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Re: [ontolog-forum] [Fwd: Re: More on patents]

To: <cassidy@xxxxxxxxx>, "'[ontolog-forum] '" <ontolog-forum@xxxxxxxxxxxxxxxx>
From: "Rich Cooper" <rich@xxxxxxxxxxxxxxxxxxxxxx>
Date: Sat, 25 Sep 2010 09:47:12 -0700
Message-id: <20100925164716.4B4D4138ECF@xxxxxxxxxxxxxxxxx>

Hi Pat,

 

My comments below:

 

Sincerely,

Rich Cooper

EnglishLogicKernel.com

Rich AT EnglishLogicKernel DOT com

9 4 9 \ 5 2 5 - 5 7 1 2

 

-----Original Message-----
From: ontolog-forum-bounces@xxxxxxxxxxxxxxxx [mailto:ontolog-forum-bounces@xxxxxxxxxxxxxxxx] On Behalf Of cassidy@xxxxxxxxx
Sent: Friday, September 24, 2010 8:28 PM
To: ontolog-forum@xxxxxxxxxxxxxxxx
Subject: Re: [ontolog-forum] [Fwd: Re: More on patents]

 

 

Rich,

   To me the most telling lesson from this paper is that, even **IF** one assumes that that a patent covers some true innovation, there is net negative social benefit from allowing patents for software.   If one adds the fact that vultures have successfully patented prior art (from the ignorance of the patent office, and perhaps the ignorance of the patenter as well), then the net social benefit is so negative as to cry out for elimination of the possibility of patenting (or copyrighting, for that patter) software.

 

Pat Cassidy

 

Pat, you are looking at a paper written by a person with only theoretical knowledge - his own theories at that.  His assumptions are as suspect as ancient baloney to me, from my own experience in working with small companies.  I have been prosecuting, litigating and developing funding projects for small technology businesses for about ten years.  Before that, I was developing technologies for large businesses and believe me, the technology they develop is minimal at best. 

 

This is a good paper, given such deeply faulty assumptions, that I find it pretty, but not convincing.  Very few technology businesses would even have made the stage of growth to get their technologies into the market without the funding.  The venture capitalists insist on patents as security for their investments, otherwise they would be foolish to put money into technology development projects.  

 

Consider what happened in the computer industry from the inception until the late seventies, when the home computer business put the technology into the hands of entrepreneurs instead of big business.  Prior to that, IBM, Univac, CDC, GE, RCA and Bell Tel were the primary force in computing.  Growth was extremely slow, and the creativity of the products was extremely minimal.  

 

After computers got to the scale that college kids could afford to build, program, develop and deploy computers, the economy exploded.  From 1981, when IBM contributed the PC to multiple sourcing, new technologies and better solutions began to emerge at a fast pace.  Before that, progress was excruciatingly slow, and funding was just not available for small technology companies.  Wall Street wasn't investing, nor was main street, nor venture capitalists, due to lack of proof of market viability in the business community.  

 

Moore's law was working as early as '72, but it was with major conservative companies such as Fairchild, TI, Motorola, HP, and the other large, conservative financial investment companies that never did take much risk with their funding, though TI was better at it than most.  That was the point when the computer revolution began to seriously make such major impacts into the economy.  

 

It's not a coincidence that Silicon Valley was made up of companies with two to twenty engineers at its inception.  And at that time, software was extremely simple stuff, doing extremely simple tasks, for a sophisticated user that had to be trained how to work with it before even applying that limited technical quality to real problems.  

 

To see the other side, look at the quality of open source software.  Every single one is a me too project, fiddling with stuff that isn’t fit to buy without at lot of custom fitting labor to meet an application's specific need.  That's why open source software is free to this day - nobody would pay for that poorly debugged, crash-prone suite of semi-developed products.  

 

Software patents were late arrivals on the scene, even compared to other patent technologies.  That's in part because the industry had not found the business plan of developing significant technologies to commercial value, then taking the company public, and then moving on (like the small companies often do compared to the big ones) and developing more sophisticated products to sell to more new markets.  

 

Without one event - IBM's release of a well engineered, well documented PC design at a crucial moment in the technology rollout, would not have gotten funding, with or without strong patent protection.  

 

So I don't believe that the issue is a social value one, but a means plus function enablement of the technology.  

 

In summary, I like the model because of its simplicity - it will be a useful general framework for investment, tactical and strategic planning, but like most models, it misses the serious realities it purports to demonstrate.  

 

JMHO,

-Rich

 

>----- ------- Original Message ------- -----

>From: "Rich Cooper" <rich@xxxxxxxxxxxxxxxxxxxxxx>

>To: <edbark@xxxxxxxx>,

>     "'[ontolog-forum] '"

><ontolog-forum@xxxxxxxxxxxxxxxx>

>Sent: Fri, 24 Sep 2010 14:16:58

> 

>Lovely paper, thanks, Ed!

> 

>Great math model, though overly simple in its

>assumptions.  Just having

>looked it over quickly so far, I also find the

>projected value judgments to

>be nicely theoretical, but likely unsupportable by

>the existing evidence.

>But that may be my own bias in then end.  As I look

>deeper into it, that

>view will likely change. 

> 

>But with proper interpretation, the math model

>should be very useful in many

>applications trading off investment and tactics

>with strategy.

> 

>So I'll give it a good read, which will take me a

>while to respond in depth.

> 

> 

>Thanks,

>-Rich

>

>Sincerely,

>Rich Cooper

>EnglishLogicKernel.com

>Rich AT EnglishLogicKernel DOT com

>9 4 9 \ 5 2 5 - 5 7 1 2

> 

>-----Original Message-----

>From: ontolog-forum-bounces@xxxxxxxxxxxxxxxx

>[mailto:ontolog-forum-bounces@xxxxxxxxxxxxxxxx] On

>Behalf Of Ed Barkmeyer

>Sent: Friday, September 24, 2010 9:31 AM

>To: [ontolog-forum]

>Subject: [ontolog-forum] [Fwd: Re: More on patents]

> 

> 

>A colleague of mine contributed an additional

>reference to Rich Cooper's

>contribution.

> 

>-------- Original Message --------

>Subject:   Re: [Fwd: [ontolog-forum]

>(Software) Patent litigation]

>Date:      Thu, 23 Sep 2010 17:24:56 -0400

>From:      Guillaume Radde <guillaume.radde@xxxxxxxx>

>Reply-To:  msidtechtalk@xxxxxxxx

><msidtechtalk@xxxxxxxx>

>To:  Multiple recipients of list

><msidtechtalk@xxxxxxxx>

>References:      <4C9BBC97.8050205@xxxxxxxx>

> 

> 

> 

>Here is another interesting paper to reference when

>talking about

>software patents, from american economist and Nobel

>price laureate Eric

>Maskin:

> 

>http://www.researchoninnovation.org/patent.pdf

> 

>Guillaume

> 

> 

>> -------- Original Message --------

>> Subject: [ontolog-forum] More on patents

>> Date:    Thu, 23 Sep 2010 12:43:08 -0400

>> From:    Rich

>Cooper<rich@xxxxxxxxxxxxxxxxxxxxxx>

>> Reply-To:     

>[ontolog-forum]<ontolog-forum@xxxxxxxxxxxxxxxx>

>> To:      '[ontolog-forum]

>'<ontolog-forum@xxxxxxxxxxxxxxxx>

>> 

>> 

>> 

>> Hi Ontologizers,

>> 

>> 

>> 

>> Since we have recently been discussion patents

>wrt ontologies, this

>> statistical study of patent litigation might be

>of interest to many

>> readers of this list.  Please see below for news

>item posted on a patent

>> list I subscribe to.

>> 

>> 

>> 

>> HTH,

>> 

>> -Rich

>> 

>> 

>> 

>> Sincerely,

>> 

>> Rich Cooper

>> 

>> EnglishLogicKernel.com

>> 

>> Rich AT EnglishLogicKernel DOT com

>> 

>> 9 4 9 \ 5 2 5 - 5 7 1 2

>> 

>> 

>---------------------------------------------------

>---------------------

>> 

>> *Bombshell Study: Heavily Litigated NPE Patents

>Overwhelmingly Lose at

>> 

>Trial<http://feedblitz.com/r.asp?l=50410480&f=15116

>1&u=191723&c=0>***

>> 

>> To date, litigated patents were viewed as

>"strong" patents - the types

>> that defendants were supposed to avoid taking to

>trial.  Moreover,

>> litigated patents were seen as more valuable,

>since they managed to

>> survive an all-out attack on validity by a

>presumably well-financed

>> defendant.  Earlier studies (John  R.  Allison

>/et  al/.,  /Valuable

>>   Patents/,    92  Geo.  L.J.    435  (2004)) looked

>at litigated patents,

>> and found that they differed from non-litigated

>patents in that they (1)

>> include more claims, (2) cite more prior art, (3)

>are cited more often

>> by later patents, and (4) come from larger

>"families" of

>> patents/continuations.  Each of these factors are

>now used in

>> conventional methodologies to determine the

>private value of patents.

>> 

>> John Allison

>> 

><http://www.feedblitz.com/t2.asp?/151161/191723/0/h

>ttp://papers.ssrn.com/sol

>3/cf_dev/AbsByAuth.cfm?per_id=118168>,

>> Mark Lemley

>> 

><http://www.feedblitz.com/t2.asp?/151161/191723/0/h

>ttp://papers.ssrn.com/sol

>3/cf_dev/AbsByAuth.cfm?per_id=32215>

>> and Joshua Walker

>> 

><http://www.feedblitz.com/t2.asp?/151161/191723/0/h

>ttp://papers.ssrn.com/sol

>3/cf_dev/AbsByAuth.cfm?per_id=1533021>

>> recently took on the task of identifying every

>patent that was litigated

>> eight or more times between 2000 and February

>2009, including cases

>> still pending, and compared the outcomes of the

>cases against patents

>> that were litigated only once.  In the course of

>their analysis, they

>> found 106 such patents, which have been litigated

>in a total of 2,987

>> different patent assertions in 478 different

>cases, often against

>> multiple defendants.

>> 

>> What did they find?  Serial patent litigants, and

>particularly NPE's

>> (aka "trolls"), for a lack of a better phrase,

>"get creamed" when they

>> go to trial:

>> 

>> [T]o  our  great  surprise,      *we  find  that  the

> willingness  of

>>   these  patentees  to  litigate  their cases  to

> judgment  is    a

>>   mistake*.    Far  from  being  stronger  than

>other      litigated  patents,

>>   the most---litigated  patents  that  go  to

>judgment  are    far  more

>>   likely  to  be  held  invalid  or    not

>infringed.  The  differences

>>   are  dramatic.  Once--litigated  patents  win

>in  court  almost  50%

>> of  the  time,  while  the  most--litigated  -

>and  putatively  most

>>   valuable  -  patents  win      in court  only

>10.7%      of  the  time.

>> 

>> 

>> 

>> The      results  are  equally  striking  for

>patents  owned  by

>>   non--practicing  entities      (NPEs), and for

>software  patents.  NPEs

>>   and  software  patentees  overwhelmingly  lose

>their      cases, even with

>>   patents  that  they  litigate  again  and

>again.  Software  patentees

>>   win  only    12.9%  of their  cases,  while      NPEs

> win  only  9.2%.

>> 

>> 

>> 

>> [S]tatistical  tests  bear  this  out.  We

>compare  the  proportion  of

>>   win  rates,  testing  the      null  hypothesis

>that  there  is  no

>>   difference  between  the  most--litigated  and

>once--litigated  patent

>>   outcomes.    We test  the  proportions  in

>several  ways,  both

>>   including    and  excluding    settlements  in  the

> denominator  of

>> decided  cases,  and  both  including  and

>excluding  default

>>   judgments    as  plaintiff  wins.  *No  matter

>which test  we  use,  the

>>   differences  are  highly  statistically

>significant  -  the

>>   most--litigated  patentees  were more  likely

>to  lose*.

>> 

>>   Also,

>> 

>>   Considering  only  the  patents  themselves,

>the  proportions  of

>>   initial  ownership  by  large  and  small

>entities  are    almost      equal

>>   in  the  most--  and  once-litigated  data

>sets:      53.5%  of

>>   most--litigated  patents  and  47.8%  of

>once-litigated  patents  were

>>   issued  to  large  entities.  The    picture  is

>quite      different,

>>   however,  when  one  looks  at  the  proportion

> of  actual  assertions

>>   in  litigation,  where  large  entities

>account  for  a  surprisingly

>>   small  percentage  of  the  most--litigated

>patents.  Because  small

>>   entities  are  disproportionately    represented

>in  the  actual

>>   litigation  of  most--litigated  patents . . .

>patents  that    were

>>   initially    issued      to  large  entities

>represent  only  22.4%  of  the

>>   assertions  in  the  most--litigated  group,

>compared  to  47.8%  of

>>   the  once--litigated  group.

>> 

>> 

>> 

>> [W]hen  the    cases  do  not    settle,  large

>patent  plaintiffs  are

>>   significantly  more  likely  than    small  ones

>to  win,  without

>>   regard  to  how  the  data  are  sliced.  When

>we  combine  the  two

>>   data  sets,  large  entity  plaintiffs  win

>53.1%      of  the  cases

>>   decided  on  the  merits  (55.9%  if  default

>judgments  are

>>   included),  while  small  entity  plaintiffs

>win  only  12.3%  of

>>   their  cases  (23.1%  if  default    judgments

>are  included).

>> 

>> Other interesting findings:

>> 

>> 

>> 

>> - Just 16.7% of the assertions of the

>most-litigated patents were made

>> by product-producing companies.

>> 

>> 

>> 

>> - Software patents constituted 20.8% of the

>once-litigated patents but

>> 74.1% of the most-litigated patents.

>> 

>> 

>> 

>> - Owners of non-software patents are far more

>likely to win their cases

>> than are software patent owners (37.1% versus

>12.9% overall)

>> 

>> 

>> 

>> - The number of defendants per case is a negative

>predictor of

>> settlement - the more defendants there are per

>case, the less likely the

>> case is to settle.  Also, the more defendants

>there are per case the

>> more likely those defendants are to win.

>> 

>> 

>> 

>> The study concludes:

>> 

>> We  designed  this  study  to  explore  the

>effects  of  repeat  play

>>   on  litigation  behavior,      contributing  to  a

>literature  on  the

>>   economics    of  civil  procedure  as  well      as

>the  substance  of

>>   patent  law.  But  what  we  found  was

>dramatic  and    unexpected:

>>   The  patents  and  patentees  that  occupy  the

> most      time  and

>>   attention    in  court  and    in  public  policy

>debates  -  the  very

>>   patents  that  economists      consider  the  most

>valuable  -  are

>>   astonishingly  weak.  Non--practicing  entities

> and  software

>>   patentees    almost      never  win  their  cases.

>That  may  be    a  good

>>   thing,  if  you  believe  that  most  software

>patents  are  bad  or

>>   that  NPEs  are  bad  for      society.  But  it

>certainly  means  that

>>   the  patent  system  is  wasting  more  of  its

> time      than  expected

>>   dealing  with  weak  patents.  And  it  also

>suggests  that  both  our

>>   measures  of  patent  value  and  our  theories

> of  litigation

>>   behavior  need  some  serious  reconsideration.

> 

>> 

>>    Read/download "Patent Quality and Settlement

>among Repeat Patent

>> Litigants" (link

>> 

><http://www.feedblitz.com/t2.asp?/151161/191723/0/h

>ttp://papers.ssrn.com/sol

>3/papers.cfm?abstract_id=1677785>)

>> 

>> 

>> 

>> 

>>   

> 

> 

>--

>Guillaume Radde

>Software and Systems Division

>National Institute of Standards and Technology

>guillaume.radde@xxxxxxxx

>(301) 975-6145

> 

> 

> 

>

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