1. One of the nation's top patent lawyers (a "top earner" at Kirkland & Ellis - one of the nation's most prestigious firms - who served for the past 6 years on its management committee) walks away from his position in order to capitalize on buying a patent portfolio from Micron, setting up a holding company for those patents, and positioning himself in his own boutique firm to use that portfolio (we assume) either to file a multitude of infringement actions or to exact royalties on threat of legal action - vividly underscoring what is wrong with a patent system that hugely rewards "non-practicing entities" that specialize in litigation far more than in any form of true inventing.
2. A patent system that so skews money incentives that the best and the brightest (and, yes, by all accounts, Mr. Desmarais is a highly likable and much admired and talented fellow) would be drawn to the seamy side of this business in this way.
3. What this illustrates about how a patent nightmare scenario can so easily arise from the fall or decline of a traditional tech company. Here, it was Micron. What happens, then, when Novell auctions its IP assets to private equity firms who in turn parcel them out to firms such as this? Developments such as this can raise significant threats for Linux and the open source community, among others (see the write-up here on this issue: http://url4.eu/3p37m - "Novell auction could be patent troll bonanza").
4. How easy it would be for Congress to make simple modifications to the patent laws so as to preclude this type of trolling, as for example by imposing a simple test that an invention be truly "useful" (and not merely theoretically so) before qualifying for patentability (see a recent proposal to this effect here: http://ip.jotwell.com/patent-utility-reduxit/).
5. How patent drafting in large corporations can become as much a function of the legal department as of legitimate engineers who are actually inventing things.
6. How this sort of activity does not promote inventions or the useful arts in the slightest and yet characterizes so much of the day-to-day activity in the patent world.
Patents generally have had a useful role in our society, whatever their limitations, but this side of the business basically makes one want to scream.
4. How easy it would be for Congress to make simple modifications to the patent laws so as to preclude this type of trolling
Considering that you just said one of the top lawyers in the nation has started a "patent portfolio company". I'd imagine his influence in Washington alone would make it pretty damned hard for Congress to do anything. Not to sound crass, but someone who is an enormously ambitious lawyer with a lot of money has the wisdom to understand his control over legal risks like the one the changes you propose. If passing the laws you're suggesting were a possibility, he never would have "gone trolling", so to say.
The near-term prospects for fixing what is seriously broken with the patent system are very slight. I did a post just the other day on the so-called Patent Reform Act of 2010 and entitled it, "Looking for radical patent reform - look again" (http://news.ycombinator.com/item?id=1365788).
The piece I cite to above is basically a law professor's proposal and hence academic only at this point. It could theoretically work but there is probably little or no impetus behind it.
Didn't mean to suggest that the process of reform would be easy. It clearly won't (Bilski might bring some needed sanity to the area of software patents but congressional action is likely to be merely cosmetic along the lines of the Patent Reform Act of 2010 cited above). The entrenched interests are very strong here.
I think that he meant easy in the sense of crafting effective legislation (usually a herculean task) and not in the sense of getting that legislation passed.
Can you point to some evidence that patents generally have had a useful role in our society, other than pharmaceuticals, which is the usual (and also incorrect) answer?
Sure. I've worked in manufacturing in the past - in the automotive context. Patents are incredibly important there: the safety regulations and requirements, along with the innate costs of producing a tangible physical product, make it incredibly expensive to bring a new technology to market. Tens, if not hundreds of millions.
If anyone could simply reverse engineer your work and produce it willy nilly, there really would be no incentive to innovate.
The patent system is broken, no doubt about it - but IMHO the view that all patents are evil/useless is myopic, and really only possible from the perspective of someone who doesn't have any experience with fields with high intrinsic costs (e.g., software, where marginal cost is basically nil).
Some research I read recently suggested that it's not software that's the exception, it's chemical and pharmaceuticals (and even there it's not a clear win, nor is it based on high costs, but rather the specificity of patents in those fields creating clearly delineated property rights).
In every other industry surveyed the patents may be felt necessary under current conditions but aren't considered useful in the sense you describe for rewarding innovation (e.g. defensive patents to stop others from blocking access to your own innovations).
I believe the research was cited in Eric von Hippel's Democratizing Innovation, ah here we are from, Chapter 6,
" The real-world value of patent protection has been studied for more than
40 years. Various researchers have found that, with a few exceptions, inno-
vators do not think that patents are very useful either for excluding imita-
tors or for capturing royalties in most industries. (Fields generally cited as
exceptions are pharmaceuticals, chemicals, and chemical processes, where
patents do enable markets for technical information (Arora et al. 2001).)
Most respondents also say that the availability of patent protection does not
induce them to invest more in research and development than they would
if patent protection did not exist."
Various researchers have found that, with a few exceptions, innovators do not think that patents are very useful either for excluding imitators or for capturing royalties in most industries
By this, do they mean that imitators are typically able to operate despite patent protection or that there aren't attempts to imitate? The latter does not really support the concluusion that patents are not useful/effective, since a lack of imitators is something we should expect if they were (though it also is not proof that they are). The former suggests some problem with the legal situation surrounding patents, since it is exactly what patent law is meant to prevent.
Without patents the only source for R&D is going to be universities. But private R&D made: the desktop, the mouse, C, Unix (do you think Berkley would have made unix without seeing what AT&T had?), C++, etc., etc.
They need to change. No doubt about that, but anything that causes even less R&D than is already going on is very short sighted.
Thanks for the great summary. IANAL, but I've been wondering lately if it wouldn't be prudent to borrow from the Lanham Act and try to add a requirement to US patent law that patents must always be defended by their owners or they're invalidated. What do you think?
I know we all hate what he is doing, but nothing he is doing is illegal. Is it immoral? That one is harder to answer, depending on your perspective. He is providing work for a whole set of new lawyers and staff in his company. He is getting money from companies that are already rich, like Apple, Microsoft, Intel (probably).
Obviously we are all against it, but why is that? It doesn't affect most of us. Sure, he is making money of something he didn't create, but so do lots of peoples, anyone who owns a shop for one.
1. The point is that the legal system is broken and he's doing something scummy by weaponizing the law. Just because something is legal/illegal doesn't change the right/wrongness of it. What he's doing is wrong.
2. "companies that are already rich" - this has a ripple effect that matters for everyone. All the money that is siphoned into the legal process isn't going to R&D, hiring, expansion, or giving people money to invest into other productive endeavors. But that's not the worst part, the worst part is it creates a huge scary barrier to entry for little guys who want to innovate.
3. It's not that he's making money off of something he didn't create, it's that he's not adding any value. He's not even pretending to add value, or questionably adding value. He's a parasite. Shopkeepers display and store things for you to use and make it easier to get what you want. Immigrants to the USA from the Soviet Union would always be amazed at supermarkets - "There's all this food? And you can just... buy it?" Truly, we live in a great era if people don't realize that stuff doesn't just magically appear all over the place for them to buy whenever they want. That kind of sorting, storing, logistics, display, packing, unpacking, and cleaning takes a lot of work and effort and planning, and adds a lot of value. This court lawsuit extortion racket does not add value, it destroys value.
I am asking in all seriousness, what about this venture seems moral? This screams sleazy personal injury lawyer to me that wants to sue for car collisions where the paint didn't even chip.
As I said, he is not doing anything illegal, he is paying his staff, and he is only going after big companies.
I can understand the patent system harming small companies is bad, and I understand there should be no patents on simple ideas, but going after big companies is not as bad.
1. One of the nation's top patent lawyers (a "top earner" at Kirkland & Ellis - one of the nation's most prestigious firms - who served for the past 6 years on its management committee) walks away from his position in order to capitalize on buying a patent portfolio from Micron, setting up a holding company for those patents, and positioning himself in his own boutique firm to use that portfolio (we assume) either to file a multitude of infringement actions or to exact royalties on threat of legal action - vividly underscoring what is wrong with a patent system that hugely rewards "non-practicing entities" that specialize in litigation far more than in any form of true inventing.
2. A patent system that so skews money incentives that the best and the brightest (and, yes, by all accounts, Mr. Desmarais is a highly likable and much admired and talented fellow) would be drawn to the seamy side of this business in this way.
3. What this illustrates about how a patent nightmare scenario can so easily arise from the fall or decline of a traditional tech company. Here, it was Micron. What happens, then, when Novell auctions its IP assets to private equity firms who in turn parcel them out to firms such as this? Developments such as this can raise significant threats for Linux and the open source community, among others (see the write-up here on this issue: http://url4.eu/3p37m - "Novell auction could be patent troll bonanza").
4. How easy it would be for Congress to make simple modifications to the patent laws so as to preclude this type of trolling, as for example by imposing a simple test that an invention be truly "useful" (and not merely theoretically so) before qualifying for patentability (see a recent proposal to this effect here: http://ip.jotwell.com/patent-utility-reduxit/).
5. How patent drafting in large corporations can become as much a function of the legal department as of legitimate engineers who are actually inventing things.
6. How this sort of activity does not promote inventions or the useful arts in the slightest and yet characterizes so much of the day-to-day activity in the patent world.
Patents generally have had a useful role in our society, whatever their limitations, but this side of the business basically makes one want to scream.