The Twitter "Patent Hack"
Yesterday Twitter announced that they plan to amend the assignments agreements that they sign with their employees. They call this proposed amendment the Innovator's Patent Agreement. I've been aware of this effort inside of Twitter for a while and I like to call this move the "Twitter Patent Hack" because I think what they have done is very clever and is likely to have a material change in the way patents are used to foster and/or hinder innovation, as the case may be.
Specifically Twitter has said that they will only used these assigned patent rights defensively to protect themselves against hostile actions. And further that any company that acquires these patent rights from Twitter will need the inventor's consent to use them in an offensive action. Twitter has also provided the inventor with certain rights to license the patent to others for defensive purposes. You can read the entire set of provisions on GitHub.
The other day I talked about Insurgents vs Incumbents. This is the framework we use at USV to think about a lot of things. And in the world of patents, the advantage goes to the Incumbents who can hoard patents and use them to their advantage. The insurgent, three engineers in a walk up in Bushwick, can't even afford the lawyer or the time to file a patent. So it is very encouraging to see an emerging incumbent, Twitter, do something like this. They are saying to the world that they do not intend to compete on the basis of patents and instead they will compete on the basis of product, feature set, user experience, etc, etc.
USV is committed to support this initiative. We are instructing the startup lawyers we work with to insert the patent hack language in our standard forms. We are reaching out to our friends in the startup world including other VCs, accelerator programs, and the startup lawyer universe to suggest that they to insert the patent hack into their standard forms. And we will recommend to our existing portfolio companies that they adopt it as well. Of course, entrepreneurs and their companies will have to be the ultimate determinator of whether they want this provision in their inventions assignments agreement. If an entrepreneur we invest in does not want this provision, we will certainly support that decision. But we will want to have a conversation about why they would want to do that.
If Thinking Media had the patent hack in their documents, the story I just told would not have happened. And thanks to Twitter's leadership, I hope that all future USV portfolio companies will have the patent hack in their documents and stories like that one will be a thing of the past. I'd like to thank Twitter's leadership team, especially the legal and engineering teams, for coming up with such an elegant and simple solution to this thorny problem. The startup world is a better place today than it was yesterday as a result of their work.
Could there finally be light at the end of the patent tunnel?I hope so, and applaud Twitter for this move.Let’s hope a hundered flowers bloom.
Nicely put, David. Flowers indeed, rather than the thorn bushes the patent trolls seem to prefer! 😉
I’m a big fan of this. Patents were supposed to be a defensive measure, designed to protect the innovator from being abused by larger incumbents. Instead, what we see is patents being used offensively by large incumbents to cripple innovators.The patent hack puts the power back into the hands of the innovator, and can stop patent’s use as an anti-competitive device.I can only hope this is widely adopted and props to you, Fred, for promoting it.
it almost makes me want to use Twitter. almost.congrats to twitter on the balls, the “no-troll” thinking, and giving the power to the innovators. and its really clever to extend that to the USV portfolio.
it was an obvious move to us at USV
obvious, but bold. most VCs were probably waiting for someone else to make the first move. i suppose it will be part of the formal thinking around IP. many things need to be clear from the start when startups want to be able to freely develop and pivot. structure is needed from unstructre to succeed.
It is easy to talk about, another to step up to the plate. Good move!
Nicely written and explained, including the proposed patent hack language.Do typical USV companies spend a lot of time, energy & money filing for patents?
not much. we don’t encourage it and we don’t even look at IP in diligence
While I’m impressed at that, I’m also kind of amazed. You don’t look at the IP at ALL in your DD?Don’t you worry about these trolls coming along to leach royalties and legal fees off of your portfolio companies? Wouldn’t it be a comfort to know they had a defense against such a threat and wouldn’t that also factor into a higher valuation when you’re working up a term sheet?And going forward wouldn’t it be especially nice if they had patents (or even provisionals) that were initiated in adherence to the IPA hack? I would think adherence would get them a gold star and the opposite would raise a red flag.Fred, if you don’t mind me asking, what do you feel is the appropriate scope of a VC’s involvement if a portfolio company suddenly falls prey to one of these predatory patent-trolls or just an IP holder who comes out of left field trying to shake them down? Do you potentially step in with extra capital to help them fight that battle and defend their business? I realize it is all but impossible to have a blanket rule about this but what would be your general inclination?
it happens to us all the time. we now view it as the cost of doing business and not something we can avoid.
“we don’t even look at IP in diligence”Same reason I don’t want a full body scan or that 23andme gene shit or monitor what my wife is doing. Might reveal to many false positives.
That is how FTW. is done.btw, your story reminded me of afghan.
How for FTW or Afghan?FTW: Make the patent impotent.Afghan: Teach how to be democratic. Take the learning to fuel terrorism.
Bold as well as smart.We don’t often get to know Twitter as a company as their leaders don’t really touch the users.I like this. The result and getting a sense that this product I love and depend on is made by a company I can care about
Its a great move on their behalf. I’d like to think it shows they remember their roots.
You don’t make a move like this unless you belief in the ‘why’ of it. I like commitment to core beliefs. When done right they are never antithetical to smart business practices.
It also speaks positively about the constancy of the culture through the upper management changes.More evidence that Dick Costolo knows what he’s about.
Yes, but Fred, it still does not address the problems of the ‘system’..and it can be attributed to one particular galling thing..The amount of judges in Federal US courts that have some basic technical understanding of technology. and remember Federal judges are appointed…guess how by?By the lobbying efforts of incumbents..To fix patents, copyright laws, IP we have to fix the lobbying corruption of the US political system.So lets stop with all the smoke and mirrors and call a spade a spade..
this may in time cause a lot less litigations to even startimagine if google and facebook adopted this provision
Great development for patent problem.Trolls will be trolls though….how can they be neutered?
if many tech companies had this provision, the developers could be handing out defensive patents to use against the trolls
Fred, trolls are immune to defensive patents. By definition, they’re not operating companies in the traditional sense. They don’t sell products or services that could be accused of infringing patents. There’s some innovation that’s happened in the last couple of years aimed addressing the troll/NPE issue in other ways. Two venture-backed companies that are doing just that are Lex Machina and RPX. You should check them out.
look at section 4 of the IPA.
All para 4 does is give inventors sublicense rights they can use to diffuse any infringement suit brought by someone (Twitter, a troll, et al.) that is against the terms of the IPA. That makes these patents unattractive to secondary purchasers like trolls because there’s always the possibility that the defendants will run out and get a license from one of the inventors. It just means that NPEs are not likely to assert these patents against anyone. Para 4 neutralizes the subject patents by making them less likely to end up in litigation. It does not convert them into offensive weapons that can be used against trolls.
Agreed that this helps going forward. Sets the right tone.How do we stop the trolls that have ALREADY amassed huge portfolios of patents and are out there carpet bombing innovators?
There’s the rub.How to protect the patent mechanism, and safeguard genuine innovation, and stop its exploitation for anti-competitive practices?More, how to make that process transparent and objective?
I know this sounds like an obvious move and I have heard of some big companies who have arrangements like this but how about a set up like this:A company pays a very small monthly fee AND contributes to any patents they have to an exchange. The patent exchange defends and counter sues the aggressor on behalf of any/all exchange members.
there are problems with that model. i do not think i am best suited to outline them. hopefully a few patent experts will chime in and explain
Nik’s describing a basic patent pool. They’re great in theory, but they’re difficult to operate in practice. Because they typically involve the coordinated activities of competitors, they have to be very careful not to run afoul of the antitrust laws. One reason you set up a patent pool is to reduce patent litigation. But sometimes the pool doesn’t work because there are disputes over the legal obligations pool participants have to license the pooled patents to others on what are known as fair, reasonable, and non-discriminatory (FRAND) terms. This is a big issue right now for the companies that own patents on 4G LTE networking technologies. A startup called the IP Collective tried to create a patent pool for startups. It was not easy to convince early stage companies to contribute their IP to the pool.That might change if VCs follow Fred’s lead and ask their portfolio companies to adopt the Twitter policy.
Let’s not pretend anyone is voluntarily disarming. Everyone is still suiting-up just with more subtle terms of engagement.Reminds me of Israel’s ‘Nuclear Ambiguity’ – “we won’t be the first to introduce them in the region”aka: We’re not denying stockpiling them or that we’ll whack you with everything we’ve got if you come after us. We’re just saying you get to make the first move, mofo.Patent warfare is now in it’s cold war stage.
we’re past cold war stage and dealing with bigco lawsuits.
‘The problems we face cannot be solved at the same level we were at when we created them’ | Albert EinsteinNew level of thinking. Good on Twitter.
Gödel said that first http://en.wikipedia.org/wik…
Thank you for letting me know.Sorry if I am being stupid here.. but I don’t see any proof of it on the Wiki page though?
This is one of my favourite Einstein gems. Another is “Everybody is a genius. But if you judge a fish by its ability to climb a tree,… it will live its whole life believing that it is stupid.”A comforting mantra I’ve been evolving that seems to qwell negative energies and move my energy into a positive light:Be kind. Don’t blame others (be understanding, learn compassion). Smile. Love.
In addition to the above, a great PR strategy for hiring top engineering talent who grew up in the world of open source and find software patents offensive.Andy Baio wrote a really good article about how Yahoo! purchased his company and forced him to “weaponize” his patents, one of which is being used to sue Facebook: http://www.wired.com/epicen…Worth reading if you are interested in this stuff.
that is certainly a big part of why Twitter is doing this
Interesting. Thanks, Luke!
did you read the comment section?Most of the people don’t believe his innocence. That is really a bad stamp every entrepreneur may get. Not that easy man … not that easy at all… to be an entrepreneur.
The Wired commenters are like a pack of hungry, cynical wolves.
One (good for the inventor) Unintended consequence is hiring an inventor from away from a competitor will presumably be a complete defense to a counter claim in a patent infringement suit.
What a horror story. Wow.Great initiative.
This is a pretty far out stance, but will it hold up in court during bad times, or against a legion of corporate vampire super lawyers?
I’m no lawyer, but I play one on Disqus….no really, why wouldn’t it hold up? An inventor has to proactively assign their rights to their employer under the usual patent way of doing things. So, this basically has the inventor NOT (fully) assigning rights.
I think it should as long as each company sticks by this clause.But imagine an opponent who can’t strike back. There’s a disadvantage if they can’t counter sue. Or does one patent “assault” open the flood gate for full retribution by the target?
It is a contract and as such is as good as it is as well written.
Patent hacks and legal hacks have been top of mind after having attended this weekend’s legal hackathon at Brooklyn Law School. http://legalhackathon.blipc… Many of the ideas discussed at the hackathon were aimed at reforming IP laws like SOPA/PIPA, the Patent Act, etc. It’ll be interesting to see how widely adopted ideas like Twitter’s patent hack and Paul Graham’s Patent Pledge become. In the near term, I expect to see more actual hacks, i.e, new technology and innovative business models, emerge in the IP space. It’s already happening. I see a huge market opportunity in removing some of the friction tech companies, large and small, experience due to patents. My hope is that entrepreneurs and investors will start focusing their attention on building new (and profitable) businesses around patent hacks.
“The insurgent, three engineers in a walk up in Bushwick, can’t even afford the lawyer”.Hmmm. That’s an opportunity.Many do file the cheap and easy provisional applications? but just fail to complete the full expensive application?Had we access to the mass of abandoned provisional applications, over the years, my guess they would be sufficient prior art to disqualify many established “patents”. It requires the USPTO to open abandoned provisional applications (if kept somewhere), and to ask for help from the people who filed them.
ooh. good idea!
Money comment Aviah :$)
I agree, that is a great idea. I would like a good summary or primer on how the patent office goes about searching for prior art when they finally get around to deciding on the validity of a filing. I think a start-up’s money is better spent on a strategic and product knowledge base that internally establishes a lot of prior art defenses. Your orphaned application pool could go into that KB.
Bear in mind that many such provisional applications are of low quality. Anyone can apply for a provisional patent but that is a very long way from producing a document that illustrates convincing prior art.
For companies whose exit strategies include acquisition, how do you think employing this agreement will affect things? Will acquirers place the same value on the IP if they know they can’t use it aggressively?
no.how can they?
Agree. If the company’s patent portfolio is a main reason why the strategic is looking to acquire the startup, I’d expect the strategic to heavily discount the valuation of the company. Founders should think very carefully about adopting an IPA provision into its standard agreements. When the relevant agreements are signed it’s usually impossible to know for sure what the exit is going to look like (or if there’s even going to be an exit). Here’s the relevant provision of the Twitter IPA, section 2(c):”Assignee acknowledges and agrees that the above promises are intended to run with the Patents and are binding on any future owner, assignee or exclusive licensee who has been given the right to enforce any claims of the Patents against third parties. Assignee covenants with Inventors that any assignment or transfer of its right, title, and interest herein will be conveyed with the above promises as an encumbrance.”
you can build value by building a businessif all your are building is an IP portfolio you might as well be in the patent troll business
i think its universally accepted fred that blood sucking sucubus patent trolls are a hated breed.I’d highly doubt anyone reading your blog is of that ilk. That said – build and protect go hand in hand for the entrepreneur.
“blood sucking sucubus”Strategy of any “blood sucking sucubus” is to take some of that money and buy respectability (by donating to charity). Or like the mafia buy turkeys for Christmas. You’d be surprised how people overlook all sorts of things if you spread the cheer around.
Would have loved to do a hidden camera april fools joke on you. Hiring a few actors to pitch you on an idea that basically went down that road and had no value in building a business but only extracting money from the IP. But in all seriousness all this really goes back to the “you can only be as honest as your competitors or industry” idea that I have mentioned. It’s tough in any business when competitors are using a particular devious strategy, absent of “fuck you money” or some clear superior advantage (which twitter has by the way in their user base and ubiquity) to not play the game that others play.
Agreed. You have to innovate and solve a problem AND if you can protect your innovation. The combination drives up value.
Too broad a generalization.ARM is in the intellectual property business. They never implement they license IP. But there is no way anyone in their right mind would consider them to be trolls.
Yep, that’s what I was thinking too. I’m surprised that Fred would *want* his portfolio companies to use this IPA – I think it’s great that he does, but surely it must have a downside for USV. Maybe I just haven’t looked into USV’s strategy enough to understand this point of view.
It might be as simple as USV took a lesson from the episode Fred described.
USV’s strategy, like most technology venture capitalists, is to invest in innovative growth businesses. When patent portfolios become significant to their investment thesis they cease to be VCs and move down a rung or two on the PE ladder.
Are they reversible?What happens in 10 years if everything is not all right in Twitter’s world?
good question, i’m curious about this as well.
I think that is why they are making the inventor also holding the rights. Even if the twitter’s world change … the inventor’s world may not change and this hack will remain.
Fascinating point, indeed. What if Twitter, universe forbid, is a future “Thinking Media” and the fire-sale buyers of their IP don’t share this altruistic outlook? In fact, Twitter doesn’t even need to fail, it just needs to be acquired by a company whose management has a vastly different philosophy. What then?Thinking it through, the original inventors would certainly have a case against the company now owning and enforcing the IP. They could collect damages. But that is still flawed because it doesn’t stop the IP owner from doing all the things the IPA is designed to protect against.Here too, I would say, to all the M&A specialists reading this, follow the IPA lead and advise your clients to make adherence to the IPA hack (assuming of course the selling company has the hack in place) a condition of the sale or merger with defined consequences for breach. That would be the one way I can think of that the industry can give IPA more legs, if you will.Awesome what-if insight on your part. Thank you for sharing it.
An M&A insight would be real interesting at this point.
Or if the patent is sold and licensed?
Hmmmh. So maybe this has a somewhat reverse/perverse consequence of “raising” the long-term value of a patent, albeit not to extreme levels. The Thinking Media patents had value in hindsight. By appending this to a patent you are saying to all other competitors, there’s value in these patents to you sometime in the future if I go under. One of the above comments said that Twitter devalued itself, which I do not believe.
The only way to know would be to wait out twitter.
A few questions:Has anything like this ever held up in court? That is, can companies and employees unilaterally change the meaning of the word “patent”?Does “hostile” mean different things to different companies/people?Who is in charge of holding the company accountable should it “change its mind” down the road? It seems that if the amendment agreement is with the employee, we’re back to square one of GIANT CO vs Individual.To be clear, I’m ALL FOR the local level of companies and individuals determining the value of their property and how it is to be used.The above questions are just the 8 weeks of sporadic law-school in me.
I’m not a lawyer either, but I don’t think this changes the meaning of ‘patent’- just restricts how and when patent rights can be exercised. As to holding the company accountable– the inventor is specifically granted rights to license to any ‘victim’ company should that occur. Paragraph 4 in the license: https://github.com/twitter/…. While we’re at it, huge respect to Twitter’s attorneys for drafting an elegant one-page document on such a complex topic. Its brevity alone makes it more merchantable.
Good questions. I’d like to see some patent attorneys blog about this topic. A little analysis from them would be insightful.
From what I’ve read so far, patent attorneys have said it’s window dressing. But of course lawyers like doctors you get 10 different opinions and it would make sense for a patent blogger to take the opposing side of something like this. If things were binary there would be no supreme court overturning decisions of well qualified lower courts.
You communicated your concerns better than I. Basically can this deal survive first contact with a court/legal battle.
Good points. But I think there is enough ambiguity in the “hack” to make that all moot. In general something loosely defined is to your benefit if you want to weasel out of later. Something tightly defined is not. Source: My years in business.
yes this is great. i’m more impressed with USV upping the stakes and including it in their terms. does that mean that if an entrepreneur wants your funding they have abide by the “no aggressive patent” rule? this is a nice step towards self-governnace — the ongoing move away from the nation-state system and towards new governance systems borne out of non-state networks. the war is far from over, though. but at least folks are stepping up to the challenge. hopefully this can become positive branding, much like how standing against SOPA became a marketing ploy. then we get competition to work in favor of liberty. maybe you’ll all even rush out to get 9/11 truth t-shirts to prove how much you stand for liberty! nah, you’re probably too scared….. i do wonder about reversibility, as tom labus inquired elsewhere in this discussion. 9/11 was an inside job,kid mercury
i said in the post that we won’t force entrepreneurs to adopt this as a condition of our investment. but we sure are going to encourage it.
sorry i missed that, read too quickly. hope others follow and continue blazing the trail!
Bravo!The IPA may just come to be Twitter’s biggest contribution to the world since, well, Twitter itself. Although the word is overused and does not hold the currency it should, I can only think of one word that suffices to describe this action: “visionary.”Just this last weekend I was conversing with an IP attorney friend of mine and an inventor about the state of our patent system. Many of us regard our patent system to be “broken” but few have come up with a real nuts and bolts approach to actually fix it. The solution is NOT the end of patents but it is also not to sit idly back, waiting for Godot.Patents were established not as a way to stifle innovation, as some have abused them into becoming. The USPTO was established to be a registrar of innovation to assist investors in monetizing their inventions, rewarding those who were the most prolific and pioneering.The core of that idea is good.The problem is patent trolls who really have no intention whatsoever to build what they register but rather wait for someone to come along so they can pounce on them to extract licensing fees and royalties. It is a form of business parasite and it stifles innovation.My view is that patent reform needs to have a “use ’em or lose ’em” kind of provision that eliminates this kind of bottom-feeder business model from even being viable. In my opinion, after a patent is filed, if you don’t build the thing you’re patenting or secure a licensee who themselves puts it in active commerce, the patent itself would go into some redemption status, like a domain name, to be released to someone who really is going to build the invention being described. That way the system will benefit genuine inventors who really build what they invented not just building a toll booth hoping to prey on future passersby.But the IPA is a huge step for this industry in empowering it not to have to keep living in hope that regulators and governments are going to understand these issues at the level of granularity we do and make proper corrections. Unfortunately, our government’s IQ on IP is woefully inadequate and they lack the political incentive to take on these highly complex issues.What makes IPA visionary more than anything else is the idea that we don’t necessary have to fix the broken system. We have well within our own powers to put an end to these predatory practices and to restore the original intent and rightful benefit patents were designed to secure. We can start from within, at the point of conception of these new inventions to see to it that the system be used to protect innovation not to undermine it.
“or secure a licensee who themselves puts it in active commerce”That would seem to be easy to game. And people are doing that now with respect to domain names as a defensive move to protect those assets. A troll could license out a patent for a nominal amount. “Building” something could easily be gamed as well.This is all similar to why it’s hard to define pornography but we know it when we see it as SCOTUS said.
You make a good point but they’re gaming the entire patent system already and it isn’t even illegal. Making false entities to feign use to circumvent this provision would definitely constitute fraud and at least it could be prosecuted.I still think it would be an improvement on the present system. This isn’t just going away. If anything, it is likely to get worse as technologies and user experiences continue to converge.
But I’m not suggesting “Making false entities to feign use”.Let’s say I am the inventor of a device, – a new door lock. Assuming I perceive the patent is valuable (and I am paying for legal help with the entire troll thing) it wouldn’t mean much to put a little bit of money into attempting to build a prototype and try to market it and even sell some below cost to hardware stores or over the internet. You are correct though that this is certainly an improvement on the present system and would create friction in the troll process.
If you build a prototype and market it to stores and over the Internet, you’re not “gaming” the system. You’re a startup.And, as you’ve already confirmed, it would create some friction for the trolls and curtail some portion of that activity. In my opinion, a substantial portion. At the very least it would make them have to work for it at lot more than they do now.
In the example I am giving I am saying “game the system” because the intent is not to create a viable entity. It is to evade some other rule. Let’s say there could be some rule with real estate which stated “any piece of ground must hold a working business or it will be taxed at a higher rate”. A million dollar casino owns a particular piece of ground and wishes to avoid the higher rate. So they place a single person selling lemonade on the property as a “working business”. That is gaming the system. In my example the prototype and market (was intended) to illustrate protecting the IP value not to actually gain any real revenue. To protect from gaming can be difficult to do legally. Something reasonable for one entity to do would be clearly gaming for a different entity of a different size.
who on here has ever had a great idea?Who on here has ever taken the steps to build that idea? if you answered yes to both then you have every right – free and clear of what the investment community thinks – to go ahead and seek protection for your idea. make no mistake – what you do with it – this is the question being posed – is a good one – and what twitter’s position is on this – is most definitely groundbreaking and i personally think, a great thing.But don’t let the investment community lead you down the path that protection of your idea is a bad thing. Its not. Its your idea. you have every right to protect it.
Are you implying that this new patent hack equates to no protection for ideas? (Sorry, if I’m mis-reading your comment).
I think he’s pointing out the fact that using patents in an “offensive” manner to protect your work is not an inherently bad or “evil” action.
what i am trying to point out is that a bunch of VCs this morning have come roaring out the gates on this issue.the message to the entrepreneur is “we don’t value your protective measures. Dont bother telling us about any patents you filed – we will ignore this in our investment discussion.”thats fine and thats great – but that does not in anyway mean that the entrepreneur should not take appropriate protective measures.
Nonsense. Patents are a great defensive mechanism and cost little to get on file. No VC will reject you because you have too many patents. What they want is a sustainable competitive differentiator e.g.. a moat around your business. The patent if it’s a good one gets you that. You just have to execute on multiple vectors – revenue and protection.
I agree. I think these generalizations are dangerous. There are cases when such protection is critical and the problem with such generalizations and the associated meme that ‘it’s all abou the execution’ is that an inexperienced entrepreneur may be hypnotized into not seeking IP protection when he/she should have done. There are such cases!
as if there were protective measures. i have never seen a patent save a failing investment.
who said anything about saving a failing investment? investments fail in the market no? its too narrow a view to patently (no pun intended) discount IP measures an entrepreneur seeks to secure. An entrepreneur should be fighting on all fronts.
i just think you were sold a bill of goods by some IP lawyer
That assumes that the only way to have a failing investment is to have a failing business ie a business that is itself fundamentally flawed or the execution is flawed. What if the problem wasn’t that but rather that a large company entered, used your IP and seriously damaged your business? In such cases a patent might not save you but it could compensate you – without that you have NOTHING.There most certainly have been such cases and if I am your limited partner I would far rather than you got me some money back or a return by prosecuting the infringer than you sit on some kind of principle and let my investment in you be wiped out.
@fredwilson:disqus that may well be the case.
offensive use of patents is – in many, and perhaps, most cases – effectively admitting that you don’t know how to use, monetize, or push your idea forward and that (f*ck!) someone else does. using the law to protect IP for these reasons most clearly stifles innovation and serves no one but the patent holder and is, IMHO, only a few steps removed from patenting ideas you never intend to use.
Protection of your idea is great, patents as the edge of the sword rather than the solid center mass of the shield is the issue here. It is thus that the age old question is posed: Would you rather be feared or loved? And the new one: Is love even a possibility if it leaves a future in which you cease to matter, if not cease to exist altogether. Twitter has chosen and I think it a wise choice but history will ultimately judge the wisdom of their actions, for them and their investors.
if you answered yes to both then you have every right – free and clear of what the investment community thinks – to go ahead and seek protection for your idea.As if one needs approval for doing something in their best interest that the crowd thinks is objectionable. Where the crowd doesn’t even have any skin in the game. It’s the old “russian shirt off your back/million dollars” story. Easy to give someone something you don’t own.I for one have a big problem with having to state an essentially unchangeable statement or pledge on something, when, as we know, the facts often change and then you are confronted with something you agreed to at a different point in time that you might have to reverse. Look what happens to politicians when they do this or if they waffle and aren’t absolute.They can’t just say that Keynes quote “When the facts change, I change my mind. What do you do, sir?”
Ideas don’t need protection. Ideas by themselves have no inherent business value. Building a successful business is all about execution not about locking up ideas.I agree with Fred that software and process patents are an aberration in the patent system that is causing great harm to innovation. Add to that the abuse of the patent protection rights by companies that acquire patents (rather than file them originally) and you have a system that needs to be disrupted.I am the registered inventor on a patent, which we filed as part of startup business (which I co-founded). So I am intimately familiar with the process of coming up with a good idea, filing a patent, and trying to build a business. I will tell you, honestly, that the patent played no part in the success of that business. What made us successful was the implementation of a solution to a problem our target market had – and getting that solution into the hands of that market at a reasonable price.
Pandodaily covering Twitter’s move here – http://pandodaily.com/2012/…
it will be a group effort
Are you going to give the Thinking Media money back to Nielsen or whoever you sold the assets to?
i don’t think it was much money. maybe $100k at most. our investors got it.
So will Google, and Apple, and FB, and MS, and the rest be applauding or laughing or worrying?
we will see where the incumbents come out on this in time. it will be telling.
right now thinking. Later worrying and finally crying.
I spent 10 years inventing tv technology, filing patents, getting patents in the two screen world. Luckily I still own 20% of the patents. The company ended up not doing much. Inventors should secure their ownership rights at the time of filing. Otherwise this twitter thing sounds like a back door to extracting money out of the patents if the inventors-owners fail to do it upfront. Obviously if there is money to be made on the offensive I know of no investors who wouldn’t happily sign up with a patent troll. Plus I can’t imagine an inventor, who is broke, will fall on their sword and not try to extract a payment for an offensive move.
i wouldn’t. so now you have one.
Chief, you have patents?
“Plus I can’t imagine an inventor, who is broke, will fall on their sword and not try to extract a payment for an offensive move””i wouldn’t. so now you have one.”Is gotham gal on board with that thinking? Don’t forget what happened to Jeffrey Wigand as portrayed in “The Insider”.
I think most inventors who would fall on their sword rather than extract payment (ie. people like me) are also the ones most likely to not bother with a patent in the first place.In fact I’ve been tempted/encouraged on a few different things to go through the patent process, but have never seen an advantage on a personal that outweighed the pain of the process (because I know I would be a ‘fall on the sword’ kind of guy, but also hate doing it and be very frustrated at the same time). 😉
Some one earlier in this blog commented about the similarities of Patents and Nuclear weapons in a similar post.That still holds pretty good. Patents are like nukes … you pile it for defensive purpose and never use it.
Commendable, but easily done by Twitter and not by others.. Twitter’s competitive advantage doesn’t come from patents on GUI elements and infrastructure tweaks; they already open source all that on GitHub. It seems to me that (big) data (combined with scale) is Twitter’s fotress and they are not going to give that the same “hack” as the processing and presentation layers.On a related note, big data sets are the new IP. All of the other patented / patentable stuff will become (is becoming) less-relevant, secondary plumbing that can be done any number of ways. In a battle, I’ll take data over an Apple GUI element any day; the former is going to create more value for end-users.
i agree that data is one of the new forms of defensibility. network effects are another. IP is quickly losing steam on that front. we don’t even consider it anymore in our investment decision making process.
Great insight by @Bruce Warila and I agree with you both. In the big picture, the network effects (“large network of engaged users” as you’ve put it) + the big data opportunities of a given service’s social graph are already starting to massively outweigh the value of patents and marks. That’s encouraging.BUT, that being said…Patent trolls can still stifle the massive potential of the big data phenomenon if we don’t create practices and trigger reform like this. Imagine, for example, a process patent being granted for “The extraction of big-data repositories for distilled reporting to data stream subscribers.”Weaponized patents are a threat to innovation in all forms — not just IP. It doesn’t much matter if a bullet hits you in the head, the heart, or the lungs. A deadly bullet is a deadly bullet. Patents were designed to be the vests that stop those bullets and somehow over time the system got “gamed” and turned around on us.
….data that should belong to the individual?Tim Berners Lee is not wrong.
Whether or not the individual owns the data (I believe they should), the fact that they are entering the data into your ecosystem has value – and if the service isn’t useful enough or has negatives to it, then the full mobility that individuals should have will allow those ecosystems to die and the better ones prosper.
I don’t believe in such generalizations. Conventional wisdoms of that form are precisely the kind of thing that blind us to disruptive innovation. There is no reason to believe that data will build the next big company than novel IP. There is no clear pattern to innovation. And whilst you (Fred) may not ‘consider it any more” I am pretty confident that you would if you were presented with a convincing case.
Good eye Bruce, it’s easy to “give away” what you don’t need.
Hopefully, Google won’t sue Twitter for violating their patent on not being evil.
The best thing to do would be buy Twitter and piggyback on all of the good press and good intentions, though Twitter’s path may potentially hurt or conflict with Google’s intentions – but sharing is a lesson Google/Google+ will need to learn anyway, so might as well learn it from a company you own; Would look better to shareholders anyway IMHO.
I’ve always had two conflicting thoughts on that.Twitter is an awesome fit with Google. They share values when it comes to the open web. One is bad at search, the other is bad at social. Seems like a match made in heaven.On the other hand, Twitter really seems to want to be an independent company and I’m so attached to the product part of me wants them to succeed in doing that.
Agreed. Twitter being independent is somewhat crucial, mostly because they can maintain some level of control of guiding where they see things going – and they can leverage their value to do so through relationships, etc..
I have to wonder what the trigger is if a company uses a patent that the other owner, the individual, disagrees with that use. What can they do?
Fred, sounds like your favorite cartoon was Underdog.
i love underdog!!!!!!!
It sounds like Underdog inspires your thesis in many ways. #muse
@fredwilson:disqus Yes, but can he sing the theme song?When my kids were young and I pushed them on the swing @ the park, I was required to do the classic Underdog push (from the front, you run under the seat of the swing, pushing the kids up and over your head, then letting them go, for the un-initiated).That’s when I realized that I could do it. Both stanzas too!
there are only 26 letters in the alphabet, and we keep rearranging them”one-click” amazon payments: patents jumping the shark
really loved seeing this news yesterdaygreat way for Twitter to stand out amongst the clamoring patent-hoarders
Fred, very interesting idea. Do you think there is any impact on the value of the portfolio company in an exit scenario if that particular IP is viewed as very valuable to the acquiror?
If they are buying a business I do not
Nail in the coffin.
Not if it was ARM?Not if it was DOLBY?Not if it was Pfizer?
You gotta wonder whether the encumberances that this may create on IP would be similar to two-tier stock plans, where the market prices in a discount because of the restricted rights you get by buying the patent (or stock). If I still have the right to veto a use of an asset I no longer own, that’s worth something to me (i.e., a lower sales price for the asset). Also seems like it will add to the legal overhead of IP transactions. Perhaps the benefits will outweigh the costs, but by no means a clean kill of this problem.
This is a great comment. It seems obvious to me that the value of these patents must go down if the new owner doesn’t have the ability to use the patent in any way they please.
I definitely see this as a bridge. The distaste for what innovation patents kill, and the increased costs they add to society, will become more and more transparent.
One of the positive attributes of VCs is their long-term thinking and investing, but I find it hard to believe that many will forgo the full value of an asset (in this case the sale of a company for its IP) on the speculation that that IP could have some far future ill effect on a hypothetical investment.
Have to think about this one. A few days ago we were issued a really important patent (#8,156,206) that has broad claims relating to Privacy on the Internet. Not sure if i would agree to this new term in a term sheet. It’s still really early to gauge how this is going to work in the real world.
Patents are an enemy of all sectors. If we eliminated them then there would initially be a messy, chaotic-like storm, though with the internet we now have the tools to filter out the noise.If an idea is good enough, and a person believes in their invention enough – they will gain support of people through traditional means – facilitated by systems like Kickstarter.Where we end up is wholly intent driven: Do we want innovation to occur primarily to make the inventors rich, or do we want innovation to occur primarily to make society more rich?I love what Twitter is doing – not only with this “patent hack” but also with Twitter Bootstrap.And I love how capitalism is still the driving force. As genuine and authentic the fundamental core beliefs are of those responsible for happenings, these initiatives fully serve the businesses’ needs.I want all patents dead, though I do fully understand the fear associated with not having them – as the incumbents have resources in place to quickly duplicate and outgrow (save the conscience of employees, though who will want to keep their job); This is why you see team acquisitions or only where a product has reached critical mass, has a userbase, and has the metrics to continue on that path.It has been that same fear though that drove me to continue innovating and evolving my theories and ideas, and now I feel much more firm in where my place can hopefully be.
2 ways of looking at this: 1) it’s impossible in today’s day and age to discern what is truly “new” and it is clear that the process of determining that is by and large flawed; 2) if we don’t have patents then you as an idea “owner” might be flummoxed that tomorrow when you wake up a complete copycat is out there selling your product and killing your margins. Or there is a 3rd way. You go to bed every night expecting a perfectly good copycat to come along, so you’re always innovating and making sure that doesn’t happen. The third path, at least logically, appears to put arguments around 1 and 2 to bed and be the best for the capitalist and society.
Agreed that #3 is best for capitalism as a whole ecosystem, and how it is meant to flow without restrictions, and then therefore the economies of scales and other metrics can fairly / properly come into play – and transfer benefits to all of society! Woohoo!
Agreed. We don’t like monopolies in anything else, why should we like them in “IP”? Somebody who builds a factory doesn’t get 7 years of use before somebody can build a competing factory. Bring on the innovation!
Seriously? Did you know that patent law is in the Bill of Rights? That the precise idea is to grant a limited time monopoly in exchang e for full disclosure of the idea so others can learn exactly what you did and improve on it? This is a trend that will pass and the vc community (btw, this helps them significantly) will change the tune as soon as that disruptive startup is copied and/or gets crushed by a large incumbent.While I really respect Fred’s openness in many things, his story is enlightening. He got mad that a company whom he invested in went south and 10 years later used patents he funded to sue newer companies. Why are you mad? The company owned the patents, not the funders. Those assets were sold to mitigate a loss because they were valuable. That’s like me getting mad that the grocery store I go to closed down because I spent money there and the new store doesn’t have the same good prices. Who spent the money has no relevance on the value/lack thereof of the business.I love IP and will use it as the Founding Fathers intended–a limited monopoly that promotes economic gain.
First, your statement is factually inaccurate. Intellectual Property appears nowhere in the Bill of Rights. The term “patent” does not appear anywhere in the entire constitution. The only reference to IP in the US constitution appears in Article I, Section 8, in the enumerated powers of Congress, specifically in Clause 8, which states:(Congress shall have the power to…) “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”Congress can, by mere legislation, abolish the entirety of the existing intellectual property framework that exists in the US today. Of course it won’t because of powerful lobbying groups like the MPAA, RIAA, and the IBM cartel. Patents are not assets. Patents are an artificial monopoly granted by the State on a semi-arbitrary basis (if you have ever filed a patent you would know this to be the case) and then utilized as a weapon against competition, frequently frivolously. The “Founding Fathers,” whatever nonsensical weight one gives to that group of dead white straight men born in the 18th Century, were a bunch of mercantilists whose concerns with genuine liberty didn’t extend much beyond the protection of their own economic interests. The Constitution also had embedded in it the protection of the ownership of human property…I presume you wouldn’t support resurrecting those provisions? Intellectual “Property” is really nothing more than intellectual slavery. Property is something that if you take it from its owner, the owner can no longer use it. If I steal your car, you are deprived of a car. If I use a process in a product you invented, you can still make your product. That’s the difference between property and the conjured up idea of “intellectual property.” As to the claim that patents promote economic gain, see the academic repudiation of that spurious proposition:http://www.amazon.com/Again… Finally, the idea that patents protect the little guy against the incumbent is the biggest ruse of all. If you have ever been involved in any form of IP/trade secret litigation, you would know that it is extremely expensive and time consuming. The winners are not small-time inventors but big companies, patent trolls, and of course, the biggest winners of all, lawyers. The only thing the little guy has going for him is his insurgency (and the innovative lethargy of the incumbent). If he can be slowed down by expensive litigation (offensively or defensively), his disruptive force is killed. If a new ‘invention’ can be easily copied and delivered to the market faster, better, or cheaper by an incumbent than by the insurgent, then the ‘invention’ was probably not that disruptive to begin with. If anything IP provides false signaling to the entrepreneur, promoting rent-seeking behavior by directing him toward the manipulation of the patent system to make a profit rather than by being genuinely innovative. Maybe without patents we would see more start-ups focused on disruption than on building feature trinkets that can be auctioned off to the incumbents copying doesn’t make as much sense.
Since you brought up past data in the past. Did you know there didn’t even exist a Bill of Rights in the past, and life and humankind evolved and innovated over millions of years without written texts?Things got figured out.Things got figured out better and better as we developed social skills, community, understanding and support – emotional bonds and connection as apart of the foundation for decision making – something we’ve disconnected from due to money; Somewhere else in here I mentioned buying a candy bar and the profits potentially and unbeknownst to you going towards a war you don’t support.I believe you’re wrong relating to this trend being somehow crushed by an incumbent. “I love IP and will use it as the Founding Fathers intended–a limited monopoly that promotes economic gain.”It promotes economic gain, for the individual.Which was fine and probably needed at the time, to amass resources to those who had innovative ideas (to make things easier, to make life easier) that just needed some resources to start, but that’s not needed now.People can now quickly and easily decide (vote with their money) what they want to happen; Historically voting for elections would take months to do / know the results of. The point being things change, things evolve. We didn’t need a piece of paper telling us what the rules were – and if one community wronged another community, the cost would have been a war in your own community. You/everyone in the community would really strongly weigh if the bloodshed was worth it or not, for whatever wronging was done.I do believe the solutions need to be put into place first before the old dinosaurs can safely collapse, and/or where they take a more synergistic role. Not having solutions in place, a safety net in place, causes things like bailing out whole industries that collapse due to economies of scale and a global economy. You should discover and have the solution ready for when they collapse – otherwise bailouts will happen due to fear, from not understanding / not feeling safe – they will be promoted by executives with fiduciary responsibilities, politicians with political gains, and let be to happen by society because of the perpetuated fear that can become stagnant and unchallenged from a lack of understanding of how the new will fill in needs.This all boils down to core beliefs, where intent is: Want the best for everyone, or the best for yourself? Wanting the best for yourself in reality happens by providing the best for everyone, taking care of and supporting everyone – otherwise crime rate goes up, productivity in society goes down, innovation slows, etc.).
Article 1, Section 8 is the foundation of patent law, so my original statement was 100% accurate. It was copied almost directly from English Common Law so the need for the word “patent” was unnecessarily specifically because people understood the context which that was written. And ad hominem statements don’t help “the Constitution supported slavery and you don’t want to bring back slavery”. And strong patent policy and laws are not the same as taking away human rights. So just don’t go there…Patents are absolutely and specifically assets. They can be bought, sold, traded, licensed and used however the owner wants. Wanting them not to be assets doesn’t make it so.You’re right. If you steal my car I’m deprived of a car. And if you steal my patented process I’m deprived of my business. Or would you suggest that if I stole your car and crashed it into a wall but returned it to you and it was still drivable (therefore you haven’t been deprived of your car but it is less valuable than when you last had it) that this is OK? It’s analagous to me.Skinner, I have been a part of several IP litigations and threatened litigations each and every time as the “little guy”. In each instance my small company (~$1MM sales) was able to get global multibillion dollar (sales) companies to back off and do something else due to the strong nature of our patents. Those patents kept 14 people employed, paying taxes, and doing productive things. I suppose the arguments used throughout say that those people can get other jobs and do other things. Theoretically that’s true. But I’d rather keep them working on something they helped build than tell them to get another job because the better capitalized company came by and stole it.In all seriousness, if people think SOPA/PIPA was stupid then you pretty much support strong IP rights. I think it’s inconsistent to be against SOPA/PIPA and for dilution of patent protection.
1. In your original argument you stated that Patent law was baked into the Bill of Rights, which is false. You otherwise miss the point of my historical argument and/or fail to address it. 2. Your supposed economic argument is the exact same argument used by trade protectionists to advocate tariffs, quotas, and other trade restrictions. Since patents essentially form the same sort of restraints of trade domestically, they have no efficacy.3. Patents are only assets because of the artificial and arbitrary grant of government monopoly. Absent this, nobody would give them any value. A car, a house, a factory, or other actual property, on the other hand, has value whether or not the State assesses it as having value.
“Patents are an enemy of all sectors.”Really?How much drug research do you imagine there would be if there was no IP protection? Which CEO would spend hundreds of millions of dollars researching a drug and getting it through FDA and other testing agencies worldwide if the day it was released someone could reverse engineer it and put it into production with no sunk R&D cost within a month?” If we eliminated them then there would initially be a messy, chaotic-like storm, though with the internet we now have the tools to filter out the noise.”No – sorry but no amount of internet filtering would stop the drug industry melting down with catastrophic consequences.The helpful thing about the pharma example is that is makes it luminously plain how dangerous generalizations are in this area. And this is part of the big picture.
I bet there would tons of drug research, and there would be better / more effective drugs with less adverse affects on people — and drugs that were harmful to people would never make it to market, which only make it to market because of billions of dollars of profits drug manufacturers want to make; People who actually cared about helping people, and not just high-paying jobs would do the work – and there would be many of them, if not more than currently exist.Development would take on the same process of theory/build plan/research, and then funding, seed through a series of rounds if needed/warranted.It would be the individual researchers with an idea, theories, preliminaries – who then would seek funding through various sources (something even like a Kickstarter variation) to keep moving the research forward.Things that require large funding and are beneficial to everyone in the world would naturally take priority/gain support first, and would gain support from everyone (and probably governments) around the world.It would take more time for research to go through whatever hoops they have to, though the waste and potential damage done would be much less.Does it seem smart to even put so much pressure on a company to perform (“you must make billions”), with fiduciary responsibility to make that money back? The pressure that it is known that has caused statistics of how beneficial medications are to be skewed to look much better than they actually are? And then the industrial complex that is created by it, which reenforces profiting off of fixing damaged people or ‘preventative’ vaccines – vaccines estimated to become a $34 billion annual market by 2014. And we know the more vaccines you give children, the more stress it puts on their body, the more potential for swelling in the brain (and other parts of the body) – which we’re realizing is causing developmental issues; What’s the cost to that to society? Sure, more profits to be made to ‘help these newly damaged people’ but that’s the totally wrong direction for profits to be pooled into IMHO.There will end up having to be much more scrutiny before things hit the public. There is a way to create a high level of R&D with great results, and not the need for a product that tens of millions of people need to use to make back the R&D costs, and to add to the billions in profit – where with the right leading metrics in place (not being how can we incentivize doctors to push these, and people to ask their doctors for these) will lead to solutions that are effective enough to thrive, and the ones not effective enough will die down; The ones that are big sellers won’t be because of the political lobbying to make vaccines mandatory, and not because 40,000 marketers are being hired to upsell and manipulate/influence opinions of doctors/caretakers.It’s the same concept of doing small boutique, low burn rate, “agile,” etc.. It creates efficiency and reduces waste, and more peer review and collaboration. And then you create the same kind of competitive environment, where only the best, most useful and helpful medications/solutions come to be – and where there are people who have developed a passion (for whatever reason) to solve a particular problem.Prior to the internet and where it’s at now this wasn’t possible, however we have the organizational ability now, the way to outreach to potential supporters, and to fund only the most promising things.We have the educational facilities in place for learning how to do research, there’s no reason pharmaceutical structures won’t change either.On the flipside I want to put the negatives of the current structure forward: Medications/research that is found to be too effective may/very likely will never come to light. They don’t want you cured, they want to make a recurring fee off of you. You’re also ignoring the COST to society, the inflated cost that are applied as profits – along with the cost from negative side-effects from things being pushed forward too quickly and without proper public and peer scrutiny. That cost to society can be shifted (and some of it lessened) to a different point in the process.In reality, certain medications aren’t the most effective solution. Certain medications increase the rate of suicide, whereas spending time and money on counseling (being humane) is the proper solution – yet not profitable, so not perpetuated by capitalistic forces – and many SSRIs, etc. are only affective overall if there’s counseling involved in the process anyway (not paid for by pharmaceutical companies). And when you have 40,000 marketing people you hire to pitch the benefits (stated and decided by the pharma companies themselves) to doctors, gifting them things, rewarding them, etc. – you really fuck with the natural way that doctors/caretakers normally would/should promote something based on its observed effectiveness – but how can they even know that when they rarely see their patient and only in a specific context, not the real-world context – currently just trusting what the profit-makers’ statements of effectiveness are honest; The FDA succumbs to the skewed data of benefits as well, and only once the data has a chance to be publicly scrutinized (if it even has the chance), and only after it’s already released en masse to the public – can it be determined otherwise.All industries will be disrupted, all industrial complexes will fall or perhaps evolve into synergistic relationships using the resources for things people actually want.Capitalism has been great for innovation, and patents / monopolies did allow that speed of innovation to increase in certain sectors, however that amplified innovation is no longer necessary – at least not for what’s currently been innovated; Interesting too how education has been an industrial complex, yet it’s failing a huge amount of people, and education is starting to be transformed into micro solutions as opposed to large-scale factory-style one-size-fits-all; Luckily there is space for these ecosystems of pooled research minds and facilities.This culture of R&D of course would need to be cultivated, and there will be billions of dollars of propaganda against whomever tries to evolve things.
MattNo matter how long your reply, the data says you’re wrong. Before Bayh-Dole (when the government owned the rights to government-funded research) NOT ONE DRUG made the market discovered using NIH funds. Since Bayh-Dole (which let universities, etc own rights and exclusively license) over 150 drugs hit the market. So the data says that patents/exclusivity leads to investment and meaningful drugs on the market.By the way, why doesn’t Twitter just say they won’t file patents. Or why don’t they file in the name of, and assigned to, the Inventor? That would assuredly have the feelings of the inventor relevant in licensing. This is a pretty silly idea. You all sound like that wise and
CPU error…..sound like that wise (and apocryphal) quote attributed to Charles Duell (Commissioner of the USPTO in 1899) “Everything that can be invented has been invented”. You don’t like patents? Don’t patent. You think there’s an IP thicket in your space? Invent something new that gets around it. I love how everything has to be innovative but innovation itself. This whole topic suggests people can’t get around patents through creativity. It’s bunk.Want to fix something important? Rail against why copyright is life of the author PLUS 70 YEARS. Blame Disney if you must (and you should) but this does more to keep ideas out of the mainstream than patents ever could or will.
Re: Data being wrong, shows not possible – I had no intention of using the length of my reply as an argument point… However apart of what I had said is that it likely wasn’t possible in the past due to the lack of engagement and transparency, the infrastructure not existing or being familiar. The data doesn’t disprove anything I said. That’s same kind of logic as monkeys aren’t humans, therefore humans couldn’t have evolved from monkeys.Re: Why not Twitter just not file for patents – Because they system currently exists how it does, and if they don’t then someone else will, and come after them; It’s first-to-file now, right? Not first to invent.You’re trying to argue based on generalizations instead of addressing the specific issues, which especially shows when trying to pool all “of us” into a group that apparently would agree with the statement of “Everything that can be invented has been invented” – that’s only used to make us look bad / stupid.Do you understand the cost to society when someone owns a patent? That’s my dislike and main focus of intent behind disliking patents. And since you mentioned data before, you’ve not seen the data nor the innovation and lessened quality of life caused by patents – because that innovation hasn’t taken place, or at least isn’t accessible to the mainstream and therefore most don’t know about it, so can’t support and wonder why they can’t get access to it – and perhaps wouldn’t it be nice to see how much of a cost of a product you’re buying is going towards people who have patents, and see how ridiculous some of or many of them are.People just assume, which has many examples contrary, that people will be lazy and not do research if there’s no incentive of being able to patent.Also, before Kickstarter most of those projects would never have found funding. Based on past data, Kickstarter would have been a horrible investment – but the whole basis and leading metric as to why it works is because it’s crowdfunded, meaning RISK is LOW for the individual; Comparatively as alluded to, a big company CEO would be risking potentially billions of dollars (though that statement’s not a fully honest approach, as it’s exaggerating the cost/risk because there’s due diligence and prior research done at much less cost before FDA study level,etc), where it would be highest risk due to it only coming from one company.Kindest regards
MattData is data. The data regarding ownership and exclusivity via patents is irrefutable. Your argument is trying to do proof by contrapositive. As in “Since no one has done it without patents, how do you know it can’t be done?” Yet I gave a concrete example of inventing in an era where non-exclusive licensing (effectively a patent that’s available to all) was the status quo and NOTHING HAPPENED. Before Bayh-Dole is a control group. I’m specifically not arguing on generalizations. I’m comparing 50 years of NIH funding with non exclusive licenses and 0 drugs created as a result, with 30 years of NIH funding with exclusive patent licenses and >150 drugs as a result.Let’s use another example. The semiconductor industry in the 1970s was in exactly the same position as the IT (especially mobile) industry is today. A thicket of patents, getting harder and harder to have freedom to operate. Did they try to take down 220 years of patent law? Nope. The market decided, patent pools were created, cross licenses were hatched and life moved on. Companies who innovated rose above, had IP that was free and clear of past IP, and found a way forward.What frustrates the crap out of me (this is not you, Matt, but the whole “this is awesome” approach) is that it treats the current point in time as special. It’s not. New, yes. But “special”, no. It’s yet another example of a new industry that had massive benefit and is finding its way to be a mature industry. Why folks feel compelled to selfishly try and tear down what over 220 years of solid progress has built up to make their lives or businesses “easier” is just arrogant.I guess in the end I simple disagree with your fundamental tenet. Patents don’t “cost” society. The promise of a patent for useful inventions is what makes investment possible, jobs possible, and is a hallmark of the most innovative economy on the planet. Let’s not race to the bottom with this.
Hey @Alechemist – can’t reply directly to your last post, so doing so here.I’d like you to try to imagine the innovation that could come from a system that I describe, crowdfunding to researchers with ideas; Assume/take away all worries of potential fraud, etc..How much innovation do you see coming from that? None? A lot? Some? Depends on how much funding people put towards ideas?Edit: Further thoughts below…Let’s assume you said this would create “some innovation” occurring, and pretend (which in reality will happen) that companies who own patents will sue people who figure innovate.If these individuals don’t get shutdown because of costs of defending even frivolous lawsuits (or even threat of one), then this innovation could, let’s say, cost an extra $10 per unit sold. 10,000,000 people wanted it before, would have benefit from it, but instead of the initial cost (which has a profit to it) of $5, it will now cost $15, and only 50,000 can afford it.Multiply this happening and innovation being squashed by a million times, all the way to infinite. You can’t know the how this would slow things down.A piece I believe that would need to be filled are experts, people focusing on a problem over a long period of time (domain expert), to curate and work towards bringing innovations to light – perhaps your example of no innovation occurring / no drugs created during a 50-year period when they didn’t have access to patents vs. >150 drugs with 30 years of exclusive rights / patents being granted; I don’t know the accuracy of those statements, but can still assume in this case.In all honesty it likely was just the fact that you needed access to a large amount of funds to fund the drug research, none of which an individual would want to take the risk of (the risk being too big), unless a patent was able to be granted.With crowdfunding you fill this same need, by providing the funding via lower risk sources – you just have to convince the people beforehand that what you’re doing is worthwhile, eg: make them understand, educate them why – and not the process of just educate yourself (being a domain expert, with access to money), take on big risk, and then educate the public after (advertising) to them afterward to try to convince/persuade them, to make back your money and profit — meanwhile, some other innovation could have occurred that makes your patented innovation obsolete (less useful), but then you sue that new innovation and increase costs, perhaps killing that added usefulness (because if they were smart they patented their improvements – but you might have deeper pockets, or you pay to license their innovation and increase the cost further to society), etc..As I said, I do agree patents were likely needed initially to get things moving, to bring technology to the point it is at now, however we have educational facilities in place and other mechanisms that we can use to more efficiently direct funds and resources, for peer review, for transparency, for reduction of cost through efficiencies and lowering of risk through crowdfunding – and where you tap into people’s legitimate support for something, and where people will buy / support the product because it’s something they need or will be good for them / society, and not because a profit is artificially high due to control mechanisms and a portion of that profit is used to market/advertise/persuade/trick people into thinking it’s much more useful and valuable than it actually is, that it will carry more benefit than it actually does.I think if something does carry such value then people will be willing to pay for it.I think people should get to decide if resources are put towards specific research efforts – it will help better manage our resources, and cause less waste being created.I think those valuable innovations can occur in a better way through crowdfunding.
I totally disagree.i don’t believe that big pharma is perfect. Far from it. But the idea of crowd sourcing AIDs drugs is a fantasy.And if for we step aside from pharma, which does occasion a rant of this kind from some who hate big pharma, and ask the same question in another field – which hopefully for them is less emotionally charged – like materials science, or solara – then the same question applies. Given that in this instance capitalism is not poisoning the planet with its wicked drugs, can we expect meaningful research investment if your research results can be copied at no cost as soon as you bring a product to market?
Aside from my careful and thoughtful reply being called a ‘rant’ by you, and the little jab of my response being emotionally charged (isn’t that where passion comes from?) – I will attempt to respectfully reply and try to paint a better picture for you;”Can we expect meaningful research investment if your research results can be copied at no cost as soon as you bring a product to market?”Absolutely, and it will be the individuals and/or perhaps teams who do it, the research and supporters, people who are fascinated with something, that have a strong interest or passion in some area.Most researchers I know are just happy to be able to pay their bills and be able to further their research/work, and they are doing incredibly important work.I can understand the frustration that comes with ‘your ideas’ not belonging to you, with no chance of them every belonging to you, mainly because this frustration is apart of a feeling that advancing yourself in what your passionate about as impossible – though people will find their path, and they will need support to learn the skills that foster patience and being persistant in their intents; We’re clearly currently in a society driven by “want now” and that’s when more mistakes happen, waste happens due to lack of thought — all good for making profits though selling things to people they don’t need or that won’t last long.For space research, as an example, let’s use an invention like trying to discover possibilities for “warp drive.”Do you want that invented faster but with higher costs to the consumer after (meaning less people can actually benefit from it), or a bit slower (time is relative anyway) but with lower initial costs, lower initial risks, and then more consumers being able to have access to use the technology – and consumers who can be engaged and excited about the process.These will be true supporters (and not just fans of a product; They’ll be putting in time, energy, and money: $10 each from 10,000,000 people, 100 times over in different sectors – that’s a lot of innovation, and if something gained that much support [even relatively smaller in size] then it will be something amazing)? And what’s to say they don’t all become shareholders?”Wow. I’m directly funding the efforts of X researchers trying to solve Y.”Imagine if Y is a cure to AIDS, or more likely some unprofitable disease, because there are only 100,000 or even 1,000,000 sufferers and they can’t afford to pay for the profits you’d need to justify the risk.The trickle effect on there being money more spread out for more research, less waste, will allow for many smaller breakthroughs / understandings of things to occur. This is the negative that money being invented allowed industrial complexes to flourish; Beforehand bartering, where a person was directly involved/supporting a transaction, where you had to have an emotional connection to it – and not the disconnect where if you buy a candy bar at the store, the profits might end up going to support a war somewhere.And the funny thing is the large “out there” ideas will actually likely happen slower, and research may not even really start to be explored in an area because what big company is going to invest money researching that?Researchers will have to become very good at explaining their work, in layman’s terms, and they will have to have a very solid and transparent peer network of researchers – who will be willing to put their name on the line for what they’re supporting, providing mentorship for and clearly outlining what the risks and possible outcomes are beforehand. These will likely need to be peer-reviewed before going out into the public for various reasons. Results should be expected to public / peer-review scrutiny (perhaps peer-review first as to not confuse the general public, which will make the process unfun/less fun).This is actually in line with Bill Gates statement of wanting 200 brilliant minds working in each energy sector to try to make quantum leaps in advancement (or something along those lines). That doesn’t happen with big companies – a lot of that could be from lack of transparency, secrecy to keeping ideas and research internal, as opposed to getting outside input – whereby some other team could perhaps find a piece of information that solves something they’ve been working on for a long time; If you cringed at that idea, then you’re on the side of the fence of intent where you want the Inventor to become more rich, versus primarily wanting Society to become more rich (as a whole, which also makes your own life more rich too).Society just needs to support people doing what they need (people supporting things that will make their own life better), and everything that needs to be figured out or discovered will with the proper support mechanisms for said discovery, R&D, etc.. We have the educational institutes and other structures now, and innovation is at a point where things can be done relatively cheaply. We just need the planning and guidance, the creativity and patience so what is created is what is needed and fosters not wasting.I see a world, a universe, where we all just live, learn, work and play – where that balance is likely a 25/25/25/25 breakdown, and work won’t feel like work because you’re be doing what you enjoy / love doing; Possibly most people don’t even know what that is because they never had the chance to explore it.Money is just time, time is money. With enough money anything is possible, with enough time anything is possible. Everyone can “live like a millionaires,” albeit not all material aspects as resources currently are finite (until we start mining those asteroids… http://news.cnet.com/8301-1… )It’s scary though, letting go, isn’t it?
Matthew – I’m sorry I called your position earlier a ‘rant.’ You clearly have a considered view of an alternative way for the world to operate and feel passionately about it. I may laud the vision but am skeptical about it. I don’t want to pursue this further here because it is so far off topic. But perhaps another forum like Quora would be a great place to explore these ideas and see what others think?:)
I’m obviously in the minority here but this feels like grandstanding more than anything on Twitter’s part. There are way too many “outs” in the defensive purpose section of the IPA in my mind for this to change much. Marco Arment has a very good summary on his blog this morning that outlines these issues.
I forwarded the post to a hacker/patent attorney fiend Erik. I’d love to hear him chime in on this topic.
“hacker/patent attorney fiend”I know IP lawyers have a certain reputation, but that’s cutting.
Freudian phone typo. Actually he’s awesome and helping me with some sticky confidentially agreement now. Historical IP hooks and long non-compete is spooky.
It was our collective sub-consciences messing with your phonepad. Fiends they mostly are. Well, let’s hear what he opines. There’s only been one other esq-like commenter so far that I’ve seen.
Alternatively, reduce the term for patent protection. If patents last a shorter period (e.g. 5-7 years), it still allows inventors/owners to exploit their idea but doesn’t keep it floating around for long enough to hamper innovation. If that happens, you don’t need this as much.
But the reality is that it takes 1-2 years for a patent to get approved. That’s the time it should take to commercialize ideas behind them.
You have been speaking on this issue for a while, and it’s about time this concrete step makes it crystal clear that this is the direction and the future of patents, startups and technology.This is a seminal move by Twitter, and let’s hope it does set a trend.Since they put it out as a draft, what sorts of improvements might you be expecting to it? And in what timeframe will this draft period end?
Serious consideration could also be made to patent pools,they have been around since the 1850s starting with the sewing machine. Theyhave been applied in many industries in the early part of a industry cycle. A patent pool is a contract betweenparties to aggregate their patents. A typical pool makes all pooled patentsavailable to each member of the pool and provide licensingterms to those who are not members of the pool.
“The insurgent, three engineers in a walk up in Bushwick, can’t even afford the lawyer or the time to file a patent. “That’s the exact reason why we haven’t filed for any patents. With this current venture, and the previous, I could think of 7-8 process patents we could be owning, but didn’t do it for the exact same reasons you just mentioned.Patents filing is old-thinking. Putting ideas into action…old thinking too, but one is out, the other is IN.
The amount of money diverted to productive efforts has much more value, especially at an early stage.Once you’ve had time to evolved you would still have the option to a create a more nuanced patent, and also hopefully a large coffee of cash to tap.
we got on file about a month ago – i am pleased as punch we did.
Those that can, do – those that can’t, patent.
Still feel that defensive actions by active innovators are of value. Patents need to be reined back to their original purpose – to protect small innovators from large, well capitalized predators.
Are you documenting everything and looking for prior art to defend your processes?
Partly, because we have to file for government R&D credits and we have to clearly explain the work and innovations we are working on, but can do more of that.
Mr.Wilson would you support this kind of a patent hack for pharmaceuticals and material sciences ventures too?
I certainly hope not. There wouldn’t be much research.
See http://www.avc.com/a_vc/201… for my disagreement. 🙂
not so much
Kudos for this!Unrestricted support, wholeheartedly agreed with.
Carol King was an amazing song writer, but did not have the voice and the skill set to make a business from a large part of her portfolio of songs. She collaborated with singers like Aritha Franklin and James Taylor and the rest is history. Whatever your position is on IP, the statement that only the “last mile” should be compensated seems short sighted.
i like carole king’s voice, tapestry is one of my favorite albums. i also like her version of natural woman better than aretha’s. although i think both are great.
She is amazing. She just released her autobiography. It gave me new appreciation for all the talent and creativity that goes into music before the last mile (the performer).
Carol King was an amazing song writer, but did not have the voice and the skill set to make a business from a large part of her portfolio of songs. She collaborated with singers like Aritha Franklin and James Taylor and the rest is history. Whatever your position is on IP, the statement that only the “last mile” should be compensated seems short sighted.
that’s called joining a startup and being on the team
Is there there a division between early and late stage VC on IP?
A few observations as one practicing IP law for more than 25 years:1) Twitter has few assets to begin with that are of any use or threat: their offer is kind of like an eskimo agreeing to quit bowling2) to the extent the patents do have any value, the strategy of artificially neutering one’s IP is just plain… silly, because it reduces the value of the asset, and just makes other cos IP more dangerous and worth more – think about it, as between two companies -both with identical businesses and patents, which one are you going to invest in? The one with an artificially induced impairment, or the one with complete freedom to monetize their assets?3) I *personally* would be fine nonetheless with such impaired assets being on the market, because it means the companies that *I* advise would have a competitive advantage and superior valuations. So, by all means, knock yourself out installing this latent defect in all your IP folks!
“Twitter has few assets to begin with”That’s today though. Companies change and can get into new areas. And some of those might contain those assets.
Yes, and this move will encourage innovators to gravitate to Twitter – in the long run it’s a smart move, but capital generally seeks out the quick ROI.
Have to agree with you. And love the analogy of the eskimo and the bowling ball.
Fully agree with this stance – if you assume that patents will always exist.
Patents have been around almost 600 years:http://en.wikipedia.org/wik…and are guaranteed as part of the Constitution (Article I). I suspect they will be around long after the companies we are talking about are gone.
A purist might say that the decision by Twitter — to essentially arbitrarily denounce the value of their patents — amounts to a breach of their fiduciary duty.Like setting a handful of Benjamins on fire.
Great point.But taking this to an extreme I wonder I wonder if a jury of “normals” deciding on a shareholder lawsuit would rule against the company.
Would likely be in front of a single Judge in the Delaware Chancery Court.
As they say in Delaware we have Chemicals, Credit Cards, and the Chancery Court.
Also Dupont, right?They also have the “Dupont Legal Model” which I know I read about a few years ago. Apparently they publish their best practices to gain adoption by other firms and law departments.http://www.dupontlegalmodel…http://www.dupontlegalmodel…Since 1992, the DuPont Legal Model has offered corporate law departments and the law firms that serve them a wide range of corporate law best practices.
LE that would be the first C which is why Delaware exists.
we will see. i doubt it.
I was waiting for somebody to use the fiduciary responsibility angle on this one.I would say you would have to judge the value of the PR versus the loss of the value.It seems the biggest percentage value lost would be in the case of the fire sale, but that doesn’t move the needle one iota for a VC.The last question is does that make them less of a weapon. Basically I think most entrepreneurs would prefer not to have these patent weapons, but as Jefferson said those that beat their swords into plowshares will be ruled by those that don’t. Not sure that this might make them less of a weapon. I see the intent was to ensure that it didn’t.
There’s more than just PR value to take into account.If you dedicate resources to it those resources are taken away from development, and there will be negative PR if you try to show a stronghold position – and a negative effect on the business, especially for Twitter as one of their core goals is creating an ‘open’ ecosystem, which presumably means open and accepting.There can also be the stress factor on the company and employees at a whole level, especially if patents are contrary to company culture.
You’re impairing an asset out of idealism. It’s the same as a company refusing to outsource support to India or mfr to China or coding to Romania solely because “it’s the right thing to do” as a citizen.
That is actually the best argument that I have seen advanced in this discussion.Such policy decisions are taken BEFORE the fact and thus they are, in fact, policy decisions rather than decisions made AFTER the fact when one might be able to argue that their is value to be destroyed rather than a policy to be followed.
But isn’t the very point they are trying to make is “patents don’t matter”. They are being a pioneer and making a point about it. True there is a bit of risk being exposed, but the upside probably outweigh that downside.
This in some manner is like unilateral disarmament. Why, even if you embrace that policy, would you announce it?There is a charming naivete about all of this like intellectual property is not an asset when, in fact, it is. If not, then they should be expensing everything related to it.
Hey JLM, I’m demoing Engagio in SF, and Jean wants to know what you are wearing. She is testing our product.
You are applying linear thinking logic whereas to a disruptive move. Its implications can’t be extrapolated.Keeping with the military analogy, this is a nuclear bomb that Twitter has dropped.
not so simple. what if the top engineers in the world flock to twitter and not to their competitors because of this?
Sure one can imagine any number of good outcomes but one’s fiduciary duty must be discharged as a “prudent man” taking only those risks which are prudent, normal and ordinary.Because the potential benefit is derived long after the risky act is taken, it would be difficult to classify that risk as prudent.
I think if you spent some more time with software developers you’d see that it’s not so much a risk as the by-product of an engineer-first culture which is essential for success in this industry.
Maybe so but I think my point is one of timing more than anything else.Present action w. certain outcome v future event w. uncertain outcome.Hard asset v something less than hard asset.
i understand. i am a professional board member. i exercise fiduciary duty for a living. and i am recommending that all of our portfolio companies do this. i am exercising my fiduciary duty in doing so.
I started this line of musing with the qualifier “A purist might say…”.I personally am not that purist seeing many shades of gray as it relates to it even rising to the level of invoking the notion of “fiduciary duty”.Even if it were to rise to that level, I further qualified my speculation by saying that “,,,one could imagine any number of good outcomes…”.These statements are intended to indicate something less than a final view of things as there is much to delve, develop and understand about the unique aspects of each situation.As to whether it invokes and awakens one’s fiduciary duty is best left to the individual in the arena and on the spot.When there is a consensus at a Board level and a majority of the shares are represented on that Board then such a policy is arguably made simply by the will of the shares.An interesting ethical dilemma.
Interesting how Twitter doesn’t have a real market competitor at this point but any company that wants to hire the same developers is essentially a competitor.They seem to have made a definitive statement about which side their bread is buttered on.
It might decrease the value of their patent holdings but increases value in other areas. You have to look at the balance.
To use a famous sports line, the best offense is a good defense. “that they will only use these assigned patent rights defensively to protect themselves against hostile actions”. This latter comment gives one plenty of latitude to go on the offensive and defend one’s IP and position in a competitive market. It’s the blatant offensive use of patents that is well, offensive. The real problem is that the system is mostly flawed and makes attorneys rich. When a company like Google spends $12bn to buy a patent portfolio to defend a (mostly) open-source, (mostly) free system to compete against 2 monopolies (Apple and the carriers), and then gets hen-pecked by Oracle who bought Sun exclusively for the patents because it couldn’t create a mobile OS, the only ones making money are lawyers and i-bankers.
you assume the patent agreement devalues without unlocking new value — i.e. community goodwill branding, etc. value creation along this dimension is what the internet excels at.
Excellent point Kiddo.
Exactly. You have to look at the whole picture and the net value.
J Nick – nicely put.I am a believer that patents need to be repositioned and the system revamped…..but I am not going to slam Twitter for taking a leadership position…..even if there are no bowling lanes in Cape Dorset.
Yep, that’s the lawyer’s perspective.The software entrepreneur’s perspective is that we’re trying to build a business and take care of our customers, rather than spend time registering patents and defending ourselves from law suites.Not only does Twitter move provided them with great PR, it makes them much more attractive for engineers. You *think* that the companies you advise will have “competitive advantage and superior valuations.” With an environment that engineers hate, they’ll have very little IP to protect.
yeah but what if thousands of companies do this? i think that’s going to happen.
Unless 1000 IP lawyers lose their minds tomorrow, I seriously doubt this will happen. Look at this way, when it comes to patents, it is just another capital item, a property right which gives the power to exclude. If you as the landlord paid for an apartment building to be constructed, would you leave it to the builder to decide how much rent you could pay, or which tenants you could evict later on? I don’t think so – its a significant encumbrance on the asset with little return value. And let’s face it, there are plenty of builders (coders), not as many landlords (VCs) financing construction. So in the end, the people with the $$ won’t sit by and watch their investments destroyed by what I believe is just… grandstanding and pandering. Its just popular now to bash patents, and Twitter is smart to tap into the zeitgeist.
just watch. we (collectively) are going to make it happen.IP lawyers cant’ stop us
I tell you what, in the spirit of friendly “co-ompetition,” let’s make a wager. By October 1 (is that enough time?) you produce a list of 1000 companies that you claim have adopted this IPA, and I’ll donate $1000 to your charity of choice. If you can’t produce said list, you donate $1000 to mine. Hundreds of thousands of people follow your posts on Twitter, so it should be a trivial matter to get the word out. This will be an interesting experiment on a number of levels?
Are we talking about this exact version or a modified version of the IPA?
I’m not trying to be tricky or anything, it doesn’t have to be this EXACT IPA. I’m happy with something that includes at least the provision that says that the inventor has to approve before certain patent lawsuits can be initiated by the owner.
Infinity likes to this
The companies you advise have superior valuations to twitter?
Did Nielsen find out they were suing based on patents your firm had funded?I now know what to do should they ever offer me one of their silly boxes: #shun
The contrast between the message of this post and the “Insurgents vs Incumbents” post, in part, perhaps also reflects the difference between the worldviews of Alex Macgillivray and Ted Ullyot (http://www.avc.com/a_vc/201… and how that is seeped into their respective organizations.
Interesting idea, but the problem is that patents are inherently offensive. Patents only allow you to exclude others from using your patent. Thus, if someone says “I will only use patents defensively”, that person is effectively saying that I will sue only if sued.So imagine that you have companies A & B who respectively own patents 1 & 2. Let’s say that patents 1 & 2 are similar. Company B says that it will use its patent (# 2) defensively. Company A decides to sue Company B using patent 1. The only recourse Company B has is to sue Company A using patent 2 (or threaten to sue before Company A initiates its suit). Company B could try to invalidate patent 1, but Company B could do that with or without patent 2.In other words, a “defensive” use of patents relies on an offensive threat.On the plus side, I suppose you’re avoiding situations such as Yahoo, Eastman Kodak, Micron where struggling companies seek to monetize their patents. Unfortunately, for newer companies like Twitter, they don’t have the giant patent portfolios (at least, not yet) of these larger companies so it will take a while for this to have any significant effect.All that being said, best of luck with effort and it’s good to see someone is trying to come up with solutions to a messy problem.
This is a great move on many levels; Company PR, recruiting tactic, industry leadership etc… I presume it will set a good example for other companies to follow suit. Much like their early API strategy of “let a thousand flowers bloom” this may get others to have the same IPA behavior, helping everyone.
We are starting to use the word Hack, Hackers, Hackathon, Hacking… a little too much 🙂
That’s cause so much in our society/economy needs hacking/disruption/disintermediation. And we’re the perfect country to do it in.
I don’t really care but the notion that a company can simply change its employee relationship arbitrarily and absent “independent consideration” seems a bit silly.I think that the entire patent environment is lagging the speed w/ which the world is developing and I am perfectly sympathetic to the notion that they may impede progress.Nonetheless, IP is property and should be respected.Remember China’s wholesale theft of everything related to IP before jumping to any notions.
I like the idea, but by not being proactive in the defense of the patent are you invalidating it?
While a noble idea, the world is too full of greed for it to work and does reduce the company would have in any matter that involves IP.What we really need is a SOPA like effort from the tech sector to overhaul the way patents are granted and enforced from congress. that is the only long term solution.the issue is there are too many competing factions within the tech sector. Look at Google and Oracle in court now over $1b to $6b in patent fights. I’d love to believe there is a truce somewhere, esp with business method patents (do you know that the repeat password feature upon registration is actually patented? come on! the patent office should never have granted that one!)This is a real problem that needs to be fixed. Unfortunately it will take congress and the President to fix it.
Twitter can do what they like but the problem I have with most discussions of software patents is that they proceed as if all software companies and all software is alike. And this is patently (!) false. Some software is trivial to develop in time and cost and some isn’t. Some software is strategic IP to the company and some isn’t. It is all very well lauding the virtues of this hack for those companies who don’t have critical IP to protect, but what about those that do?There are secrets worth protecting – google’s search technology is held as a trade secret for good reason. And many companies have such secrets. But not all IP can be protected in this way. And as for copyright only a truly naive person thinks that is of any value in the context of software. So all that is left is the patent system. Anyone who has been in the industry any time knows of many abuses where small companies had IP ripped off and with no protection there is no recourse. So any mature discussion of this topic, as opposed to a rant, has to take into account not just the excesses of trolls but the needs of those who have existential value tied up in their IP and need it protected.
Are you sure this actually solves the problem without any precedent related to it given its nascent state?
I would agree with you completely if, in act, the alternatives are things of real value not things of such indefinite and difficult to evaluate value such as “PR”.In one hand you have patents and in the other you have PR, way different assets.
Great decision. However, are we at a point where doing the right thing is a cause for massive recognition and applause? Amazing.
This is disruptive economics.
“If Thinking Media had the patent hack in their documents, the story I just told would not have happened.” — unless Nielsen approached the original inventors and offered them enough money to get their permission to sue, right? It seems to me that it might be better to establish some kind of agency, a Patent Defense Trust or League, and make the contract with this agency. The agency’s core mission would be to refuse to ever grant permission, so it could not be bribed. I discuss this at http://c4sif.org/2012/04/tw…
How do you protect your investors from your inventors spinning out a company and competing directly with you?As far as I can tell (and I am not a lawyer) you could.1) Invent something for a company.2) Let them spend money to get a first customer. 3) Spin out a brand new company. (So not involved in any IP Lawsuit, ever.)4) Offer the same services to that customer for less (because you have no sunk R&D cost in your cost structure.)5) Put the investor out of business. If they did sue you (“offensively” use the patent), you would get the right to grant yourself a license to your own invention.
You COULD of course protect yourself a little more with a rigorous anti-compete clause in the employment agreement, but given the orientation of the crowd here, I wonder how many of them would feel better about giving THAT up in favor of having enforcement veto-rights. In reality, enforcement of the not-yet-issued #patent is a decision made years down the road by persons other than the inventor and thus is mostly out of mind; but a restriction on starting your own business is fairly immediate and “real” so I suspect many would balk. In the end it seems to me your point reinforces the notion that investors would not be keen on companies that intentionally handicap their own assets and business prospects. The result is what I refer to as “ineffectual” property.
Oh my Dog – a big hitter actually took action on this front!? A company with plenty to lose took a risk, in true start-up style, and are attempting to turn the tides against patent trolling by walking the high ground? It’s as if the folks over at Twitter are just trying to do the right thing, trying to move a heavy needle currently pointed in the wrong direction, because they can. Not the best action to protect their downside, not the safest option out of all those weighed by their lawyers … just the right thing, a new right thing that attempts to fix some of the broken old wrong thing. We should be dancing in the streets. Fred: at my previous startup, Nielsen shafted us in the same way, costing us ridiculous amounts of time, money and resources. What we had to do on the technical front to move ourselves out of conflict with their claims would make anyone with a modicum of basic computing knowledge drop their jaw. That experience re-defined ludicrous for me; other terms that come to mind include appalling, egregious abuse of process, and a few others that I won’t sully this brilliant discussion with. But your story is an unexpected level up; the legal equivalent to DNS cache poisoning, or a lawyer-spawned virus are metaphors that come to mind. Out of all the awesomeness stemming from Twitter and USV’s position on this front, my favorite aspect is that it isn’t a years-long push for new USPTO legislation, nor is it an attempt to navigate our gummed-up, non-scaleable hub-and-spoke patent bureaucracy centered by the USPTO – it is a hack, one that’s already shown its own scaleability in network-distributed style, and it’s happening right now. Add me to the list of sword dodgers, hoping to have the opportunity to do so someday, living large on the fruits of hard work and ideas. Power to all non-bowling agreeable Eskimos. With Elvis.
with elvis! indeed.
“… And in the world of patents, the advantage goes to the Incumbents who can hoard patents and use them to their advantage.”This is a very sad reality. The purpose of a Patent is to protect the insurgent not the incumbent. It is to protect innovation, not litigation. #timeforreform
Fred,I’ve been thinking about this and have a question for you. Lets say I build an app tomorrow that uses the swipe down to refresh feature that Twitter has patented. What’s the outcome? Am i free to infringe your patents?
they are not my patents. twitter is saying they are not going to sue for infringing their patents offensively. draw whatever conclusions you want from that.
Interesting. Then i suppose the only reason they have them is for defensive purposes if someone sues them. I’d would be easier and cheeper to simply place the code that does the magic in the public domain, (c) it and now you have prior art.
While the “patent hack” idea makes a lot of sense, it’s a bit disingenuous to say that IP that was partially funded by your firm was used to attack your portfolio companies. You sold the company, and most of the value that Nielsen got for that was the IP. If they weren’t getting that, they may not have bought, and they certainly wouldn’t have paid as much. You can’t have it both ways. You can’t claim ownership and rights to use something after you’ve sold it. You can’t even claim moral ownership.That said, I think that IP law is horribly broken and is being used in ways it was never intended. And, protections granted to inventors are far too generous and for far too long. The whole point of granting copyrights and patents is to promote innovation and the public good, not to create expansive and unlimited monopolies and prevent new invention. I think this will be the next major legislative battlefield, and what we saw with SOPA will look like a small border skirmish when 3D printing takes center stage and threatens virtually every product, trade dress and profits of companies that sell replacement parts for 100x the cost of that same part in a new product.
I am an ex vc turned entrepreneur and I think it is a great idea! Who should I talk to get the patent hack. I want to incorporate it in my documents.
Ever since Intellectual Ventures entered wholeheartedly into the patent litigation wars, I completely disbelieve any company claiming that it is acquiring patents “for defensive purposes only.” Although it’s refreshing to see that Twitter — unlike its social media counterpart Facebook — has so far avoided getting bogged down in wasteful patent litigation, you have to wonder how long it will last.http://www.aminn.org/patent…