Submitted by Forbes’ Timothy B. Lee has dug up a remarkable piece of history regarding IBM and Sun Microsystems that’s an almost one-to-one copy of the situation between Microsoft and Android. Thirty years ago, IBM knocked on Sun’s door. We’ve got some patents, IBM said. Please pay up.
We’re talking the 1980s, and Sun is still a relatively small start up. Gary L. Reback is a lawyer at the company when fourteen IBM employees in blue suits show up at Sun’s doorstep, carrying with them seven patents they claimed Sun was infringing upon. The IBM men, dressed in dark blue suits, held a presentation about the seven patents. Sun’s employees present in the conference room, people with engineering and law degrees, were stunned. Sun confronted the men from IBM: “Only one of the seven IBM patents would be deemed valid by a court, and no rational court would find that Sun’s technology infringed even that one.”
An awkward silence ensued. The blue suits did not even confer among themselves. They just sat there, stonelike. Finally, the chief suit responded. “OK,” he said, “maybe you don’t infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?”After a modest bit of negotiation, Sun cut IBM a check, and the blue suits went to the next company on their hit list.
This is the story as told by Reback himself, on Forbes’ website, back in 2002. This story was dug up by Timothy B. Lee a few weeks ago, but I decided to keep it in the queue until the patent news had died off a bit. In any case, the similarities with the current Microsoft v. Android are tantalisingly similar.
“[Microsoft is] visiting Android licensees and giving the same sales pitch Reback remembers from a quarter century ago. ‘Do you really want us to go back to Redmond and find patents you infringe? Or do you want to make this easy and just pay us?’ Once again, many of the targets are writing checks to make the problem go away,” Lee notes.
As far as I’m concerned, this should be criminal behaviour. It’s quite clear that Microsoft is abusing the patent system to fight Android, instead of actually competing on merit. This is quite infuriating to those of us who want competition to be fair and honest – instead of companies abusing patents (software patents, no less) – to block others from entering the marketplace.
You may wonder why politicians in the US are oh so relatively silent about this issue – even though it’s become quite clear that especially software patents hinder competition, and constitute the biggest threat to the technology world. Well, as Reback explains – the USPTO is actually a cash cow. And which politician is going to kill a cash cow, especially now that the US is utterly, utterly flat broke?
“During the first Clinton Administration, for example, USPTO Director Bruce Lehman attempted to deflect criticism of the USPTO’s practices by traveling around the country with a chart showing precisely how much revenue the USPTO raised for the federal treasury,” Reback details, “Lehman’s approach shocked many in the technology community. ‘It’s like he’s bragging about the amount of money he brought in selling plots of land in Yosemite’, marveled a Silicon Valley executive.”
“Worse, Congress recognized in the patent system a revenue source and began lifting a portion of USPTO fees to subsidize profligate spending,” he adds, “The USPTO became the federal government’s cash cow.”
It would appear that not only is the US patent system a huge threat to the technology industry, it has also firmly entrenched itself as a cash-generating institution no “sane” politician would butcher in the current US economic climate. It would appear that the patent system will continue to harm innovation in the technology world for a considerable amount of time to come.
I’d like to see actual numbers on that. According to the IRS, the 2009 FY budget was financed by roughly 50% taxes (income, social security, medicare, etc) and roughly 40% borrowing. The rest is excise fees and the rest, & I know from experience that immigration fees are steep, because USCIS is required to operate in such a way that immigration fees pay for the processing of the corresponding forms.
So unless I see real numbers, I’d guess that USPTO provides a fraction of a percent of income to Uncle Sam. That doesn’t sound like either a cash cow, or a reason not to reform it.
(This doesn’t mean that they don’t — I just want to see the numbers.)
Yeah, I’m no fan of software patents, but the idea that the patent office supplies any kind of significant revenue producer seems a bit far fetched. If so, they should increase their fees. We could use it, and it might not be a bad thing if it caused less than meritorious patents from being issued.
But the exact opposite would likely happen – more patents would make it through the review process because even the less meritorious would be worth giant sums of money to the government who runs the USPTO in the first place.
Only extremely rich corporations would afford it, and having a monopoly on every idea that they can push through the patent office would essentially eliminate competition completely.
Yeah that makes a thousand times more sense. I hope my brain returns from vacation soon, these mental farts stink.
You’re thinking large scale.
People operate on a more local scale.
The USPTO itself sees patents as a revenue source for its employees. No different than police or anti drug squads like anti-drug laws.
Then the ‘profits’ of the USPTO go to some program or group that gains an interest in it and it gets hard to cut. No different than red light camera or speed traps being used for city funds.
Note that comment about the USPTO as a profit center was made in 2002.
Brad Smith of Microsoft has been arguing since at least 2005 that PTO fees should remain with the PTO – effectively ending the federal government’s fiscal interests being served by printing patents. See http://www.microsoft.com/presspass/exec/bradsmith/03-10-05aeipatent… .
This has been incorporated into the America Invents Act (2011.) See http://en.wikipedia.org/wiki/America_Invents_Act#USPTO_practice_cha… (second point.)
Because you think software patents should be non existent… not because they did anything wrong.
You qualified the first statement with a “As far as I’m concerned” but failed to do so on this one. They are not abusing the patent system. Patents were meant solely to give its creators an opportunity to benefit from their creations.
Actually, what they are doing IS fair and honest. You may not like it but that does not make it unfair or dishonest.
YOU might wonder but the reason why they’re quiet is the same reason why they don’t debate the price of tea in China.
No they don’t.
Forgot to qualify that with an, “in my opinion”.
This country is in massive debt but it does NOT have a revenue problem but rather a spending problem. You can thank Obama for that.
If it stifled fair competition then sure they would but it doesn’t. It allows companies to earn their just reward for their creations.
Again… in your opinion.
…in your opinion.
(:P)
Not really. Obama has contributed more to the federal debt than any other President – including both Bushes. From some estimates, the debt added by Obama already exceeds the debt of several Presidents combined; and at the very least the debt accrued during his first two years exceeded the debt accrued by the second Bush during Bush’s entire 8 years.
Revenues (e.g. taxes) this year have been noted to already exceed expectations. Income is not much of a problem except for some entitlement programs (e.g. Social Security, Medicare, Medicaide), programs that depend on a high receiver to payee ratio – a ratio that is quickly falling and will only get worse.
War Debt has also not been a very big contributing factor. The big issue is all the entitlement programs that will start ballooning in cost over the next decade, as well as the existing debt.
The Federal gov’t try as it might simply cannot always operate in the red. Congress needs to be responsible (there’s an oxymoron for you) and work towards a more financially stable position.
And yes, in all the debt talks of late, Obama and the democrats have been quite far off-base in their method of tackling the issues.
[Sorry for all the OSAlert readers who don’t want to talk politics. I’d really rather make this response offline, doesn’t look like that’s possible
]
In a typical recession, we’d expect unemployment to jump up meaning fewer people paying taxes. Those that still work are subject to wage compression, so don’t pay those higher marginal rates. Companies make less money, so corporate tax receipts fall. Capital gains give way to capital losses. So we’d expect revenues to be less than they otherwise would be in a healthy economy. Note this is not the same as “expectations”, which can be essentially any value.
On the other side of the ledger, we’d expect that more people will become eligible for some form of assistance – housing, tuition, health care, unemployment, etc. Some people will retire and commence drawing on existing programs. This happens (to some degree) without any legal or policy change.
So the question (IMO) is how large the piece of the deficit is caused by policy changes and new spending. Since Obama inherited a deficit and the above factors would grow it naturally, to the extent an Obama-initiated “spending problem” exists it’s not the entire deficit.
Thus far I haven’t seen any good data on the volume of additional spending policies, just media soundbites from the GOP about how there’s a spending problem. I’d really love to see more convincing data here before concluding that large deficits necessarily imply excessive spending growth.
There is so much confirmation bias in all of that – it signifies a lack of discipline. You should check your facts before you stake your reputation on that kind of rant.
Actually, no.
http://en.wikipedia.org/wiki/Copyright_Clause
Patents and copyrights were both actually meant “To promote the Progress of Science and useful Arts”.
Right now, copyrights on software do no damage (and it is only fair that everyone should do their own work), but software patents OTOH are being used to eliminate competition and erect a very high barrier to entry into the market for provision of software, and thereby they actually hinder the progress they were meant to promote. Software creators are not able to enjoy any benefit, they mostly just get sued, often by patent trolls, and they have to pay up. Software patents are clearly an un-necessary economic cost, borne by everyone except patent lawyers.
http://developersagainstpatents.org/
http://en.swpat.org/wiki/Insurance_against_patent_litigation_doesn‘t_work
http://en.wikipedia.org/wiki/Software_patent_debate
http://fsfe.org/projects/swpat/swpat.en.html
http://en.swpat.org/wiki/All_businesses_are_targets
Edited 2011-07-26 02:58 UTC
Of course, you can’t quantify that “very high barrier to entry” because it’s largely theoretical for most people developing software.
I finally figured out what is wrong with Jennimc. He/She is a Republican. Only a Republican could blame our current fiscal problems on Obama and not mention the glutinous spending by the Reps for the previous 8 years. Remember, we actually had a budget surplus when Clinton was in office. Now it all makes sense.
We have enough fodder to argue over without bringing political party affiliation into this… I mean no offense by that, just saying it will only lead to off topic bantering that we will all have to wade through to get to the useful stuff.
No, I think quite a few true scotsmen would as well. The truth is everyone is wrong about economics, politics and religion. If you want to argue that go somewhere else.
There was only a budget surplus during Clinton’s administration b/c (i) they started borrowing money from the Social Security coffers, and (ii) the economy was very active.
Since 9/11 the economy has pretty much been in the tank. Needless to say, Obama has done more borrowing in his 2-3 years than Bush did during his entire 8 years.
Uh…
http://www.theatlantic.com/politics/archive/2011/07/the-chart-that-…
As for the rest of your post, Microsoft did not create Android. So your whole argument about creators profiting from their works is a load of crap. Even pro patent people admit the current system is screwed up, I don’t see how you can argue otherwise. As for software patents, well, software is a written media and there for should be ineligible for patent protection. It is also a form of math which is also ineligible for patent protection. How a judge thought that software deserved patent protection is beyond me.
Jennimc,
“Because you think software patents should be non existent… not because they did anything wrong… They are not abusing the patent system. Patents were meant solely to give its creators an opportunity to benefit from their creations.”
Excuse me? You really think ethical companies should go around saying “maybe you don’t infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?”?
This behavior is clearly unethical. It’s not much different from hypothetically corrupt police charging a man saying “Ok, maybe you didn’t break this law, but we have thousands of laws. Do you really want us to go back and find laws that you did break? Or do you want to make this easy and just settle right now?”
I shouldn’t have to spell out why this is wrong.
“Actually, what they are doing IS fair and honest. You may not like it but that does not make it unfair or dishonest.”
Just like when the mafia sells protection.
“No they don’t.”
Patent monopolies, by their very nature, are designed to block open competition for the duration of the patent. You can be for or against this monopoly, but you cannot deny their nature.
“If it stifled fair competition then sure they would but it doesn’t. It allows companies to earn their just reward for their creations.”
Just being pedantic, but the patent monopoly is not intended as a “reward”, but rather as an “incentive”.
Again monopolies are the opposite of competition, that is in fact the main incentive. There’s no denying that for the duration of patents that they do in fact stifle competition.
In your opinion this monopoly may be warranted, but some people have the opinion that the free market solution is better.
If you want to talk about how competition is affected after patents expire, then feel free to start that debate.
Edited 2011-07-26 03:45 UTC
It may be true that Thom (and others) believe software patents should be non-existent, but that isn’t what makes this “wrong”. What is wrong here is sending an army of lawyers to your competitors demanding money to protect them from you.
It is called extortion and it is illegal. The patent system and all of it’s “issues” are not the direct cause for this type of misconduct, but it certainly acts as an enabler.
I’m not claiming that what Microsoft is doing with Android is the same thing – I don’t know. I DO know that if the characterization of what happened between IBM and Sun is accurate then they committed extortion – that is in fact a text-book example of it.
That is not at all what they “were meant” for. That might be the reality of things now, but that is absolutely not the intention of the patent system. What patents “were meant” to do is provide a mechanism for valuable trade knowledge to become public knowledge (eventually). Providing government granted property rights is simply the mechanism to achieve that goal – it is not and never was the goal itself.
The problem is most patents simply don’t contain any valuable knowledge – some do, but most are simply stupid and useless. IBM’s “Thick Line” patent is a good example of the later. IBM gets all the benefits and society gets nothing in return.
How is extortion fair or honest? What planet are you from?
I actually agree with you on the first sentence, but the list of people to thank for that is as long as my arm…
So IBM deserved 20 million dollars to “go away”? Because it is very obvious they were not paid for their patents – Sun didn’t believe they were valid (with the possible exception of one). Sun paid to avoid having to pay for a lengthy law suit, not for patent licenses…
You have a system where those with money and power (patents) can use their money and power to coerce smaller competitors into paying them money – the only alternative is to pay even more money to defend yourself in court. Sounds like extortion to me. Just because companies get away with it does not make it legal. To be clear Im not making a morality case here – it is illegal to do this. The problem is just that it is really really hard to prove extortion, more so when lawyers are facilitating it – they tend to know how to do it without getting caught (i.e. RIAA).
+1 on knowing the history of the patent.
I actually leave my comment score threshold low just so I can see comments like yours.
I mean you must surely be trolling right? Nobody could possibly defend the software patent laws in their current form.
Thom did not have to preface his statements with “In my opinion”, because he was making a statement that most right-minded folk would automatically agree with. I mean if I say “murder is wrong”, you would not expect me to have to preface that with “In my opinion”.
With regards to Obama being responsible for US debt. You might want to do some research into where US federal funds are being spent:
http://tinyurl.com/3lcu6ch
You can thank George Dubya for the current US financial $hitstorm. Although Obama is partially responsible for not ending the single largest sink of funds the US has ever seen.
Thanks for that link. Interesting.
My pleasure. Was a real eye-opener for me.
IBM sued Sun several times. Another time Sun got nearly bankrupt. It was over a trivial patent of RISC cpus. James Gosling (creator of Java) explains that is the reason Sun started to collect patents everywhere. Among the Sun engineers there was an internal contest to get as silly patents as possible.
Sun started to collect patents to be able to defend themselves when IBM and Microsoft and other evil companies sued Sun for easy money over silly patents. Sun used patents for defending, not to be aggressive and collect easy money. Sun had tons of patents. Maybe that is one of the reasons Sun went out of business? To be nice is not good in business. For instance, NetApp sued Sun for ZFS. NetApp was really afraid of free ZFS that threatens NetApps expensive Enterprise servers.
Interesting story by Gosling:
http://nighthacks.com/roller/jag/entry/quite_the_firestorm
For instance, CEO John Schwartz wanted to open up Solaris, but there were some closed bits so Sun had to pay 90 million USD to be able to open up as OpenSolaris.
Edited 2011-07-27 23:24 UTC
Real areas of blame: It’s really big business and the concept of lending money to people who can’t pay it back.
Sure, G W Bush did nothing to end the situation that outside observers knew was going to end badly, but neither did any of the presidents that came beforehand. And neither has Obama as far as I know, despite it having ended badly.
Yes they are. Not because they are asking to pay for a particular patent, but because they are demanding to validate their whole patent portfolio because of a small subset of patents.
I’ve seen these deals, they prohibit lawsuits to invalidate any of the patents. Once you sign the licensing agreement, you are going to pay regardless of validity or future invalidation of the patent(s).
In this particular case, it’s honest but definitely not fair. When they geographically limit their patent licensing terms, then it’ll be fair.
I’m pretty sure that they do debate on why China’s yuan is so cheap today…
Technically, it’s in the definition of a patent – “a government granted monopoly”
And what, your last president was a very light spender? 700billion to the banking industry with no strings attached…
The mere existance of software patents in & of itself is wrong.
Holding a patent doesn’t mean that you actually created anything here in the U.S.
No, it’s neither fair nor honest. It’s really the stuff that bullying is made of.
They’re quiet because it would create a burden of money, manpower, & an overload of bureaucracy in the form of committees & commissions with endless studies & debates before anything will change. None of which would ever come to any benefit in a timely manner.
YES, software patents DO hinder innovation. Innovation normally doesn’t come from major companies, they come from smaller companies. In order to keep from being upstaged, larger companies use lots of tricks to keep the smaller companies from getting a leg up & software patents are the latest craze. Surprise! Surprise! This also works against other major companies, because the more you have, the more you fear that you’ll lose.
Wow, you really don’t seem to have a clue. Don’t blame the guy who’s trying to fix the problem that he inherited. Clinton gave Bush a country with a surplus of funds. Bush used up the funds & gave Obama a country with a massive deficit. The huge deficit didn’t just magically appear when Obama showed up, genius.
Hey brainiac, the problem is that companies are receiving patents that shouldn’t be valid & using these to beat up on other companies. It doesn’t matter if you actually invented anything, our patent system will give you all types of dubious patents. There’s also the case of companies who’s business model is to generate revenue almost solely from buying patent & then squeezing other companies for “protection” money.
(For those who don’t know, protection money is money paid to thugs & crooks so that they don’t cause physical harm to you or your place of business).
When it’s actually happening, it’s not an opinion.
P.S. Before anyone attempts to call me a traitor or someone who’s bashing their own country, I’ve earned the right to call it like I see it. I’ve recently finished serving my country for the past 14yrs. So, before you point fingers, I’ll ask you this, “What’ve you done for your country lately???”
I hear this absurd overgeneralization repeated so many times, but it doesn’t make it any more true.
It’s pretty simple. In the broadest of terms, you have a software program consisting of executable instructions. It can be shipped to customers in two ways: as software either binary or source, or burned into an integrated circuit as firmware.
It’s the same software performing the same business method covered by the same patent.
For some implementations a hardware solution is the preferred method because it will run faster, such as say a hardware SSL accelerator. If on the other hand, it is more important to be easily modified/upgradeable than it is deployed as software.
If you are saying that software patents should not exist, are you also saying that patents on integrated circuits should not exist?
http://jonathanischwartz.wordpress.com/2010/03/09/good-artists-copy…
but I suppose already see this one
In the article or any of the link in the Tim Berners Lee article is there any indication that Microsoft are using IBM’s technique … they maybe doing that … but all I see is that certain companies signed a deal … nothing more.
Lets not claim things as fact when we don’t actually know.
Edited 2011-07-26 15:19 UTC
Actually, that is part of the problem. We know now from the Barnes and Noble lawsuit that Microsoft is doing this. Microsoft normally includes an NDA in all agreements to keep its image clean. There are also reports that Microsoft was doing this with Linux to its customers for some time. At least one of these reports came from Chris DiBona of SAMBA fame. He wouldn’t say what company it was, but he is a fairly well known and trustworthy source.
So the long and the short of that is … we really don’t know??
Err…
the writer is is NOT the Tim Berners-Lee. Different person (the picture is a dead give away).
Edited 2011-07-26 16:32 UTC
For some reason I did Tim B. Lee as Tim Berners Lee …
This is extortion. Is this punishable?