Saturday, July 23, 2011

IP, Public Enemy #1

Here is a report from Planet Money of NPR on the problems with "patent trolls". It starts with:
Nathan Myhrvold is a genius and a polymath. He made hundreds of millions of dollars as Microsoft's chief technology officer, he's discovered dinosaur fossils, and he recently co-authored a six-volume cookbook that "reveals science-inspired tech­niques for prepar­ing food."

Myhrvold has more than 100 patents to his name, and he's cast himself as a man determined to give his fellow inventors their due. In 2000, he founded a company called Intellectual Ventures, which he calls "a company that invests in invention."

But Myhrvold's company has a different image among many Silicon Valley insiders.

The influential blog Techdirt regularly refers to Intellectual Ventures as a patent troll. IPWatchdog, an intellectual property site, called IV "patent troll public enemy #1." These blogs write about how Intellectual Ventures has amassed one of the largest patent portfolios in existence and is going around to technology companies demanding money to license these patents.
Go read the whole article to find out how high tech "patents" are just one way to give unscrupulous people (like Nathan Myhrvold and lawyers) lots of money while allowing them to block technological progress through the bottleneck of the court system. It is thoroughly disgusting. It is a perversion of the original idea of "patents". It is proof that it is time to throw out all the previous IP, Intellectual Property, legislation and start over with a more rational system that won't impede the progress of civilization and won't get greedy SOBs like Myhrvold to enrich himself at the expense of others.

Luckily I worked with a company that built systems mainly for scientists and governments. We never had software patents and as yet haven't fallen into the gunsights of a patent troll. But it is probably only a matter of time. Forget that the company develops all of its own software independently. I won't be surprised that after all the low hanging fruit has been "exploited" by the patent trolls, they will dig down deeper and attack companies like the one I worked for. I view the patent trolls to be a blight on industry and like potato blight, they will leave vulnerable populations, like Ireland in the mid 19th century, starving. They are a disease. They bring nothing to the table. They do nothing for civilization. They are driven purely by greed and a legal system that turns a blind eye to legalized robbery.

And it all adds costs to everything you buy. The NPR report ends with:
In early July, the bankrupt tech company Nortel put its 6,000 patents up for auction as part of a liquidation. A bidding war broke out among Silicon Valley powerhouses. Google said it wanted the patents purely to defend against lawsuits and it was willing to spend over $3 billion to get them. That wasn't enough, though.

The portfolio eventually sold to Apple and a consortium of other tech companies including Microsoft and Ericsson. The price tag: $4.5 billion dollars. Five times the opening bid. More than double what most people involved were expecting. The largest patent auction in history.

That's $4.5 billion on patents that these companies almost certainly don't want for their technical secrets. That $4.5 billion won't build anything new, won't bring new products to the shelves, won't open up new factories that can hire people who need jobs. That's $4.5 billion dollars that adds to the price of every product these companies sell you. That's $4.5 billion dollars buying arms for an ongoing patent war.

The big companies — Google, Apple, Microsoft — will probably survive. The likely casualties are the companies out there now that no one's ever heard of that could one day take their place.
I have a real soft spot in my heart for Nortel. It was a Canadian company that fell under from grace due to bad management. It once represented well over one-third of the Canadian stock exchange. Today it is worth nothing. It left a black hole in many Canadian investors pockets. From Wikipedia:
Nortel's market capitalization fell from C$398 billion in September 2000 to less than C$5 billion in August 2002. Nortel's stock price plunged from C$124 to C$0.47. When Nortel's stock crashed, it took with it a wide swath of Canadian investors and pension funds, and left 60,000 Nortel employees unemployed. Roth was criticized after it was revealed that he cashed in his own stock options for a personal gain of C$135 million in 2000 alone.
But Nortel built good products and had excellent patents. Sadly these are now bought in an "IP war" that does nobody any good and simply raises the prices of products. Shame!

No comments: