The IPA

No, I am not blogging about India Pale Ale, although I must say that I am a big fan of it.

I am writing about one of the best patent hacks I have seen in the decade that I have been working to find relief from the ridiculous patent system in our country.

Twitter came up with a concept last year called the Innovator's Patent Agreement (IPA) and put a draft IPA up on GitHub. They have gotten a ton of feedback and have iterated and improved the concept since then.

The basic idea of the IPA is that it is a contract between Twitter and the engineer(s) and designer(s) who developed the IP. The contract says that Twitter will not use the patent offensively nor will anyone who acquires the patent from Twitter. It goes on to say that Twitter or a subsquent owner could use the patent offensively with the engineers' and/or designers' approval.

Twitter announced yesterday that it had entered into an agreement with Loren Brichter, the author of the pull to refresh patent that will subject that patent to an IPA. They also announced that they will subject all of their patents to the IPA. They went on to say that Jelly, Lift, StackExchange, and Tell Apart have agreed to adopt the IPA for all of their patents.

USV has been talking to our portfolio companies about the IPA since Twitter posted it last year. They all know we are big fans of it and we hope they will choose to adopt it for all of their patents. We will not do more than that however. Our portfolio companies are independent of USV and can make up their own minds about their IP strategies.

That said, I would expect to see other USV portfolio companies join StackExchange on this IPA parade.

Twitter is an amazing company and I am very proud to be associated with it. The fact that they would take this extraordinary step and then show leadership in the industry to get others to join them is a testament to that. It's a proud day for Twitter and for me.

#VC & Technology

Comments (Archived):

  1. aminTorres

    Applauses for twitter! (and for you Fred)

    1. fredwilson

      will try it

    2. pointsnfigures

      For a local midwestern one, try 3floyds.com in Indiana.

  2. John Best

    I have to admit the first thing I think of is hoppy ale too.Patent reform is good news. Protection for innovators shouldn’t be weaponised for big companies.

  3. William Mougayar

    It is “refreshing” to see Twitter’s leadership with this approach.

    1. Matt A. Myers

      Normally you’d have to pull teeth for a company to be open to something like this …

  4. laurie kalmanson

    this is awesome. there is profit, and there is theft.related: if you spend the r&d money to discover and patent a genetic test for a relatively common disease, you can make money by:(a) charging a few people a lot.(b) charging a lot of people a little.Unfortunately, (b) is the french approach with the breast cancer test and (a) is the american approach, based on patents.http://www.ncbi.nlm.nih.govhttp://www.nytimes.com/2013…Quote:Unlike routine tests for diabetes or high cholesterol, however, the BRCA gene evaluation — performed by only one company in the United States, Myriad Genetics — is phenomenally expensive, with a “list price” close to $4,000 when a related genomic-rearrangement test is included in the analysis, which oncologists typically recommend.The question is why? Today, molecular scientists like me can sequence all of an individual’s genes — at least 20,000 of them — for about $1,000. About five cents per gene.

    1. David Clarke

      As you probably know, this specific (Myriad BRCA) patent was litigated recently in the Supreme Court: http://www.oyez.org/cases/2…. Based on the tenor of the oral arguments, it seems it is highly likely to be overturned. Also fun to hear the Supremes musing on whether the BRCA gene is inherent in the human genome in the way that ‘a baseball bat is inherent in a tree…’.

      1. laurie kalmanson

        yes, excellent pointer; looking forward to it.

    2. ShanaC

      you know, in light of the Jolie op-ed : The test cost is actually holding back innovation for the test. I’m high risk, and one of the main reasons I’m declining testing is because the test’s patents actually limit what genes are covered (and what variations are known). No matter my medical history, I would come back negative – a totally useless state to be in when you need to make decisions on the subject.

      1. laurie kalmanson

        fail faster: true everywhere. take a trip to france?related: amnio/genetic testing costs a fraction of that and tests for a lot of things.also related: “uninsurable” is a disincentive to testing until there is universal single payer: the market distortions introduced into healthcare by the insurers block innovation to the extent people decline testing because they fear that a consequence of knowledge includes not being insured.

        1. ShanaC

          Brief science discussion. There aren’t 2 distinct BRCA genes. There are two major mutational groups with thousands of variants – http://www.dslrf.org/breast… Some variants are non cancerous. Some are. And some are unknown (this is why they talk about risk ranges with BRCA)My mother (who is a survivor, I think this year is 10 years, so technically she might be in the cured category) has a variant in the BRCA area that doesn’t fall under either BRCA1 nor 2. It is also unique to her. When she tests, she comes up negative (the only reason I know this is that she, her sister, and her father went into a genetic study when my aunt got breast cancer 2 years after my mother. Also, my grandmother died of it, so this became of interest to those who do studies)Testing doesn’t really tell me anything in other words. But the patents existing make it worse because we don’t test cohorts of healthy people to see if my mother’s variation would pop up because of the expense.(the insurance thing doesn’t matter, it’s banned to include it as a pre-existing condition)

          1. laurie kalmanson

            i’m glad your mom is well. so many things are more treatable now than they used to be. a neighbor’s little girl has passed a lot of milestones in her treatment; kids like that didn’t used to make it as often as they do now.

      2. Jorge M. Torres

        The US Supreme Court is considering right now whether isolated BRCA 1 can be patented. The case is ACLU v. Myriad Genetics, or something similar.

        1. ShanaC

          my fac ebook group of high risk women will be watching that closely. Also you should all donate to @falicon’s wife when she bikes again.

          1. falicon

            Hey thanks for the mention! My wife actually is doing the ride again this year ( 220 miles over 3 days to benefit young women with breast cancer )…and on the outside chance anyone wants to donate to the cause, here is her link -> http://www.ysctourdepink.or

  5. reece

    it’s an exceptional move among their peersam curious, if you know/it can be shared, who/what produced it within Twitter? management? legal? engineering?

      1. reece

        legal team – pretty cool to see innovation within that departmenti’d have guessed it was by suggestion of an engineer…

        1. fredwilson

          It was. The Verge piece points out that this all originated when Loren negotiated this point when he sold to Twitter.But Ben took the idea and ran with it with the support and encouragement of Amac, Twitters GC

          1. reece

            ahh ok. i’d Instapaper’d the article… thanks for the Cliff Notes!

          2. takingpitches

            top notch GC, top notch legal department

  6. Carl Rahn Griffith

    Sometimes, common-sense DOES prevail!

  7. pointsnfigures

    There needs to be more of this with companies and patent agreements leaving the government out of it. Just read a book, America 3.0 Rebooting America Rebooting America’s Prosperity. I think the AVC crowd would find it appealing. It makes better sense to me to see Monsanto and farmers work out a patent agreement using Coase Theorem. Much cheaper and better solution than involving the government. Confederations of businesses and people that are involved know better-and can tailor agreements to fit their industry. Good for Twitter on taking the lead. The company knows how to lead-and that makes a difference for the industry.

    1. Jorge M. Torres

      Agree with your comment 100%. If Coasian bargaining were possible, it wouldn’t matter what the patent laws look like. But we live in a world of transaction costs, so it matters a lot. Entrepreneurial approaches to patent reform, like the IPA, remove friction from the system and make it work better. New legislation, while often well-intentioned, usually has unintended consequences that can make things worse.

  8. Jorge M. Torres

    Twitter gets props because it’s driving market-based approaches to patent reform. In addition to the IPA, other examples include the Patent Pledge (written by Paul Graham), and the Defensive Patent License, which Google is exploring as a way of promoting innovation. A recent grass roots effort is this Indigogo campaign, where a startup is crowdfunding its legal expenses in a patent suit. These efforts are great because they show us that we don’t have to wait for Congress to fix what we think is broken with the patent system. We don’t have to accept the patent system we’re given. We can remake the patent system ourselves.

    1. ShanaC

      Do you think the IPA could promote a new generation of trolls vis a vis the agreement?

      1. Jorge M. Torres

        No, the intent of the IPA is to “de-weaponize” patents by burdening them with restrictive provisions that reduce their value. The value of a patent to a patent troll lies in the troll’s ability to successfully enforce the patent in court. A patent that’s subject to the IPA can’t be asserted against someone who hasn’t sued Twitter first without the inventor’s permission. If that patent falls into a troll’s hands (if Twitter is acquired or if the patent is sold), the troll can’t sue someone first without getting the inventor’s permission. As a result, that patent is a lot less valuable to the troll, and, therefore, less likely to be purchased by a troll in the first place. As I said, that’s the idea. Whether and how this will actually work in practice is another story. If you want to learn more, you can read the blog I wrote when Twitter first announced the IPA. Or you can just call me.

        1. ShanaC

          I owe you a call anyway. 🙂

  9. kidmercury

    getting closer, but still doesn’t have enough teeth to it. ultimately, there needs to be economic sanctions of some type. such as: you don’t get funded by certain investors, you don’t get API access, etc. moreover, there needs to be an independent authority that regulates this contract, to determine what constitutes patent offense.the digitally led revolution to the world beyond the nation-state is inevitable and that is the real “regulation 2.0.” of course as we know it requires political will the youngsters in the valley don’t have. bubbles make you complacent; perhaps with economic pain they will find the fortitude needed.lastly i think the slogan used by environmentalists — “think global, act local” is useful here. those who use the nation-state system to enforce tyrannical patents are in the process of shifting the whole game to the supranational level; i.e. internet control under the ITU and intellectual property control via the WIPO. the way supranational government works is that all the nations form treaties with each other and if you don’t sign on you lose economic rights. that is how all these nations end up relinquishing their sovereignty to the UN and its sub-divisions (like the ITU and WIPO). things like the IPA need to mirror this process by imposing economic sanctions to legitimize the government they are creating.as this game evolves the question of whether or not it is morally right for an independent government to be created naturally emerges. an education in kookology will provide you with all the moral authority needed to justify this line of thinking.

    1. Matt A. Myers

      If you care about the whole, holistic picture, then patents shouldn’t exist.We know they kill / slow innovation.Mechanisms will quickly surface to provide systems / processes for -a) Funding- via crowdfunding (Kickstarter, Indiegogo, Angellist, etc), and investor risk analysis systems (Riskalyze, etc)b) Reputationc) Accountability

      1. Pete Griffiths

        I don’t think this is the whole picture.’We know they kill/slow innovation’ is surely too broad a statement.A huge amount of innovation takes place in drug research that wouldn’t otherwise take place. Hence there is at least one field in which is enhances enhances/speeds innovation.

        1. Matt A. Myers

          That’s where the government comes, using everyone’s money (taxpayer money), and will be directed specifically for that – without the biases of for-profit private companies influencing how results are displayed or marketed, etc..There could also be incentive / reward systems along the way for those who contribute in different processes.And I disagree overall that things couldn’t get funded otherwise. If a researcher can convince their peers / other experts in their field that research should / could be done to progress our knowledge, then they could reach out for crowdfunding or other investment – even if it’s for a very specific group of individuals that would benefit – who then could own part of the solution, or of course just pledge money towards it; Accountability and reputation of everyone involved of course very much matters for this.

          1. Pete Griffiths

            It’s a great idea in principle, and I absolutely agree that it is highly desirable that the ‘truthiness’ of research results be strongly separated from commercial interests, but it isn’t sufficient in practice.a) government funds are limited – even disregarding for the moment those political interests that would like to see them still further curtailed. To cut out private investments would represent an annual cut of hundreds of billions of research dollars.b) researchers dependent on government grants bemoan the process. It is excruciating and biased (the nature of this bias is a whole topic in itself).c) there is no way that crowd funding will collect the kinds of funds required for even early stage pharma research.

      2. ShanaC

        i don’t think this would work, particularly for non-software patents

    2. LE

      “moreover, there needs to be an independent authority that regulates this contract, to determine what constitutes patent offense.”A nice idea but explain the way you would put legal teeth in that approach? Otherwise without a stick how useful is it?

      1. kidmercury

        just like the UN. if somebody violates the IPA, they kicked out of the club and lose the perks (API access, access to investors, etc).

        1. LE

          Was thinking UN in my comment actually but unfortunately I don’t believe legally an agreement among competitors to restrict someone for not signing on to something like this is enforceable. Nor would I ever want that lack of free will (in general of course).In a sense it seems a bit like extortion. Part of it also seems like Amish shunning. And there is certainly enough moving parts in this idea for an aggrieved party to hang a hat on and have a basis for some type of legal action [1] against the group for something that could be cooked up after a bit of thought (more than it took me to write this comment).http://en.wikipedia.org/wik…[1] Added: Legal actions taken by companies and individuals directly relates to the pot of gold to be had. If the pot is big enough anything is possible.

          1. kidmercury

            it’s not extortion, it’s like membership into a club. you don’t want to pay the dues and abide by club rules you don’t get to participate.it may be illegal, but that is a different story. in any event, the need to break the law is something i regard as inevitable.

  10. harris497

    What does it mean to “… not use the patent offensively” ?

    1. fredwilson

      In layman’s terms it would be suing someone before they sue you

  11. bsoist

    No, I am not blogging about India Pale AleMost disappointing start to an AVC post ever.but this is very good news. I can’t wait for others to get on board.

  12. leapy

    It’s a great work-around. Interested in how the governance will work – you need processes in place hoping they will never need use. It would be great if these were standardised and accepted across all parties using the IPA – a bit like the GPL for licenses.Great idea from a company that I have never quite clicked with until now. I feel twitter are about to make a bunch of new friends.

  13. Dave W Baldwin

    Slightly off subject, but thought I’d post link to story by Jennifer C. Kerr of the Associated Press showing teens migrating to Twitter from Facebook. Well written article showing the evolution of today’s teens accepting difference of private/public and fact that Facebook has too much drama…http://www.google.com/url?s

    1. fredwilson

      My kids exactlyThey didn’t adopt Twitter when I didThey didn’t adopt Twitter when I investedThey didn’t adopt Twitter when I begged them toThey adopted Twitter when their friends did

      1. Dave W Baldwin

        Isn’t life fun?

        1. fredwilson

          Very much so

          1. TeddyRt

            FredOff topic: would you mind creating a post about how the general process work of being acquired.Note, I’m *not* asking you to write about Yahoo nor specifics on any deal.But it would be highly educational, especially for companies who are privately held, to learn in general how money is actually exchanged in an acquistion process (eg escrow?), how stock is converted from private companies. What actually makes the sale official, etc.

          2. fredwilson

            i did a whole MBA Mondays series on thisit’s posts 44-53 on this table of contents http://mba-mondays.pandamia

          3. Teddyrt

            Thanks Fred as always

          4. Donna Brewington White

            Don’t you love when that happens. A veritable gold mine.

      2. Kasi Viswanathan Agilandam

        That’s because teens spend more time with friends than parents… and ofcourse, they are scared of getting-off the band-wagon,…and on top of that they think ‘wat the crap this ol-man is trying to say’ :-)….my son at his 5-th grade already started telling’brinjal’ to whatever advice i give him.

      3. pointsnfigures

        My kids too. On Facebook less and less-on Twitter, Instagram and Pinterest. (one is 20, one is 22)

      4. laurie kalmanson

        facebook, isn’t that for old people?

      5. LE

        The question is how do you get those people who your kids follow on board so your kids follow? One of the ways is by identifying and seeding connectors people who evangelize others and create the movement. When selling printing one of the things we did was simply get adoption of our services by a known company and then all others would simply follow that, thinking it must be right if those they admired did it.

    2. kidmercury

      a poll of 802 parents and 802 teens. far too insignificant a data set.i don’t think chasing teens is prudent. they are fickle. they once liked myspace too, and friendster.that facebook has “too much drama” can easily be replaced by twitter has too much “noise.” the only true cultural lock-in is a passionate niche of some kind.

      1. Cam MacRae

        The sample is reasonable and more importantly defensible. The reporting of only point estimates is not.

      2. LE

        Agree. Twitter totally needs to cash out. Hogs get slaughtered pigs get fat.

        1. kidmercury

          problem is they are valued in the private market at $10 billion. maybe they can find some private equity firm to pay that amount. otherwise it is only apple, google, or microsoft that can afford that price — and $10bn is still a steep price for anyone.

          1. LE

            Comcast has a 110b market cap. They did buy NBC you know. Att has a 200b market cap. I’m just pointing out that there are more than the usual suspects here. And nobody is saying it has to be all cash either. I’m not saying anything other than the fact that there are other people than the usual suspects. Thinking also some sovereign investment fund might want to get their hands on twitter as well.

          2. kidmercury

            yes, of course. maybe exxon will buy them! the rich are only getting richer so there are folks with the cash, whether they fell off the turnip truck and actually want to spend that much for it remains to be seen.

          3. fredwilson

            companies are eventually valued at a multiple of cash flow. i suspect in time twitter will generate enough cash flow to justify that valuation.

      3. Dave W Baldwin

        You make good points, but I was referring to the evolution per behavior, not who is getting the action. Kids are probably more apt to use Instagram, Tumblr and so on anyway.If you’re going to be big, you have to be able to handle the different niches and both Twitter and Facebook will have to figure that out.

  14. Cam MacRae

    Maybe I’ll finally get my hover board?!

  15. Kasi Viswanathan Agilandam

    one thing i want to see in patent arena is …. reducing the validity period to 5-6-years.

  16. Max Yoder

    Today is Loren Brichter day. Good for him.

  17. William Mougayar

    They should have called it TMPP,- Take My Patent, Please.

    1. Vineeth Kariappa

      What do u think the probability of Apple “giving” their is?

      1. William Mougayar

        I don’t think Apple is leading in that department. But I’m sure some of their patents are probably solid. I don’t have any data on this personally, I have a hunch that some patents are valid and should be protected, and many others not.

  18. LE

    I’m in favor of patent reform at the granting level. I don’t own any patents (although I do own federal trademarks which I obtained for defensive purposes.).Here are my comments on the IPA below.”that keeps control in the hands of engineers and designers”will not be used in offensive litigation without their permission Engineers and designers are people. Companies are made up of people. People make decisions. Something that might not appear to be in someone’s best interest today is not the same as down the road. (See my last comment re: divorce.)”Under the IPA, it also means that you can use these patents against anyone who has sued others offensively in the past (up to ten years).Sued anyone for anything patent related offensively? Or just for the patent in question? Or?As if there is no basis to sue someone for infringing on a patent and have that not be trolling? Obviously the devil is in the details. Also a definition of “anyone”. And a definition of “others”. Entities change hands and ownership changes. Builders frequently start a new LLC for each development for example. Would “anyone” mean a specific entity of an entity that is somehow affiliated with another entity “we know it when we see it”. To vague and ambiguous.You do not keep the capability to seek patent licensing fees from others who have not used patents offensively.Once again seems very restrictive and assumes there are not valid reasons to seek licensing fees at all.Nor can you sell your patents to someone who will seek patent licensing fees from them.You actually can the way I am reading this you just have to get the inventor on board. Possible that the trolls will simply waive money in front of the inventor and assuming he isn’t rolling in the money at the time he might very well all the sudden see the religion of this approach. Or maybe he needs to pay for the latest cancer drug for a relative? Or college? Or has lost his job or gambled away his fortune? People change. This is all obvious, right?Whether the IPA may be right for your organization depends on a lot of factors, including whether your business model is based on generating revenue from patent licensing fees or whether it is based on competing by innovating and providing the best product or service. Once again not recognizing the other reasons or the value of patents at all. In other words “you suck if you are using patents to make money real people innovate they don’t license EVER!”. Is your company saying that it is filing the patent for defensive purposes? If it is, ask your company representative whether they are willing to put that in writing by using the IPA. If they are unwilling to do put their promise in writing, you may want to ask yourself why (and consider working someplace else)Don’t like the way that’s phrased at all. That’s very manipulative and lemming like. I don’t like that at all. What is this high school or a small town? You will be shunned or you suck if you don’t go along with this doctrine? The best place to work is the best place to work. Not the place that decides to “not use patents except for defensive purposes”. I’d rather have a better health plan, salary and benefits personally. Most people obviously are not in a position to even make a demand like that anyway.Lastly, as anyone knows who has gone through divorce patents and ownership of them would almost certainly come into play in any divorce proceedings and property distribution. Or perhaps if the engineer is sued or as an asset or collateral for something else? An engineer going through divorce who is all the sudden having to give up 50 to 60 percent of his assets may very well have an “aha” moment with respect to how he feels about monetization. (Or for that matter his wife could right from the start.) (See my first point..) Of course people who get married never think it will be them.

  19. jason wright

    “i’ve just perfected the cure for a common fatal disease. i’m not going to share it with the world because i can’t make any money from it, and money was my only motive. @$%& you all.”

  20. jason wright

    an interesting subordinate clause;”It goes on to say that Twitter or a subsquent owner could use the patent offensively with the engineers’ and/or designers’ approval.”What corporation (which exists in law to maximize profit above all other considerations) would want to become a subsequent owner with this potential block in the way?

    1. Jorge M. Torres

      Few would, and that’s the point. The IPA is supposed to “encumber” a patent, making it much less attractive in an acquisition scenario. It’s like putting a covenant in a deed that restricts who can buy a piece of land or how a purchaser might use it. You might have a good reason for doing that, but it might make it harder to sell the land to someone else.

      1. jason wright

        yes, and yet it could blunt the willingness to make the necessary investment to bring a beneficial invention to the market.

        1. Jorge M. Torres

          It could, but those companies that want to recover investments in R&D by using the patent system will have a more traditional invention assignment policy. They won’t use the IPA.

  21. DANNY BECKETT JR.

    Great to see things like this happening!

  22. William Mougayar

    In line with this topic, and yesterday’s NY events bonanza, this just landed in my Inbox:Tune in tonight to hear from patent experts and a startup founder sharing the story of his ongoing fight against patent trollsThe New York Developer Patent Summit will be broadcast tonight at 7:30 PM EST. Speakers will include developers and patent experts from Google, Rackspace, and WellcomeMat.com.Watch the livestream at: http://devsbuild.it/devpate….Tweet your questions to panelists with the hashtag #DevPatents.

  23. thinkdisruptive

    I think piecemeal patent reform is the worst possible thing we could do, like tinkering with the tax code to satisfy special interests. We now have a tax system which is about the most complex and incomprehensible in the world, leading to inherently and implicitly unfair results, leading to complete lack of trust in the entire system (from the politicians who lord over the trough, to the people paying the bills, to the cynical pigs lined up for handouts). Do we want a patent system that ends up the same way, despite any individual reform appearing to have good motives?Any reforms need to be comprehensive and self-consistent (which is why they need to be comprehensive and considered in context). IP law is broken, and has been for some time. Technologies such as 3D printing are going to make a thorough mockery of patents and expose the holes for even the average man on the street to see, just as music file sharing did with the silliness we call [email protected]:disqus is correct on this ( http://www.avc.com/a_vc/201… ). No one innovates in a vacuum. We all build on what came before, and patents are legalized monopolies that inhibit innovation. I’m not suggesting that innovators shouldn’t have some incentive and reward for their efforts, just that the system as it exists isn’t right, and that it will be increasingly stressed as we enter an age where virtually everything is digital, shareable, and design patterns are close to free to distribute. Twitter’s IPA agreement is a bandaid, and not a particularly good or well thought out one. It’s fine for one company to create a patch that satisfies its needs, but it’s quite another for industry momentum to adopt a patch en masse, and then consider the problem to be solved.My feelings about IP protection in general are articulated in this old article: http://www.anti-marketer.co