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Jun 30 2008

The Emergence of Defensive Patent Commons

Today’s Wall Street Journal has an article titled Tech Giants Join Together To Head Off Patent Suits.  It describes the efforts of a new organization named Allied Security Trust who’s goal is to "buy up key intellectual property before it falls into the hands of parties that could use it against them."  The named companies that have joined Allied Security Trust are Verizon, Google, Cisco, Telefon, Ericsson, and HP.

Allied Security Trust appears to be an example of the emerging construct of a "patent commons".  There are already a number of existing patent commons such as the Patent Commons Project aimed at protecting open source software.

There are two types of patent commons – offensive and defensive.  So far the folks that have been putting together patent commons for potentially offensive purposes have kept a very low profile and often have denied publicly that they will use their patent portfolio’s offensively.  However, I’ve heard directly from a number of people involved in some of these organizations that the long term goal is to aggressively license the patent commons once it is large enough.

I’m not a fan of the offensive patent commons.  However, I am a huge fan of the defensive patent commons. As I’ve written in the past, I strongly believe that the entire ecosystem around software patents is completely fubared.  The courts – especially in the US – are poorly equipped to deal with the software patent issues and the USPTO has demonstrated that it’s either not up to the task or unable structurally to change the way things work.  Our government – especially Congress – has demonstrated that it lacks the political will to address the situation.  And, while the Supreme Court has finally waded in with a few key decisions, it still has an extremely long way to go if it really wants to address the underlying issues.

Having studied this for the last few years, it’s my strong belief that the software / computer industry has to solve the problem.  Recently, I’ve been advocating the idea of defensive patent commons – ones that are organized by clusters of large companies – but open to all that are interested.  There are lots of challenges in organizing this, including determining who can join, what the price of admission is, and what the ongoing costs of supporting the organization are, but these are solvable issues if the broad construct is adopted.

I’ll reserve judgement on the Allied Security Trust until I learn more about it, but it seems like it’s a step in the right direction if the brief description in the WSJ is accurate.  A key indicator to me will be whether organizations like Allied Security Trust vow to only use their patents defensively.  The absence of this will always raise suspicion that it’s a veiled effort to create a mega-patent-troll or that unintended consequences might result from future activity. 

Ultimately, a defensive patent commons is analogous to the idea of patent insurance, which is also starting to emerge.  I think a defensive patent commons is ultimately going to be a more powerful mechanism if organized correctly, but the analogy is a useful one to understand better how a defensive patent commons might operate.

May 5 2008

Let’s Make Software Patents "Defensive Only"

In my quest to abolish software patents, I’ve been pondering "short term approaches" since I doubt the Supreme Court is going to wave a magic wand and make my fantasies come true anytime soon.

I’ve been hearing about something lately that bothers me a lot.  More and more companies are paying engineers a bonus to file patents.  Not "get patents" – simply generate patent applications.  The intended consequence is an obvious one – companies get to file more patents.  The unintended consequence is a particularly nasty one – lots of shitty patents get filed and the PTO has to wade through that much more garbage.

A friend of mine – who recently was "paid to file a patent" said he considered requesting that – if granted – the patent only be used defensively.  I asked him why.  He responded that he felt conflicted and thinks a lot of his peers feel the same way.  He didn’t think the patent was particularly valuable, useful, or valid.  However, he was reluctant to turn down the bonus that he was getting for simply filing the patent.  He didn’t view it as a good use of his time (or of his company’s time or money), but he realized that the patent system is motivating his company to file as many patents as they can.  He has little expectation that the patent will be granted, but he was happy to get paid the bonus.

I asked him what would make him feel better.  He surprised me when he said "My company should agree to only use the patent defensively if it is granted."  I asked him if he thought this was a unique perspective and he said no – he thinks many experienced software engineers are skeptical of software patents.  While they are skeptical, they understand the battle going on right now and realize the value of ever increasingly large number of patents for defensive purposes.

Wouldn’t it be interesting if there was a grass roots movement of experienced software engineers around software patents for defensive purposes only.

Apr 12 2010

Why the Decks are Stacked Against Software Startups in Patent Litigation

The conventional wisdom has long been that software startups benefit from patents.  I’ve been investing in software / Internet companies for over 16 years and I’ve never once had a patent influence my investment decision.  More importantly, since it takes a number of years to get a patent, most startups haven’t even contemplated applying for a patent when they raise their first angel or venture round.  Our friend Sawyer has seen this first hand and has some specific thoughts on what they decks are stacked against software startups in patent litigation.

Software startups are particularly vulnerable to patent suits, and often are in jeopardy of losing their businesses entirely after being sued.  I think it’s important for everyone to understand the dynamics involved, because knowing why and how startups can be sued into oblivion will give you a new appreciation for the problems in the patent system.

A typical one patent case costs approximately $5 million to litigate through the end of trial, according to data that isn’t available online for some reason (the lack of pricing transparency in attorneys’ fees is a topic for another time).  Costs vary wildly depending on where the case is, how complicated the technology is, who the firm involved is, etc, but $5 million is a decent estimate all-in-all.

I’m sure you can already see the problem.  What software startup has $5 million to burn on defending a case with no value-add?  Even $500k?  I’d say it takes $1-2 million or thereabouts just to get through claim construction, which will give the parties a better sense of the overall merits of the case.  One patent suit with a slightly determined plaintiff could very easily end a software startup just in legal fees, let alone the impact of the suit on gathering customers in the future.

So, software startups have to settle patent cases very early, and at high settlement amounts, because they have absolutely no leverage.  Invalidity takes years to litigate, so you can’t threaten to invalidate the patent; same with inequitable conduct.  Non-infringement arguments are great in theory, but the plaintiff won’t have a judgment day until the middle of the case at the earliest, after claim construction, when summary judgment motions are allowed (on most schedules), and that’s several years of litigation and several million dollars away.  The defendant could file for a re-exam, but once it’s filed, the defendant has no control over it, and it takes a few years to get through the PTO.

Software startups sometimes have other leverage points, like the value of publicly shaming the plaintiffs, but when software patent NPEs are backed by investment funds through seven layers of corporate shell companies, or are dead companies with nothing to lose, who can you shame?  And does anyone particularly care?  The average person thinks patents are property (not entirely true) and a “great thing” for the economy; heck, our elected representatives say the same thing all the time.

The bottom line is that, in a world where a few million dollars and several months of work can build a promising software business, albeit one without serious cashflow, a patent suit can stop progress and kill those companies very quickly.

Luckily, perhaps, plaintiffs want money, and so in most cases it’s not worth it for them to sue a company with no revenue.  But sometimes it happens, and it seems to be happening now with more frequency.

Startups can and do usually settle these cases, it’s just that the amounts paid aren’t particularly fair or a reflection of the value of the patents (generally nil); rather, it’s a reflection of a patent litigation system that only allows the huge players to defend themselves.  Everyone else?  Well, they’re kind of screwed.

Jul 27 2010

Excellent Summary of Berkeley Patent Survey Results

In 2008 I was invited by Pamela Samuelson, who I met through several Silicon Flatiron events, to be on an advisory board at the Berkeley Center for Law & Technology.  I attended the one meeting that we had and a subsequent symposium and wrote about it in the post Entrepreneurial Companies and the Patent System.  As with most things like this, I found it fascinating, stimulating, and frustrating all at the same time and hoped that I’d contributed something useful to the discussion.

I read the paper titled High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey when it came out at the end of June 2010.  I thought it was a solid paper although there were some things that I struggled with which is typical for me in any academic paper, especially when I get bogged down in arguing with myself while trying to parse the footnotes.  But I was optimistic that as the authors started talking about the article, some thoughtful and constructive discourse would result.

I was appalled when I started seeing soundbites emerge from at least one of the authors of the paper from weak conclusions buried in the midst of the data.  My partner Jason took one of them on when he wrote his post 76% of Venture Capitalists Believe that Software Patents are Important (NOT!) In this post I think Jason does an excellent job of dissecting the data and explaining why this is not only an incorrect conclusion from the data, but a terribly misleading soundbite.

Fortunately, Pam Samuelson (one of the other co-authors) has set the record straight with her excellent summary of the Berkeley Patent Survey on her post on O’Reilly Radar titled Why software startups decide to patent … or not. Her essay is very digestible and focuses specifically on the issue of software patents and what she believes they reported in the paper.  She reached the following conclusions which she states in her intro:

  • Two-thirds of the approximately 700 software entrepreneurs who participated in the 2008 Berkeley Patent Survey report that they neither have nor are seeking patents for innovations embodied in their products and services.
  • These entrepreneurs rate patents as the least important mechanism among seven options for attaining competitive advantage in the marketplace.
  • Even software startups that hold patents regard them as providing only a slight incentive to invest in innovation.

Pam is balanced in her intro as she concludes by saying “While the three findings highlighted above might seem to support a software patent abolitionist position, it is significant that a third of the software entrepreneurs reported having or seeking patents, and that they perceive patents to be important to persons or firms from whom they hope to obtain financing.”

The juiciest conclusion is about halfway through the essay and is “One of the most striking findings of our study is that software firms ranked patents dead last among seven strategies for attaining competitive advantage identified by the survey.”  Another one was “We were surprised to discover that the software respondents reported that patents provide only weak incentives for engaging in core activities, such as invention of new products (.96) and commercialization (.93).”

I’m glad Pam took this on and put this out there.  I look forward to more studies she does from this research set.

Mar 3 2010

Sawyer Opines on the Eastern District of Texas

My friend Sawyer is back with another post in his series of talking about software patent issues.  As I mentioned before, Sawyer is a real person named after our intrepid friend in LOST (I haven’t seen it this week – no spoilers please) who has agreed to help us navigate the parallel universe known as software patent land.  I’m channeling Sawyer’s points of view as a public service announcement since he’s uncomfortable being named publicly – these are his words, not mine.  Today’s post is on the famed “Eastern District of Texas” (EDTX), one of the most popular places in the United States for patent litigation.

In the past several years, the Eastern District of Texas (EDTX) has become one of the premier venues for patent litigation, along with NDCAL, CDCAL, DDEL, and WDWIS. Although the dockets are packed now, when the trend first started, plaintiffs could anticipate trials in short order, perhaps 12 to 18 months, and plaintiff-friendly juries.  There is also a basic sense of unfairness that defendants, rightly, feel when they have nothing or almost nothing to do with the district and yet get hauled down to court there, but the ability of plaintiffs to do that is a more fundamental flaw in the Supreme Court’s personal jurisdiction jurisprudence that is best left for another discussion.

There are a lot of stories told about EDTX and how it became a big spot for patent litigation. I won’t name any names here because EDTX lawyers have a tendency to sue anyone who says anything that could be portrayed in a negative light (see, e.g., the Troll Tracker defamation suit.) The basic story I’ve heard though, is this: EDTX was well-known as district with plaintiff-friendly juries after a raft of tort litigation where juries handed down large judgments. The judges and practitioners in area, seeing the coming wave of patent litigation, got together and decided to retool the district for being “patent-friendly.” This mainly involved adopting rules to streamline patent cases, similar to NDCAL, so that plaintiffs would get to juries faster. It’s important to note that this isn’t per se a bad or unethical thing – lots of federal districts are known as “rocket dockets” for one kind of case or another because of concerted efforts to attract and streamline litigation of certain types of cases.

The adoption of those patent local rules, along with a general unwillingness of the courts to throw cases out before trial on what’s called “summary judgment,” lead us to where we are today. Another thing to note, which is changing due to recent appellate decisions, is that EDTX courts have been very unwilling to transfer cases out to other venues. The Fifth Circuit and Federal Circuit have issued an unusually high number of reversals of EDTX decisions not to transfer, and the message seems to be taking and moderating both the desire to keep cases and any “pro-plaintiff” bias one could see.

These days, EDTX actually isn’t so bad for defendants. They win a significant number of cases, primarily because defense counsel has figured out how to navigate the courts, how to wear the “white hat” with the judges, and how to appeal to the juries down there. Still, the data show that when plaintiffs win in EDTX, they tend to win bigger than in any other court; and, when certain defendants develop “bad” reputations with the court or with juries, they get hit with big judgments repeatedly.

It’s also appears that EDTX has made a concerted effort to be “patent friendly,” and that the concomitant economic impact on the area, particularly in Tyler and Marshall, Texas, has been significant. From observation, EDTX is also where most of the software NPE/troll cases are filed these days because it’s still the fastest and most friendly docket for those cases.

That said, blaming EDTX won’t solve the underlying problem of patents and the patent system, especially in software. If there was no EDTX, another district would crop up to attract the big-ticket software patent suits, especially the NPE/troll cases. As long as the expected value of an NPE suit is positive, plaintiffs will find friendly places to file, and districts will make themselves friendly to those suits to stay busy, attract the economic windfall, and generally stay relevant. Don’t get me wrong, venue is a significant issue and has a big impact on the outcome of cases, but focusing reform and publicity efforts on grumbling about the courts won’t get us anywhere. The real problems are more fundamental to how people get patents, what is patentable, what the patents themselves look like, and how the legal system allows them to be used; focusing on the mechanics of where suits are filed is a distraction from the real issues that are bleeding our most innovative technology sectors and slowing down technological progress.

Apr 13 2010

The Typical Kinds of Software Patent Plaintiffs

Yesterday I published one of Sawyer’s posts titled Why the Decks are Stacked Against Software Startups in Patent LitigationIn it, I realized that Sawyer hadn’t defined the different types of plaintiffs in a patent case.  Below are good definitions (from Sawyer) of each type and clear explanations about what you are up against in each one.

If you’re sued in a software patent case, the first thing you should do is figure out what kind of plaintiff you’re up against, because that will have a major impact on your negotiation posture, and you will almost surely want to settle out sooner rather than later.

One important prefatory note has to do with contingent fee arrangements.  Most software patent plaintiffs hire their lawyers on contingent fee.  Depending on the state, the contingency can be anywhere from 30-40% of the final dollar amount exchanged between the parties, and it’s usually taken off the top.  This arrangement gives the lawyers powerful incentives to (1) push the case toward its maximal outcome and (2) not do any work on the case if they don’t have to.  So, if you think you have a contingent fee suit on your hands, know that you’re not just negotiating with the other side, but also with the lawyers who, both in front and behind the scenes, may be trying to undermine a resolution that they don’t feel is significant enough financially.

Now, here’s my non-exhaustive classification of types of software patent plaintiffs:

The active competitor:  These are the IBMs and Apples of the world, the active, money-making companies that get patents and sue their competitors for market advantage.  Competitor cases are usually not on contingent fee because the plaintiff doesn’t want money, it wants a more intangible advantage in the marketplace.  Between big players, these cases are often settled in cross-license arrangements, but one can imagine cases like Apple v. HTC being taken straight to trial because the plaintiff wants nothing more than to wipe out or diminish the defendant.

The defunct competitor or pseudo-competitor:  Many startups in the dot-com era filed for and got patents on things that we now would consider silly or obvious.  As those companies went under, or go under now, the entity that ends up with the companies’ assets seeks to monetize whatever is left, which usually ends up being the patents.  These companies morph from going concerns creating stuff to pure licensing entities that proceed to sue every player in a particular market sector.  These case are often on contingency because the plaintiffs can’t pay hourly.  Settlement strategies vary widely in these kinds of cases, but usually the plaintiff will be incentivized to push every suit to its rational limit unless someone comes along to vigorously defend against the patents.  These, in my experience, are the cases startups get caught up in the most, because the plaintiff doesn’t want to sue big players who can defend themselves (the patents are usually pretty bad), and so decides to extract as much value out of small companies in a particular sector as it can.

The “small fry” troll:  Here’s the strategy – I have a patent, and I want to collect money to fund some serious suits against big players.  What I do is find dozens of small companies (and by small I mean even made up of two people) and I sue them all in one suit, or several suits.  I have my lawyer play “nice guy” and offer to settle each plaintiff out for anywhere from $30k-100k, depending on company size.  At the end of the day, I’ve collected several million dollars and I can roll that money into suits against the big companies.  The reason the defendants settle is that they can’t afford to litigate the case out for a few months, let alone to trial, so they’re stuck and have to pay something.  I won’t call it extortion, but I guess I just did.  These cases are also sometimes on contingency, but the plaintiff usually hires very inexpensive counsel, with no intention of litigating the case, and those lawyers are fine with the relatively small payouts they get from small settlements.

The fund troll:  Many patent suits these days are backed, if you can figure out who the backers are, by specialized funds.  These are “venture funds” that collect money from LPs like traditional investment banks and use that money to identify and buy promising patents and set up/manage litigation against significant players to “make” the fund.  These cases are sometimes on contingency, and usually on partial contingency with capped fees (half of fees paid, with a 15-17% contingency).  The guys running these suits from the funds are usually very sophisticated, and have very specific ways of evaluating cases and deciding settlement amounts.  They usually won’t sue anyone too small to defend themselves, because it doesn’t make financial sense.  They also don’t let their lawyers influence settlement discussions.  In my experience, they are the most reasonable people to deal with in settlement, but at the end of the day you’re still paying the toll.

The “big fish” troll:  Sometimes there are software patents out there that have no good invalidity defenses, and where infringement by major players is very likely.  These are the holy grail for plaintiffs:  big, valuable, winnable cases.  The number of firms who handle these types of cases is very small, and one in particular has been racking up huge wins down in Texas for a few years now, especially the past year or two.  The plaintiff could be a specialized fund, or just an individual inventor; regardless, the plaintiff and the lawyers are perfectly aligned in wanting to litigate the case through trial.  If you see one of these firms, it’s a signal that they did their homework and think they have a very good shot at winning several hundred million dollars against some major player in the case.  The chances of settling these types of cases for anything less than eight figures is basically nil.  If you’re ever on the other side of a case like this, be afraid.

There are other “types” of software patent plaintiffs, but I think they draw characteristics from the types above.  The key takeaways, I think, are (1) that as a defendant, you’re negotiating both with the plaintiff and with the lawyers and (2) the suits aren’t usually filed by “real” businesses, so it’s generally hard to reach fair business-driven settlements.  Favorable settlements tend to happen only when a defendant is prepared to litigate a case to the end, and in discovery produces some very solid prior art and information on good non-infringement defenses.  This ends up being a function of the ability of the defendant to pay its own legal fees, so at the end of the day, settlements are based much more on the ability of the defendant to pay than the merits of the case.

May 9 2013

Potential Progress On Dealing With Software Patents

I woke up this morning to a great article by Nick Grossman at Union Square Ventures on The Patent Quality Improvement Act. Nick does a great job of describing the software patent problem, suggesting several solutions, and explaining how the Patent Quality Improvement Act helps the increasingly dismal situation around software patents.

Nick has a great paragraph from Mark Lemley of Stanford Law School that describes a powerful solution to part of the problem – that of eliminating “functional claiming.” Regarding functional claiming, Mark says:

“This is a problem that is unique to software. We wouldn’t permit in any other area of technology the sorts of claims that appear in thousands of different software patents. Pharmaceutical inventors don’t claim “an arrangement of atoms that cures cancer,” asserting their patent against any chemical, whatever its form, that achieves that purpose. Indeed, the whole idea seems ludicrous. Pharmaceutical patent owners invent a drug, and it is the drug that they are entitled to patent. But in software, as we will see, claims of just that form are everywhere.”

Mark has written a strong paper on this called Software Patents and the Return of Functional Claiming that describes the problem – and the solution – in detail.

Fred Wilson, Brad Burnham, Jason Mendelson, and I have been talking about the problem of software patents for a long time and Fred brought it up again today on his blog in a post titled Piecemeal Patent Reform. It’s nice to see Senator Chuck Schumer proposing a simple yet powerful solution to part of the software patent problem.

While we continue to struggle with patent trolls in the US – which used to be called “non-practicing entities” (NPEs) but now apparently prefer to be called “patent assertion entities” (PAE) – the New Zealand government has announced that software will no longer be patented. Maybe someday we will be so bold.

Aug 31 2009

The Drumbeats Against Software Patents Are Getting Louder

There is a great article by Timothy Lee, an adjunct scholar at the Cato Institute, out today titled The Case against Literary (and Software) PatentsLee, an adjunct scholar at the Cato Institute who is also a Ph.D. student in Computer Science at Princeton, totally nails it. 

Here’s the beginning:

“Imagine the outcry if the courts were to legalize patents on English prose. Suddenly, you could get a "literary patent" on novels employing a particular kind of plot twist, on news stories using a particular interview technique, or on legal briefs using a particular style of argumentation. Publishing books, papers, or articles would expose authors to potential liability for patent infringement. To protect themselves, writers would be forced to send their work to a patent lawyer before publication and to re-write passages found to be infringing a literary patent.

Most writers would regard this as an outrageous attack on their freedom. Some people might argue that such patents would promote innovation in the production of literary techniques, but most writers would find that beside the point. It’s simply an intolerable burden to expect writers to become experts on the patent system, or to hire someone who is, before communicating their thoughts in written form.

Over the last 15 years, computer programmers have increasingly faced a similar predicament. We use programming languages to express mathematical concepts in much the same way that authors use the English language to express other types of ideas. Unfortunately, the recent proliferation of patents on software has made the development and use of software legally hazardous. That’s why many of us are hoping the Supreme Court definitively rules out patents on software when it hears the case of Bilski v. Doll this coming term.”

And here’s the conclusion:

“The writing of software, like writing in English, is a creative activity practiced on a vastly wider scale than other activities commonly afforded patent protection. Small businesses and nonprofit organizations far removed from the traditional software industry have IT departments producing potentially infringing software. The Brookings Institution’s Ben Klemens has documented that this is not a theoretical problem. Entities as diverse as the Green Bay Packers, Oprah Winfrey, Kraft Foods, and J. Crew have been sued for developing or using ordinary business software.

Regulations that work well when applied to a handful of large, capital-intensive firms can become an intolerable burden when applied to millions of small organizations and individuals. It’s not reasonable to expect hundreds of thousands of small businesses to vet the software they produce for patent infringement, any more than it would be fair for them to face liability for publishing a brochure with an infringing turn of phrase.

The high overhead of the patent system demands that it be limited to relatively concentrated and capital-intensive industries in which most participants have the means to comply with the requirements of patent law. Patents on English writing would not meet this requirement. Neither do patents on software.”

There’s plenty of good stuff in between.  Go read it.  I just got invited to go to the Supreme Court and listen to re: Bilski.  Psyched!

Jun 13 2014

Thanks Elon Musk For Being A Real Leader On Patent Reform

Fred Wilson beat me to it this morning with his post A Big Win For The Patent Reform Movement but he’s got a couple of hour time zone advantage over me. Regardless, I love Fred’s punch line:

So it was with incredible joy that I read these words by Elon Musk, founder and CEO of Tesla Motors and possibly the most innovative entrepreneur in the world right now. [Elon wrote in his post All Our Patent Are Belong To You] “Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.”

I’ll pile on with my accolades to Elon. While I don’t know him, I’m long time friends with his brother Kimbal who lives in Boulder so I always feel like I get a little taste of Elon whenever I talk to Kimbal. So – Elon – thank you for being a real leader here and taking action.

I’ve been asserting for a number of years that while software patents are completely fucked up, the general patent system stifles innovation. More and more research is appearing on software patent issues and patent trolls in general, including this recent piece by Catherine Tucker, an MIT Sloan professor of Marketing, titled The Effect of Patent Litigation and Patent Assertion Entities on Entrepreneurial Activity. As Ars Technica summarizes in New study suggests patent trolls really are killing startups:

Turns out there is a very real, and very negative, correlation between patent troll lawsuits and the venture capital funding that startups rely on. A just-released study by Catherine Tucker, a professor of marketing at MIT’s Sloan School of Business, finds that over the last five years, VC investment “would have likely been $21.772 billion higher… but for litigation brought by frequent litigators.”

As my lawyer friends tell me, “the Supremes” are finally making some calls on this. The induced infringement theory, a particularly obnoxious patent litigation approach, is no longer valid. The main event, Alice Corp. v. CLS Bank, is still waiting to be ruled on. Let’s hope the Supremes take a real stand on when software claims are too abstract to be patented this time around, unlike the punt they made on Bilski.

Aug 6 2008

Patents, Commons, and Anti-Commons

Yippee – the criticism of the software patent stupidity is starting to heat up and some really smart people are making both useful arguments about the issues and interesting proposals about the solution.  In addition, there are some general articles starting to appear that explain that while patents (and property rights) have an important role in our society and in encouraging and supporting innovation and entrepreneurship, there are some well understood problems that emerge from patenting small components of complex systems – especially when the vector of innovation is steep (like – for example – with software or the Internet.)

James Surowiecki has a great short article in the New Yorker Magazine titled The Permission ProblemIn it, he gives a great example of what Columbia law professor Michael Heller calls the "anti-commons" in his book The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives.

"In the second decade of the twentieth century, it was almost impossible to build an airplane in the United States. That was the result of a chaotic legal battle among the dozens of companies—including one owned by Orville Wright—that held patents on the various components that made a plane go. No one could manufacture aircraft without fear of being hauled into court. The First World War got the industry started again, because Congress realized that something needed to be done to get planes in the air. It created a “patent pool,” putting all the aircraft patents under the control of a new association and letting manufacturers license them for a fee. Had Congress not stepped in, we might still be flying around in blimps."

The anti-commons is a great reference point for what has happened with software patents.  Simply put, if too many people own individual pieces of a valuable asset – especially if those pieces are overlapping and vaguely defined (e.g. software) – you can end up with gridlock instead of innovation.  Surowiecki explains:

"When something you own is necessary to the success of a venture, even if its contribution is small, you’ll tend to ask for an amount close to the full value of the venture. And since everyone in your position also thinks he deserves a huge sum, the venture quickly becomes unviable."

So – we have (a) Google Sued For Patent Infringement For Keeping Track Of How Many Ads People Click OnAt the same time, we have (b) U.S. Patent Office Rejects All Ninety-Five NeoMedia Patent Claims.  For those of you uncertain about my perspective, (a) is bad.  (b) is good.  Hopefully (b) motivates the folks at Google to fight like hell to invalidate silly patents, rather than take a "let’s retrench and patent everything in sight" position.

Finally, I read an article by Timothy Lee on Ars Technica last week titled Patent Office finds voice, calls for software patent sanity.  We need smart people to step up, shout from the rooftop about how fubared the software patent system is, and provide real alternatives.  I’m optimistic that this is finally starting to happen.