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Old 25th July 2011, 05:37 PM   #1
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Default The End of Innovation

I love audio, and I've posted thousands of things online that are audio-related. Every once in a while, a friend will ask why I don't do it for a living. And my answer is simple - there's no money in it. So I work in technology, because it pays the bills, and do audio as a hobby.

So today's episode of "This American Life" was very interesting, as it seems that lawyers have figured out a great way to pay the bills, which is to buy up patents and then sue the crap out of companies left and right.

For instance, a patent troll bought up patent 7,620,565 and proceeded to sue Electronic Arts, Square, Atari, and the team that did Angry Birds.

Here's the patent in question, granted five years ago. It seems to me that they patented something which already existed, didn't they?

A network, including a product sub-system that interacts with a user, gathers information from the user, communicates the information to the product's vendor, and receives new pre-programmed interactions from the vendor for future interactions with the user. The sub-system is in or attached to a product. Further components include a data processing system for constructing and downloading pre-programmed interactions to the product sub-system; a communications sub-system for transmitting the data from the product sub-system to the vendor's computer; a communications apparatus for reading the product sub-system's data, transmitting it to the vendor's computer, and downloading new pre-programmed interactions to the product sub-system; a data processing system residing in the product sub-system for conducting interactions with a user; and a data processing system residing in the vendor's computer for analyzing and reporting information gathered from users.

Customer-based product design module - Google Patents

I think the part about this that's particularly chilling is that patent trolls discourage innovation in a huge way. For instance, I've often daydreamed about writing a software program, because every millionaire that I've ever met got rich off of software. Software seems to be one of the legitimate ways to attain the American dream. Sure, there are tons of companies that fail, but when you succeed in software, the jackpot can be millions.

But what's the point of software innovation if a patent lawyer can drag you into court and say that you infringe on an existing patent? The issue becomes particularly acute if you read the patent above, because you'll notice that the patent granted was on something which already existed.

Taken to the extreme, I wouldn't be surprised to see a financical instution collaterize patents, similar to the way that mortgages were collaterized into CDOs
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Old 25th July 2011, 05:44 PM   #2
zman01 is offline zman01  Bangladesh
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Hope this does not become a trend.
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Old 25th July 2011, 06:03 PM   #3
18Hurts is offline 18Hurts  United States
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Those that can't innovate--litigate. I look for companies that use that as a model; Bose for instance--and I don't buy their garbage. Same way with computers, Apple has turned into a sue everyone walled garden--time to dump them off at the alter of trash can companies. Litigation is a nice short-term gain but once you are a hated company, that is what you're left with. The last choice company to deal with.

On the positive side of things, China will surpass the US as the world's largest economy in 2015/2016--they won't put up with patent trolls. Default to the golden rule on that one. Getting into a trade war with a larger economy than you that holds over a trillion in your treasuries is not a wise move.

So relax, the solution is coming in a few years so I expect rather large changes in the US/Euro ideals of politics, business, legal and defense matters. I'm looking forward to China and India driving the world around for awhile...then we have to clean up our act with tort reform, political reform, balanced budgets, patent reform and actually compete on a more level playing field.

Real patents that are innovative will survive--patent trolls and lawyers will die on the vine. I've noticed that China is very picky about what patents they pay attention to--this might be a good thing? At least it is a wake up call at the very minimum.
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Old 25th July 2011, 06:17 PM   #4
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Sadly all a patent is worth is exactly what you are willing or able to pay an attorney to protect it.

Once the attorney's own the patent, yikes, I don't even want to think about it.

Patent litigation can be drawn out for decades and become one of the most vile and destructive "legal" situations imaginable. Read the book Man of High Fidelity about Edwin Howard Armstrong, one of audio's brightest stars and see if that doesn't make you just sick!

Were headed to hell on a handkart if this becomes the norm.
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Old 25th July 2011, 06:36 PM   #5
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I work in software and dabble in audio, but my real passion is economics. We have a situation here that's created a moral hazard.

But first, a definition:

Moral hazard occurs when a party insulated from risk behaves differently from how it would behave if it were fully exposed to the risk.

Moral hazard arises because an individual or institution does not take the full consequences and responsibilities of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to hold some responsibility for the consequences of those actions.


Divorce law is a good example of a moral hazard. In 1975, 71.4% of divorces were initiated by women. Thirteen years later, the percentage had fallen to 65%. I would argue that the moral hazard created by divorce law had declined because women's incomes had risen, therefore they stood to gain less in a divorce. (IE, if men and women both stood to lose equally in a divorce, there would be no moral hazard.)

There are over a million lawyers in the United States, and a significant percentage of them are divorce lawyers. Therefore, it's safe to say that there is money to be made in divorce law.

Patent trolling seems to hinge on a similar moral hazard, and I have a feeling that a lot of lawyers are going to make a lot of money off of it. The upside of a successful lawsuit is just too great to ignore.

Depressing really, because it will certainly stifle innovation, and the business of patent trolling seems to be in it's infancy.
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Old 25th July 2011, 06:43 PM   #6
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Quote:
Originally Posted by 1audiohack View Post
Sadly all a patent is worth is exactly what you are willing or able to pay an attorney to protect it.

Once the attorney's own the patent, yikes, I don't even want to think about it.

Patent litigation can be drawn out for decades and become one of the most vile and destructive "legal" situations imaginable. Read the book Man of High Fidelity about Edwin Howard Armstrong, one of audio's brightest stars and see if that doesn't make you just sick!

Were headed to hell on a handkart if this becomes the norm.
Not so sure about that. Parasites are quite successful really. Humans have been around for 200K years, and mosquitoes have been around for four hundred times as long. If I had to place a bet on humans or parasites, my money is on parasites!
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Old 25th July 2011, 07:42 PM   #7
DF96 is offline DF96  England
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Two things wrong with that patent IMHO: it does not describe a mechanism but only an idea, and it is an idea which has been in use for many years. I don't think you would stand a chance of patenting that in Europe.

Patent law is written by lawyers, although at some point it had to be passed into legislation by politicians (also lawyers in many cases). Lawyers, like many 'professionals', are very good at establishing and maintaining closed shops. The crazy thing is, many people assume scientists and engineers are up to the same game when we say things that 'ordinary people' don't understand. We bend over backwards to make difficult things sound easy, while they seem to make simple things sound difficult.
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Old 25th July 2011, 09:57 PM   #8
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If I had to place a bet on humans or parasites, my money is on parasites!
Now, now. No need to talk about the legal profession like that.

If I ruled the world it would be much different. If a patent was taken out, and nothing using that patent by the company or individual holding it was released, say, within five years, (to allow for R&D), then that patent would be annulled, and free for anyone to use. Simple.
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Old 25th July 2011, 10:12 PM   #9
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I wonder when they are going to start suing microsoft, redhat, and other big software companies. IMO That patent is a joke and any attempts to sue people over it should be thrown out of court

Tony.
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Old 25th July 2011, 10:22 PM   #10
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Originally Posted by wintermute View Post
I wonder when they are going to start suing microsoft, redhat, and other big software companies. IMO That patent is a joke and any attempts to sue people over it should be thrown out of court

Tony.
This is the thing that's so fascinating about Myrhvold I think.

Click the image to open in full size.

Here's a guy who used to do "the daily grind", and worked as Microsoft's CTO. And then somewhere along the line he realized that there's a giant pile of cash to be made by suing technology companies. So he buys up all these patents and seems to spend most of his time winning trophies for barbecue and writing cookbooks.

From one perspective, it's completely evil. Getting sued stinks.

But from another perspective, he's kind of "living the dream"

And one can argue that he didn't invent the idea of patent trolling, and if he didn't do it someone else would.

Here's some info on the relationship between the owners of the patents and the people getting sued (it's not as direct as one would expect)

http://jacobinmag.com/blog/?p=752

Last edited by Patrick Bateman; 25th July 2011 at 10:28 PM.
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