~~~
hkmurakami
iirc the finance industry grew a ton over the same time period.

------
dmak
1.36% of AdWords Revenue? That is a lot of money. I don't see how they are
entitled to that amount in any way.

~~~
increment_i
Also, why an ongoing 1.36% cut? What's the significance of that number? Might
as well peel back the layers on this farce.

~~~
mehwoot
Read the article, it explains the percentage calculation.

~~~
increment_i
I did, still seems kinda arbitrary..

------
yetanotherphd
Here is what two economists at the St Louis Federal Reserve have to say about
patents (tl;dr they are bad)

[http://research.stlouisfed.org/wp/2012/2012-035.pdf](http://research.stlouisfed.org/wp/2012/2012-035.pdf)

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increment_i
Is there any push right now to enact legislation that makes patent litigation
available only to entities that actively participate in the relevant
marketplaces? It doesn't seem like there is, but maybe I'm not that informed
in these affairs.

~~~
dror
No. Just stop granting patents on software or business processes. Copyright,
yes, patents, no.

~~~
scotty79
You can grant both but for no longer than a year.

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AJ007
We need a numbers based study that shows patent trolls retard innovation and
consequently weaken national security. Regulators, senators, and Presidents
(in the US) prioritize that stuff.

How can I, as a small start up, produce a new mobile phone? Every concept from
the hardware to the software is layered in patents. What other things are
small companies not bothering to produce because of the patent minefield? At
every turn and corner you may be stepping on another patent troll waiting to
take a percentage of your earnings as well as drain your bank account on legal
fees.

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sheetjs
> US-based revenue from AdWords, Google's flagship program

Given Google's structure and revenue recognition, I'd be surprised if they had
to pay out anything significant.

~~~
Danieru
Google's corporate structure is designed to hide and move profit, not revenue.
If this ruling is upheld we're talking a super-massive quantity of money going
to someone who did nothing.

And the patent system will still not get reformed.

~~~
magicalist
It's also not even designed to hide or move _US_ profit, so it's doubly
irrelevant. Double Irish Dutch Sandwiches don't do anything for money made in
the US.

~~~
MichaelGG
Is it because Google operates servers and whatnot in the US that they couldn't
sell all their ad inventory at $1 to their Ireland division or another company
or something?

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protomyth
"While publicly-traded Vringo" \- hum, somehow they have a market cap of
$332.30M.

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danielharan
Almost 334 now; it was the first thing I checked after reading that story.

A hostile take over might be cheaper than paying royalties.

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ohashi
So if Google took over the company and settled for paying a massive amount to
them, this would in turn force Microsoft to pay 5% of that. Except anything
Google paid, would essentially go back to Google. Could you bankrupt Microsoft
this way?

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protomyth
No, the judge would alter his ruling because of a Microsoft appeal. Judges are
remarkably unimpressed with such attempts to use their rulings like that.

~~~
MichaelGG
What if Google had bought Vringo after the settlement with MS but before the
judges ruling? Then it'd be a private contract?

Sort of the inverse of the Mosaic licensing, where Spyglass got a royalty off
of IE revenue, and MS proceeded to give it away for free.

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abalone
What does this mean for ad-supported startups? Does anyone have specifics on
the patent issue here? I didn't get it from the news coverage.

~~~
dclara
I haven't read the patents yet. According to the original article and it's
comments, looks like there are two aspects are infringed: auction model and
user re-targeting model.

It looks like the auction model based on the number of hits is pretty obvious
now, but it was not quite obvious in 1999. The re-targeting model is
definitely novel in 1999.

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shmerl
Software patents need to be abolished for good.

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noptic
I´m a peacefull and calm person, which despites violent but the more I read
about US patent law the more I want to set a torch to the trolls and kill them
with fire.

I know that this is not very constructive. I know that violence is not a
solution. But seeing what these [insert insult here] do to our industry I just
can not help myself.

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moondowner
They are pretty clear on what they do: "Vringo, Inc. is engaged in the
innovation, development and monetization of intellectual property and mobile
technologies"

[http://www.vringoip.com/cgi-bin/index.pl](http://www.vringoip.com/cgi-
bin/index.pl)

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dquigley
With a market cap of less than $350 million, shouldn't Google just buy them? I
realize that they'd pay more than that, and that there might not be enough
stock available to get a controlling share, but it would be an interesting
strategy if they could pull it off.

~~~
adventured
It's about $425m as I write this. Yes, Google should probably try to buy them
if they can. The people that control VRNG might consider that they'd rather
have a billion in cash from the payouts, that they can then push into more
patent gains, than to sell right now for, say, $800m.

I think people in that type of position frequently tend to get over-confident
after winning, and rather than take one big payday, they keep rolling the
dice.

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trekky1700
As long as clueless fucking judges allow this shit to keep happening, America
is going to keep losing its tech edge. These patent trolls make creating
anything in the US risky for businesses.

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yeukhon
> Smart people invent things. Then they get to protect the intellectual
> property on what they invents.

Then all previous knowledges we get from ancestors should be protected. The
dead also deserve a share.

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tantalor
Article makes no mention of the validity of the patent. Does the court not
take that into question?

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analog31
I'm not a lawyer, but as I understand it, the validity of a patent, and the
infringement case, are handled by separate courts, each on its own schedule.
You can get an infringement judgement against you for a patent that is
ultimately invalidated, and the judgement still stands.

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bborud
Repeat after me: the patent system cannot be reformed -- the only real way to
fix this is to abolish patents completely. Patents no longer serve any other
purpose than wasting our time.

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auggierose
Yeah, just get rid of patents. They serve no purpose any more today.

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joelrunyon
Just hundreds of millions? Is that only going forward or is it retroactive? If
it's the latter, I'd expect that number to be much, much higher.

~~~
magicalist
It's only retroactive back to 2012 and the patent expires in 2016.

~~~
dclara
I was wondering Google started to use Adwords from 2012? But I heard about re-
targeting in 2012 though. It is said Google knew it from 2005, but didn't buy
it or failed to buy it. Not sure. Interesting story.

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option_greek
Why can't they simply incorporate outside US in some country where the patents
are milder ? Or is it that they have to pay royalty even then...

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tsotha
It wouldn't have any effect on business they do in the US.

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FollowSteph3
Wouldn't it be cheaper and safer for google to just controller interest in the
company? A hostile takeover if you will...

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brosco45
If you infringe, you have to pay.

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RuCrazy
google got shafted...or was it the other way around...? Good day!

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squirejons
Wow! As a patent agent, those patents are pure MONEY patents, incredibly
broad, especially to have been published in 2001 (but with a priority date of
1996) Here is the money claim:

A search engine system comprising: a first system for receiving informons from
a network on a continuing search basis, for filtering such informons for
relevancy to a query from an individual user, and for storing a ranked list of
relevant informons as a wire; a second system for receiving informons from a
network on a current demand search basis and for filtering such informons for
relevancy to the query from the individual user; and a third system for
selecting at least one of the first and second systems to make a search for
the query and to return the wire or demand search results to the individual
user. ==========

here is the money claim for the other patent:

. A search system comprising: a scanning system for searching for information
relevant to a query associated with a first user in a plurality of users; a
feedback system for receiving information found to be relevant to the query by
other users; and a content-based filter system for combining the information
from the feedback system with the information from the scanning system and for
filtering the combined information for relevance to at least one of the query
and the first user.

man, that second one is a pretty broad patent.

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graving
Vringo isn't your average patent troll and actually has a fascinating back
story and history behind it. Here's a good link to understand the background.

[http://techcrunch.com/2012/03/31/why-google-might-be-
going-t...](http://techcrunch.com/2012/03/31/why-google-might-be-going-to-0/)

~~~
magicalist
Note that the author is an investor in Vringo.

