
Twitter Pays $36 Million to Avoid IBM Patent Suit - svenkatesh
http://www.wired.com/business/2014/03/twitter-ibm/
======
WildUtah
First, Twitter didn't pay off IBM for trolling here. They outright bought a
set of patents in the hope that Twitter's own new portfolio would be enough to
discourage other companies from suing Twitter in the future.

Defensive portfolios of garbage patents used to be the key to preventing
competitors from suing you with their garbage patents. After the eBay v.
MercExchange [0] case in 2006, it's not as dangerous to be sued but defensive
portfolios are now much less useful also because you can't threaten to shut
down aggressors' businesses with injunctions. The Apple v. Samsung and
Microsoft v. Motorola cases also recently demonstrated that vague garbage
patents are much more useful in court than technological patents. Juries and
judges understand them better and are inclined to award hundreds of times more
damages.

Second, IBM is the least awful kind of patent troll. They generally ask for
small fractions of revenue or investment in companies that have established
themselves. The IPO phase is a favorite time for them to ask for a few million
from growing companies. The worst kind of trolls -- such as Microsoft's
Intellectual Ventures -- ask for much more money from companies and often go
after startups. IBM exercises restraint with the idea that they might have an
ongoing relationship with companies someday in some other context.

And IBM, unlike most trolls, actually does real research. Most of the new
ideas in Google Search were first published in an IBM research paper that
Larry and Sergei read. IBM didn't patent those ideas, though; they mostly seem
to accumulate scattershot patents at random. I think IBM's primary goal is to
top the list of prolific grantees every year.

[0]
[http://en.wikipedia.org/wiki/EBay_Inc._v._MercExchange,_L.L....](http://en.wikipedia.org/wiki/EBay_Inc._v._MercExchange,_L.L.C).

~~~
josephlord
> The Apple v. Samsung and Microsoft v. Motorola cases also recently
> demonstrated that vague garbage patents are much more useful in court than
> technological patents. Juries and judges understand them better and are
> inclined to award hundreds of times more damages.

I don't think that I agree with this part especially if you are equating
Standards Essential Patents with "technological patents" and all other patents
as "vague garbage patents". If that wasn't what you meant I misunderstood.

The reason that SEP are worth less (than other valid patents) and not entitled
to injunctions is because commitments were entered into by their owners to
enable them to be included in the standard. And some SEPs are pretty low grade
too and alternative approaches are often only prevented by the standard
itself.

~~~
WildUtah
_The reason that SEP are worth less (than other valid patents) and not
entitled to injunctions_

Actually, almost no patents are entitled to injunctions since the eBay
decision made courts apply the same standard to patent cases as to other
injunction requests, and we all owe many thanks to the Supreme Court for that.

 _some SEPs are pretty low grade too_

Indeed, the Microsoft v. Motorola patents were particularly lousy. One
Motorola patent was on the use of a particular number as a key in an error
correcting code. The code itself was prior art but any two devices needed to
use the some identical arbitrary key to communicate. It's embarrassing that
the PTO allowed that one, but the court is making Microsoft pay for every
device shipped now. Fortunately the price is small.

The Apple v. Samsung case involved a few Samsung radio channel efficiency
patents that the jury found not infringed even though Apple did infringe them.
They were probably as invalid as all the utility patents in the case but they
failed to be useful probably because they were complicated and juries don't
pay much attention to technological patents or discussions of them.

Apple's garbage patent about bounce-back was much more effective. Juries can
measure that.

Now SEP (standards essential) patents are much less useful because judges are
not inclined to allow them to be used defensively. And arguably valid patents
are slightly more powerful than clearly erroneous ones. But simple garbage
patents focused on non-technological UI and superficial means of doing
business are much more effective in all litigation than actual technological
patents independent of SEP status or validity.

~~~
josephlord
Fair enough, I have seen plenty of comments on here assuming that SEPs are
better patents than others but your view seems clearly much more nuanced. I
mostly agree with your actual view and did incorrectly interpret the section I
quoted.

I'm not sure the bounce back patent is inherently garbage (although it may be
invalid due to prior art) but that sort of patent is entirely possible to work
around. I'm not saying it is great patent but it does strike me as somewhat
inventive, novel (AFAIK). I do understand what you mean about the likelihood
of juries putting too much weight on what they understand.

I'm not aware of the details of the Samsung radio channel efficiency patents
but I wonder why Samsung didn't bring them to (or didn't win with them) at the
ITC where there isn't a jury. I'm not actually disagreeing here but it would
be something ai would want to understand before completely agreeing with you
about the lack of value in true technological patents (I'm in a don't know
state rather than disagreement at this point).

~~~
WildUtah
The Obama administration vetoed ITC's Samsung-requested ban on importation of
Apple phones last year. That ban depended on SEPs, so perhaps Samsung should
start over with some of its other patents. Samsung seems to have unlimited
money for American legal fees but little wisdom in spending it so far.

It seems quite unlikely, though, that an iconic American company like Apple
will ever see an ITC action that really harms its interests sustained. It is
especially unlikely to happen in favor of an Asian competitor company, given
American trade politics.

Apple's ITC bans against Samsung phones don't face similar barriers so far.

In any case, since particular phone models are seldom sold for longer than two
years and both district court and ITC cases take longer than that, it has
almost always been obsolete phones targeted by injunctions. Until the
companies get more clever about targeting broad classes of devices, that is
some small relief for the industry from the insanity.

~~~
josephlord
I don't know if the Presidential veto would have been applied if the
companies' nationalities had been reversed (I hope it would have been as it
was correct). [0]

ITC bans include devices that aren't explicitly listed if there is no
colourable difference in the infringement.

[0] I'm British so nationally neutral.

------
bluedevil2k
There's a lot of guessing and conjecture about how IBM deals with patents, so
I thought I'd write a new parent thread to discuss.

I worked at IBM for 7 years, leaving many years ago. I am an IBM Master
Inventor, having 36 patents filed with the USPTO with my name on them (some
are still winding their way through the system). I worked heavily on patents
for 3 years, and the last 2 years I was there, I was on the Patent Review
Board. I'd also estimate during my active time with patents, I submitted
250-300 patent ideas to the board.

The Patent Review Board is organized along technologies - so, mobile would
have its own Patent Review Board. People on the Patent Review Board tend to be
Master Inventors and others who are active in the patent process. Once a week,
about 3-4 hours of presentations are made to the Board (which includes the
patent lawyers as well). After a 5-10 minute presentation, they are asked to
leave the room, and the Board votes whether it should continue to the lawyer,
or whether to close it. Most obviously are closed at this step with prior art.
If it's voted to go to the lawyers, in my background, there was a pretty good
chance it was going to get filed.

If your patent got filed with the USPTO, you got a point. IBM is very generous
with their patent bonuses. You get $750 per patent filed. You also get an
additional $1500 on your first patent filing, and $1500 every 3 after that.
So, effectively, about $1000 per patent.

Patent ideas could be anything and everything. If they could patent it, they
would. I remember from my time on the board seeing ideas on everything from
dog doors to server optimization techniques to music devices. Given the people
who work at IBM, most tended to be tech related, but it definitely was not a
requirement at all.

The stuff people have asked about royalties makes me laugh as well - I never
got the feeling once they cared if your patent would make them $1B or $1. And
they certainly didn't care about compensating us for an idea that could make
$1B. I was awarded the Software Group Patent of the Year one year, and other
than an email denoting that fact, nothing was different than some of the lame
ones I had filed.

Overall though, I thoroughly enjoyed every aspect of the patent process at IBM
- it was one of the few outlets that rewarded creativity and hard work at the
company.

~~~
balls187
What you wrote underscores how the patent process is flawed. IBM abused the
spirit of patents for their own financial gain.

~~~
broodbucket
>A company did something to make money

Stop the presses!

~~~
balls187
Stopped.

Now what?

------
guelo
The bullshit patents that IBM threatened to sue Twitter over were for url
shortening [1], inline user-customized advertising[2], and diff-ing contact
lists[3].

[1] [http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO2&Sect2=H...](http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-
bool.html&r=1&f=G&l=50&co1=AND&d=PTXT&s1=6,957,224.PN.&OS=PN/6,957,224&RS=PN/6,957,224)
[2] [http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO2&Sect2=H...](http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-
bool.html&r=1&f=G&l=50&co1=AND&d=PTXT&s1=7,072,849.PN.&OS=PN/7,072,849&RS=PN/7,072,849)
[3] [http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO2&Sect2=H...](http://patft.uspto.gov/netacgi/nph-
Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-
bool.html&r=1&f=G&l=50&co1=AND&d=PTXT&s1=7,099,862.PN.&OS=PN/7,099,862&RS=PN/7,099,862)

------
rhizome
This is how companies become members of the exclusive club known as
"entrenched interests."

It would be interesting for a company to take an alternative route and
threaten to go out of business, or, say, publicly announce that they can't
implement certain features, because it would require them to purchase their
freedom to do so. [Insert your own slavery metaphor here]

However, now Twitter will have to say that their position on a given technical
controversy is "complicated" and "nuanced" and imply that we rabble just don't
understand the real world of business.

------
raverbashing
Ah good old IBM

Yeah, 36Mi is not a lot to Twitter, but it's more fuel to the extortion racket

Another reason to buy nothing from this company

~~~
atmosx
Really?

I wonder how many people could take medical care, buy food (mind goes to
Africa), etc with that amount of money that apparently was given to a patent
troll (IBM).

Just sad.

ps. Nothing against twitter, or IBM. They are just exploiting rules made by
humans.

~~~
iends
Really?

I wonder how many people's lives have been made better by technologies
created, sold, and serviced by IBM.

~~~
jp_sc
Really?

[http://en.wikipedia.org/wiki/IBM_and_the_Holocaust](http://en.wikipedia.org/wiki/IBM_and_the_Holocaust)

(And by Goodwin's law corollaries I've lost this debate)

~~~
iends
It's tragic that IBM built technology that helped enabled the death of large
number of people. One thing the wikipedia page doesn't make clear was IBM
aware of the atrocities? The article cites the 1933 census, but things in
Germany didn't really heat up until Kristallnacht in 1938?

Anyway, the point was, things are not always black and white. IBM has
certainly done some bad things, but it has also had a tremendous positive
impact on society, medicine, techology, etc easily; more than 36m.

~~~
pessimizer
>The article cites the 1933 census, but things in Germany didn't really heat
up until Kristallnacht in 1938?

"As the Nazi war machine occupied successive nations of Europe, capitulation
was followed by a census of the population of each subjugated nation, with an
eye to the identification and isolation of Jews and Gypsies. These census
operations were intimately intertwined with technology and cards supplied by
IBM's German and new Polish subsidiaries, which were awarded specific sales
territories in Poland by decision of the New York office following Germany's
successful Blitzkrieg invasion."

------
teddyh
_" OK,"_ [IBM] _said,_ [to Sun in the 1980s] _" maybe you don't infringe these
seven patents. But we have 10,000 U.S. patents. Do you really want us to go
back to Armonk [IBM headquarters in New York] and find seven patents you do
infringe? Or do you want to make this easy and just pay us $20 million?"

After a modest bit of negotiation, Sun cut IBM a check, and the blue suits
went to the next company on their hit list._

 _Patently Absurd_ , Forbes, 2002:
[http://www.forbes.com/asap/2002/0624/044.html](http://www.forbes.com/asap/2002/0624/044.html)

------
mrschwabe
Interesting how the playing field changes when you reach a critical mass.

Reforming patent law could be part of the solution against this type of thing,
but the bigger problem may actually just be that IBM is run by assholes.

~~~
diegomcfly
Ding. Ding Ding. We have a winner.

Creating / getting a patent at IBM is comical. Sort of like a game. All you
have to do is document something, pass it to their patent lawyers ... and they
fill it with so much verbose lawyer language and fluff that any normal person
can't read and interpret it. Then it gets submitted and ... voila ... patent
pending (and quite typically a couple years later, patented).

(Source: Me, a former employee of IBM (Indian Business Machines)).

~~~
mrschwabe
Really, THAT is the procedure they use to 'invent' new patents? Wow, just wow.
Appreciate you sharing this.

Curious, did you submit any yourself? Did they provide incentives for you or
staff to come up with these 'documents' ? Do they have a monthly quota for #
of new patents per week/month? In addition to staff submissions, did they have
special division specifically their to conjure up new patents fulltime? Feel
free to indulge, I find it fascinating to hear it from someone who has been in
the belly of the beast.

~~~
iends
It's not quite like that, at least in the USA.

For example, my good friend had to submit and modify his idea 3 times because
the lawyers were not quite happy with the novelty of it. Documenting your idea
is a bit more involved then just slapping a few paragraphs down and sending it
off to the legal team.

As an IBMer, I've refused to participate in patents because they are a net
negative for society. IBM does however reward you for filing patents.

In the USA, it's like $1000 for your first file and then royalties from the
patent in some cases (I've heard 1%, but this is just a rumor) if it is
granted. Beyond filing your first patent there are different tiers for the
number filed & accepted that provide extra monetary reward.

As far as I am aware, there are no divisions at IBM that just sit around and
come up with new patents. Novel ideas come as a product of working on other
things, so a team doing nothing but patents would probably quickly run out of
inspiration. There are however monthly meetings with "Master Inventors" who
have been through the process several times and are willing to help mentor you
through the process. As an employee, management regularly has asked (2-3x a
year) if anything we've done we thought was patentable.

~~~
tom_b
My experience at IBM in the US (six years worth) was that management "strongly
suggested" patent submissions as part of the review/promotion game.

On one occasion at a meeting of a second-line managers entire org (4 or 5
teams), an employee questioning the utility of making patent submissions a
numbers game (e.g, everybody better submit some) was told - with limited
paraphrasing - "Hey, 1,000 people on the street want your job and will do the
work plus publish technical reports plus submit patents for less money. You
should keep that in mind."

I suspect, but didn't really know enough people in other software group
divisions to verify, that this particular managerial mindset may have been
more tied to our specific division than IBM "in the large."

~~~
mquirion
Oh yeah. This sounds familiar (6 years at IBM). Very familiar. I wasn't even
in the software division. I was in GBS. EVERY thing we did would get discussed
and executives would ALWAYS ask if it could be patented. Half the time stupid,
normal stuff like making AJAX requests to improve a web page's UX or embedding
a browser in some piece of software would be cause for execs to encourage us
to try to get a patent for it. It's insane. IBM will one day be the world's
largest non-practicing entity.

------
us0r
Not sure Twitter had a choice here. IBM is the largest recipient of patents.

[http://en.wikipedia.org/wiki/List_of_top_United_States_paten...](http://en.wikipedia.org/wiki/List_of_top_United_States_patent_recipients)

~~~
bluedevil2k
As someone who used to work at IBM and generated 36 patents for them, I can
tell you that the incentives at IBM are HEAVILY in favor of patents at the
expense of your "real" work. At IBM, you can bust your A## off all year, work
60 hours a week, and get a PBC rating of 1 (top 10%) and get rewarded with a
bonus of 5% (if you're lucky). Or, you can slack off and spend the majority of
your time ducking assignments, getting a PBC rating of 2 (middle 50%) and get
rewarded with a 2% bonus, and using your work time to submit patents, where
you get $1000 per patent. Which path would you choose? Is it any wonder they
have so many patents submitted by their employees?

~~~
sk5t
I suppose it depends how many patents you can turn out annually... personally
I would rather see my salary double each 14 years rather than in 36.

~~~
bluedevil2k
I said bonus, not raise. Your salary would never double at IBM unless you were
one of the chosen few pegged for superstardom.

------
yeukhon
Two questions:

1\. If a developer co-own a patent with his former employer (IBM), does this
developer have the right to use his patent technology later at Google? I don't
know how IBM handles patents with his or her employees.

2\. Developer does not own any patent but being the person who invented the
technology does he have the right to invent a similar technology like his
earlier invention at Google? People carry knowledge with them!

Regarding #2, since I really have zero idea how companies handle patent
(except patent filing process), I think maybe patents have something to do in
this deal ([http://www.theverge.com/2013/1/23/3906310/the-no-hire-
paper-...](http://www.theverge.com/2013/1/23/3906310/the-no-hire-paper-trail-
steve-jobs-and-eric-schmidt-didnt-want-you-to-see)). Maybe, maybe 1%.

~~~
diegomcfly
1\. No. Assumption being that any thing "invented" while working for IBM,
belongs to IBM. The developer does not "own" it. He/she is only listed as
basically the "(co)-inventer". He cannot go to Google and "use" it with out
licensing / agreement from IBM. Now .. it is plausible that an employee
invented something totally on their own time while an employee of IBM. That
said, if this had any value (now or in the future), it is entirely likely and
plausible that IBM could make a case legally for having rights to said
invention. This is especially true if your "invention" is in the same domain
you work in for IBM (e.g. if you are a middleware developer for IBM Software
Group and you make a new type of messaging technology .. on "your own time" in
the evening/weekends).

2\. This is a grey area that will ALWAYS be open to legal interpretation
(enter the lawyers). There are different things involved in your question: Are
there non-competes in your employment contracts?, are they actually
enforceable legally?, will they be enforced legally?, what specifically is the
"technology"? So .. this is not possible to answer beyond just saying: It
depends. It is case-by-case and is balance between an business' intellectual
property, any contractual agreements (non-compete) you may have signed, and
your right to work / find gainful employment.

~~~
bluedevil2k
1\. Correction on #1 - technically you "invent" whatever the patent is, and
then assign its rights over to IBM, whereby the compensate you. That's why the
inventors' names are on the patent.

~~~
_delirium
The reason for that is that under the prevailing caselaw, companies can't be
"inventors" of things, and therefore they don't fit under the clause of the
U.S. Constitution that authorizes patents, which specifically mentions
securing exclusive rights to an invention to its "inventor". Hence the legal
dance where the inventors (specific humans who invented something) are named
in the patent, but then they assign their exclusive right to the invention to
another legal entity (their employer).

I think that might be a bit of a historical anomaly, though, related to when
different doctrines were developed. Nowadays legal personhood is personhood-
enough for most areas of law. One could imagine a court in 2014, looking at
this issue for the first time, deciding that when a company puts a bunch of
R&D money into something, and an invention results, through the actions of
perhaps dozens of people working within the company's structures and
facilities, it is in effect the company as an aggregate entity that has
invented the invention. That might even fit a bit better (though still
imperfectly) with modern scientific/historical understanding of invention,
which generally views single-person "eureka!" moments as the exception, and
collaborative efforts where some R&D "system" can be reasonably credited with
the invention as the norm.

But this particular body of law was settled back in the days when the
prevailing legal fiction around corporations was a bit different, so only
humans can legally invent things. Due to the common dance around assignment,
it doesn't make much practical difference anyway.

------
devx
Thanks for making the world a worse place, Twitter, by giving in to the patent
bullies, and setting an example for others. It's sort of "understandable" for
small start-ups who would be ruined by the trial alone, but for companies that
have billions of dollars in their coffers to do this is just plain pathetic
and cowardly. Instead of fighting the problem, they become part of it and
accomplices to it.

This also completely devalues the credibility of their IPA [1] patent thing.
If Twitter gave in, why would everyone else who might've been interested in
the whole IPA thing not do the same, too?

[1] - [https://blog.twitter.com/2012/introducing-innovators-
patent-...](https://blog.twitter.com/2012/introducing-innovators-patent-
agreement)

~~~
snorkel
Actually Twitter didn't just pay IBM, but bought the 900 patents from IBM
outright, which hopefully Twitter will not then use offensively as IBM did, so
this could be a good thing, and perhaps another way to deal with patent
trolls: buy their arsenal leaving them with fewer extortion tools.

~~~
mcintyre1994
Twitter have a public agreement to use patents only defensively, so hopefully
these won't be used offensively now. [https://github.com/twitter/innovators-
patent-agreement](https://github.com/twitter/innovators-patent-agreement)

~~~
pyre
Good thing 'public agreements' aren't binding.

~~~
mcintyre1994
I'm not a lawyer, but the documents look legally binding. They say to have a
lawyer if you want to implement it. It forms part of their employee agreements
and their patent filings.

------
ipValue
The patents that Twitter bought from IBM were mostly low quality assets. IBM,
largest patent holder for the last 21 years straight, is known for having tons
of narrow patents on every little feature they develop. This deal was a good
way for IBM to get rid of some garbage and a good way for Twitter to get a
Big, Scary looking patent portfolio.

I did a qualitative analysis of the patent portfolio here:
[http://www.preferredembodiment.com/1/post/2014/03/twitter-
bo...](http://www.preferredembodiment.com/1/post/2014/03/twitter-bought-ibms-
junk-patents.html)

------
briantakita
According to patents, innovation is property that you must pay the "innovator"
to use. The innovator is someone who bought the property of the innovation.

In most peoples' worlds, innovation describes the act to innovate. An act is
not someone's property.

------
antonius
_" According to the SEC document, Twitter now owns 956 patents — up from just
nine before it filed its IPO in November."_

Twitter's been busy buying up patents with its' IPO capital by the looks of
it.

