Saturday, March 6, 2010

The Chinese Finger Trap



For a very long time I have said that software patents were bad for our community, they stifle new businesses from being able to confidently take existing concepts and build new and unique applications of those concepts into business plans.

There is a philosophical reason to resist software patents, the ethical reason is because software is the encoding of human understanding. What if all of science, the understanding of quantum theory, the standard model of particle physics, the human genome, was patented? What would the effect on human understanding be? I would argue that these discoveries would not even be possible because we could not build upon what understanding we have already achieved. But let us ignore the philosophy momentarily and focus on making money.

Why do businesses want software patents? Some want to protect themselves (at first), but I wonder how much one is really protected by creating a patent? You see, I think patents are a distraction, and trap of one's own making even, for not building a business that has natural defenses from competitive predators.

Software patents are a chinese finger trap, you get in but nobody can get out from under their control once they are created, and to extract the value from them you use the thermonuclear warfare of legal action which can take over your company's life and distract you from actually creating great products that compete based on their merits.

Remember SCOX? SCOX came out with a 1B lawsuit against IBM based on software patents related to the LINUX operating system. For 3 years they spent over 10M dollars trying to litigate a patent claim instead of creating great software and building their customer base. Once they made the claim they had to follow through, all the way to the bitter end. They got themselves into a trap, and every time they pulled the trap held on tighter. SCOX's ultimate fate was bankrupcy.

In the past Venture has supported the creation of software patents to protect intellectual property and to act as a hedge against the failure of the businesses they have invested in but thankfully that is changing, many are coming out against software patents.

Plaintiffs try to use "theft" to inject a moral element into patent suits, but there is no substantive moral element in patent law. The point of a patent is to grant a monopoly in exchange for public disclosure, and patentees want people to use the ideas (in exchange for license fees), otherwise the public disclosure aspect is pointless. 

Brad Feld, Feld Thoughts Blog

Brad is a progressive VC (that we really like), but he isnt alone. What is happening is that companies are squatting on software patents like domain names, commonly without any relevant claim to related market segment. It looks like this this a theme that is starting to form consistently in the community, here is another perspective on patents from Union Square Ventures.

Almost a third of our portfolio is under attack by patent trolls. Is it possible that one third of the engineering teams in our portfolio unethically misappropriated technology from someone else and then made that the basis of their web services? No! That's not what is happening. Our companies are driven by imaginative and innovative engineering teams that are focused on creating social value by bringing innovative new services to market.

Brad Burnham, Union Square Ventures Blog

Software founders: If you cant touch it dont patent it. Secondly, we need a way to thwart the predatory actions of patent trolls who retard the foundation of new businesses and extort monies. I don't have a solution to this problem, just a longing for a way to stop the trolls from destroying businesses before they have a chance to succeed.

2 comments:

  1. I'd like to suggest a defense to patent trolls and frivolous patent lawsuits!

    http://patenthitman.com/

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  2. bolt, bad unconstitutional law is bad unconstitutional law. The patent system is extremely broken. You can spend a ton on defense of one nature or other only to be left with a huge injustice and hole in your pocket because the rules of the game are so broken in the first place.

    A better investment of the money is to communicate with your government representatives to explain why the law is so broken. [techdirt.com covers the patent topic frequently, eg, http://www.techdirt.com/articles/20100603/1550369677.shtml ]

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