June 15, 2006 11:43 AM PDT

Politicos mull action against patent system abusers

WASHINGTON--U.S. politicians appeared sympathetic on Thursday to tech companies' cries for help combating what are commonly called "patent trolls"--companies that supposedly hold patents for no reason other than coaxing inflated settlements out of wealthy corporations.

"The patent system should reward creativity, not legal gamesmanship," Rep. Lamar Smith, the Texas Republican who chairs a House of Representatives intellectual-property panel, said at a hearing here entitled "Patent Trolls: Fact or Fiction?"

California Democrat Howard Berman said he was concerned about the patent holder who "spends not a cent on development...(and) patents every monkey he kisses. All he does is spend his time sitting around waiting, (hoping) that he can make enough of a case that it might infringe on his monkey that somebody will pay him to go away."

Each of the politicians has already put forth his own proposal aimed at improving what some decry as a broken patent system, though those suggestions remain works-in-progress while competing interests try to work out the best language. Both Berman and Smith said Thursday that they'd like to see new laws enacted this year. But that may prove tough because of an abbreviated election-year calendar.

Committee members seemed to agree that the U.S. Supreme Court's decision this spring in eBay v. MercExchange settled one of the thornier issues they were struggling to legislate--namely, when injunctions are appropriate in patent suits. The high court's ruling established that patent holders aren't "automatically" entitled to injunctions barring convicted infringers from using their inventions and instructed courts to consider several factors contained in centuries-old patent law, such as whether the patent owner would experience irreparable harm if an injunction weren't granted or whether other remedies, such as monetary compensation, would be enough.

The politicians also clearly took note of concerns expressed in a concurring opinion by Justice Anthony Kennedy, who wrote, "An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees" that can be "exorbitant."

"Is that an activity that is essential to innovation in America, that should be rewarded and that the process should accept and legitimate?" Berman asked.

He and his colleagues said other areas of concern remain, such as the way that damages are awarded to patent holders who win infringement suits and the quality of patents issued. Both bills, for instance, would establish a "post-grant opposition system" in which the public would have a certain number of months to dispute the validity of patents after they are issued without having to go to court.

'Loser-pays' approach suggested
Paul Misener, Amazon.com's vice president of global public policy, urged the politicians to concentrate primarily on rewriting the law surrounding the damage awards process. One suggestion made by Amazon and other technology companies, whose products often rely on as many as hundreds of thousands of distinct patented components, involves requiring juries to award money to patent holders based solely on the infringed patent's contribution to the overall product, not on lost sales for the entire affected product.

They argue that by effectively reducing the potential gains, people and companies may not have such a great incentive to obtain their livelihood by sitting on patents until they can find a company to sue for infringement.

Misener also called on politicians to outlaw the practice of awarding compensation for estimated lost profits to patent holders who don't offer a product that competes directly with the company they're accusing of infringement. Those who "do not compete in (the) marketplace are not entitled to lost profits but instead to a reasonable royalty," he said.

But Dean Kamen, a New Hampshire-based independent inventor perhaps best known for inventing the Segway Human Transporter, cautioned politicians not to erode, in their quest to root out "bad actors," the rights of legitimate innovators who thrive on licensing their patents to larger companies.

"If a big company repeatedly disregards people's rights, they are as bad as the trolls at the other end," Kamen said. He suggested that a way to quell abuses by both sides could be to institute "some form of loser-pays" approach to "penalize people who are abusing the system."

After hearing Misener's suggested reforms, Smith and Berman couldn't resist taking jabs at an ongoing controversy over Amazon.com's one-click patent, which covers a process for making online purchases in a single step and is currently under review by the U.S. Patent and Trademark Office. The e-commerce giant earned notoriety when it asserted the patent against rival Barnesandnoble.com several years ago.

"Could not Amazon.com be accused of being a troll for patenting the one-click?" Smith asked, a wry smile on his face.

Misener defended the patent as "a radical departure from the shopping cart model" when it was granted in 1998. "We only exercised the patent against someone who at the time...had publicly announced intention to crush our business," he said. "This wasn't some scheme to hit up small users."

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It's not who holds the patent and it's not "quality"
It's not who holds the patent and it's not "quality" of the patent.

The real problem is the word "obvious". Isn't it obvious that ANYTHING can be done with computers? The universality of computers is their defining property. So now we hear that someone sues over "storing and forwarding video". Someone else over "network based telephony". Isn't it obvious that ANY KIND OF DATA can be sent over a digital network?

So perhaps it's not whether it's obvoius or not, but whether there was some effort or investment in determining the details? Amazon spent money on redesigning it's website all those shopping cart icons. Doesn't it deserve a monopoly on "website that sells and does not display a shopping cart"? It was not "obvious" to others that you can design a website that works like a european department store and not like an American supermarket...

The problem is the word "obvious". It should be replaced by something else. Perhaps "straightforward". Perhaps something else. There might be a lot of development work involved in making something happen. It doesn't mean that it innovative in any way, even if no one else has done it before. If it's done in a straightforward way that others trying to do the same thing could have followed, i.e., if it doesn't require any kind of ingenious idea to make it work, it should not be patentable. Even if it's a very complex system. In a complex world you get complex solutions. That doesn't mean they deserve the protection of a monopoly. E.g., sending video over the internet should not be patentable, since it's just sending data over the internet, everyone knows it's possible to send data over the internet, and the rest of it is sorting out the details. On the other hand, a radical new way to reduce the size of the video data being sent might deserve a patent, if it's not just reshuffling of existing compression methods to obtain a slightly better compression ratio. Redesigning an online store to work "without a shoping cart" is just copying the way many brick and mortar establishments work, and since all online commerce is just copying of brick and mortar commerce to the web (using additional functionality that the web obviously makes possible) there's nothing in it that should make it patentable.
Posted by hadaso (468 comments )
Reply Link Flag
It's about being 1ST (and 1st software should not be "patented")
of course the obvious is sometimes obvious to many people before someone patents a way to do it. What difference does it make if you're the first one to think of something or not? Aren't patents supposed to be about rewarding the first one to come up with a WAY TO DO IT, the first shot at profiting from their innovation? But, this has nothing to do with software.

Software is writing. Unique writing is covered under Copyright and Trademark law. There's nothing patentable about the written word. However, if you "invent" a new language in which to write, now you might want to try for the 'twenty' year or so patented exclusive right to YOUR language and either put out all of your writtings in your new language yourself, or, license others to also write things in your language. `Capishski`?
Posted by Possibilliam-20000913113191555 (3 comments )
Link Flag
It's not who holds the patent and it's not "quality"
It's not who holds the patent and it's not "quality" of the patent.

The real problem is the word "obvious". Isn't it obvious that ANYTHING can be done with computers? The universality of computers is their defining property. So now we hear that someone sues over "storing and forwarding video". Someone else over "network based telephony". Isn't it obvious that ANY KIND OF DATA can be sent over a digital network?

So perhaps it's not whether it's obvoius or not, but whether there was some effort or investment in determining the details? Amazon spent money on redesigning it's website all those shopping cart icons. Doesn't it deserve a monopoly on "website that sells and does not display a shopping cart"? It was not "obvious" to others that you can design a website that works like a european department store and not like an American supermarket...

The problem is the word "obvious". It should be replaced by something else. Perhaps "straightforward". Perhaps something else. There might be a lot of development work involved in making something happen. It doesn't mean that it innovative in any way, even if no one else has done it before. If it's done in a straightforward way that others trying to do the same thing could have followed, i.e., if it doesn't require any kind of ingenious idea to make it work, it should not be patentable. Even if it's a very complex system. In a complex world you get complex solutions. That doesn't mean they deserve the protection of a monopoly. E.g., sending video over the internet should not be patentable, since it's just sending data over the internet, everyone knows it's possible to send data over the internet, and the rest of it is sorting out the details. On the other hand, a radical new way to reduce the size of the video data being sent might deserve a patent, if it's not just reshuffling of existing compression methods to obtain a slightly better compression ratio. Redesigning an online store to work "without a shoping cart" is just copying the way many brick and mortar establishments work, and since all online commerce is just copying of brick and mortar commerce to the web (using additional functionality that the web obviously makes possible) there's nothing in it that should make it patentable.
Posted by hadaso (468 comments )
Reply Link Flag
It's about being 1ST (and 1st software should not be "patented")
of course the obvious is sometimes obvious to many people before someone patents a way to do it. What difference does it make if you're the first one to think of something or not? Aren't patents supposed to be about rewarding the first one to come up with a WAY TO DO IT, the first shot at profiting from their innovation? But, this has nothing to do with software.

Software is writing. Unique writing is covered under Copyright and Trademark law. There's nothing patentable about the written word. However, if you "invent" a new language in which to write, now you might want to try for the 'twenty' year or so patented exclusive right to YOUR language and either put out all of your writtings in your new language yourself, or, license others to also write things in your language. `Capishski`?
Posted by Possibilliam-20000913113191555 (3 comments )
Link Flag
lawyers
what do you call 1000 lawyers at the bottom of the sea?
Posted by gggg sssss (2285 comments )
Reply Link Flag
A small start
n/c
Posted by aabcdefghij987654321 (1721 comments )
Link Flag
lawyers
what do you call 1000 lawyers at the bottom of the sea?
Posted by gggg sssss (2285 comments )
Reply Link Flag
A small start
n/c
Posted by aabcdefghij987654321 (1721 comments )
Link Flag
trolls...aka inventors
All this talk about patent trolls is not what it seems. Rather than promoting the publics interest these handful of multinational tech firms who continually whine about this are simply looking for ways to legalize theft. They cant innovate so they steal. Their objective is not to fix the patent system, but kill it. They would rather compete on size alone so they dont have to worry about the next great invention marginalizing their businesses.

Sadly, some legislators and other parties have been duped by these slick firms and their well greased lawyers, lobbyists (some disguised as trade or public interest groups), and stealth PR firms. Dont be surprised to find the Washington lobbyist scandal spreading into the patent deform proceedings.

Where do trolls come from? Take a look and you will be enlightened. The game works this way. A lone inventor or small company develops a new technology or process. They take it to a large firm to try to sell it or get it funded. The big company isnt interested. Guess what? A year or two later to the consternation of the inventor the big company is using the invention they said they werent interested in! Surprised? You shouldnt be. It happens all the time.

At that point the inventor is ticked, but he doesnt have the money to do anything about it. What does he do? He signs an agreement with an investor who puts up the cash to go after the big company and hold their feet to the fire. So tell me, what in blazes has the inventor or the investor done wrong? Nothing! Rather, by going after these crooks they are defending American ingenuity and progress.
Posted by stevewr (14 comments )
Reply Link Flag
trolls...aka inventors
All this talk about patent trolls is not what it seems. Rather than promoting the publics interest these handful of multinational tech firms who continually whine about this are simply looking for ways to legalize theft. They cant innovate so they steal. Their objective is not to fix the patent system, but kill it. They would rather compete on size alone so they dont have to worry about the next great invention marginalizing their businesses.

Sadly, some legislators and other parties have been duped by these slick firms and their well greased lawyers, lobbyists (some disguised as trade or public interest groups), and stealth PR firms. Dont be surprised to find the Washington lobbyist scandal spreading into the patent deform proceedings.

Where do trolls come from? Take a look and you will be enlightened. The game works this way. A lone inventor or small company develops a new technology or process. They take it to a large firm to try to sell it or get it funded. The big company isnt interested. Guess what? A year or two later to the consternation of the inventor the big company is using the invention they said they werent interested in! Surprised? You shouldnt be. It happens all the time.

At that point the inventor is ticked, but he doesnt have the money to do anything about it. What does he do? He signs an agreement with an investor who puts up the cash to go after the big company and hold their feet to the fire. So tell me, what in blazes has the inventor or the investor done wrong? Nothing! Rather, by going after these crooks they are defending American ingenuity and progress.
Posted by stevewr (14 comments )
Reply Link Flag
 

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