I enjoyed Levitt & Dubner’s “Freakonomics”, and picked up the followup “Superfreakonomis” recently at an airport.Â The last chapter, however, was astonishing.Â The entire chapter was devoted to a glowing advertisement for Intellectual Ventures, pointing out that they own 20,000 patents “more than all but a few dozen companies in the world”, but of course “there is little hard evidence” that they are patent trolls.
But this bunch of wacky genius billionaires have solved global warming (much of which they dispute anyway) and can control malaria and prevent hurricanes from forming.Â Unlike the rest of the book which covers analysis of well-known facts and disputes them with insightful economic research, this chapter is so breathless and gushy that it makes me question the rest of the author’s work.
I first came across Intellectual Ventures when The Economist reversed their 100-year opposition to patents, and the only reason I could find was a similarly cheerleading piece about this company.Â (I had naively expected new research revealing some net positive of patents, or some such revelation).
Side note: when a respected information source covers something where you have on-the-ground experience, the result is often to make you wonder how much fecal matter you’ve swallowed in areas outside your own expertise.
So, what is IV actually doing?Â Buying up loads of patents and licensing them to companies who calculate it’s not worth the fight is patent trolling 101.Â Yet the scale they’re operating on puts them on new ground, and opens new opportunities.Â It seems obvious to get corporate investors on board by promising them immunity from patent claims.Â With enough patents you stop trying to license them one-by-one and just tax each industry at some non-negotiable rate.Â No doubt they have more tricks I haven’t even thought of, but these potential devices really do make them a new breed of Super Trolls.
Their efforts to actually attain their own patents could simply be more of the same, but it’s also a relatively cheap but clever PR exercise (as shown by their media treatment).Â This will help them when (legislative?) efforts are made to shut down patent trolls.Â I’m fairly confident that they’ll simply license rather than implement anything themselves; actually producing things requires much more work, and simply exposes you to others’ patents.
Without diving deeply into this, they seem to understand two things clearly:
- They learnt from Microsoft that government-enforced monopolies are worth billions.Â Microsoft had copyright on software, this is patents.
- Development is getting much cheaper, while patents are getting more valuable.Â Â Cheaper development is shown clearly by free software, open hardware and hackerspaces.Â Patent value increases as more of the world becomes a more profitable and enforceable patent target.
Now, I don’t really care if one company leeches off the others.Â But if they want to tax software, they have to attack free software otherwise people will switch to avoid their patent licensing costs.Â And if you don’t believe some useful pieces of free software could be effectively banned due to patent violations, you don’t think on the same scale as these guys.
thanks for opening my eyes.
I’m afraid this scary, scary circumstance will never become an issue of public debate.
These douchebags know their dance too well.
Politicians work only in two modes: quiet mode or flash mode.
In quiet mode they do what the most powerful lobby in the room tells them while the majority of voters is not looking or does not understand. Typically: relaxing rules (e.g., safety rules on offshore drilling, on patent granting,…).
The only way to trigger flash/agitated mode is a massive public outcry. So the only way to reform patents is to fight fire with fire and have more and more patent madness, until the system implodes somehow. Not clear how. This could be for instance a number of big software companies migrating out of the US to “patent havens”, leaving only trolls and lawyers behind?
I’m not a fan of Levitt. His most famous and controversial research was fundamentally flawed :not using per-capita numbers, and not controlling for state-level effects as the paper claimed. The first is a theoretical flaw, the second is either a really, really bad mistake or an attempt to cook numbers.
The critical paper: http://www.bos.frb.org/economic/wp/wp2005/wp0515.pdf
The following website appears to have a decent discussion of the issue: http://www.isteve.com/abortion.htm
Couldn’t agree more. That one terrible chapter puts the quality of all their other work in doubt, and is just completely out of place. They should fire their editor.
The following excerpt caught my attention:
“Development is getting much cheaper, while patents are getting more valuable. Cheaper development is shown clearly by free software, open hardware and hackerspaces.”
So in a way, as long as software patents exist, Free software encourages companies to turn to patents as a source of wealth. For example, were there not a dozen top-notch MP3 encoders and decoders available for free with source code under permissive licences, Fraunhofer might be charging for its software (i.e. the implementation of its patents) rather than for patent licences.
Of course, the solution is not to get rid of Free software, but rather to fix the patent system. Patents subvert the free market’s mechanism for lowering prices, and they hinder innovation on existing technologies. Both of these negative effects must be weighed against the positive effect of encouraging invention, and the balance is off at present.
Your blog post has given me a new perspective on the relationship between patents and Free software. Thanks!
For some reason I was very disappointed to learn that Neal Stephenson works with Intellectual Vultures.
Thanks for your interesting pontification. It opens the doors to much introspection & invites a step-back-to-look approach for things one “already knows.”
“Side note: when a respected information source covers something where you have on-the-ground experience, the result is often to make you wonder how much fecal matter youâ€™ve swallowed in areas outside your own expertise.”
How true! I’ve often noted that when I see something in the newspaper or TV(or hear it on radio) on a topic that you DO happen to know something about, how it is that they nearly always get it WRONG. I’ve tended to assume it is from ignorance rather than malice (or perhaps just overly enthusiastic attempts to “dumb it down” for the general populace), but the result is the same: bogus information being proffered.
The concept behind patents is funny.
I can just hear the professor telling his students:
“The first to submit the next assignment’s solution onto our class’ web forum will get a passing mark and everyone else will fail the assignment since obviously everyone else would have copied the first person. Also, keep in mind that for the next 8 semesters the rest of you will not be able to get any credit for future problems that leverage the features of that solution since its author (ie, the student that turns in the solution first) will have an 8 term monopoly on it. Finally, as a warning, the solution will be *non-obvious* to many of you, so don’t think you will necessarily be able to submit the solution before the end of class today.”
Actually, this professor is a bit kind. At least professor puts all students on an equal footing rather than what our USPTO does, granting only to those that pay the big bucks per “invention” the stifling privileges to keep others from duplicating or extending freely the ideas behind those broad patent outlines. In fact, the patent author can easily get most of the ideas and inspiration from highly detailed open source, but do not attempt to do same to those patents’ broad ideas afterward.
Software patents are so sad. See for example http://techdirt.com/article.php?sid=20100706/03220710079#c946 and a few comments that follow that one.
Rusty, I agree with you whole heartedly. Unfortunately, you failed to mention the pitch for Microsoft Amalga. I finished the book in disgust, vowing never to read Levitt and Dubner again. As far as I am concerned, they sold out. Thanks for the rant!
Am going through this chapter and feeling exactly the same.
Sadly, nothing you’ve said here is at all surprising :(
Intellectual Vultures are notorious. Nathan Myrvold is a scary person because he really believes he is doing good.
Yet I think in the end they will fail. Recent arguments before the Supreme Court seem to have put some common sense back into the legal system with regard to business method patents and they have some implications for software patents as well – see Opensource.com for more on the Bilsky case.
Also, the Free Software cat is out of the proverbial bag. It will be extremely difficult for monopolies to identify proprietary software in GPL licensed code, not least since we now have a body of prior art and there has yet to be any identification of infringing code.
So yes, we will still struggle with patents stifling innovation, and blowhards like the Freakenomics dudes will still do puff pieces on a social succubus like Intellectual Vultures, but software patents worldwide will most likely falter. And we’ll all be better off if they do.
every time a party sues for patent infringement they take a chance with odds around 50% that they will lose. that is what the stats stay. lawyers may argue otherwise. i came across this blog because i was researching my favourite browser: elinks. you smart hackers need to *not be intimidated* by patent threats. there is far too much fear in the IT world of patents. e.g. IV has the resources to litigate heavily (their pool partcipants have agreed to fund such litigation). but… they still stand a (roughly) 50% chance of losing everytime they decide to litigate. result: most patent disputes are settled not litigated. either way, lawyers make some coin. that’s why i think this man started IV: yrs at MS of being frustrated by lawyers profiting from the patent system while he was scared stiff (or obliged to be) of patents. now i’m sure he feels less fearful. but make no mistake, fear is what drives the IV business. fear is certainly the prime motivation for many IV clients to join an IV patent pool.
– links is actually my fav (elinks is for times i need added features like cookies, etc.)
– i forgot to mention that in these patent suits, the risks for the patent owners may sometimes be greater than the risks to the *alleged* “infringer”… because in these trials (if it goes that far), patent claims can be invalidated… and the patent owner loses the right to assert them against *anyone else* going forward… such can be a major loss of IP asset and a difficult explanation to the board, wall st. and shareholders. on the other hand, what is the potential loss to the other party? it depends. but you guys have control over what you do as programmers. you can minimise your potential loses.
the point is: to assume the patent tribunals are always consistent and predictable is unwise. there is a reason ED Texas is a very popular venue for certain types of disputes. but please look at the stats and judge the odds for yourself. (hint: you could write a program to do this ;)
Intellectual Ventures’ Nathan Myhrvold told Business Week in July 2006 that he didnâ€™t think suing people was a good idea. Apparently, his investors â€“ including universities receiving government funding, private equity funds, and corporations â€“ decided that his returns were not coming fast enough. Or maybe, he was just marketing one story on his way to his real business plan. Back in 2006, his position was summarized in the following manner.
“Myhrvold adamantly rejects the idea that suing people will become a mainstay of his business operation. “Litigation is a huge failure,” he says. It’s “a disastrous way of monetizing patents.”
Times have changed. However, MÂ·CAMâ€™s commitment to patent quality is as clear today as it was when he and his investors first started Intellectual Ventures. And, given Intellectual Venturesâ€™ recent cases, we thought the public may want to know a bit more about whatâ€™s â€˜under the hoodâ€™.
Today MÂ·CAM, Inc. released its Patently ObviousÂ® report today on the patent infringement lawsuits filed by Intellectual Ventures in December, 2010.
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