Permissionless Innovation and Patents

My partner Brad Burnham wrote a post today explaining why he disagrees with Nathan Myhrvold's recent Harvard Business Review piece in defense his patent holding company,Intellectual Ventures.

In the post, Brad talks about the power of "permissionless innovation" and says:

The real reason the independent software industry emerged is that operating systems and APIs made it possible for independent software vendors to develop applications independently. They no longer had to ask permission of the hardware vendors. This same characteristic of permissionless innovation led to the explosion of independently created services on the internet. The rampant abuse of the patent system has created the opposite condition for the creators of software and web services today.

Brad ends the post with the following observation:

We have all benefited from the extraordinary innovation delivered first by the independent software industry and more recently by the web services industry. In both cases, this innovation was a direct result of the ability to innovate without permission. Nathan proposes to replace this world of decentralized innovation on open platforms with one dominated by a new gatekeeper, "intellectual property market makers". In this world, young companies, may not need to ask permission of Dell, Microsoft, or Verizon, before they launch a new web service, but they will have to negotiate with Nathan's firm to as he puts it "get all the patents they need to roll out an innovative product faster and at the same time reduce the risk that they'll miss a necessary license and get blindsided by an infringement suit"

I agree 100% with Brad that software and business method patents are a major inhibitor of innovation. If you'd like to engage in a discussion this topic, I'd encourage you to do so on Brad's post on the USV blog.

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#VC & Technology#Web/Tech

Comments (Archived):

  1. Ovi_Jacob

    Intellectual Ventures is a fascinating case – They were in the news this very week, with Bill Gates touting their nuclear energy spinout TerraPower (by the way, a potential game changer) at TEDEven more interesting than the companies that will emrge from IV is their business-modelCompanies and developments look to be shrouded in secret, as is the case with many IP oriented ‘invention shops’. I personally have worked with one similar group, albeit less illustrious, and experienced the same anti-openness.I am in such strong agreement with you and Brd here. Not just in terms of software innovation, but in the space I am working, the energy and, to a lesser degree, biotech front.When will these guys understand that the cost of open-innovation and broad collaborative capability far outweighs their costs. I’m not saying there are no land mines. There are. Smart and forward thinking entrepreneurs will learn to navigate IP (US and globally) as part of their successes and failures.For a healthy contrast to this approach, check out ResearchGATE (, a model that places discovery and innovation at the fore (profiled today on VentureBeat).

  2. Joe

    I would suggest that Nathan reads The Innovators’s Dilemma by Clayton Christensen to see how we benefit more from uninhibited innovation.

  3. phanio

    The number of patents should not really matter as long as they are narrowly written – the ones that are broad in nature are the ones that can stop innovation.

  4. Prokofy

    I never hear the owners of patents complain about how the patent process stifles innovation. I only hear people who want to innovate on the basis of other’s work without permission complaining.

    1. CJ

      It’s not stealing ideas as you seem to imply, it’s about the absurdity that some ideas can be patented at all. A patent granting ownership to the left-click of a mouse is absurd, while a patent granted to the creator of the mouse itself is much more reasonable. How much scientific discovery would we have to give back if someone owned the patent to the Scientific Method and sued every scientist for using it?

      1. AgeOfSophizm

        Maybe Prokofy is a patent lawyer

        1. kidmercury

          damn prokofy continues to catch a beatdown in this thread….nice blow ryan

        2. fredwilson

          No. She is a reactionary

          1. Prokofy

            No, I’m a liberal, unlike you all, who are truthers (kidmercurcy) or a technocommunist (Fred). You don’t know a classic liberal in the mainstream when you encounter one because you’ve been out on the fringers for so long.I don’t feel particularly “beaten down,” I think it’s fine to criticize these goofy ideas to overthrow the patent office because I think it’s important that this be done democratically with lots of public discussion. You want to use social media to reform the patent system, Fred? Then guess what, “reactionaries” get to comment and criticize too. You can’t just steamroll it into what you want like the Bolsheviks.I’m more about process than substance on this one. I’m no patents expert. Perhaps the patent system needs reforming — let’s posit that it does. Perhaps it’s old and dysfunctional and creaky. Perhaps social media collectivizing will be conceived as breathing new life into this moribund outdated system.OK, then, I will play along too. I’m a member of the social media collective, too. And I want to see the beef here. I want to here how you *protect* good ideas *and get people paid*, not how you “liberate” property for vague “innovation” that I don’t get who serves — you and your companies?. I don’t want to hear how Google usurps this process to blow out of the water all kinds of little competitors by insisting on “liberating” everybody’s IP under the ideology of “Creative Communism”. That’s all that’s about.I want to see the *beneficiaries* of this fabulous liberation exercise. Hey, I’m more a socialist than you all are when it comes to caring what happens to people who work here. Systems like this are all too easily taken up by crony communists and their pals. I want to see how the ordinary engineer, one of a mass of engineers working for Xerox or Kodak or IBM like my dad, benefits from this system so that he stays employed and his company states afloat. So far all I hear is how you people would *take this away*, not how you would *improve it*.If that’s “reactionary,” Fred, then you all are in for a very big surprise at the polls. It’s precisely your failure to understand and respect the values of classic liberalism in America that makes you and your friends so destructive.You’ve got your Community-Organizer-in-Chief in office now through your unelected Wired. How’s that working out for you, even?

          2. fredwilson

            I’m not suggesting you shouldn’t share your opinions. I’m all for debate and as publicly as possible. You call me a bolshevik because that’s how you see me. I call you a reactionary because you hate change and new ideas

          3. Prokofy

            Er, I don’t think someone who runs 14 servers with a virtual business in SL, and runs half a dozen blogs, and was an early adapter on Twitter and other services “hates change,” Fred. I think what you hate is a challenge to your received wisdom, which is the ideology only of a narrow circle.You and your fellow technocommies have destroyed the music business, the newspaper business, and related businesses on the “Freetardia” model. Now, none of those sectors can reliably get publishers, journalists, and musicians paid. You hold up a few anecdotal cases of a few bands you know that sold a jingle to some company once or Cory Doctorow selling a book he gave away for free, and pretend that’s the business model.Zynga, the company you invest it, sells commodities — tractors, vegetables, etc. It’s no different than John Deere, in fact you said it sells more than America’s real-life tractors now. And that’s real (although virtual) and it’s not destructive. Yet you aren’t connecting up the dots.Now you want to destroy the patent system, which got engineers paid. What are you putting in place, like you are putting in place in the music and news businesses? Google, and API engineers get paid with the Freetardia model. Other people don’t. I’m more of a socialist than you are, because I want more people to get paid. In fact, I’d even like *you* to get paid so that companies like Twitter and Zynga can keep thriving. But I marvel how you *can* get paid when your model isn’t really to sell tractors, but it is to pass these companies around like baubles on a string among yourselves. They never go public. They never get beyond themselves.Bolshevism is wrong because it forces change without justification and people’s participation. The Luddites weren’t stupid or reactionary; they were merely people who wanted to be paid for their work at a decent price. The technocommunists of their day Taylorized or rationalized their work and put them out of business and they lost a living wage and ultimately the consumer got shoddier products and industrialized societies had to cope with everything from pollution to dysfunctional families as a result. Real socialism would care about this more than it does.

          4. fredwilson

            i’m just telling you how i perceive you which is the same thing you aredoing to meit’s fineyou should just know that is how you come across to me

          5. Prokofy

            That’s fine, but then, you’re rather impatient. Because you fail to see that people could “embrace change,” and use the tools of new media, but then…have different views than you do about how change should be *applied*. That’s the problem. You want change only to go in your direction. I’m willing to concede that I’m one stream of many in a system that should have pluralities competing, under the rule of law.What is your understanding of the rule of law, Fred?

          6. fredwilson

            I’m not much for laws but I like the idea of jail even less so I follow themAnd you are right that I am impatient. Terribly so when I was young. I’ve learned to be more patient over the yearsI guess you could call me patiently impatient

          7. ShanaC

            you should read De Cive. Or the Leviathan.

          8. Prokofy

            BTW, your ideas are not so new and innovative. They were old even when Marx was examining in them in dusty libraries more than 100 years ago.

          9. CJ

            You’ve politicized an issue that is less about politics and more about common sense. I don’t care if you’re liberal, communist or conservative, the issue is that the patent system is stymieing innovation due to outdated rules and regulations rather than encouraging it by creating specific rules and regulations that address the issues that have been created with the digital age. When you attempt to legislate digital ideas with analog laws you will always lose something in the conversion, that is what’s happening here and that’s what needs to be fixed. Instead of trying to make this a test of politics, why not educate yourself on the actual issue so that you can offer something other than conspiracy theorist rhetoric about an elitist takeover of intellectual property rights that was never endorsed or proposed.

          10. Prokofy

            Well, let me tell you something: A VC politicized this issue when he titled this post “Permissionless Innovations”.Permissionless.That means he wants some companies, I guess the stronger ones, or his own, or something, to be able to grab the IP of other individuals and companies without permissions. Without having to pay for patents. Just grab.Fred says he doesn’t much like laws, and it’s only the fear of jail keeping him on the straight and narrow. At some level I think he conceives of a Higher Law, but I think he thinks its backing him or he’s in the flow or something.Permissionless.He didn’t say, “We Need to Fix a Broken Patent System” or “Here’s How to Reform Patents, Which are a Good Thing,” he said “PERMISSIONLESS” Innovation.So that makes it a matter of the big and strong (Google, Twitter, Zynga) eating up the weak.Please show me the, er *cough* small businessmen benefiting here.Please show me the fabulous digital “code-as-law” that does a better job than analog law. BTW, human beings remain analog lol even with their wired overlayer and wired overlords.I’m not a conspiracy nut like the truther kidmercury and others here. I’m just for common sense, I don’t see it, and am not persuaded that “Permissionless Innovation” — a world without a patent system, essentially — is going to help the little guy.

          11. raycote

            Come on now! Allowing blog authors a little poetic license on their blog titles is surely not asking to much. Nice ad hominem attack on that big bad TRUTHER —> kidmercury

          12. raycote

            Thank you so much, with my bad habits, I could not possibly have kept it that short. Thank you comrade for liberating my time.

          13. ShanaC

            Ok, Can you please put up some Marx quotes and show how the ideas are the same. Also some Bolshevik thinker (because a student of history knows that in Certain ways, The Bolsheviks broke with Marx which is why, for the most part, the Bundists left Russia or got absorbed into the Communist Party…which is still not the same as the Marxist Party…)

          14. AgeOfSophizm

            If the big companies don’t produce, that means that smaller companies would. so the ordinary engineer would actually make more money in a small business environment (if we allow small business to flourish). What you don’t understand is that CEOs, CFOs, boards etc… are WAY overpaid. They don’t add nearly as much value as they like to imply. They merely spend their time worrying about how they can make the share price go higher in the short term and keep their board happy. They don’t give a flying f$ck about two major stakeholders: the employee and shareholder. Small business is the answer. Fixing the patent system to allow small business to compete is a major part of the solution.

          15. Prokofy

            I don’t have this religious, Puritanical abhorrence at CEOs getting big payments and bonuses that the hard left does. Capitalists, especially those who take risks, should get paid a lot. Fred, for example, should get paid bunches. He should get dividends, bonuses, whatever. Why not? That’s capitalism. That’s how it works. Why would I put a cap on it?And what would be a fair way to cap Fred’s salary, bonuses, incentives in his company? Shouldn’t his board, stockholders, whatever decide that privately, without a lot of socialist sausage eaters banging on the table? If we were all decide the “fair” salary that Fred should have, he wouldn’t get anything done.The way to solve the problems of unfairness is to have minimum wages, Social Security and such. But capping capitalism doesn’t strike me as the answer.It’s another matter if a capitalist company has received the public’s bailout money. There a cap might make a difference as they’ve accepted a socialist infusion in the public interest.The market is correcting those that don’t add value. That’s why these companies have collapsed and why there are layoffs. Pretty brutal Schumpeter eat-the-rich stuff, eh? So shouldn’t you be happy? If anything, the recession is one giant corrective.You, like a lot of young people, have a caricature of capitalism and corporations in your mind that is taken off the worst cartoons of Pravda. Maybe it’s because you haven’t worked in them. Unemployment amoung youth is rampant these days, shaping up for many social problems to come down the line, not the least of which is their ideological propensity to hate capitalism.I’m not hearing small businesses make the case for patent reform. Here’s what I’m hearing making the case for patent reform or even destruction:o Marxist professorso Socialist bloggerso Leftist Obama officialso Technocommunist VCso Unemployed youth on blogsetc.Please call me when the small businessmen are blogging about this and showing examples.

          16. AgeOfSophizm

            The problem with your argument is that I embrace capitalism and agree with a lot of Ayn Rand’s ideas. However, we find ourselves in a system of CORPORATISM, not CAPITALISM – a fine distinction that CEOs and big business have exploited for years. Now we unfortunately have a socialist backlash because of this, and I’m afraid a true market based society won’t exist in my lifetime as we deal with the disfunction.So you really couldn’t have been more wrong.

          17. Prokofy

            Do you have a job?Have you ever worked in a corporation?I’ve worked everywhere, 7/11, Citibank, Xerox, Rite-Aid, you name it.I don’t care for Ayn Rand. She doesn’t believe in God, and she’s a Bolshevik in reverse with her rigid theories. An unpleasant personage, all the way around.Corporativism is a form of fascism, and the reds and the browns often find things in common.The solution is not to hate corporations. They bring good things to life, they provide jobs for people, I’m all for them. Especially Fred’s corporation which keeps Twitter going, even though neither he nor they have a notion in their technocommunist heads how they will make this server-burning enterprise pay out even for themselves. Meanwhile, they exploit our social media labour in the networking vineyards and hope they can push ads to us or something. I’m happy to pay for my Twitter subscription whenever Biz and Fred are ready to stop sandboxing with this thing.

          18. raycote

            “Unemployment amoung youth is rampant these days, shaping up for many social problems to come down the line, not the least of which is their ideological propensity to hate capitalism”So your augment is, perfected capitalism is at the end of it’s evolutional history. Those young people, disenfranchised by this present formulation of capitalism should either love it or leave it. NO! If something is not working for you, it is your right, no your responsibility, as a free agent to proactively pursue your interest. This does not necessitate you’re hating capitalism. It simply motivates you to improve on the present formulation. Surely, there must be more than on way to skin the capitalist cat?

          19. raycote

            As regards my post aboveIt pains me to be reduced to participating in this futile, simplistic lexicon of right vs left polemics. But anything else requires to much epistemological linguistic preamble. So you have language-trolled me into the disservices of participating in a mad madder’s tea part. Or in light of current events maybe just a plain TEA PARTY!

          20. raycote

            Just one more. Now am I the first to to have a (meta(meta))post cause if not I’ll do it one more time!

          21. Prokofy

            I live in hope, to see Fred’s skinned capitalist cat!

          22. Anne T. Monopoly

            << Capitalists, especially those who take risks, should get paid a lot >>Does it make any difference what they’re risking? … like other people’s money in most of the cases attracting attention …. have you ever taken notice that there are relatively few complaints about CEO pay when they don’t screw up?WHY should they “get paid a lot” … Is it an inherently good thing to encourage risky behavior? are there any limits to the kind and amount of risk which should be encouraged and rewarded?Or is this the idea that we won’t be able to get Jamie Dimon to show up at the office if he’s paid something less than the $19M or so he received last year? Is it really worth having him show up? Why does John Varley show up at Barclay’s every morning for about 10% of Dimon’s paycheck?There is a parallel bit of stupidity that floats around chronically saying that people wouldn’t invent things if they weren’t paid massive amounts of money to do so. And yet, none of us would be having this discussion but for innovations like TCP/IP, HTTP, HTML, etc, none of which made the people who gave them life wealthy and can be used by anyone without first taking a license.

          23. Prokofy

            It’s great to question received wisdom, so let me question yours. Your hatred — vicious hatred, really — of someone who is rich like Jamie Dimon — is a function of a deeply “eat the rich” meme that is purveyed all over the Internet and media these days. We’re *supposed* to see these people as exploitative, slothful, undeserving, arrogant, rogue, rash, selfish, etc. etc. Whatever the truisms there, a correlary to this arden hatred of the wealth becomes visible: a belief that human nature can be different, better, changed; be made altruistic, unselfish, prudent, etc. This is an age-old utopian impulse, but that’s ok, it’s a religious impulse that is worthy of cultivation. Yet in our anti-religious day, this desire to change behaviour and rein in what is seen as bad behaviour then takes a decided ideological, legislative, even coercive turn. Then, not only does Jamie Dimon have to be ridiculed as if he wouldn’t show up for work for anything less than $19 M; he has to be pilloried, savaged, his earnings confiscated, his life ruined. Er, his paycheck is redistributed…somewhere. Haiti? You? Me?The idea that there is then some “right” level at which people like this should earn becomes absurd. Who would decide? The state? Some committee of enlightened Obama gurus? Can we all agree that John Valey at 10 percent less is a mensch, but Jamie Dimon at 10 percent more is an evil blood-sucking vampire? What would be the *right* number for the rich? THERE is your stupidity. The idea that you could somehow decide on behalf of individuals and society at large just what the right form of capitalism is by fiat or even coercion.There’s a name for this jealous, rampant egalitarianism that takes the form of coercive levelling in Russia — it’s called “uravnilovka”. Under the uravnilovka imperative, if my neighbour has two cows, I don’t aspire to work harder and get a second cow myself, I ask the state to take away his cow or I even kill his cow in spite. Better we all have less and he especially have less than God forbid, one have more.There’s another stupidity meme floating here, which in fact is your example purporting to debunk the bit of stupdity about ‘people won’t invent things’. First of all, they *should* get as much as they think they can get in a free economy with a liberal capitalist system. Why not? Because you’re jealous and hatred? But as for the Internet, the idea that opensourceniks noodling around in their basement coding stuff “made the Internet” and the Internet “depends on them” and if it weren’t for this glorious selfless nerd labour we wouldn’t be having this conversation is all bunkum. Because the Internet became *free* — open to lots and lots of people besides opensource tekkies — when it became *commercialized* *Gasp* *The Horrah*. Yes, when amazon, ebay and others could monetarize sites, and use proprietary code to do so. Do you think Disqus, which Fred invests in, doesn’t want to get paid? Do you think they’d be inventing their improvements if they had to be in the collective farm love jam that you’d like them to be in? Of course not. Nor should they.

          24. ShanaC

            Actually I would take a Posern-ian (Law and Economics) approach to all of this. The real problem is we don’t have Patent Auctions. Therefore we cannot discover the true price.And you need to have a baseline collective of at least two people to have an auction; however, you get better auctions if you have more people involved (liquidity). So I am all for ebaying patents, and I am for social media and patents (discovery of more people who want said patent, to create more liquidity), if only to discover their true price…That seems to be the massive issue at hand. There seems to be market power issues. Why should it be HP? Or this company, Intellectual Ventures? If you create a liquid market, then you have provided for the payout issue, and you’ve made sure that those who really want a patent get the patent they want.So far we have neither. Unless you have some better ideas?

      2. Prokofy

        And yet the patent office, which is an institution in a liberal democratic society, decides to grant those patents, and litigators cannot undo that. So that counts for something. You may find it absurd, I don’t buy it. Absurd because…why? Because somebody else is making millions on a paperclip and not you? Please cite an actual example of “the scientific method” being patented — use that “scientific method” of which you speak instead of asking unreal hypotheticals.The average person is going to fail to see why you can’t patent left-clicking and its functions if you can patent the mouse itself.The question is whether the patent office should be reformed, which is what Beth Noveck is campaigning on. I’m not buying it. Sure, you can use various facets of online and social media to speed up the process or make it more fair, but Noveck starts by celebrating groups working on this online, then winds up smuggling in an authoritarian system that recognizes only certain group leader experts to make decisions. Her friend is now in charge of the FCC and could push through these changes undemocratically. This is something few are paying attention to, and it is definitely worth trying to involve many more stakeholders in this process, so it doesn’t become the pet of just a few people who changed things through “the tyranny of those who show up”.

        1. raycote

          The debate over what constitutes the cut off point for overly general or generally obvious patents can not be based on what you or anyone else can personally buy into. That debate obviously hinges on a an open and epistemologically well grounded triangulation process that includes all the public and private stakeholders.I am a pretty( ok… lets say handsome) average person. Yet, it is very obvious to me why the invention of the mouse as a user input control device should be worthy of a patent. While adding a second button is simply to obvious to warrant a patent.INVENTION OF THE MOUSEConceive of a mechanical hand size device that you move over a flat surface. The device is capable of measuring it’s movement and translating that movement into digital signals that represent is relative motion. The device can transmit those motion detection signals to an attached computer. The computer transposes those digital motion tracking signals into a screen position overlay that generates user feedback about the abstracted relative position by placing a moving visual pointer on the screen. Place image or text components on the screen. Conceive that these mage or text components represent symbolic place holders for user input events. Equip the hand held mechanical motion tracking device with a mechanical actuator. When the accuator is actuated send a signal to the computer. Detect weather the actuation signal is synchronous with the pointer being over one of the screens symbolic user input event place holders. If yes, match the symbolic user input event place holders with an appropriate user input event handler.INVENTION OF THE SECOND BOTTONStep and repeat with a differentiated secondary actuator signal——————-Sorry for posting twice. Some how I managed to post this as a general comment when I intended to it post here as a reply to Prokofy

        2. CJ

          Henry David Thoreau said “Unjust laws exist: shall we be content to obey them” Your argument that the patents exist and have been upheld legally has no bearing on whether or not the process is unjust to start and needs to be changed. We can be content to follow this process, ignoring the injustice, or we can strive for change to the system so that it can be fairer for all. You use words like democracy and institution and ‘the tyranny of those who don’t show up’ because you think they give your words a moral authority and make you sound patriotic. In reality, they illuminate the rigidity of your opinions and your unyielding opposition to change and evolution. Just because something has always been, doesn’t mean it must always be.

          1. AgeOfSophizm

            well said Malcolm. change happens fast and clearly our legal system can’t keep up (and there are many people in high places that don’t want it to keep up).

          2. CJ

            Totally, and up until recently it probably didn’t need to move quite so fast. But the times have changed and we need to modify the system so that it can be as nimble as the minds of our nation if we are to continue to innovate and make progress. There will always be those who long for the good ol’ days, but I’ve come to realize that the good ol’ days were never as good as most remember, just comfortable because if you’re here now you managed to make it through them.

        3. ShanaC

          An example: BRAC2. The test in the US for BRAC2 is much more expensive because the gene is patented. Right now it is legal, that if you can1) identify novel genetic sequences, (2) specify the sequence’s product, (3) specify how the product functions in nature –ie, its use (4) enable one skilled in the field to use the sequence for its stated purpose However, it is very awkward to keep this logic going, since genes on their own don’t do much, particularly on their own. (unlike say patenting adrenaline, that will do something to you)Remember environmental factors can hugely alter genetics (that’s why we do twin studies, and family studies). Even carrying BRAC2 will in no way guarantee Breast Cancer or its related Cancers. It’s only 60% according to the US government (as opposed to 12% otherwise).Should they have patented? That gene probably is not acting on its own. Effectively because they can purify a lot of BRAC2 and do tests with it, they can patent it. Is that enough for the patent system to stand on its own for gene patenting?

          1. Prokofy

            I don’t have an opinion about genes. Is this maybe different than an engineered product?As to your other questions, maybe read, I dunno, Bukharin? I mean, the idea that the Bundists broke with the Marxists, well, kinda, but what has that to do with the price of tushonka?Sorry, I have to get back to work now, see you next week.

          2. Tereza

            That’s an interesting point, Shana. The was a story on gene patenting a few weeks ago on NPR talking about what an ethical mess DNA patenting is. I’ll have to dig it up and send a link.In point of fact, I know the person who is BRAC2. Meaning, it was her body, her breasts, her genetic sequence — from which researchers extracted and identified the BRAC2.She certainly does not own the patent for her gene. But someone does.This gene killed her mother, her sister and many other female relatives before age 40. She was an early activist for testing. I’m pretty certain she would be disappointed if she understood that the US costs to administer the test are artificially high due to patenting, and therefore some people who should get it can’t afford it.Indeed — that’s f-d up.

    2. Anne T. Monopoly

      Maybe you’re not talking to enough patent owners and inventors, Prokofy. Several years ago I litigated two related patents and in deposition testimony all four of the named inventors testified that they never thought there was anything patentable in their work; they considered the innovation to be relatively trivial, obvious to most any engineer skilled in the art, and generally just “all in a day’s work.” All the same, the patent stood.In any event, nearly all “innovation” builds “on the basis of other’s work” … often with neither need nor thought of obtaining permission.

      1. Prokofy

        No, I don’t accept your anecdote as undermining my essential point. If the left-click of a mouse seems like a utility that ought to be in the public domain like a paperclip, well, that’s the point of the patent approval system, and of litigation. That will sort it out.My conviction about this “cause” is that it is a single-issue campaign that is launched by those with a broader agenda to smuggle in a direct assault on private property and capitalism. I see this cause taken up by Lessig, Noveck, Doctorow and others with an ulterior agenda and a full-blown world view which is about undermining the entire system of private property and intellectual property in general, in favour of a giant “Creative Commons” that is supposed to make everything endlessly for free at little or no cost and usher in a technocommunist utopia.I can only urge those raising this issue so tirelessly to bring it back down to earth and cite a concrete case of a concrete patent that gets in the way of your concrete innovation. Your case here doesn’t tell that story, it tells the story of a sort of weak sense of ownership of some engineers. But that isn’t the point, their weak sense of ownership. What I want to see more of are examples of how some tragically misunderstood genius was thwarted from innovative glory because of some evil capitalist patent troll. Bring it.It’s like copyright, and the same Lessig whine. Disney is always wailed about in those discussions. That’s when I ask them how it is they found their creativity was cramped because they couldn’t put a jpeg of Minnie Mouse on their blog.And no, I don’t confuse patents and copyright. But the same cause of copyleftism attacks both in the same way for the same reasons which is why I raise both.

        1. Anne T. Monopoly

          Your tone suggests that a fully elaborated reply would do little more than expend my time so I will simply say this: it really is possible to embrace property rights and capitalism and still think that the PTO is doing a miserable job of implementing Section 103 of the patent statute.The inventors in the case I talked about briefly did not have a “weak sense of ownership” …. they had a strong sense of solving a simple problem and of having no legal right to a monopoly in their solution. They would never have filed an application at all; their participation was mandated by a CEO interested solely in extracting license fees from his competitors and burnishing his reputation as an innovator … which he was not.

          1. kidmercury

            no worries anne, you definitely won the beef with prokofy.

          2. Prokofy

            Then it’s a game, and a game that has served companies to have an entrance fee to the game in this fashion.

        2. fredwilson

          Yeah but when red blooded capitalists who are paid to generate a return raise it you can’t call it bolshevism any more. Saying “litigation will sort it out’ is like saying “world war will sort it out”

          1. Prokofy

            Your definition of “red blooded capitalists” and mine might differ, Fred. I find that people who you might call capitalists, like Chris Anderson or Craig Newmark or Seth Godin in fact function an ideology of technocommunism, that is, socializing or collectivizing the means of production to the masses, making the worker supposedly own the means of production, but then harvesting the profit from it just as the Soviet state would under “state capitalism” which is what communist states practice. Capitalism isn’t only practiced by liberals who are for free enterprise and the rule of law; it can be practiced by communists like the Chinese.Litigation is the tool that has sorted it out because it’s what works. The tools that Beth Noveck and others are now proposing, which is to have a wikitarian code-as-law approach decide it by a few wired elites, is the same problem as you running philanthrocapitalism with no PAC or no NGO to keep you on the straight and narrow.

          2. AgeOfSophizm

            Prokofy, have you ever worked for a corporation? You seem to hold that corporations are the best allocators of capital (which i did at one point as well, that is, until I went to work for one). Corporations can be terrible allocators of capital, and so can politicians. Chris Anderson, Seth Godin, etc.. seem to be suggesting that maybe society and truly free markets should decide how capital (human capital, monetary capital, intellectual capital. etc…) should be allocated.

          3. Prokofy

            Of course, lots of them. Usually in low-paying clerical jobs. Have you?I don’t have this religious belief that you have that corporations are evil, and that they aren’t the best distributors of capital.Um, can you tell me who has gotten paid by the Chris Anderson Long Tail shill other than…Chris Anderson himself with lectures fees about how this is supposed to work?Trust me, I’m out on the smaller vertebrae of the Long Tail in Second Life, and I gotta tell you, it’s rough.

          4. AgeOfSophizm

            yeah – here’s how big corporations work (i’m not talking about google or facebook here, they are in a different class of corporation:10% of people know what is going on and add value90% are free riders and have no clue (and have no INCENTIVE to obtain a clue)You see, that is the problem, how do we incentivise employees to get a clue? it doesn’t happen in the existing corporate structure. CEO’s are way too greedy and hoard shares for themselves when they should be distributing to the rank and file employee to INCENTIVISE them to innovate! I know, a novel idea, huh?

          5. Prokofy

            Er, why are Google and Facebook “better”? If anything, they are monstrously worse in a thousand horrible ways than the old companies that have been around for 25 or 50 or even 100 years.Give me a McDonald’s, Wal-Marts or even IBM any day that is tethered to some kind of reality of marketing and product and consumer than Google and Facebook, which are users of their users, which don’t even have any demonstrable business model that will work in the long run (Facebook) and which keep eating up more and more sectors (Google even turning itself into a utility company and buying electricity now, Google taking over books, phones, etc.)I don’t know if it makes sense to distribute shares to rank and file workers. When I worked at Xerox or Citibank or Kodak shovelling paper into copiers or typing correspondence, I don’t think I deserved a share. I was just a worker bee. I deserved a living wage and a benefits plan, but don’t shill me with the shares, that’s for people who are investors. If I want to buy stock, I can buy stock in the company I work at like anyone else.This idea that you can distribute shares to workers is one of those ideals of the Soviet Union that was tried after the Soviet Union broke up, with disastrous results. The shares were either meaningless or valueless or they were snapped up by middlemen or worst of all, given to the state for loans. Loans-for-shares collapsed the ruble in the late 1990s.

          6. AgeOfSophizm

            Google keeps eating up more businesses in more sectors because those businesses were terrible at what they did had have been around so long to the point they’ve become anti-innovative. But the CEOs made a pretty penny for being anti-innovative for quite some time…they drank your MILKSHAKE! Now you are left running 14 servers just to get by.

          7. raycote

            “The blood runs cold in a Hired Hand”

      2. ShanaC

        Most people forget that the original purpose of the Patent and Copyright Offices was to make work more available so that people would innovate off the good parts in a functional manner.

        1. fredwilson

          If we had compulsory licensing at commercial rates (meaning affordable rates) then I could live with the systemBut as currently constructed its all about preventing innovation. Innovation means competition. They are one and the same thing

          1. Prokofy

            Please provide one specific example about how an existing patent has prevented innovation in something you care about or are investing, rather than just spouting.

          2. raycote

            Bingo, short and to the point, well said!I’m jealous of the, short and to the point thing 😮

          3. ShanaC

            I disagree slightly. Some ideas are clearly more valuable to some than others. And some ideas are more valuable at different points in time.Auction. We need a sale and resale market. Just because there is a patent holder, doesn’t mean the person holding it is the right person to have it. A highly liquid market would probably start exposing a lot of work….

          4. Jim Milton

            Innovation entails improvements in function or design, toward system ideality, via true resolution of technical contradictions- as opposed to marginal improvements that leave a system riddled with embedded trade-offs and imperfections..Or so says the TRIZ methodology. However you precisely define it, innovation is mostly about inventive problem solving. If someone contributes real blood, sweat, tears and capital toward a problem solving endeavor that yields true, unique progress, then let them protect their invention, publish it for all to see, and to inspire new inventions that are more than marginal improvements. In addition, yes, let’s have compulsory licensing as in the music industry where anyone can pay a copyright owner 7 cents per song covered (mechanical royalties), per album sold, without needing special permission.

        2. Prokofy

          No, that’s some sort of utopian spin on the process. The purpose of patents is to couple intellectual property with commerce, just like copyright. Yes, they differ, but yes, they are most decidedly about red-blooded capitalism, selling your idea and making sure that you are paid for your ideas, and not others who steal them. And that’s ok. My father had a number of patents in his life, some got taken up by Xerox or other corporations where he worked, some he kept as an individual and made some money from them, patents are a good thing. People work hard to make inventions and their work should be safeguarded.Those criticizing the patent system keep coming up with ways to destroy it, not improve it. I believe that when Noveck claims she’s trying to reform it, in reality she’s just taken a single issue to put over a more complex ideology that involves collectivization of innovation and liberation of property — Lessig goes even further.

          1. ShanaC

            No, I’m just being strict in my reading of the constitution To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; Article 1 Section 8 Clause 8. Nothing about commerce. Yes to promotion.You might get more traction out of British Common Law…but remember, we’ve moved away from it.

          2. Sethop

            Jefferson, who is considered the father of the US patent system, was hugely progressive. I wouldn’t be surprised if the conservatives and reactionaries of his day called him a Utopian. He also once wrote “it may be proved that no society can make a perpetual constitution, or even a perpetual law. The earth belongs always to the living generation.” and ” Every constitution, then, and every law, naturally expires at the end of 19. years. If it be enforced longer, it is an act of force and not of right.” – let the strict constructionists stick *that* in their pipe and smoke it.(Reference:

      3. fredwilson

        That’s it in a nutshell. The system is all fucked up

  5. Andrew Stern

    Since my company holds some very important patents in our industry, I guess I can’t get aboard the “eliminate them all” bandwagon. But I will say that I look at start-ups all the time (for investment or acquisition) and don’t give a ton of weight to alleged patents in that context. A good team, technology, and execution is going to win in the marketplace, and then the patents become — if anything — a relatively minor matter of licensing if it turns out that someone was granted something relevant. Am I alone — how do other VC’s and Corp Dev people think about patents when evaluating early-stage companies?

  6. raycote

    The debate over what constitutes the cut off point for overly general or generally obvious patents can not be based on what you or anyone else can personally buy into. That debate obviously hinges on a an open and epistemologically well grounded triangulation process that includes all the public and private stakeholders.I am a pretty( ok… lets say handsome) average person. Yet, it is very obvious to me why the invention of the mouse as a user input control device should be worthy of a patent. While adding a second button is simply to obvious to warrant a patent.INVENTION OF THE MOUSEConceive of a mechanical hand size device that you move over a flat surface. The device is capable of measuring it’s movement and translating that movement into digital signals that represent is relative motion. The device can transmit those motion detection signals to an attached computer. The computer transposes those digital motion tracking signals into a screen position overlay that generates user feedback about the abstracted relative position by placing a moving visual pointer on the screen. Place image or text components on the screen. Conceive that these mage or text components represent symbolic place holders for user input events. Equip the hand held mechanical motion tracking device with a mechanical actuator. When the accuator is actuated send a signal to the computer. Detect weather the actuation signal is synchronous with the pointer being over one of the screens symbolic user input event place holders. If yes, match the symbolic user input event place holders with an appropriate user input event handler.INVENTION OF THE SECOND BOTTONStep and repeat with a differentiated secondary actuator signal

  7. CJ

    I totally disagree with you but feel that further discussion is futile as you would obviously rather debate Fred’s ethics and politics rather than any issues with the system. If you’d like to debate the merits of the existing system and why you feel it needs to stay the same I’d be happy to participate, but as you prefer to drag the discussion as far away from that point as possible, I don’t think that there is anything left to say.

  8. Dale B. Halling

    There is extensive evidence that patents increase the rate of innovation. Those countries with the strongest patent laws have the fastest rates of innovation and diffusion of innovation. Those countries with weak or non-existent patent laws have the weakest patent laws. Before patent laws became widespread in the western world, the rate of innovation was slow enough that the per capita income of the west had not changed in centuries. Note that many of the other conditions of a free market, such as low taxes, property rights, etc existed for centuries before per capita income started to increase in Europe. If you believe this is just correlation, the burden is on you to prove it since all the evidence is against you. For more information see…Dale B. Halling, Author of the “Decline and Fall of the American Entrepreneur: How Little Known Laws and Regulations are Killing Innovation.”

    1. Anne T. Monopoly

      you’re kidding, right? you present ONLY correlational evidence but I have the burden of proving what? That your correlational evidence really IS only correlational?Nice try

      1. Dale B. Halling

        Anne you have no contrary evidence – correlation or otherwise. Increases in technology are the only reason we are wealthier today than in the past. Patents are the only free market method of encouraging advances in technology. Property rights encourage maximizing of any assets whenever it has been tried including patents for inventions. The evidence is overwhelming if you open your eyes.

        1. Anne T. Monopoly

          << Anne you have no contrary evidence – correlation or otherwise >>you’re prosecuting this case, counselor … your burden, Mr. Halling<< Increases in technology are the only reason we are wealthier today than in the past >>I’ll assume you mean “advances” rather than “increases” but I demur on the point; it’s not the issue under discussion<< Patents are the only free market method of encouraging advances in technology >>Didn’t your mother teach you to be skeptical when you hear — and cautious when you speak -– words like “always,” “never,” “only” and the like? Have we forgotten about trade secrets, the law of unfair competition, first-to-market, effective branding, marketing and sales? Patents are NOT the only free market method of advancing technology; and as for the “free market” aspect, the essential purpose of patents is to foreclose competition.I am reminded of a gentleman I met who had his inventions manufactured in Guangzhou, PRC. I casually asked him how he was protecting his IP; without missing a beat, he said: “FUCK MY IP! … I get to market quickly with quality products that people trust and like; what? I’m supposed to worry about my stuff being knocked off and sold into Europe? When I go to Europe I go for fun, not to chase down Chinese assholes and Euro-scumbags in courts for months at a time. I make more money in North America than I know what do with … the last thing I need is an army of lawyers keeping me awake all night worrying about intellectual property.” It’s another perspective.Let’s be clear, though; I am not anti-patent; what I’ve said here is that I have a problem with lax examination practices which grant monopolies on claimed inventions which manifestly do not meet the statutory mandate<< Property rights encourage maximizing of any assets whenever it has been tried including patents for inventions >>again, I’m not anti-property, but one of the questions you’re not addressing is for whom this supposed “maximization of assets” accrues to and who it should accrue to; if NIH does all of the basic research for Drug X and then licenses it exclusively for a song to PharmaCo Y (which happens all the time thanks to the 1980 Bayh-Dole Act) is this asset being “maximized” when it’s sold at a price beyond the means of large numbers of people who would benefit (or stay alive) from it?<< The evidence is overwhelming if you open your eyes >>we’ve come full circle, Mr. Halling; you really haven’t presented even enough evidence to venture beyond the threshold question of whether patents create wealth or if wealth gives rise to a system to protect it against any and all incursions. I gather you’ve written some kind of book which claims, inter alia I presume, that “little known laws” have been “killing” innovation and entrepreneurship, among them Sarbanes-Oxley (which I think is pretty well known, but perhaps you write for a different audience than I am imagining). The thesis seems to me indefensible: in the last reported year (2008), the USPTO received a record-high 485,000 applications for patent. The number of applications per million people (world population) has steadily increased from 25.2 in 1980 to 33.4 in 1990, 51.7 in 2000 and 72.7 in 2008. What that tells me is that there is more, not less, innovative activity in the world … yes, even after Sarbanes-Oxley … which, by the by, has produced all kinds of innovative compliance apparatus.The story is not all in the numbers, though. The stark reality is that the vast majority of the patents granted each year have zero commercial potential. For my nickel, we can keep the patents but it’s well past time that we take a look around and start thinking broadly about value and not so much about wealth and legal abstractions. The discussion we’re having should not be a technocratic exercise; it’s about how we want to live.

          1. Dale B. Halling

            Actually the burden is on you Anne. You are the one suggesting a change. You are the one suggesting a position that is inconsistent with the evidence. Under Occam’s razor the most likely answer is clearly that patents encourage innovation. Your contrary position not only requires evidence that you have not provided, but requires extraordinary evidence since it is an extraordinary claim that property rights (patents) do not encourage the activity for which rights are provided. See David Hume

    2. ShanaC

      he happens to be right. Good Patent and systems to expose patents means more ideas to be in view. it means the legal system overall is strong and fair, so you are unafraid to pursue your idea. Just saying.

    3. raycote

      “If you believe this is just correlation, the burden is on you to prove it since ALL the evidence is against you”my emphasis on “ALL” – thats is a pretty tall claim!That is a questionable epistemological assertion. Your shot summary of second hand knowledge assertions may actually be well defended by the preponderance of evidence. I am not personally willing to do the research required to present a more robust summary of the evidence, you so forcefully assure us is overwhelming .So, why exactly is the burden upon the contrarian view to execute a more complete and effortful airing of the evidence than you have been willing to provide. A surface view would suggest that the rate of invention, the rise of wealth and strong patent law would be, at the very least, so what mutually reinforcing. Unraveling the chicken and egg factors here seem much less trivial than your summary or your implied evidence would suggest.

  9. Anne T. Monopoly

    I came across this statement at the Intellectual Ventures site: “In the simplest form, an invention is the idea and a patent is the formal property right to that idea.”It’s curious that Nathan and his team apparently don’t understand that idea <> invention … and that there no such thing as a property right in an idea. Some might think this is nit-picking but actually it lies right at the heart of the issue under discussion here. We’ve ended up with too many people, including patent examiners, believing that every brain excitation resulting in a solution to one or another problem is entitled to an enforceable legal monopoly.And so it is that we end up with foolishness like the Amazon “1-Click” patent, which requires all ‘net merchants who want their customers to be able to complete a transaction with one mouse click to pay Amazon for the privilege … upon the general theory that sending a SKU along with an identifying token which can be used to fetch the other required transactional data is somehow a notion that nobody in the e-commerce world would ever have thought of. It’s preposterous; I had thought of it myself, in a few moments of casual thought at that. It’s a good idea. It works. Amazon did a nice implementation. But there’s no way in hell that it meets the non-obvious standard.We can not, in effect, make “first-to-use” the de facto (or de jure) standard for meeting the non-obviousness requirement and still preserve a sensible regime of intellectual property protection. It seems to me that much of what Nathan is doing encourages more of this chicanery … and then makes it easier to pay for what should have been cost-free. He’s a bright guy; he could do better.

    1. raycote

      Very succinct!You gave me the idea to thunk a thought experiment!Notice I said you GAVE me the idea, so I keep patent and copyrights.In the distant future, when every idea we have can be digitally capture, documented and legally registered automatically via the great mother-ship central patent office, which will then automatically send out mental blocking signals so that no other brain can have that same idea ever again, unless as that other brain is about to traverse that idea pattern, said other brain must acknowledge the pre-existing idea copyright signal and accept the micro copyright charges.No more socialist, collectivists leaching a free lunch off the ????????? of us.

    2. Jim Milton

      I feel like the 1-click example may be over-used. I know of many more sophisticated “inventions” that have been rejected.

  10. raycote

    @ProkofyEase up on the ideological war sloganeering and shoe banging. Careful with those things, you’re likely to poke someone’s third eye out, more likely your own.LETS REVIEW SOME OF YOUR LANGUAGE:utopian spinred-blooded capitalismcomplex ideology that involves collectivizationliberation of propertya broader agenda to smuggle in a direct assault on private property and capitalismfull-blown world view which is about undermining the entire system of private propertya giant “Creative Commons”usher in a technocommunist utopiaweak sense of ownershipevil capitalist patent trollcopyleftismideology of technocommunismsocializing or collectivizing the means of productionstate capitalismfree enterprise and the rule of lawwikitarian code-as-law approacha few wired elitesreligious belief that you have that corporations are eviljust a worker beeshares, that’s for people who are investorssome sort of utopian spintruthersclassic liberalBolshevikssocial media collectivizingCreative Communismcrony communists and their palsclassic liberalism in AmericaCommunity-Organizer-in-Chief in office nowideology only of a narrow circleyou and your fellow technocommiesFreetardiaNow you want to destroy the patent systemReal socialismthe rule of lawreligious, Puritanical abhorrence at CEOs getting big payments and bonuseshard leftsocialist sausage eaters banging on the tablebrutal Schumpeter eat-the-rich stufftaken off the worst cartoons of PravdaMarxist professorsSocialist bloggersLeftist Obama officialsTechnocommunist VCsUnemployed youth on blogsCorporativism is a form of fascismthe reds and the browns—————————————-THIS IS SO OVER THE TOP – I SMELL A RAT!A mythic mind, attention getting rat, riding in brandishing a well polished, theatrical, shiny, polemic sword. Rubbing everyone’s fur the wrong way.Some kind of discordian?….NO….. maybe some kind of slack master?Formal conspiracies, informal conspiracies, everything human falls into one of these two classes. CONSCIOUSNESS = VOLITION = CONSPIRACYI don’t know about you, but the first thing I do when the lights come on in the morning is start conspiring to make things turn out my way. And at some level, that pretty much continues on all day for me.LESS POLEMICS -more- MORE SUBLATIONSublation from the german word AufhebenA term used by Hegel to explain what happens when a thesis and antithesis interact in a productive mental thrashing so as to generate a new perspective or modeling of a process. This new thesis, on how to visualize the process, is a synthesis of the best elements distilled via constructive arm wrestling between thesis and antithesis. Key terms and concepts in both the thesis and antithesis are both preserved and changed through their dialectical interplay. Key terms and concepts is both the thesis and antithesis are SUBLATED, subjugated and subsumed into the newly evolved thesis. The new thesis generates a new antithesis and the process of thesis-antithesis SUBLATION spirals off into the endless void of historical evolution.Sublation is far more productive than his evil twin brother Mr. Polemic, who often masquerades as his brother!NOBODY HERE BUT US PUPPETSTHEM FOOLSAND THE ODD TUNNELING ANOMALY

  11. DanMalven

    I did a post on my blog a few years ago about the same concept of “permissionless innovation” in the fine art market in the 19th century. the rise of the Merchant Class in 19th century Europe, all art was created under the “sponsor” system where artists were on the payroll of the money’d class. There was very little innovation because the sponsors don’t understand innovation and weren’t willing to fund it.Once the Merchant Class developed and created individuals able to buy completed fine art on the open market, the artists became independent entrepreneurs and unleashed a torrent of innovations, such as cubism, impressionism, etc.USV probably sees the same thing with its investment in Etsy.The same idea with technology innovation….if you force creators to get permission before they create, it will stifle innovation. It’s been going on for hundreds of years and will continue to go on.Thanks to Fred and Brad for bringing this out starting the discussion about it.

  12. Jim Milton

    I feel like this thread has happened before a few dozen times on slasdot.

  13. Anne T. Monopoly

    “On Tuesday, Facebook was awarded a major patent for “Dynamically providing a news feed about a user of a social network”. This is a huge deal for a number of reasons, most significantly that it grants Facebook the opportunity to pursue other social networks which are infringing on their patent. Included in the patent are additional claims including feed filters, feed advertising, searching the feed, and more.”well … that’s bound to stimulate all kinds of innovation; will be interesting to see what effect this may or may not have on Twitter

    1. fredwilson

      I posted about that yesterday

  14. Tereza

    Charlie thanks for bringing us down to earth here.My To Do list this week includes closing on a decision and action this week re: filing a provisional patent. I thought this discussion would cover it, but it didn’t go there. Too esoteric.I want to explore the “Should You/Shouldn’t You” question of whether or not and/or when to file, and what’s the minimum effort/expense I can get away with here.I’ve heard conflicting advice (a range from “don’t bother”, to “pay mucho bucks for a quality filing”, and in between). I need to focus 100% on a killer product instead of lawyer’s fees. I am bootstrapping. Writing checks for BS makes me cringe. Yet, I recognize we have to be practical here.Do any of you seasoned startup jockeys have advice to share?

  15. gorbachev

    “Nathan has the model all wrong.”For maximizing common good, maybe, but for maximizing his profits, he’s absolutely in the right business however slimy, and borderline immoral it may be.