

Almost a third of our portfolio is under attack by patent trolls. - figured
http://www.unionsquareventures.com/2010/01/we-need-an-independent-invention-defense-to-minimize-the-damage-of-aggressive-patent-trolls.php?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+UnionSquareVentures+(Union+Square+Ventures)

======
thaumaturgy
I would really like to see something along the lines of a TED talk in which
the presenter stands up, spends a couple of minutes demonstrating some kind of
really interesting new technology -- something that could really help people,
either in their lives or in their jobs -- and then the presenter would pause
for a moment and say, "...but none of you are going to get to use this", and
continue the talk but on the subject of patents.

I don't think people really understand the extent of the problem. I think they
need to see exactly the damage that's being done before there will be any
energy put into fixing it.

I do think that patents hold a valuable place in certain areas of research and
development, but there are also areas in which patents are crippling
development.

~~~
zaphar

        I do think that patents hold a valuable place in certain
        areas of research and development, but there are also
        areas in which patents are crippling development.
    

I hear people say this but they never give an example. Can you name an area of
research and development where patents hold a valuable position? I myself have
trouble coming up with any and I'm curious what others think.

~~~
alain94040
Conventional wisdom says that pharma qualifies. Labs wouldn't spend the
resources if anyone could come up with generic drugs once the hard work of
finding out which drug works is done.

~~~
danek
i don't know if this is true, but i heard somewhere that drug companies don't
really innovate anything.

it's the NIH and universities (via government funding) that actually discover
the drugs, then they sell the exclusive rights to manufacture it to big pharma
(who then spends a lot to get it approved and market it and such...)

(this is the book, i haven't read it) [http://www.amazon.com/Truth-About-Drug-
Companies-Deceive/dp/...](http://www.amazon.com/Truth-About-Drug-Companies-
Deceive/dp/0375760946/ref=cm_cr_pr_product_top)

so in this case (if true) patents fail again.

~~~
mseebach
I don't know if that's correct, but if it is, it's patents that make it
possible for the universities and NIH to sell the right exclusively.

Since manufacturing, testing and marketing a drug is hysterically expensive,
the patent seems to serve a purpose there -- even if pharma companies are more
akin to specialized investment bankers than scientists.

------
paulgb
> They pick on startups because undercapitalized small companies cannot afford
> to be ideological. When faced with the prospect of extensive legal fees and
> a huge distraction, they do the pragmatic thing - they settle.

Patent trolling reminds me of a game of chicken. I wonder whether chicken
strategies have been tried to combat it.

For example, if the start-up could position themselves so that it is
profitable for them to defend themselves if they are sued by a patent troll,
and the trolls were aware of this (and rational), the trolls may be scared to
litigate. This could be in the form of "insurance" that pays out when the
company successfully defends itself against a patent claim. Ideally, the fact
that the company is insured would thwart off trolls, so the premiums could be
lower than what companies currently pay out in settlements.

~~~
dangoldin
That's an interesting idea for a company! An company that insures against
patent lawsuits. It would have be staffed by lawyers who know whether there
are any possible patent violations but it might work.

As you said, the fact that you are even insured by this company may already
signal to the troll to back off.

~~~
alain94040
Nice idea but it doesn't work because when I sue you with a bogus patent
troll, you can't make money out of it. All you can do is make the lawsuit go
away and lose as little money as possible.

So it's a win-lose scenario. So there is no insurance possible. The best
lawyers in your hypothetical insurance company, at best could convince the
judge that you are not infringing. But it won't make you any money. So there
is no business insuring against patent troll.

Don't get me wrong, I wish there was.

~~~
lliiffee
The good guys pay me money for insurance, I promise to release my team of
ruthless lawyers on anyone that sue them, the patent trolls see my scary
lawyers and don't sue. Doesn't that work?

~~~
decode
It doesn't work with Patent Trolls (AKA Non Practicing Entities). What is the
team of scary lawyers going to do? Since the trolls don't actually have a
business or product, you can't sue them for patents they infringe. And their
whole business is litigating patents, so tying them up in court is not exactly
a deterrent. The trolls themselves are often lawyers, or just a company that
employs lawyers on retainer.

~~~
electromagnetic
> their whole business is litigating patents, so tying them up in court is not
> exactly a deterrent.

Lawyers can make a considerable amount of money, any disruption to the Patent
Trolls' game will severely reduce their numbers. These Patent trolls, as you
said, are often lawyers and by tying them up in court you are costing them
profitability. Every non-settlement _forces_ them to go to court and actually
fight.

This is how the courts work: Out-of-court settlements are frequent and are
preferred as it saves a Judge's time for real cases, however mass submission
and withdrawal of suits are seen as a waste of the courts time and effort. A
fair amount of cases end up in front of a judge before settlement, if these
end up being withdrawn (and the judge will know it's withdrawn _not_ settled)
you're going to be in bad credence with a judge. Pissing off a judge is a big
no-no. Patent Trolls will be pissing off multiple judges, which is like
putting a shotgun in your career's mouth and pulling the trigger.

An insurance agency that fights patent trolls would be ideal. Offer $X amount
of legal fee coverage for $Y a month, get a few talented lawyers and a fair
amount of paralegals. Once word gets out, the majority of the work can be
performed by paralegals (essentially everything up until you're standing in
front of a jury-or-equivalent can be performed by paralegals) as no troll will
want their time tied up. Eventually, only Trolls with a fair-case will fight,
you then have 3 options to give your clients: offer them your lawyers'
services/suggest settling/wish them good luck elsewhere. It would be a sort of
no-case-no-extra-fee's deal.

Lawyer's typically bill by the 6-minute interval, and frequently charge 100's
of dollars an hour. In fact 1-2 billed hours is typically a lawyers daily pay,
and they may still have 6-8 hours on top of what they're billing clients. If
you start consuming these lawyers time, their profitability drops, especially
considering they require settlements for their pay. They're invested in the
'easy win', which isn't conducive to fighting a drawn out case. If companies
actually start going through with the court battles, the payment is
potentially delayed anywhere from 3-months to 3-years.

~~~
ssp
_Eventually, only Trolls with a fair-case will fight_

Don't a lot of trolls actually have valid patents that read on whatever it is
you do?

If this worked, why wouldn't Microsoft just "self-insure" and never, ever
settle a patent claim?

~~~
imajes
because a license might cost $1m, but going to court to fight it might cost
$100m or more. It's a no-brainer whatever size you look at it. The win-lose
equation here is about risk management: it's too risky for Microsoft, with an
'endless budget', to go against a troll.

In this instance, Microsoft's attorneys risk alienation too by playing the
chicken game, and they don't want to do that.

How it could work is to find a judge who thinks patent cases like this are
ambulance chasers, and then ensure that all the suits against you are
relocated into her court. If you have a friendly judge then it becomes much
easier to play chicken.

~~~
noonespecial
_How it could work is to find a judge who thinks patent cases like this are
ambulance chasers, and then ensure that all the suits against you are
relocated into her court. If you have a friendly judge then it becomes much
easier to play chicken._

How exactly do you do this? I've been wondering. It seems trolls are able to
get these cases heard in disproportionate numbers by a strange little puppet
court down in east texas that has become famous for being troll friendly. (and
indeed seems to have based its entire local economy around it)

~~~
asmithmd1
As a patent holder you are allowed to sue in any jurisdiction where your
invention is made, sold, or used. So the trolls naturally pick a friendly
court.

~~~
ZeroGravitas
Has anyone tried boycotting this area of Texas? It would be amusing for PR
purposes alone. Would they be able to run their courts without access to
Microsoft products?

------
aristus
I'm a little cautious about this post. He is exaggerating by stretching the
definition of "patent troll", if I am reading correctly. A true patent troll
is a company that produces nothing except lawsuits. With a company that
produces something and also sues over patents, there is at least the
possibility of a countersuit / crosslicense / armed truce.

I assume their portfolio companies pool their patents together for the common
defense. If not, that might be a good idea.

Still, with 26 portfolio companies, he's claiming 8-ish concurrent lawsuit
threats... that's alarming. On the other hand, their portfolio is pretty high-
profile (Etsy, Twitter, Zynga, Foursquare, Indeed, etc).

Also he doesn't put this claim in historical context: is this normal for a
maturing (and very nice) portfolio? Are they going after the tender young
startups or the bigger ones?

~~~
decode
"With a company that produces something and also sues over patents, there is
at least the possibility of a countersuit / crosslicense / armed truce."

Unless you're a startup that just wants to make a good product and isn't
interested in spending tens of thousands of dollars acquiring patents on
software you think shouldn't even be patented in the first place. Then you
have no defense. You also don't have the funds for a protracted legal battle,
since you're living on investment capital, or are barely profitable.

~~~
aristus
I'm not arguing anything about the validity or wisdom of patents. I'm saying
the poster (a VC) left out a lot of pertinent information and using the term
"patent troll" incorrectly.

It's an interesting item but wrapped in self-serving omission and linkbaity
style.

------
cwan
An addendum from Fred Wilson (another one of the partners at USV):
[http://www.avc.com/a_vc/2010/01/why-we-need-an-
independent-i...](http://www.avc.com/a_vc/2010/01/why-we-need-an-independent-
invention-defense.html) -

"But anyone who has spent a significant time in technology based businesses
will understand that two groups working completely independently from each
other will often solve a problem similarly. One group is not copying or
ripping off the other group. They are simply coming to similar conclusions
about how to get something done.

In these cases, it makes no sense to protect one group from the other. Nobody
has taken anyone's "intellectual property." Both groups should own their
inventions outright without having to license technology from the other."

------
twohey
I really feel for smaller companies here as I know people with great products
who have been trolled out of existence.

I wonder if there is a non-legislative fix available because I've heard about
programmers wanting patent reform for as long as I've been programming and I
believe almost no substantial progress has been made.

Brad mentions that larger companies have more resources available for fighting
patent trolls. What if VCs set aside a pool of capital for defending their
investments from patent trolls as part of raising their funds?

The idea would be to create a pool money whose size would ward off patent
trolls. I'm sure it would take a few victories in court, but it could
establish a precedent and change the game.

It certainly seems easier than attempting to reform patents.

------
trunnell
Check out this patent. It appears to be for storing web page state in the web
page itself and transmitting that state using HTTP POST. I'm not even kidding.

[http://www.google.com/patents/about?id=wIEoAAAAEBAJ&dq=5...](http://www.google.com/patents/about?id=wIEoAAAAEBAJ&dq=5623656)

It's especially interesting to read the "referenced by" list on that page.
"Incorporating state information into a URL" ... "Method for transmitting
images over a network" ... "System for tracking the purchase of a product over
the internet."

Seriously, what are we going to do about this?

------
chrischen
The fundamental problem with patents is that it rewards the first person to
file a patent, disregarding the possibility that two people can synchronously,
or asynchronously come to the same idea independently of each other.

I guess the "American" (assuming you're in America) course of action is to
speak to your senator to push for reform and help evolve our government. If
that fails, ditch the government altogether and either start or move to
another country.

~~~
Daniel_Newby
U.S. patents go to the first inventor, regardless of filing order.

~~~
chrischen
In any case first doesn't mean the only, or the only one deserving.

------
kschrader
I'm curious, has anyone ever seen a software patent novel enough that it could
be considered a "non-obvious" solution to the problem that the inventor is
trying to attack?

~~~
tptacek
Sure. Cryptography is littered with them.

~~~
argv_empty
Except then you're patenting math.

~~~
tptacek
Not true at all. Cryptography Research has patented most of the implementation
techniques required to do hardware crypto without being susceptible to
differential power analysis (btw: that? My favorite business model ever!).
That was almost pure systems research.

~~~
Psyonic
What is the business model associated with differential power analysis? Why is
it your favorite?

~~~
tptacek
They discovered a horrible, systemic vulnerability and then patented most of
the effective defenses for it. It's pure evil genius.

~~~
JCLevesque
And that's why patents are broken.

~~~
tptacek
Strong disagree. They found the vulnerability. It is a remarkably interesting
attack. Without their work, we'd just be silently vulnerable to the problem. I
think (for instance) the DPA patents are a decent example of good-faith
patents.

RSA was patent-encumbered for a long time too. You can formulate a similar
argument about that. "RSA makes systems safer [ed: no it doesn't, but
continuing...], so it's wrong to allow it to be patented".

~~~
gjm11
I think there are some steps missing in your argument. It seems to go
something like this: (1) CR found the issue, spotted a business model,
patented all the best solutions, and told the world. (2) Without patents, CR
wouldn't have done this. (3) So without patents, no one would have done it.
(4) So without patents, we'd all be silently vulnerable to a very general,
very clever side-channel attack.

The step from (1) to (2) seems doubtful. If the CR people hadn't been able to
patent a bunch of ways to deal with DPAs, they might none the less have
published about them. It's not as if no one ever tells the world about a
security vulnerability without a patent-based incentive.

The step from (2) to (3) seems doubtful. It seems more likely that without CR,
sooner or later someone else would have thought of differential power attacks
and published about them. Unless CR are just _much much smarter_ than everyone
else -- in which case, the guys in black hats would have been just as much
worse off as the guys in white hats.

The step from (3) to (4) is OK, with the proviso I just mentioned: it seems
that the obvious way for (3) to be true would tend to make the vulnerability
matter much less.

~~~
tptacek
Regarding (2) to (3): sorry, I think it is --- in large part --- the fact that
CRI is just _much much smarter_. They're a peculiar company: they do real-
world implementation _and_ high quality research. Yes, there are Dan
Bernsteins and Dan Bleichenbachers in the world, but for the most part those
people don't get a lot of exposure to custom hardware.

Regarding (1) to (2): sure, maybe CRI would have published even without
compensation. Just like maybe I'd do my job part-time for free anyways even if
I wasn't getting paid. You can say that for anyone who's doing what they love:
musicians, lawyers, architects. But what's the win for not compensating CRI?
Huge consumer electronics companies have to pay slightly less NRE to build new
products. I'd rather have CRI in the world.

~~~
gjm11
If CRI really are that much smarter, then in a world without CRI the bad guys
would probably never have thought of differential power attacks, in which case
it wouldn't matter that they aren't there.

I don't think "maybe CRI would have published even without compensation" is at
all the same as "maybe I'd do my job part-time for free". In a world in which
CRI couldn't patent anti-DPA measures, I'm betting they'd still be able to get
paid plenty well for doing crypto. A fair number of super-smart crypto people
are, after all, and they don't all have CRI's patent portfolio. So the analogy
is more "maybe I'd publish interesting and useful crypto stuff for free even
though it isn't what I'm getting paid for". Which, in fact, you do.

(If you're inclined to object that what you publish for free is not innovative
on the scale of the discovery of DPA attacks, let me remind you that you just
claimed that CRI are much much smarter than you are.)

For the avoidance of doubt, I am not positively claiming that the world would
be better with a patent system in which CRI couldn't have got the patents they
have. I don't know whether it would. I just don't think your argument supports
your claims very well on this point.

------
scottdw2
Personally, I don't value software parents much.

I think they are a giant waste of money. You spend $20K on lawyers, to get
nothing more than the right to spend more money on lawyers in the future.

That $20K could be better invested elsewhere (like on product improvement).

I think it would be worth considering eliminating software patents.

However, I don't think an "independent invention defense" is a good idea. It
would essentially eliminate all patent protection. Basically, the absence of
proof that you knew a patent existed, would get you off the hook for
infringing on it. This means that as long as you had the right set of rigorous
policies in place, you could operate with complete immunity from patent
infringement claims.

If all employees were trained (by mandatory corporate training) that "under no
circumstances should you ever read any patents, ever", and "if you ever have
any doubts about anything being patentable, direct the question to our
lawyer", and you were very strict about enforcing it, you could make a case
that pretty much every invention was discovered independently.

That would defeat the whole purpose of patent protection. The idea is that by
getting inventors to disclose details of their invention (which benefits
society), that they get a monopoly on its use. Without the monopoly, there is
no point in having a patent.

If software patents pose a fundamental problem, then I think the best course
of action is to eliminate software parents, not to undermine the entire patent
system.

~~~
noonespecial
_If all employees were trained (by mandatory corporate training) that "under
no circumstances should you ever read any patents, ever", and "if you ever
have any doubts about anything being patentable, direct the question to our
lawyer", and you were very strict about enforcing it, you could make a case
that pretty much every invention was discovered independently._

Thanks to the "treble damages" part, this is _exactly_ how it operates right
now, right down to the corporate training. Unless you're a patent attorney,
"never ever read a patent" is pretty good advice for any technical
professional.

------
figured
"Almost a third of our portfolio is under attack by patent trolls."

That quote astonished me, I never really knew the extent of the problem.

~~~
algorias
Depends on what the meaning of "is" is, actually.

What falls into the category "under attack"? threat of litigation? actual
litigation? in process of settling? having settled?

~~~
zaphar
Any one of those mentioned in your question are bad. If it's all of them it's
still bad. No matter what meaning of the word "is" that you choose it's bad.
That's kind of the point of the article really.

------
larsberg
Somebody should patent the process of patent trolling. Then, at least, there
would just be one doing it...

~~~
Hoff
"Halliburton Tries To Patent Form Of Patent Trolling"

<http://www.techdirt.com/articles/20081107/0118162765.shtml>

------
justinsb
Though perhaps there's a selection bias at work? Maybe 'competing' venture
funds are doing more thorough IP due diligence?

------
schammy
God damn I hate nothing more than patent trolls. I'm positive that Lucifer is
reserving a special place in hell for them, because there's no question
they're going to burn.

