My Suggestion on Patent Law

It is easy to complain. Much harder to come up with solutions. Many won’t like what I propose, but who wants to make lawyers happy anyway ?

The solution ?

1.  End all software patents. Don’t make them shorter, eliminate them. 

I have no problem with software being copyrightable just as it always has been. That is more than enough protection and keeps enough lawyers un-gainfully employed.

2. End all process patents. They serve absolutely no purpose. None. 

If you create a new process, use it. The benefit is from creating the idea and using it in a business to your advantage.  Afraid that some big company might steal the idea ? That is life. When you run with the elephants there are the quick and the dead.  That is a challenge every small company faces. A process patent is not going to make your business successful. The successful execution of business processes will. If we had process patents or the culture of software litigation  in the 1980′s as we have today current technology would consist of  running terminals on DEC and Wang Computers at the local library for $10 per hour and there probably would not be a world-wide web.

No doubt that by the mid 90′s someone would have sued Marc Andreessen and his friends at the University of Illinois long before Mosaic could ever turn into Netscape. My guess is that the patent attorneys at British Telecom would have been all over them contending that hyperlinking was protected, but for $10 per download they could use them in their new browser…

Some of the benefits of eliminating process and software  ?

a. Reduce the court room costs associated with process and software patent litigation. That is taxpayer money saved.

b. Improve the efficiency of the Patent Office.

Process patents are a magnet for everyone who has ever dreamed of being awarded a patent. The flood of applications not only slows the speed at which inventions that deserve patents are awarded, it reduces the quality of investigation into applications. That is a lose lose situation. Patents that shouldn’t be awarded are awarded, which in turn creates more work as those patents are  challenged.

c. End the ridiculousness of the current Patent Arms Race.

Companies are buying patent collections as a way to defer litigation or to support their litigation efforts rather than to benefit from the intellectual property purchased. Billions of dollars are being spent on this arms race. Billions of dollars that without question impact consumer prices from these companies.

d. Patent costs cost jobs.

Uncertainty is never good. Certainty of risk is even worse. What i mean by that is that almost every major corporation is this country has ongoing patent litigation and many, many small companies (my companies included) have ongoing patent litigation as well.

How does this impact jobs and job creation ? The thing about patent litigation is that it is unlimited and unquantifiable. There is absolutely no way to look at your business and say “this is where and what my risk is”. Because of software and process patents any company could be sued for almost anything. It is impossible to know what the next patent to be issued will be and whether or not your company will be at complete risk. It is impossible to go through the entire catalog of patents issued over the last 10, 15, 20 years and determine which will be used to initiate a suit against your company.

It’s impossible to quantify just how much and how often you will be sued and what the costs associated with those lawsuit(s) will be.

The risks are unlimited.

Unlimited risk in any environment will force a company to hold back resources in an attempt to protect itself. In the case of several of my companies, it means that we have held off hiring people so that we have cash in the back to deal with current and future patent litigation.

It’s a joke, but that is the reality of doing business in this country.

e. Look overseas

Pick any country that is currently doing well, China is a perfect example. In China the Intellectual Property Laws are so weak that someone thought it was a good idea to completely replicate Apple retail stores. Compare their economy to ours. As much as I hate to compare other economies to ours, it’s worth taking a look .

It is time to change. This country needs the change.

Eliminating software and process patents won’t end patent litigation, but it certainly will be a good first step. And while it may only be a step, it will be a positive step towards improving the economy and adding jobs.

Update: I wanted to re post a comment from my last post. I think it is important. It obviously doesn’t go as far as I would like, but if you care about patent reform let your representatives know.

Unfortunately, the patent reform bill that President Obama just encouraged Congress to pass, does nothing to address the problem of patent trolls. (The full text of the bill, H.R. 1249, can be read here: http://www.govtrack.us/congress/billtext.xpd?bill=h112-1249).

This bill passed the House 304-117 and it’s companion bill (S.23:http://www.govtrack.us/congress/bill.xpd?bill=s112-23 ) passed the senate 95-5, vitally assuring that the two bills will be reconciled and signed into law in early September, once congress returns from recess. This is “reform” in name only, as the bills will do nothing to discourage the job-killing litigation tactics of the patent trolls that Mr. Cuban references above.

If you care about the issue of patent trolls, you have one month to encourage your Congressperson to amend S.23 and/or H.R. 1249 to include limiting damages from “non-practicing entities” (aka, trolls).

 

Update:Aug 8 – From the comments of a reposting of the blog on another site.. I couldnt resist

5 hours ago (2:43 PM)

I agree totally with Mr. Cuban. The software industry spends too much time, money, and effort creating patents on bloody obvious ideas, and defending themselves from others who created such stuff.

“One Click Purchase” – Patented. Obvious. And I like Amazon.

“IBM Patents Changing Color of E-Mail Text” – Patented. And I used to work for IBM.

“Google Patents Country-Sp­ecific Content Blocking” – Patented. And I like Google

Software is already Copyrighte­d. Thus, one cannot copy or create derivative works.

And get this:
“USPTO Awards LOL Patent To IBM”
Yes, LOL, and IMHO were granted to IBM for a method of translatin­g abbreviati­on to/from text.

And to that, I say “WTF

99 thoughts on “My Suggestion on Patent Law

  1. I appreciate your post. I also wrote that SMS advertising provides a cost effective method of targeting promotions to specific customer profiles. You might want to remind customers of specific events or promotions, but for whatever reasons, SMS allows you to pass information directly to the right customer at very affordable prices and fast delivery.
    iso 9000

    Comment by ISO 9000 -

  2. Mark,
    As a small business owner and entrepreneur, tax policy does not affect my decisions on hiring, but like every opportunity cost, you’d better be thinking about the future costs of the new hires. When you are very small(under 50 employees) every hire comes with a price and matching FICA and work comp play into that decision, so in a very small business any tax is a cost and not an investment until the employee begins making the company a profit and, as you know, most small businesses live at the margins of growth and collapse.
    I did like your thoughts about transparency. What business doesn’t have some type of mission statement that people can look to for guidance in the daily affairs of the company? None I can think of, even if they don’t have a written one. But can you tell me, is the mission statement of the Department of Education the educating young people and/or college age adults or is it the perpetuation of the Department of Education first?
    I was not aware of the Shark Tank, but would have loved a shot at what I think it was all about.
    Thanks,
    Bill

    Comment by sledgehammer300 -

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  4. Owned and controlled by Uniloc. If software and process patents are eliminated, by your logic, it would hurt my company. Im ok with that. The right thing to do is to eliminate these types of patents. No hypocrisy at all. If we are a good company, we will excel anyway

    Comment by masatenisimi -

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  9. Mark

    Tell me then how do you get around it? Short of hiring an IP attorney, small tech startups are screwed. Not to mention those bootstrapped startups that can’t afford to throw themselves into an IP war. Business is business just like a hamburger patty goes on a bun the same way at every burger chain.

    Severely annoyed at process patents.

    Comment by hillary6806 -

  10. In the software world today, most software is connected in some way. Either through the internet, local networks, or through APIs. Standards are essential to successful software and happy users.

    Although you can describe physical objects with math, it doesn’t mean they actually are math. Software is different. Now I could talk about software binaries being 1′s and 0′s, or Haskell programs and the Church-Turing Thesis, but since you introduced Nilay Patel into the discussion, let me simply quote him directly. At minute 33:00, on http://cnettv.cnet.com/live/reporters-roundtable/

    Nilay Patel says:

    “It used to be the patent office said you can’t write a software patent.  Software is just math.  You can’t patent math.  No software patents.  And the way patent lawyers got around it basically was saying, well software programs a computer, a computer is a machine, software changes the machine, so software makes the computer a new kind of machine.  This is the way they got around it.”  “Finally, 20 years later the Federal Circuit says wait, wait, wait, that’s ridiculous.  We shouldn’t do it that way.”

    But you know, whether software is math or not is more of a philosophical question that seems secondary, compared to the overall impact on people’s lives and the future of innovation in our country.

    Let’s analyze this thesis:

    “Doing something unique and protecting it with a patent is exactly how a small company can build a business that competes with large companies and cannot be driven out of business because the larger company has more engineers.”

    First, what if it is the large corporation that has the patent, and you want to build a business to compete with them? In today’s environment, it is the big players and NPEs who are amassing the massive patent arsenals.

    Because software is an amalgamation, often involving dozens of features, hundreds of decisions, and tens of thousands of lines of code, infringement is all but guaranteed.

    Small companies cannot afford to even search the hundreds of thousands of patents out there written in lawyerese, much less afford royalties on every possible aspect of the software that would be required if everything that is patented was enforced.

    Every software company does a cost benefit analysis. Is it better to license a component from someone who has already built what we need, or spend the time and money to build it ourselves?

    But software is much more than a single component. Software is a thousand decisions. It’s coding and creating and assembling it altogether. Software is an art. Which is what copyright is for, not patents. Software patents do far more harm for small companies in the reality of today’s fast-paced marketplace.

    Finally, just because a larger company throws more engineers at a problem, in no way guarantees they are able to succeed. The market is much more complicated than that. For example, on one hand, Google has been rocking it with performance on Chrome, but on the other hand they’ve failed in social with Buzz and Wave, and Apple with Ping.

    In fact, a small company often has an equal chance to compete by simply being better. For example, Firefox gaining over IE6. Microsoft over IBM. Facebook over MySpace. This is the great and unique aspect about software. The low barrier of entry. And the speed with which they can get to market.

    Larger companies are often lethargic compared to the agility of smaller companies. Smaller software companies can push builds out faster, with far less bureaucracy and legacy support. Smaller companies have an incentive to create something different, because they are trying to create their very reason to exist.

    This is the great thing about America. This is the great thing we must preserve. This is the reason, we must return to a marketplace free of software patents.

    Comment by johnmcmillion -

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  14. You could call it “Pat Town”

    Comment by lisarlee101 -

  15. just create an official web site that all you have to do is upload a visual record along with a written discription of your invention and in this way you would have a real time record that can be viewed by anyone and in this way everyone would know who the patent belonged. Many other types would also be include – i.e. copyrights, logos, trademarks, etc.

    I have many invention ideas and only had one trademarked because of the rigamaroe and red tape involved.

    Comment by lisarlee101 -

  16. Pingback: Patently Obvious: Pitiful Patent System Has to Go | LocatePC | Locate your stolen computer or stolen laptop - Works for both Mac and PC

  17. johnmcmillion:

    “Actually, there is. A software algorithm is math. You can’t patent math, according to patent law.”

    Using the math argument, you could not patent a mouse trap either (or anything else, for that matter) because every physical object is described using math. For example, a traditional mouse trap works because a spring is loaded with a specific amount of potential energy (described with math) and is released with the application of force to a lever (also described with math). In fact, that is the purpose of math: it is a tool to describe objects and the relationships and interactions between them. While a software algorithm might use math, that does not mean it is math, and arbitrarily stating that all software is math is both overly simplistic and fundamentally wrong. [Of course, some algorithms are just math (e.g. a sine function), and therefore are not be patentable.]

    Now, although software design in general is (and should continue to be) patentable, that does not mean that all designs are patentable. Anything that is obvious to a person with “ordinary skill in the art” (per the Supreme Court “a person of ordinary skill is also a person of ordinary creativity”) is not patentable. The problem is that patents for many things which people believe are obvious are being granted patents. This, I believe, is because the patent office does not employ people with “ordinary skill” in software engineering. Doing so would help a lot.

    Regarding the standards argument, that is also is not a good reason to disallow all software patents. While standards are important for software that needs to interoperate (e.g. browsers and web sites), that does not mean that all software must interoperate. Sometimes the right solution is to create software that has a unique feature. Doing something unique and protecting it with a patent is exactly how a small company can build a business that competes with large companies and cannot be driven out of business because the larger company has more engineers. Also, just because a design is patented does not mean that the owner has to charge for its usage. In some cases, people have obtained a patent and granted free license to use it simply to prevent others from locking it down.

    I would encourage you (and everyone) to read Nilay Patel’s excellent editorial (with some intriguing suggestions) at http://thisismynext.com/2011/08/11/broken-patent-system/.

    Comment by draconoir -

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  20. Mark

    Focus.com offers a graphical representation of the ridiculous amount of litigation associated with Patent lawsuits.

    http://www.focus.com/images/view/30296/

    All I can say is WTF is the USPTO thinking?

    Comment by 2dpopout -

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  24. Well, some of the points make sense but all of this will be received
    with violent reactions, that’s for sure.

    Fisher Capital Management

    Comment by harveydrew -

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  39. Pingback: Regarding patents

  40. Software Patent Debate, 8/24 at the Computer History Museum

    When:
    Wed. August 24, 2011
    Noon: Program
    (Free to Attend)

    Where:
    Computer History Museum
    1401 N. Shoreline Blvd.
    Mountain View, CA 94043

    More info at
    http://churchofbsd.blogspot.com/2011/08/fwd-register-now-software-patent-debate.html

    Comment by johnsokol -

  41. Mark would do us all a service were he to clarify the functional meaning (that is how the term would effect the proposed law changes he envisages) of Troll.

    Is an inventor trying to license his invention a Troll?

    Is an inventor who has sold his invention a Troll or Troll enabler?

    Is a University trying to license a Troll? A R&D lab or company? A Non-producing arm of a large corporation? NIH?, NASA?

    Traditionally most if not all entities seeking to license are not actual producers of the item invented.

    Comment by vickley -

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  44. Pingback: Software Inventions and the Patent System « draconoir

  45. “There is no difference between inventing a new software algorithm and inventing a new mouse trap.”

    Actually, there is. A software algorithm is math. You can’t patent math, according to patent law.

    I too am a software engineer, for well over a decade professionally, and I too am proud of my work. But not for one second do I believe I am entitled to being the only person in the world who should be able to implement my solutions. Copyright protects source code, but this is not what patents are for.

    Moreover, when it comes to software, end users come to expect, and often need a common user experience. This requires adopting commonly used standards when we build software. Software patents only serve as roadblocks that hinder innovation, adoption of standards, and in today’s world, are a mechanism for unprecedented legal extortion, rather than protecting and encouraging innovation.

    While you are likely to have only a handful of people who will invent a light bulb (Edison, Tesla, etc…), you are likely to have exponentially more people arrive at the same solution for say a “1-Click Checkout” (Amazon’s absurd patent). Further, no one should have a monopoly on light bulbs in general. Or shopping carts, or social networks, or web browsers.

    Because innovation is evolutionary. Incremental improvements to previous ideas. We all stand on the shoulders of giants.

    Real success comes by continuing to innovate. Not once, but perpetually pushing for what comes next.

    Comment by johnmcmillion -

  46. I am a software engineer. I have been writing code since about age 12 and have done it professionally for nearly two decades. During that time, I have learned several different programming languages and become an expert in too many technologies to count Recently, and after years of hard work, I have been rewarded with the filing of a patent with my name on it.

    Inventing (and I use that word deliberately) solutions to problems is hard. It takes skills and experience, but most of all it takes talent. It is the engineering equivalent of art. It is not something that you can just hand to anyone with the requisite skills and expect it to be done right. You actually have to be able to create something new out of nothing. There is no difference between inventing a new software algorithm and inventing a new mouse trap. Although both of them may build on previously existing ideas or parts, they do so in unique ways. It is this creation that patents seek to protect. Once a design has been created, anyone with the relevant skills can assemble it into a working product. However, that doesn’t mean that they should be able to steal the years of investment that went into inventing it in the first place.

    As evidenced by his blanket statement that we should “end all software patents” it is clear that Mark Cuban does not understand the problem with the patent system, or software at all. (In all likelihood, he probably does understand it but just wants to increase his profits by walking on the backs of others.) The problem is not with the type of the patent, it is with the vetting and approval process of all patents. Many (I suspect most) patents are overly broad. Many do have prior art (e.g. anything in the human genome). For example, a This American Life episode on patents discussed the recent “invention” of toasting bread (which I am sure has existed for hundreds of years). (Notice how that was not a software patent.) That should have never happened and highlights what really needs to be fixed. The patent office needs to actually read the patents and thoughtfully consider the merits of each If an application does not make sense (probably because of all of the “lawyer-speak”), then it should be sent back to the filer for clarification instead of simply approving it with an it-sounds-complex-enough-to-be-unique rubber-stamp.

    I, personally, take pride in the patents that I work on. They are a reflection of me. I would not want to have my name on one that was filled with nonsense. In fact, I spent many hours on my first one working with the lawyer on revisions until it was accurate and meaningful. I would hope that all software engineers would strive for the same level of integrity as I have.

    Comment by draconoir -

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  48. Woow good article :)

    Tekno Gündem
    http://www.teknogundem.net

    Comment by teknolojit -

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  57. You know the “four boxes of liberty,“ right? – http://en.wikipedia.org/wiki/Four_boxes_of_liberty Here we have the first box encouraging use of the second. I have to wonder—if the law is not changed—if an attempt to go to the third box, if an attempt incite juries to nullify, might work. Though judges almost never inform them of this ability, juries can choose to judge the fairness of a law and disregard it altogether in their verdicts. If the trolls choose to exploit the law in such a way, why not go around it with another loophole? Nullification is something you think of more with criminal law, but started thinking that if I found myself on the jury of a case with a patent troll, why not try to invoke it there? Big issue would be how to argue the case that way without specifically mentioning nullification, which I understand these days could mean a contempt charge. And even if allowed, risky as hell of course, especially with how much would be at stake. Given that, maybe even some sort of grassroots effort to inform people of the truth of things, should they find themselves on such a jury, could be worth the effort.

    http://www.law.stanford.edu/display/images/dynamic/events_media/Rhonda%20Sadler%20-%20The%20Role%20of%20Jury%20Instructions%20in%20Patent%20Remedy%20Gatekeeping.pdf – Though this author’s argument is that better jury instructions are needed rather than legal reform, some of the comments made here in this article (especially bottom of page 2 and top of page 3) make me think that a nullification-type movement might actually work. Mainly, that these cases are just so complex legally that a good-guy-vs-bad-guy approach might work when jurors find themselves in over their heads in technical terminology– as stated, jurors tend to go by outside factors they bring in with them when cases are too complex for them to totally understand. From that article, almost 70% of patent cases were decided by juries as of ’09, and if nullification were to happen enough, get enough people behind it onto the juries, might take the wind (or money) out of the sails of the trolls enough in the long-term to make a bit of difference if the law is not changed. Or not… just speculating, of course. ;-) As it stands, I’m gathering from what I’m reading that juries tend to favor the trolls at this time. And they do like to boot anyone with a grain of sense from the pools…

    Comment by bucfanpaka -

  58. Pingback: Mark Cuban wants to end patents on software and business methods

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  60. Mr. Cuban,

    Thank you for writing this! After recent pieces in NPR and the Economist, this issue may be starting to gain traction.

    Those of us in tech completely agree.

    Someone really needs to coalesce all of the best arguments into communication with our Congress reps and the White House. From citing the absurd patents granted like Amazon’s “1-Click Checkout”, to Justice Stevens arguments over the years including his dissent in Bilski.

    You’d think Google would take the lead in lobbying for this, instead of trying to drop $3.5 billion on Nortel’s portfolio and fighting in the press with Microsoft.

    Anyhow, thanks for writing this here, and giving the issue some visibility in HuffPo.

    Comment by johnmcmillion -

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  62. As long as we’re talking about fixing patents, I think getting rid of patenting living organisms is worth it’s own bullet on Mark’s list.

    Comment by Mike -

  63. Hilarious that my post has 5 thumbs down and 0 thumbs up. Must be a lot of IT folks that blog here. Hey, no offense folks, but the majority of the 9% unemployed Americans are blue collar folks who can manufacture durable goods but aren’t really code writers.

    Comment by hailguardian -

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  66. In the context of software and the current firestorm whipped up by patent trolls, it is easy to assume that process patents are ludicrous. However, process patents serve a very real purpose in the non-digital world, particularly in the business of chemical products.

    Many people imagine that the job of a chemist is to spend their lives in a laboratory, trying to invent new chemicals. In reality, most chemists spend their lives in a laboratory trying to create the SAME chemicals in new and better ways. That is literally the entire job of most chemical R&D divisions, and it’s a damn good thing, too, or many of the products we take for granted wouldn’t exist due to their prohibitive cost. In a situation like this, the process IS the product.

    Suppose Big-Time Chemical Co. and Hi-Tek Chemicals, Inc. both want to manufacture Additive X, which makes yeast patties taste just like sirloin steak. Unfortunately, Additive X costs far too much to manufacture, so neither company is currently producing it.

    It’s important to note at this point that Additive X is not a patented product. Its inventor came up with it decades ago, but never found a way to make it profitable before the patent lapsed. Anyone can make it now, with no cost beyond the manufacturing cost.

    Without process patents, neither Big-Time Chemical nor Hi-Tek Chemicals are going to want to spend millions or even billions in R&D to come up with a cheaper process. It would be more practical to wait for the other company to spend their money developing the process, then simply copy it themselves.

    In the absence of process patents, the only protection either company has available to them is trade secrets. Many companies go this route (even in our world where process patents DO exist), but unfortunately, this hampers the spirit of collaboration and building on others’ ideas that the dissolution of process patents is meant to encourage.

    I’ve rambled enough in my unedited comment here, but the take-home is this: process patents are not any more ridiculous than product patents in cases where changing a process can mean millions of dollars of R&D and the difference between SOMEONE making a product and NO ONE making that product.

    Comment by Wonkey the Monkey -

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  70. Blue Cava may be a spun off but the web site clearly states it gets all its power from the patent owned and controlled by Uniloc. The clear value of the blue cava spin-off appears to be the license to the 216 patent. Simply spinning a new name is not spinning a new product.

    Comment by honestabe92612 -

    • Owned and controlled by Uniloc. If software and process patents are eliminated, by your logic, it would hurt my company. Im ok with that. The right thing to do is to eliminate these types of patents. No hypocrisy at all. If we are a good company, we will excel anyway

      Comment by markcuban -

  71. Pingback: Mark Cuban: Mark Cuban: Solving Our Country’s Patent Law Flaws | FierceReason.com

  72. Again Mark, how do you spout off against patent reform on your blog and then so blatantly invest in a patent troll: http://www.bluecava.com/tag/mark-cuban/

    Simply google uniloc troll cuban and tell me how many results show up?

    Comment by honestabe92612 -

    • Bluecava is not part of Uniloc. Its spun off. It has its own products that generate real revenue from real products. And the real point is that despite it being a spin off of Uniloc, I am all for software and process patents being eliminated. Regardless of the impact on either company.

      m

      Comment by markcuban -

  73. Pingback: Mark Cuban on the idiocy of patents « The Orange View

  74. Mark:

    Software and process patents are not going away. There is a way to fix these kinds of issues, but it won’t happen until the problem the technology community correctly identifies the problem. No one is doing that.

    John Koenig – Founder, The Patent Studio

    http://tinyurl.com/fix-patent-law

    Comment by John Koenig -

  75. Pingback: Mark Cuban: End All Software Patents | WebProNews

  76. As someone who works with Congressional Members to receive and manage constituent feedback, I encourage you NOT to solely use the Member’s websites to submit your opinions on the reform bill. While this email is all reviewed, it is done so in aggregate or quickly due to the tremendous volumes. An email won’t have the biggest impact on swaying your Member’s opinion.

    Instead, reach out to the offices more literally — phone calls, old school hardcopy letters, attend Telephone Townhalls (if they do them), visiting the District Office (did you know every Congressman had one?), even Tweeting them can be more productive than slamming the Member’s website.

    However, if you are going to write an email letter (which you should do on top of trying other less conventional channels), here’s some tips:

    1. Keep it short. An underpaid Hill staffer is going to read it and they get thousands of letters a day, so your five page novella isn’t going to work out. Think like you’re writing a resume for a job application; one page, quick hit, to attract attention.

    2. Remember your goal — you want the underpaid Hill Staffer to escalate the letter upchannel to someone with decision-making authority because it speaks to them. A rant is not going to speak to them.

    3. Don’t try to win with a legal or logic argument; like anything in politics, there are two sides to every issue that can be argued. Instead, as your Member’s constituent, relate the issue and your opinion to a personal story — demonstrate how it has affected you personally, if possible. That is the type of thing that stands out. Representatives love these types of things as they can form the framework for their speeches and rhetoric.

    Comment by dhaller311 -

  77. Great post, Mark. I absolutely agree that patent laws create a security bubble to keep lawyers employed and make insecure companies feel more secure instead of inventiveizing the companies to compete, evolve, and ultimately develop a better product or service.

    It reminds me of the argument against slaughter rules in sports. Bottom line is you’re on the field. If you don’t want them to run up the score do something about it! I would not wait for the a referee or a rulebook to bail me out.

    Comment by Hassan -

  78. Mark, its very hard to eliminate any law with ur US Congress.

    Why not do it a game theory like way. If we raise the costs to file a patent that might help. we can even call it tax to pay for budget reform even and kill two birds with one stone.

    Let us say raise the Patent filing fee to $125,000 per application. That will do two things at one:

    1. 187,000 patents issued will reduce to say 100,000 so that is a tax revenue of $125 Billion.

    2. Patents will specific as a result of a high filing fee.

    3. Patent Office will be able to increase the number of patent examiners to fight the invalidated patents being issues by the patent office trend.

    You have to look at US Congress as a social game, ie what carrots do you give them that have big sticks or hammers attached to clobber them over the head..Taxes is always nice carrot as once they feed on the tax trough they will not eliminate that tax as that reduces the political influence they wuse in budget talks for pork barrel spending etc.

    Comment by Fred Grott -

  79. Pingback: Software patents: Lots of whining, but reform unlikely | ZDNet

  80. Pingback: Browsing Catharsis – 08.08.11 « Increasing Marginal Utility

  81. Pingback: End Process Patents and Software Patents

  82. The patent troll could serve the function of middle man if not for the cloak of patent law. Like other middle men he could serve the purpose of matching producer to retailer, distributor, or direct to consumer. Buying in bulk or warehousing to offer discounts. The problem with applying this model to patents is the false scarcity which the patent and legal framework around patents produces.

    I would argue that the only reason software/process patents are target is the ambiguity, and subjective nature of improvements in application. Trolls have been around since the patent system was introduced albeit to a lesser form due to the more obvious nature of utility patent claims.

    The system needs an overhaul, but blaming trolls, and software/process patents is curing for a symptom.

    Josh
    Inventor who chose not to enter a market due to a looming troll.

    Comment by joshuagore -

  83. Pingback: Mark Cuban on Patent Law » Musings of the Technical Bard

  84. Mark,
    I know your legacy is in Info Tech, but with your ambition to create jobs in the USA, why not take stronger looks at durable goods businesses which develop manufacturing jobs and require more headcount than Info Tech. We’ve been trying to get your attention for a couple of months now. Hail Guardian is based in the Dallas area. We are traveling the US as we speak doing demonstrations for manufacturing companies looking to license our durable good tech/design. With your help we can ensure we produce Hail Guardian in the USA. I’m not asking because I’m over my head, I’m asking because I’m under water and yet so very close to putting this product on the market. 100M units in the USA is the goal. 500M units worldwide. Let’s create jobs together. http://www.hailguardian.com. Patent Pending.

    Comment by hailguardian -

  85. all these ideas are great, mark, but do you actually think congress is going to listen? the US government is seriously dysfunctional and is no longer representative of the people. it is fascism, rule by corporations — not the democratic republic it was intended to be.

    the kind of reform you’re looking for through congress is virtually impossible. it is time for a peaceful revolution — for organized civil disobedience orchestrated through cyber-communities. (like lulzsec and anonymous combined with thomas jefferson and gandhi). i always recommend starting with 9/11 truth to gain the moral authority needed to launch such an operation.

    Comment by kidmercury -

  86. I must have been out of the loop for a while. Process patents? I work with processes. We call them things like “best practices”. We write our processes around the best way we can find to get something done. It’s the best way to get something done because it’s been documented by “industry leaders” as the best way to get something done. What’s next, patenting methods to blow your nose? Then suing people who blow their nose using that method, unless they pay a royalty every time they grab a tissue?

    I’m all for “getting rich”. I’m all for coming up with great new ideas. But this seriously has gone too far. I’m sure these patent trolls are getting some great short term benefit. But I’ve also found throughout history, short term benefit often leads to long term consequences. I’m eager to see these zombie patent troll companies eat those long term consequences. But I weep at the expense those who are actually trying to produce things have to pay in the short term.

    Patents should protect objective new designs. But software (which we were told in school could actually be copied; copying anything else was plagiarism) and processes are seriously not objective things to patent.

    Comment by Eric S. Mueller -

  87. I’m still rolling around in my head what Mark said. I hear what he’s saying but how do we get there from here? I just don’t see a viable mechanism for cessation… ”1. End all software patents; 2. End all process patents..” Not only for the ones issued—- but there are currently over a half -million patent applications on file waiting review. And… these are all sent back? With refunds for the patent fees from the USPTO? And then with refunds from the attorneys who prepared them for submission to the USPTO … or the inventor just eats all those costs? (this is going to stimulate the economy?) Or, we just set a deadline and as of June 2012 no more software patents or process patents are acceptable after that date? I’m having a hard time wrapping my brain around that, because to me all it is going to do is INCREASE the fighting and costs for the patents already granted, because those are now a finite number with no more to come in the future… its going to put those costs on steroids … which seems to escalate the aforementioned thermonuclear problem we were wanting to ameliorate? And if we make them all obsolete and just say across the board they are no longer enforceable — I think we’re looking at total and complete mayhem and meltdown with no one having any incentive of responsibility for custodial care of the existing systems. Very nearly EVERY facet of our entire (global) existence is heavily invested in the 1’s and 0’s of code. I rather favor a different approach – gut the financial incentive that is fueling the greedy madness. I’m thinking more along the lines of no patent infringement case may be brought without both parties engaging in meaningful license discussions first
    Much as exorbitant interest is called usury, license fees are set at a NOMINAL rate, with no onerous clauses woven in. The idea is for inventors and interested parties to IMPLEMENT and EXPAND the product into the marketplace. Patent holders have both the incentive and obligation to sell (multiple) licenses to qualified companies. The more licenses, the more licensing fees they are collecting, the more people participating in the invention and the more people being put to work. Part of being a qualified company is that licensees have the wherewithal, means, business plan and obligation to PUT IT INTO PRACTICE by a defined period of time or lose any claim to using it (good-bye patent trolls).
    Failing to reach a license agreement carries a HUGE non-refundable penalty fee assessed to both parties for the privilege of using the court to fight this out … just for both to walk through the door, and is funded to the USPTO. No attorneys… your rep is a salaried USPTO examiner qualified in that class of industry. (good-bye litigators and the unbelievable fees fueling the current financial incentives).
    As an inventor I WANT people using my product and understand with this sort of system that without expanding it via a licensing network to those who come to me to obtain a license, I can very easily be the victim of natural selection as the invisible hand marketplace will reward those inventions most favorable to the marketplace. I also know I need to keep evolving and keep tweaking it and keep bringing in more participants in the process until its reached its (inevitable) level of market obsolescence. BUT I’m allowed to share in that success, and participate in the process … it is not taken from me. BING! Thank you for letting me play … and where are the lovely parting gifts???

    Comment by SMARTePLANS -

  88. I would like to provide a personal counter-example.

    In 2008, while configuring a home theater PC, it occurred to me that a network of HTPCs running DVR software could provide a free computer, free broadband internet, and free cable/satellite programming, financed by skip-able, interest-based advertising / sponsored content.

    There are many reasons such a system might not work, but if successful, the potential revenue could could provide millions of Americans with free computers/internet/TV.

    Because the system uses standard PC hardware and DVR software, I did not think it would be eligible to patent. A local IP attorney explained to me that because the system is a novel business method, it is eligible for patent protection.

    Computer cost subsidizing method
    Patent application number: 20100058378

    I have raised $400,000 in first round funding, and have employed several developers in producing a prototype system.

    I agree with the dangers and excess costs associated with NPEs (non-practicing entities) or “patent trolls”. However, a new company based on a novel business method can be just as beneficial to the economy, and disruptive to the established players, as a new engine or renewable energy source.

    Comment by Openivo -

    • Computer Cost Subsidizing Method ? Are you kidding me ? Bundling to subsidize costs is as old as personal computers. Remember Free PC ?This is a perfect example of a process patent that should never be granted. If you want to build a business around it, go for it. That is what capitalism is all about. But if you think this should be patented, its a perfect example of what is wrong with the patent system.

      Comment by markcuban -

    • This is a stomach churning example of what should not be protected by patent. The reason is that it is obvious and has prior art, and most importantly – like most startups – you will probably produce a shitty product and fail. You will then sit back and troll any companies that succeed where you failed – assuming those companies aren’t too afraid to even he started because of your patent. The result is consumers get shitty products at high prices, fewer companies and jobs are created, and innovations fail to compound.

      Bottom line – your patent is bullshit and if you think otherwise you are the same sort of self important tool who floats around silicon valley thinking his armchair ideas are so much better than anyone else’s and asks everyone to sign an NDA just to hear them. Sorry, neither of you are that clever. Real innovation comes from deep expertise, experience, and hard work – not hooking up a stereo system.

      Comment by alexneth -

  89. The current state of the patent wars is pretty ridiculous. The idea that two companies measure stacks of patents to determine who wins sounds to absurd to be true, but it is true…

    That being said, there are a lot of downsides to what you are saying. The first that comes to mind is the fact that it will stifle innovation. Why would a company spend money trying to come up with a process if they can wait for someone else to do it, and then steal it? Sure, it is great to be first to market, but it is better to be a close second to market with $0 in research and development.

    Big companies would stifle their own innovation, if they are leading a market, they will have no motivation to try to better their product. They know that they can afford to wait and just steal the innovations that try to compete with them.

    Software is a bit more difficult. The idea that you can patent things that are done every day today is rather absurd. That being said, if someone invents something like XML, they should have the right to protect that.

    I think we all know why China is doing well, it isn’t their lack of IP laws. They keep their dollar down and they don’t have too many labor laws or environmental laws.

    Imagine what would happen if the Mavs had to compete with the Lakers, but they Lakers didn’t have a salary cap, or free agency rules. They could pay every kid that looks promising and then spend as much as they want on players. In this example, the Mavs are the US, and the Lakers are China.

    Comment by grantcline -

  90. I agree with both eliminating software and process patents. Patenting essentially descriptions that do not involve how a product works was never the intent of creating patents in the first place. The copyright laws protect software and allow its licensing (I think). Why is more protection necessary?

    Why allow a process to be patented anyway? If the product is patented, and the process is unique to that product, then the process is, in effect, protected as well. If the process is a recipe (like making a cake) then it could be copyright protected as long as it’s unique (generally hard to prove). The Patent Office in the US has been ineffective for decades. Unlike other countries where the patent departments actually check out patents to see if they are really new technology, the US Patent Office just issues patents and lets the validity be challenged through litigation. This means I can patent anything, including things that are in common usage (say a lightbulb) and as long as no one challenges it and I challenge no one, I could claim that my “light bulb” was “patented”. The patent trolls (as they are called these days) can buy up unchallenged patents and then threaten to enforce them through litigation. This threat can usually be bought off by a company using the technology in an existing product. If the Patent Office had to check out all patents (without the software and process burden) against “prior art”, previously patented products and common usage, the attorneys could be eliminated along with much of the expensive litigation costs, which would hopefully get plowed back into R & D and/or capital investments. This is just another lead weight dragging down American industry. The same type of troll also exists in “intellectual property”, where someone in a given country can beat the owner of a brand (say) to the “punch” and register that brand, logo or related art, first and then require the owner to buy it before it can be used in that country. I believe that this happened to Nike in Spain (a well publicized case in the 90′s). This can be another big expense (international registration) for a small company trying to start exporting and marketing its products internationally. Mark, you have some excellent ideas that would help American businesses reduce these kind of “non value added” costs.

    Comment by maduceone -

  91. For more information on the Patent Reform Act of 2011 (HR 1249), which looks to be on track to be signed into law by mid-September, consider the opinions of the Coalition for Patent Fairness: http://www.patentfairness.org/. While their specific policies differ substantially from Mr. Cuban’s recommendations above, they at least seem to agree in spirit. Plus, they’re one of the few organizations that has Congress’ ear on this issue, so, if nothing else, it’s worth getting to know the major players in this debate.

    Ending software and process patents (including business method patents) will be extremely difficult to accomplish this legislative cycle. However, limiting the amount of damages that can be recovered by any one patent in litigation means there is much less incentive for trolls to extort licensing fees from companies actually contributing to the economy.

    In other words, we may not be able to rid ourselves of the trolls anytime soon, but by limiting the damages they can collect from asserting their patents against small businesses, we can make it much less profitable to be a patent troll. Yes, this is a far cry from the steps outlined by Mr. Cuban above, but when it comes to legislation, it’s important not to the let the perfect become the enemy of the good.

    Comment by pomeroy41144 -

  92. From a small time entrepreneurs/innovators point of view, I agree with you 100%. In an attempt to explain why software patents are inherently a problem I came up with this analogy which seems to get the point across to the lay audience pretty well:

    http://appupdate.com/fv-b-1-5/why-software-patents-are-a-terrible-idea–or–why-you-shouldn-t-be-allowed-to-patent-a-better-virtual-mouse-trap-.html

    Comment by ylamers -

  93. The problem in the USA is the Trial Lawyer lobbyist. They donate more money then any other lobbying group and they have taken a strangle hold on US politician who not to mention many are lawyers.

    So when any good tort reform is thought of it always fails if it is going to hurt lawyers.

    We need tort reform for doctors it would cut the cost of medical care by 1/4 if we just had a limit to how much one person could claim.

    In business everyone is worried about being sued many business don’t expand or even start because a person knows if one product leads to them being sued they can have their business wiped out.

    I like how you stated you are not hiring because you have reserve money to protect yourself against false litigation.

    I feel that almost all business stand in fear of being sued. It is a huge damper on the economy.

    Lawyers produce nothing they are a leach on the economy. while legitimite producers stand in fear.

    http://reason.com/blog/2010/12/13/erin-brockovich-town-shows-no

    I osted a link to a closer look at a erin brokovich she sued the crap out of a water company for a cancer so called cancer causing agent in the water. Won a crap load of money they made a movie about her and now guess what the cancer never developed in the city, but she and the lawyers got their money.

    Comment by realnathanh -

  94. For developing technology patents, instead of the government spending billions of dollars to giant corps. Like GE getting billions from the governemnt for the smart power grid tech, why can’t they have an auction process that instead of involving simple monetary transactions, implement a time auction, where the government has an open system with what they want done, i.e. smart power grids, and instead of awarding money up front, any company can develop the technology, once they have an a functional design with extremely well documented costs of R&D, the government reimburses those costs and awards a patent. In turn said company develops a new tech faster, and likely more efficiently, and can then sell licenses to develop. Exclusivity patent would last approx 10-15 years so that there is time to implement the technology but not long enough so that there are issues that we have in the x86 market for CPUs with Intel dominating the market for essentially ever, with no real signs of anything changing.

    Comment by brianrstephens -

  95. Austan Goolsbee has been hitting the airwaves on his way out saying that precise same thing. I have no problem with regulations that protect. You can’t sell rotten meat. You can’t drill in deep water unless you can clean what you fuck up. But these types of regulation serve no purpose. You nailed it with Copyright protection on software. That should be all you need. But if you have the idea to re-invent the umbrella, you ought to be able to get it patented without that lengthy process.
    rog

    Comment by rogerawilbanks -

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