That Troll Session-slashdot, IOU an apology

by Andrew Watson on 23 June 2010

Oldman-baddie

I can’t leave Munich without a comment on that NPE session. Picture the scene. Have you ever seen the film the Fifth Element? Gary Oldman, the excellent Gary Oldman, plays the baddie, the ultimate capitalist owner of everything sold or produced worldwide, everyone’s boss. He tips a glass from his desk, breaking it on the floor of his office, little robots come out from the walls, one a hoover, one a dustpan, one to wash, one to polish, all to demonstrate to Bruce Willis, the hero, how chaos and disorder is good as it gives us mindless humans a range of purposes and keeps us busy.

I’ve just sat through the IPBC session titled “Getting to Grips with NPEs”. Now that was a session which generated real emotion in me, and showed how amazing us humans are at spending time and effort on things that are ultimately meaningless.

I went through a large range of emotions. I started out neutral . Here we go, just another session about trolls, trolls justifying why even trolls do social good (we help small inventors make money from their IP!-well done, good for you), lawyers arguing over technicalities (rule 11, blah, blah blah), the anti-troll lobby screaming about how unfair the system is to allow this abuse and Dan McCurdy (we’ll come back to him later) giving his troll stats.

I quickly got into irritated. Mainly as the session was dominated by American accents justifying their respective positions. Mild anger soon followed. More American accents, more justification, more self-justifying arguments.

Soon followed by seething. Vigorous agreement with Nokia (great speech, really great speech Dr Schneider) and Technicolor (ex Thomson, good “I hate trolls” speech Beatrice de Russé). I found myself wanting to applaud. C’mon the anti-troll lobby!!!There was little room for middle ground in the room. And, for me, the anti-troll camp has my lifetime vote.

Why? Well it is quite simple really. With one very limited exception (genuine lone inventors) I concluded that the whole troll business model is just so lacking in any creativity or social worth. I found myself asking “What went wrong in these people’s childhoods or lives to lead to a conclusion that they can look themselves in the mirror and believe that they are doing anything good?”. Daniel Papst by the way gave a good human explanation if I understand their heritage, gamekeepers turned poachers.

And then I realised I owe slashdot an apology for ever expressing any admiration for organisations that create nothing. So here I am, saying sorry and asking for forgiveness for my error. I’ve now seen the inside and see how futile it all is.

The one exception that one has to make and should make it for the small and lone inventor. He/she deserves reward if he is the godfather/mother of a new technology that creates wealth. He or she, exceptionally, deserves a fair reward. The rest of you, have you really got nothing better to do?

Dan McCurdy is a legend in the IP world. An IBMer under Marshall Phelps, a licensing expert/jobbing consultant in Thinkfire (I’m sure I recall his profile with a dollar amount against his face for his lifetime licensing dollars generated), now AST. But how can these two statements be reconciled? Statement 1, timed at about 46 minutes in “I would be delighted to close down AST tomorrow if the NPE problem went away!!” (hooray!!), and then, at around 58 minutes in “When we buy patents in for our AST members, we commit to sell them within 12 months, and we sell them to the highest bidder, we sell to operating companies, aggregators, and….to NPEs”.

Excuse me, come again….WHAT!!! You perpetuate the problem by selling on patents, to NPE’s, who can then sue those who don’t have licenses as they aren’t your members.

Go back to the first image of Gary Oldman in the Fifth Element. What peculiar beings we are. Like my kids when they’ve nothing better to do they create chaos until a parent says stop. This really does need some high up parent to say stop. The US risks damaging its credibility as a country by this worthless pursuit, threatening new innovations by imposing a totally arbitrary and senseless tax created by some out of control kids. If we have anything we in Europe we can do to stop this catching on in Europe, we really should.So sorry Slashdot again, I got it badly wrong. I apologise.

There is nothing to admire in this.

{ 2 trackbacks }

Trolls Are Capitalists Too | smarter companies
06.23.10 at 1:55 pm
Trolls Are Capitalists Too – ipstrategy.net
07.15.12 at 11:22 am

{ 8 comments… read them below or add one }

Mary Adams 06.23.10 at 1:00 pm

Andrew –

I am sympathetic to your feelings about trolls. But I submit to you that trolls are no different from private equity or even ordinary stockholders–they seek to profit from ownership of an asset.

The same American accents that brought you trolls also brought you the ideologies of private equity and shareholder value based on three assumptions: First, that it is the divine right of the owner to all the profits from owned asset. Second, it is the sacred obligation of everyone working for them to maximize their return. Third, the definition of “return” can be defined by short-term stock market movements. These three concepts together can lead to behavior that is profitable in the short run and destructive (even to the company itself) in the long run.

In our new book, we make the case that “reputation is the new bottom line.” Not because the financial bottom line will go away but because companies will feel ever more pressure to meet the needs of their community and stakeholders. And stakeholders will judge by more than just short-term profits.

Ultimately, you (and we) are asking for a different set of rights and obligations around ownership of assets. I’m all for it. And I’ll keep beating the drum over here with my own American accent! But don’t single out the trolls. It’s not fair.

Mary

Andrew Watson 06.23.10 at 5:38 pm

Thanks Mary. That’s a good perspective. I don’t blame trolls, I just think that we have so many problems to solve in the World, it seems wasteful of time and talent to spend it playing an arbitrage game trading possible high legal costs versus the cost of a license. It is frustrating and damaging to real businesses. And, at least to date, its uniqueness to the US market is created by all the features that make litigation a low risk pursuit in the US.

Flipping around, I agree with your point on reputation. Nir Kossovsky was excellent on the same point at IPBC and I was alluding to the point in questioning the reputational value, or damage, of trolling to the US as a country. Surely there is a way that trolls can be rewarded, taking your point above, that does not involve $50bn of wasted legal costs annually to fight it (according to Dan McCurdy anyway). Like the damaged reputation of my country post BP (see below) reputation is a core part of long term value for people, businesses and even countries.

Andrae Muys 06.24.10 at 3:42 am

In the case of dedicated NPE’s (as opposed to out-of-field NPE’s alla Amazon’s patent on social networking), can either of you suggest any way in which they benefit from a reputation as anything but vicious rapacious cutthroats? In the absence of such a motive, to appeal to reputation is to beg the question.

We aren’t discussing the merit of the patent-system itself, but rather the economic inefficiency and social damage of unalloyed rent-seeking in the patent-system. So Andrew, having had a couple of days, what’s your preferred fix to the problem of patent trolls?

Andrew Watson 06.24.10 at 8:07 am

Great question. I have a few currently unstructured thoughts that focus on how to solve the very-variables (ie litigation uncertainty), the very-certainties (ie litigation costs too much) and how to bring a degree of independence to the whole area (ie somehow rating the relative importance of the technology that is represented by the each respective patent). I don’t want to deprive good patents (whoever holds them) of a fair reward but a degree of independence would be at the core of my thinking. I’ll think more on it.

Nick White 06.25.10 at 10:09 am

A seething Geordie! I hazard a guess that they were not aware of the imminent danger they were in!

This is a very emotive area but it is not as black and white as it may look and the reality is often clouded by the emotive language used, commercial politics and the US effect. Just reflect on some of the issues here Andrew and come back into the fold. You were not wrong and you don’t owe Slashdot an apology.

NPEs are a good thing. All Patent Trolls are NPEs but the corollary is certainly not true. It really suits the anti-NPE movement to tarnish all NPEs with the “Patent Troll” brush. The anti-NPE lobby has an agenda and it’s clear. They want to be the only effective patent game in town. They shout “Patent Troll” at every NPE that tries to assert a patent that they would rather ignore.

NPEs cover a wide range of entities from lone inventors even to “parts” of Intellectual Ventures. We have Universities in the mix, research trusts, charities and every single corporation that has a redundant and unpractised patent portfolio up for sale/licensing. The vast majority of NPEs have something of added value to offer in addition to their patents; real know-how and technology packages.

Within this broad Church there are a variety of NPE behaviours and activities in the market. What you see with Patent Trolls is extreme behaviour, which utilises a simple focused form of value extraction. They do not go through any preliminary value extraction processes they go straight for the jugular in the US courts because that works in the US. Many of these Patent Trolls ONLY acquire patents where there is a known US infringer; all other patents are worthless in their eyes. See this post, which also relates to your concerns about Patent Freedom; is it a Patent Troll? (More below). http://tinyurl.com/34vadjs

It’s no accident that the accents you were hearing are US accents. The US patent system produces plenty of dubious US patents, has a costly and unpredictable patent litigation system, a blame culture with punitive damages and a winner/loser dynamic. It’s no wonder that almost 100% of the Patent Troll activity is in the US it’s ripe for this extreme NPE behaviour. Not so elsewhere.

Having said that there is another dynamic at play here where even Patent Trolls have a valuable role. Frankly, for more years than I can remember there has been a major imbalance of power in the world of patents. Major global corporations or large practicing entities (LPEs) have had a disproportionate number of patents in their arsenals (note the language of war) they have had (and still have) the ultimate nuclear IP deterrent, namely the Mutual Assured Destruction (MAD) patent arsenal. The lone inventors, SMEs and even large Universities may have had patents but these did not equate to a nuclear arsenal so they had no serious effective mechanism for impacting the LPEs. What was the consequence of this? Exclusion. The LPEs largely ignored the valid IP of smaller players because they could. NPEs and Patent Trolls in particular have changed this landscape and that is a good thing. For many it is now worth considering patents as being something of potential value.

You refer to the Patent Trolls as having some minor legitimacy in regard to the small inventor. The numbers are not small here. See this link http://tinyurl.com/3ywtb9n. The most striking element in this analysis is that 50% of NPE litigated US patents came from small inventors. I doubt these inventors would have seen any reward through direct interaction with LPEs. It is only when the Patent Troll has a place at the table that we see some levelling of the playing field. But it’s war so it’s ugly. It’s asymmetric war so it’s very ugly.

So who are the anti-NPE lobby? They are largely the self-same LPEs with their MAD arsenals. Some go public about their anti-NPE stance and then embarrassingly sometimes get it wrong http://tinyurl.com/2vbyvp7. Others hide behind organizations such as Patent Freedom (I love the irony Patent Freedom for who?). Do we know who the companies are within the Patent Freedom fold? No it’s a secret cartel of LPEs who have one objective and that is to nullify the impact of NPEs on THEIR activities. You are alarmed at the fact that Patent Freedom sells to NPEs. I’m not as that has always been the case once they have extracted maximum value for THEIR members. The big problem here is lack of transparency. Who is in the fold, what are the patent pools and who has the licences? It’s a very murky area and as in days of old the smaller operators are effectively excluded from the club. This lack of clarity is a serious problem for SMEs in commercial decision making. The figure of $50 billion is just plain ludicrous.

I have no great love for Patent Trolls but equally I have no great love for LPEs that knowingly and flagrantly ignore the IP rights of others. I have even less love for secret anti-competitive clubs. Let’s leave them to slug it out in the US. Everywhere else NPEs are the future, which brings me to Intellectual ventures. IV is a unique entity and just like LPEs will show some extreme NPE even Troll like behaviour on occasions but does this look like a Patent Troll to you? http://tinyurl.com/37rrq7b. Also IV actually creates IP. It is arrogant of the anti-NPE lobby, largely LPEs, to believe that they are the only legitimate source/custodians of worthwhile ideas. Slashdot eat your heart out.

There is a lot going on in the global IP ecosystem at the moment; it’s an exciting time. We have a growing open innovation ecosystem, patent reform, emerging knowledge economies, aging first world economies struggling to define their future and even the European Commission thinking about creating a European market for IP http://tinyurl.com/2f2tcae. The US LPE/Patent Troll scuffle is a US sideshow let’s just treat it as such.

Regards

Nick White Tangible IP

Andrew Watson 06.25.10 at 5:56 pm

Nick. Good to hear from you. As ever strong in your views. Broad church or otherwise this is not a creative force at work. It is a very inefficient system for levying a tax. Even if tax is justifed, it should be fair, and fair by reference to some measure other than the alternative of spending $4-6 and rising (I heard $7.5m in the central district of California) on legal fees. Objectivity is missing. Trolls (like any other parasite) will always tag onto a growing market as will all other forms of unwanted cost. Its the inefficiency of the market forces that annoys me.

I agree that there are many many good and creative forces at work inside the IP system. IPBC was excellent in this regard. People making genuine and worthwhile attempts across the board to create real value and transparency. Lots of good and new perspectives and a lot of new friendships and alliances built. Too many positives as you say to feel too down at the NPE debate but you know me well enough by now Nick to know that I say what I feel.

Andrew Watson 06.25.10 at 5:59 pm

BTW, my apology stands!

Nick White 06.28.10 at 10:40 pm

Andrew, keep on saying what you feel; I would not want it any other way! Passion about IP is always good as far as I’m concerned.

I know exactly where you are coming from but it is really important to separate Patent Trolls (a US phenomenon) from NPEs (pervasive globally and the future). We can condemn Trolls but let’s make sure we don’t kill the golden goose here.

Patent Freedom pushes hard on the broad NPE definition and the view that all NPEs are bad. We must counter that position, because it is wrong and is damaging to the emerging NPE market where real positive value can be achieved from technology licensing and transfer. It suits major patent holders (LPEs) to stick with this broad NPE definition. We are moving into the age where ideas can be developed, captured and traded by ALL. It’s a paradigm shift. The business of invention.

In my view the LPEs (with their MAD policy) are as big a problem as the Patent Trolls. There is many an SME that cannot move in some markets due to the massive dominance of LPEs with their large patent portfolios. You know as well as I do that the majority of the patents in these portfolios are probably junk. Boiler plate applications drafted using BPO services on a never mind the quality feel the width approach. An SME presented with a 500 patent FTO problem just can’t afford to work out which 5 patents are the real problem. So masses of junk patents are distorting the market. That’s a real tax not the litigation costs for LPEs with deep pockets….who are infringing valid patents in the main!

Slashdot’s perspective on IV is just wrong; the blog is so inaccurate it is embarrassing. They understand zilch about what IV has done and is doing and just jump on the Patent Troll bandwagon. As you said in your original blog “To call Nathan or IV a troll is incredibly simplistic”. You were spot on there.

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