
Mark Cuban: If you want to see more jobs created -- change patent laws - fraXis
http://blogmaverick.com/2011/08/06/if-you-want-to-see-more-jobs-created-change-patent-laws/
======
ender7
All right, so we all agree that software patents are a problem. So what do we
do?

A). Abolish software patents. Existing software patents, or parts of patents
that govern software, are nullified.

B). ???

Personally, I'm fine with A, but I would like to hear a really good B. Anyone?

Bonus points: Provide a list of ~5 software patents that are "good" software
patents. Something were granting the patent led to innovation, or where the
technology would not have been developed without the existence of software
patents. Actually, I would be happy with just one patent, so I know what it
looks like.

~~~
beagle3
Intellectual "Property Tax". Have everyone declare the value of their
intellectual "property" (patents, copyrights, trademarks) - each and every
item, for that year, on their tax return, and have them pay 1% of the value as
"IP tax".

That amount is what one pays for a compulsory license or if successfully sued,
and up to 3 times that for willful infringement, per year -- and no more. (But
of course, patent owner can always negotiate a lower payment)

All of a sudden, everyone has an incentive to state a reasonable value for
their patent. Copyright catalogs that are not being published (old music
recordings, old books, old movies) would be assigned 0 value by copyright
holder, to avoid tax - which means anyone can freely make a copy. If they
believe -- at the end of the year -- that someone is making a profit at their
expense, they can set the value as high as they want at the end of that year,
pay the tax, and sue the profiteer.

Simple, elegant, and coffer filling.

~~~
joe_the_user
Bad idea for several reasons:

1) Patents are monopolies to begin with. A monopoly can generally pass its
costs on to the consumer. So the companies now being harassed by intellectual
property leeches would just feel a bigger bits

2) The government getting revenue from patents would be an incentive for the
government to expand patents.

3) It would legitimize the patents even further.

4) It would be a quick way for a company to claim a huge value. Even if it
cost the company some taxes, showing a return that said "10 million dollars in
intellectual property" would be a fabulous way to convince a naive investor
you really had something worth 10 million dollars - that they could buy for a
cheap only 1 million dollars.

...

I could probably go on. File under "the seductive lure of perverse
incentives..."

~~~
beagle3
From the time-of-day you have replied, I have to assume you are in Europe or
the UK, whereas this discussion is about the US (if you are in the US, I would
have to assume you were misinformed or trolling), so ...

1) Monopolies can pass costs only as so far as they have become essential
monopolies - like the power company, Microsoft, US health care or phone
companies. But 99.9999% of patents are monopolies on _inessential_ things,
which the customer can just avoid if not competitively priced, so they CANNOT
pass it on. New cheese making patent may give monopoly on a new cheese kind,
but if not competitively priced would keep customers with their old Camembert.

2) that has already happened, that's why in the US, the patent office is
already a rubber-stamp, patent examiners have 8 hours to review a patent, and
are encouraged to accept the patent rather than reject it.

3) Patents are at the top of the legitimacy scale already in the US.
Unfortunately. Which is what Cuban (the original article) is talking about.

4) Well, patents don't do that any differently than anything else. A company
could just as well buy a house for $100K, claim it is worth $100M, pay
property taxes to the local council, and claim "huge value". If someone is
going to be this fraudulent, it doesn't matter if they do it with "house",
"patent", "copyright", "trade secret", or any other "property".

You could probably go on, but nothing you mentioned is relevant to the
discussion of patents in the US (which is what the original article and my
proposal is about), and very little (3, maybe) has any bearing on that
discussion in Europe.

~~~
joe_the_user
Wow...

You begin making a big about you (false) assumption concerning my location.
That might be clue you could take a look at the world outside the one
construct in your head. In any case, considering that your solution won't
happening in any industrialized country, I most looked at this abstract
proposal as a chance demonstrate how the intentions of would-be tax-creators
often go awry. As to your arguments, the fact that we are having this debate
shows that legitimizing patents is still a challenge in the US and it is Econ
101 that monopolies pass-on price increases.

Your initial false assumption might be a clue to your excessive in your own
mental constructions.

1 - The point is that software are specifically on things that on can't easily
work because they are so. _And they sue the companies after their software is
implemented._

2-3 - The fact that we're having this debate shows that the question is still
in play

4 -

....

Considering your solution will happen in any case, my point were mostly
concerning

~~~
beagle3
Ok, so you say you're not in Europe, and you say you're not a troll. So I
would have to assume that you are misinformed (the other alternative based on
the coherence of _this_ post, is that you are drunk).

> the fact that we are having this debate shows that legitimizing patents is
> still a challenge in the US

No. Hackernews and reddit are two places that don't consider patents
legitimate. Outside of those two, there are fewer things in the US at large
that are considered MORE legitimate than patents. (If we had a discussion here
discussing how evil Zebras are, would that indicate Zebra innocence is still a
challenge in the US?)

> it is Econ 101 that monopolies pass-on price increases.

No. Apparently, you've failed Econ 101. There's a huge difference between
essential monopolies and inessential monopolies - if I open a banana stand, I
have a monopoly over selling bananas in that stand. Does that mean I can pass
on any price increases? Yes, if everyone needs a banana AND there is no
alternative supplier close enough (making me an essential monopoly).
Otherwise, no. Patents are mostly for very limited and inessential monopolies,
and they therefore CANNOT do that.

> The point is that software are specifically on things that on can't easily
> work because they are so. And they sue the companies after their software is
> implemented.

I have no idea what you were trying to say here.

The important thing to note is that the baseline is not a patent-free world.
The baseline is a world in which patents are legitimate, cheap, and let the
patent owner set the value (including infinite value, stopping others from
using that patent) without any increase to that cheap fixed value of the
patent (beyond the costs of litigation)

------
AgentConundrum
I really wish he had been a little clearer on what these patent trolls are and
why they're bad. I'm sure most people here on HN understand what's going on,
but this article is little more than preaching to the choir without that extra
clarification.

As it stands right now, this article has sort of a whining feel to it. "All my
companies are getting sued because we're infringing patents, and I'm sick of
paying for it! The only way to stop them is to similarly arm yourself with
lots of patents so you can sue someone just as hard as they can sue you!"

I'd like to see more detail from him about how most of these patents are
obvious and non-innovative, and that the idea of patent troll companies who do
nothing with the patents but sue for infringement of them. I think that's what
he was getting at with these lines:

> _I’m not talking about a new company that had an idea that someone beat us
> to. No sir. I’m talking about companies that have been doing business the
> same way for years that are getting hit by patent trolls._

...but that could also be read as "we've been infringing these patents for
years, and I'm pissed off that someone noticed." We all know that's _not_ what
he meant, but there's a lot to be said for clarity, and clarity wasn't a major
component of this article.

~~~
azakai
I don't know, I thought he cut right to the chase:

> Google just spent $900mm buying a patent collection. Other big companies are
> spending the same way. That is money that for many companies would have gone
> to job creation.

That's exactly right. That money is going into the pockets of $500/hour
lawyers instead of creating jobs for people that produce products. Just the
public patent deals of the last few months amounted to billions. And there is
a lot more we don't know about.

He could have explained more about how the vast majority of software patents
are dubious at best, etc., but that takes more explaining, it's complicated.
Focusing on the direct link to job creation is more straightforward.

~~~
AgentConundrum
He's arguing the impact of it, but I'm saying he failed to clarify why they
shouldn't have to pay for the $500/hour lawyers and the multi-million dollar
patent packages.

> _He could have explained more about how the vast majority of software
> patents are dubious at best, etc._

That's all I'm saying. He needs to explain why he shouldn't have to defend
himself against patents, rather than just complaining that it's too expensive.
Defending yourself against any lawsuit is expensive, but if you've done
something wrong then it has to be done. Cuban just didn't take the time to
explain that his companies hadn't done anything objectively wrong.

I wasn't disagreeing with him at all - I agree that there needs to be patent
reform - but I just thought that he didn't adequately state his case. He
complained about how expensive it was to have to deal with the lawsuits, but
never made a compelling argument as to why those lawsuits were unjust.

------
pbh
According to Wikipedia, Mark Cuban has $2.5 billion.

If he thinks the patents are bogus (which I totally believe), why not fight a
high profile, precedent setting case?

If he thinks the law is broken, why not lobby for patent reform? Or a loser-
pays system?

~~~
danielharan
Do you know he's not doing those?

~~~
pbh
I have no idea about the lobbying, but the article seems to suggest that he is
just paying increasing insurance and settlement costs instead.

------
atlei
From Wikipedia:

"The term patent usually refers to an exclusive right granted to anyone who
invents any new, useful, and non-obvious process, machine, article of
manufacture, or composition of matter, or any new and useful improvement
thereof, and claims that right in a formal patent application. "

In my opinion, the key part is the non-obvious part of "new, useful, and non-
obvious"; the invention of a new medicine is usually non-obvious, but the
invention of Amazon 1-click shopping is obvious (in hindsight).

What is "non-obvious" ? If a single individual can come up with a similar
solution (without access to the underlying research/data involved in the
patent) in a short amount of time (a week, or at least in a DAY in the 1-click
example) it does not represent a significant investment.

There should also be a requirement that the idea is _implemented_ to be able
to sue others. You may stop others' implementation if you have a patent, but
you should not be able to charge them for anything until you have implemented
a working solution yourself (to avoid patent trolls).

Or simply use the KISS principle and remove _all_ software patents once and
for all !

------
AllenKids
This is more of a thought on Google's awkward situation rather than patent
laws in general:

What if the DOJ scrutiny around the Nortel patent bundle went well for Google
and Apple/Microsoft etc were forced to put essential patents in a pool and
license it to other vendors under fair conditions? As Google's CLO said, it
still does not give Google the weapon to negate Oracle or Microsoft or Apple's
IP lawsuits. What if DOJ smites down the same way everytime an important
patent auction is happening? As long as Microsoft/Apple etc is willing to
throw money at it, the best outcome will always be everybody gets its fair
share. Again, Google's patent WMD remains a dream.

Unless a patent reform retroactively grands Google all the immunity in the
world I really do not understand how this would end well for Google without
sorting everything out in court just as it is.

* Of course theoretically Google could buy up MMI or other companies with a giant patent trove in mobile space to balance things out. Then again all public companies' board have fiduciary duty to maximize shareholder value and as long as Apple/Microsoft are willing to pay more, Google has slim chance of exclusivity.

~~~
shareme
It already went well ..according to Google Lawyers that has already happen
with MS..namely they were forced by DOJ to divest of those patents bought
through that deal and the Patent holding company was forced to license to open
source at reasonable rates

~~~
AllenKids
That were Novell patents, which were very entangled in the whole
SCO/IBM/Novell/Red Hat/Microsoft legal soap opera regarding Linux/Unix
licensing. Basically Microsoft was caught hand in the cookie jar, hence DOJ's
interest.

------
Hyena
Auction patent extensions in blocks. First, you start with a free, though much
shorter than present, initial period. After that, however, you must purchase
the next extension at auction. At period2, there will be X2% as many
extensions as there are expiring patents. At period3, you must buy another
extension out of that tranche, which has X3% as many extensions as period2.
And so on.

Extensions could be sold to any party before their "apply on" date, they are
not specific to a particular patent until it has been attached to it. Once a
patent passes its expiration date, it can never be recovered and is now public
domain forever.

I think this would work best if the sum of the extensions was less than
currently available. The basic idea is that a company who felt a patent really
was central to their business could pay a potentially very hefty price for the
privilege, so the number of extensions for sale should be kept quite small.

~~~
masklinn
The only point I would see for this scheme is to make money for the patent
office.

> The basic idea is that a company who felt a patent really was central to
> their business could pay a potentially very hefty price for the privilege,
> so the number of extensions for sale should be kept quite small.

It won't be. There's too much money to be made and too much lobbying involved.

------
protomyth
At this point I would be fine with starting with the baby set of killing any
patent that implements a business process. It would be a good start, simple to
explain, and kill off a goodly chunk of the trolls.

~~~
arockwell
Bussiness processes are already unpatentable.

~~~
protomyth
One click and most of Loadsys's patents are really biz process patents
implemented with technology.

~~~
arockwell
Sorry, I should have been more specific. My point is more that the problem is
systemic. You also can't patent something that has prior art, but it happens
all the time.

------
lists
Is the tech industry really that influential for job growth in America? Say
everything Cuban says is true, wouldn't there only be a marginal difference
between today and his tomorrow? Aren't the majority of unemployed non-tech
specialists?

It isn't clear to me why money lying around necessarily entails job growth in
the tech industry, especially for larger software firms but even smaller ones.
But again, I feel this would only be marginal contribution to the job
situation were it the case.

------
Goladus
So he makes an excellent point, especially for the long run, but I must admit
the tech sector is not currently facing serious job issues. Of course it would
probably be more beneficial to the economy and to society to have Google
hiring employees instead of buying patents, but that's not going to save
Detroit.

------
zenica
I think that just having requirement that a patent actually has to be in "real
production/read product" by the holder is the only modification to the law we
need. (there is challenge here how to ensure that production in not fake, but
it could be possible to ensure that)

------
epynonymous
good points raised by cuban, but i have to say, he's offered zero solutions to
the problem, just gripes. i don't think anyone's come up with a good solution
yet for patents probably because there are an over-abundance of them
(millions, possibly billions pending), you can't just do away with the system
suddenly, hell i think i have 1 or 2 myself.

but let's just play devil's advocate and say that the government refused to
grant anymore new patents and grandfathered all the current patents, you would
still need something else to take its place, perhaps say the latest trend of
open source licenses, though some of the issues with some of these licenses
seem to be on similar bad footing of corporate abuse.

i don't have any solutions myself, but i think china's ip laws are relatively
lax and a good example of what would happen if there weren't patents or at
least very poor enforcement. basically you'd have a bunch of companies
competing against each other possibly reverse engineering or out right
stealing things, at the end of the day, you, the consumer, would possibly have
a better set of choices and these companies would be innovating to compete,
not necessarily strangling you financially with patent litigations.

my major gripe with patents are the same as cuban, these big corporations are
using it as a new line of business/revenue stream and are throwing their
weight around with the protection of another big corporation (a.k.a. the
government), this a major loophole in the system, what was meant to quite
possibly protect the little guy, the small company, has now backfired and
become a major liability. e.g. nobody in their right mind would file a suit
against ibm, they would surely find some infringement in their arsenal of
patents and make you hurt for a good long time. you're suing ibm for using
your algorithm, they'd turn right around and sue you for something along the
lines of using the bathroom on an airplane
(<http://news.cnet.com/2100-1017-961803.html>).

the problem is truly systemic. when governments/companies/countries become too
powerful, it really becomes easy to abuse/manipulate the system, absolute
power corrupts absolutely. that's why there needs to be more refinement of
government to handle these things, to make sure that the system works.

------
artsrc
Many standards bodies require reasonable and non-discriminatory licensing. One
reform would be to require all patent holders to offer reasonable and non-
discriminatory licensing.

------
watty
Think of all the jobs required to fight these patents in court.

~~~
AgentConundrum
"Let's not legalize marijuana. Think of all the DEA agents that would lose
their jobs!"

~~~
KeithMajhor
I've heard that argument and I just don't know how to respond to it. Why would
you ever want to _create_ jobs. People don't need jobs. They need food and
cars and what not. To my way of thinking jobs should be actively destroyed.

~~~
AgentConundrum
I honestly can't tell if your comment is sarcastic or not.

~~~
KeithMajhor
I was being serious.

~~~
danielharan
Fair enough. If we replace jobs with prosperity in the OP would you be in
agreement?

~~~
KeithMajhor
No. If a job is unnecessary then it shouldn't be done. The fact that people
need to have jobs, even jobs which create no value, is a systemic failure.

~~~
danielharan
I actually agree with you.

What I was asking was: if you change Cuban's argument from "If you want to see
more jobs created – change patent laws" to "If you want to see more prosperity
created – change patent laws", would you agree?

~~~
KeithMajhor
Oh I thought you meant, "Let's not legalize marijuana. Think of all the DEA
agents that would lose their jobs!"

Yes I would agree. I think lawyers are generally pretty smart people and we're
losing the prosperity they could be creating.

------
notJim
I'm sorry, but this is completely absurd and startlingly naive as a solution
to the unemployment problem.

The limiting factor on the number of people with programming jobs is the
number of people capable of filling those roles. There simply are not
competent developers who are having trouble finding work right now.

If you want to talk about creating high-paying jobs that will allow the US to
be more competitive and prosperous in the future, that's fine, but then you
still have to address the greater problem of creating a qualified work force.

~~~
randomdata
I wrote about this under another thread:
<http://news.ycombinator.com/item?id=2853308>

The problem isn't that the workforce can't be programmers, or other technology
related discipline. Entry-level programming skills can be picked up in days by
virtually anyone. The problem is that, unlike the jobs of the past, there is
no force to drive companies to hire anyone but the very best.

If every single person in America knew how to program, they still wouldn't be
working, because the companies would hold the position open until someone who
is better at programming is available.

------
pkulak
"Another words"... Really, Cuban? At least we know this is really him
speaking, because that's pretty damn embarrassing to put out to the whole
world. It's a great post though. I agree 100%.

------
known
I'd say US should try doubling their exports to $2.5 trillions.

------
donnaware
Yes, the patent syste is broken, but here is what I think is at the crux of
it. What happens is that the patent office is completely overwhelmed by, not
only the volume but the complexity of the patents being filed. So what they do
is basically punt it to the courts. They take a cursory look at a filing and
if it is not too obviously a bad patent they grant it and then let the
interested parties fight it out in court. So that is what is driving the
patent troll problem.

To do it right you really need the patent office to a real in depth analysis
so that when the patent is finally granted it can really mean something.

Politically, that is simply not possible because it would require an expansion
of the Federal Government which we all know now is somehow a horrifying
thought.

------
donnaware
the really insidious effect of this patent trolling is that it robs capital
from true inovation. Instead of companies like Google and Apple spending money
on hiring people to inovate and create new products, they are spending
billions on defending what they already have. Very sad.

------
startupcto
For one, patents are not only serving technology companies. Drug companies
live ad die by their patents. A new drug cost that much to develop if without
a patent protecting it, it would have not make any business sense to even
develop new drugs.

~~~
dannyr
Cuban wasn't specific but I'm pretty sure he was referring to just software
patents.

------
maeon3
While we are patenting every line of every software program ever written, we
should also patent colors, smells, tastes, sounds, sensations, thoughts,
individual words, photographs, individual syllables, and visual/body language
gestures.

How come lines of code fall under the category of 'invention', But English
sayings, phrases and quotes do not?

~~~
justinsb
"English sayings, phrases and quotes" would come under copyright law instead
of patent law, but can still enjoy IP protection.

~~~
clark-kent
This is interesting because software is a composition in a computer language.
So the OP has an interesting point there. Code and algorithms shouldn't be
awarded patents just like you can't patent a musical composition.

~~~
capnrefsmmat
Software itself isn't patentable -- software licenses work on the basis of the
copyright on the source code, not a patent. Software patents generally
describe algorithms rather than their specific implementations, just like
ordinary patents describe a method of solving a problem.

------
justinsb
Perhaps these patent deals that are putting a price on inventions
(particularly at the billion dollar valuation level) will encourage companies
to spend _more_ on R&D - hiring more highly skilled workers - because they can
create relevant patents more cheaply than they can buy them.

The suggestion that abolishing patents will cause companies to spend that
money hiring people instead is not intuitively obvious to me. It sounds a lot
like trickle-down economics, which may be intellectually appealing but doesn't
seem to have worked out as originally expected.

