Is There Still A Big Loophole For Software And Business Method Patents?

from the just-add- dept

I've been talking to plenty of people (mostly lawyers) about the Bilski ruling on software and business method patents while also having more time to reread the discussion in detail, and I'm going to backtrack on my original assessment. I should have known something was wrong when I wrote that CAFC may have gotten something right. They so rarely get it right, that I should have known better.

Some of the good news, I still stand by. The court clearly limited the scope of software and business method patents. It rejected using the standard set forth in State Street in most cases. Some people are saying that since the court didn't completely reject State Street that this is not the victory I thought it was. On that, I disagree. As I said in my long post about the filings in the case, I thought an outright rejection of State Street that carves out a special exemption for software and business method patents is a bad idea. Instead, I'm in favor of a much more stringent standard for anything to be patentable. So, I don't have a problem with the court keeping State Street, but establishing a more stringent standard -- exactly what it did. I recognize that many folks who are focused on software patents really wanted a carveout exemption, and to them, this is a loss -- but I'd argue that it's better to have a more general standard than trying to carve out exceptions.

The part that I'm a little more concerned about is the loopholes that appear to have been left by CAFC in the decision. I was on a conference call with some of the lawyers who filed briefs (in favor of stronger patent protection), and they were spinning the ruling to be in their favor as much as possible -- but it became clear they were only doing so via loopholes. Specifically, they seem to think that as long as the software works on any device it qualifies for patent protection under the new test. In other words, they seem to be saying that so long as you add the words "on a computer" to a claim, then you're all good. In fact, when one reporter on the call (Joe Mullin) asked what sorts of patents this would impact, and after a moment of silence one of the lawyers blurted out that it invalidated Bilski's patent (the patent at the heart of this case) and that would be about it. Other lawyers basically said that it would only eliminate poorly written patents, which they seemed to define as those that failed to include that sort of "on a computer" language.

I don't think this is the actual intention of the ruling, and it will be interesting to see this tested -- but it's troublesome that already there's this huge loophole that many lawyers see. It means the court didn't do a very good job in actually establishing what the rules are for patents, and that's a problem. It will also be interesting to see if the "and on a computer" claims still get thrown out thanks to the earlier Supreme Court KSR ruling which limited patent claims that simply combined two obvious things.

Still, in the short term, I stand by my assessment that this is a ruling in the right direction. It's not a full rejection of software or business model patents, but I think that's for the best in the long run. It's better to create proper overall rules, rather than trying to carve out exemptions and creating a patchwork of rules. However, I'm still worried about the loopholes, and how quickly lawyers with tons of patents seem ready to leap through those loopholes.


Reader Comments (rss)

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  1.  
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    angry dude, Oct 31st, 2008 @ 9:53am

    Oh boy

    Mikey is in the mood today
    Drivel after drivel

    I might need an extra beer today to calm myself down
    hell, I might even need vodka

    Whta the f888 is wrong with this country lately ???

     

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  2.  
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    Michael Feigin, Esq., Oct 31st, 2008 @ 9:54am

    Much better post

    This post today is much better than yesterday's. As I wrote in my own article (http://patentlawny.com/index.php/business-method-patents), which I also had to update after thinking it over for a bit, this case is very unclear. Bilski was a method not tied to any structure. The old test gave little guidance. The new test, while giving guidance on a claim like Bilski's, does not give guidance when it is tied to structure. If I modify the display on a computer screen, isn't that tied to a machine and making a transformation of a physical article? Every time a new case comes along, we will have to keep re-examining the test and rewriting it.

     

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    Lonnie E. Holder, Oct 31st, 2008 @ 10:03am

    KSR & Loopholes

    Mike:

    KSR is okay, but another case that might be even more relevant when adding "and on a computer" is Leapfrog v. Fisher-Price.

     

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  4.  
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    Anonymous Coward, Oct 31st, 2008 @ 10:12am

    Re: Oh boy

    anything useful to say? or just the standard whining?

     

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  5.  
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    Honza, Oct 31st, 2008 @ 10:40am

    lawyers can say that black is white

    What? How about that "it is tied to a particular machine or apparatus" thing? Does it not mean that the patented thing has to be related to something physical that is new or working in a fundamentally new way? As far as I know that is basically how it is supposed to work in EU.

    What I mean... the fact that the thing runs on a computer does not mean anything - computers in general are old and if it can run on any old computer there is nothing to be patented. If the idea "it runs on physical computer -> it is patentable" is accepted then anything will be patentable as long as you create a computer representation of it. Pure ideas, mathematical algorithms, business models... absolutely anything can be run on some hardware and displayed on a screen of some computer. Even Bilski's rejected method of hedging risks in commodities trading could be run on a computer if Bilski formulated it properly - it would be just technicality; is that all that matters these days?

    Sometimes I think that lawyers can twist anything in its exact opposite and there is no justice - the guy with more money to pay lawyers wins. Kind of depressing:-(

     

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    Jesse, Oct 31st, 2008 @ 10:43am

    How does that work with business model patents?

    "I wrote the business model down on a computer..."

     

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    Mike (profile), Oct 31st, 2008 @ 10:44am

    Re: lawyers can say that black is white

    What I mean... the fact that the thing runs on a computer does not mean anything - computers in general are old and if it can run on any old computer there is nothing to be patented. If the idea "it runs on physical computer -> it is patentable" is accepted then anything will be patentable as long as you create a computer representation of it. Pure ideas, mathematical algorithms, business models... absolutely anything can be run on some hardware and displayed on a screen of some computer. Even Bilski's rejected method of hedging risks in commodities trading could be run on a computer if Bilski formulated it properly - it would be just technicality; is that all that matters these days?

    Yes, exactly. This is EXACTLY what some of the lawyers I spoke to implied. Their point was, literally, that the ONLY problem with Bilski's patent was that it was *written* improperly. If it had been written better, they claimed, it would have been fine.

    That's why that loophole is ridiculous.

     

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    Michael Feigin, Esq., Oct 31st, 2008 @ 10:47am

    Response to Honza

    Read what the case says - I put some quotes on my website (follow the link by clicking on my name).

    This is how we've been patenting software since State Street thanks to the tests we've been provided. Software isn't patentable, but a computer implemented method, or instructions readable by a computer for carrying the steps of X, Y, and Z is patentable.

    That being said, I do partially agree with your arguments, but if you're method is new and unobvious, I would say, whether it runs on a computer or you do it with a paper and pencil should not be a factor. Methods are patentable and have been since Jefferson. Now, if you're method is obvious, that's another story... but don't say it falls out of the type of thing which can be patented.

     

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    GrammarNazi, Oct 31st, 2008 @ 11:01am

    Re: Response to Honza

    You're a lawyer. At least TRY to be literate. There is a very large difference in meaning between "your" and "you're". Or perhaps you're not a very good lawyer, and really have no business commenting on specifics of language when you can't even get your own right.

     

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    Michael Feigin, Esq., Oct 31st, 2008 @ 11:02am

    Response to Mike

    Exactly right! The case clearly says:

    We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine. - Page 24


    That being said, I do not think it was their intention to just get rid of any "software" patents. They are trying to get rid of "bad" patents and trying to come up with a test that will work to do so, but it doesn't make much sense. My guess is this is what they needed to do to get a broad consensus of judges. They also say they know the Supreme Court will likely disagree with them.

    That being said, I can't say I could draft a better test and I challenge anyone to try and do so. How do you differentiate between "abstract law of nature" and a "patentable process" when all processes are based on laws of nature and we're really arguing about what degree of abstraction is enough.

     

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    Michael Feigin, Esq., Oct 31st, 2008 @ 11:03am

    Re: Re: Response to Honza

    My bad, G'Nazi.

     

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    Honza, Oct 31st, 2008 @ 12:34pm

    response to Michael Feigin, Esq.

    Thank you for your response. I have red the article on your website and I am afraid that I have to point out fundamental flaw I see in your arguments.

    You quote Justice Mayer (>>Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development. - Page 112) and your reaction is "SO WHAT? [...] Life isn't always fair and it's not the job of the patent system to deny a right to one group and give to another simply because the cost vs. return is different for one group compared to the other."

    That is the problem. There is no such a *right*. It is a privilege - and it should only be granted to those who would not have any other incentive to invent. That is the point - patent law is supposed to support innovation... which does NOT mean it has to support all innovators by giving them patents. There is no need to give artificial monopoly to inventors who do not need it to compensate costs of inventing - in cases like that negative consequences of such a monopoly would outweigh the positive effect for society... which would be close to zero because with such a low costs of innovation someone would have invented it anyway.

     

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    Michael Feigin, Esq., Oct 31st, 2008 @ 12:56pm

    Re: response to Michael Feigin, Esq.

    I think you make some good arguments. I can't say I agree, but you could say even better - the constitution (Article I, Section 8, Clause 8) provides patent protection "To promote the Progress of Science and useful Arts." If it doesn't promote progress, forget it, right?

    However, you then say we shouldn't give patents to people who "would have invented it anyway." Proving they would have "invented it" anyway verses taking it public are two different things. An inventor may not bother if there's no money in it. In fact, I know they won't. I have done Novelty Searches that have turned up negative (meaning, couldn't get a patent on it because it's out there already). So the inventor gives up or does something different. I've had plenty of long conference calls with startups in determining how we can get patent protection and what if they try this or try that. It is precisely the process that energizes them to move forward and seek out new territory... that, and they can have a limited duration monopoly.

    Lower cost... maybe. Low cost... no. A patent will still run you $10k minimum before you're done and starting up a business and marketing an idea will run you 100k minimum.

    If it were really a point of negative consequence, yes, but I don't think that's the case in most instances. Remember: if the patent is really lousy (i.e. the bathroom reservation method), you're probably not going to make any money on it anyway! That is (or should be) a disincentive by itself.

     

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    Phil Marcus, Esq, Oct 31st, 2008 @ 1:20pm

    Re: Response to Feigin

    I think Mr. Feigin's comment points the way out of the forest.

    The problem is a pure idea should not be patentable. Nor should, say Newton's Laws of Mechanics. The qustion, IMHO, should not be whetehr the method is tied to soemthing physical, a physicla construct.

    We are accustomed to seeing only physical constructs as real. First, if you know any quantum mechnaicns you know that what we think we perceive is not real. Second, why is soemthing consytructed in a realm of ideas less real, or potentially less inventive, than soemthing constructed in a "physical" reralm?

    Why is turning a flange 90 degrees from the usual way and thus making a device more useful inventive, but doing a certain calculation is not? Is not the real question whether what is "invented" is obvious, for example to other business people, other financiers? The laws of nature, that we want to ensure not be patentable, are obvious to natural scientists--PHOSITAs.

     

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    Lonnie E. Holder, Oct 31st, 2008 @ 1:23pm

    Re: response to Michael Feigin, Esq.

    Darn good point you bring up (I knew there were intelligent people on this site - they just needed to speak up).

    Another thing to consider is that the government has already deemed that certain industries (specifically the pharmaceutical industry) gets special favors, opening the door for industry specific rules. If the pharmaceutical industry can get special favors because of the significant cost of developing new drugs, why should businesses get clearly excessive favors for something that requires a couple of bottles of wine and an evening to develop? While I am not in favor of putting a financial test into patent laws, neither am I in favor of allowing all business method patents and software patents.

    A method for propelling a glass sphere comprising a thumb and forefinger, wherein at least one of the thumb and forefinger is oriented to cause the glass sphere to acquire a spinning movement about the line of travel when the thumb causes a propulsive force to be imparted to the glass sphere, causing the glass sphere to be propelled away from the thumb and forefinger.

    Oh please...

     

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    Honza, Oct 31st, 2008 @ 2:05pm

    Re: Re: response to Michael Feigin, Esq.

    >>>An inventor may not bother if there's no money in it.

    This seems that you imply that there are no ways of making money out of your invention without patent protection. That is not true. You have monetary motivation to go public with your invention even without patent protection - it's going to take some time until the others can implement your invention, you will be the first, the smart company with innovative product, a lot of publicity etc. etc... that all means costumers and money. And without paying huge costs of getting a patent.

    >>>So the inventor gives up or does something different.

    ...because they *think* they need patent protection. In many cases they probably don't... but it does not matter. The dogma says they need it so they pay for it or give up. And in fact many times they really need it... not to protect the invention, but to protect themselves against the other patent holders. Software development is incremental and it is almost impossible to develop anything new without using something old (supposedly already patented) - so you have to pay for patent protection just to have some ammo against the other patent holders; wasting resources in this cold war of mutually assured destruction the only winners are lawyers.

    >>>If it were really a point of negative consequence, yes, but I don't think that's the case in most instances. Remember: if the patent is really lousy (i.e. the bathroom reservation method), you're probably not going to make any money on it anyway!

    I meant negative consequences for society, not for inventors. The problem is not when inventor does not make money on lousy invention... the problem is when inventor is granted monopoly for something that would have been invented anyway, because monopoly obstructs competition and thus also obstructs further innovation, raises prices... this all can be reasonable price for invention that would not have been invented without protection but there is no need to pay this high price for something that society would have gotten anyway... most of those business methods or software patents are based on just good (some of them not that good) ideas, nobody had to pay years of research in expensive labs for them and they would have been implemented even without protection... just for benefits I mentioned earlier. I think the price we, as a society, pay for these patents is too high.

     

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  17.  
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    ehrichweiss, Oct 31st, 2008 @ 2:12pm

    Re: Oh boy

    Waaaaaaaaaaaaaaaaaaaaaaaaaaaaah!!!!!!

    Come on, for someone claiming to be more intelligent than the average person, you don't really pull that off that well nor do you appear very mature.

     

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    Anonymous Coward, Oct 31st, 2008 @ 2:24pm

    Re: Re: response to Michael Feigin, Esq.

    "...neither am I in favor of allowing all business method patents and software patents."

    I daresay even the strongest advocates of a patent system agree with your comment. The Bilski et al. case, however, raises a serious and substantial question as to whether or not commercially valuable business methods, per se, and software, per se, can even get through the Section 101 "door" so that they can be examined for novelty and non-obviousness.

    Mr. Masnick has apparently spoken with my counterparts in Silicon Valley and been left with the impression that one or more "loopholes" remain that can be advantageously employed via claim drafting. Having read the opinion in its entirety (majority, concurrence, each of three dissents), I am left with the impression that the so-called "loopholes" would be more accurately characterized if they were referred to as "eyelets".

     

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  19.  
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    Honza, Oct 31st, 2008 @ 3:17pm

    Re: Re: lawyers can say that black is white

    Right now I am reading that article on Patently-O which claims that the PTO Board of Patent Appeals (BPAI) has already answered the question about 'particular machine': "A general purpose computer is not a particular machine, and thus innovative software processes are unpatentable if they are tied only to a general purpose computer." See Ex parte Langemyr (May 28, 2008) and Ex parte Wasynczuk (June 2, 2008).

     

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  20.  
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    Mike's assessment = Strike one, strike two, strike, Oct 31st, 2008 @ 3:35pm

    Mike understands rulings as well as my Barber

    Which Mike do we believe?

    The one which stated that patent law was going back to where it was 30 years ago?

    Or the apology I fucked up assessment and backtrack?

    If you were a real reporter, you would have been fired today.

    But you're not. So it's OK.

    A Baker shouldn't fly a 747. Mike shouldn't provide legal assessments without going to law school

     

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  21.  
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    Mike's nitwit posting pals, Oct 31st, 2008 @ 3:41pm

    Mike's fans = Child molesters, law school dropouts, Asian driving instructors, serial killers, and Anon Coward

    To all of Mike's "Yes Women."

    When a guy with no legal expertise writes a legal blog, this is gonna happen more often than not.

    Mike: Time to step away for a while. Or are you going to stay the course, Arrington like?

    Consider yourself spanked.

     

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    Eclecticdave (profile), Oct 31st, 2008 @ 3:41pm

    Mental Arithmetic

    AIUI the ruling excludes from patentability "claimed process[es] where every step may be performed entirely in the human mind".

    Surely this puts some limits on attempts to create "on a computer" patents. Any process that runs on a general purpose computer can also be performed using mental arithmetic given enough time and patience.

    The term "a particular machine or apparatus" is likely to be interpreted by the courts as meaning something custom designed for the application, as this is widely acknowledged as being the intent of the Supreme Court rulings.

    One can hope anyway ;-) Personally I just hope the EU is looking this way as it chooses how to clarify the patentability of software in Europe.

     

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  23.  
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    Esquirious, Oct 31st, 2008 @ 4:14pm

    Approach the bench - and bend over Mikey

    First, you get hand-fed your initial take, simply because you're a gullible chump, and the losing lawyers cheered you into it, since you're blindly ideological about the fluid body of law.

    Then, you start out a post saying you're now going to backtrack, and proceed to bury your embarrassing delusions and frothing that led to your first complete misinterpretation, with - surprise - more delusions and frothing.

    Mike you just need to change your subject matter. Leave the lawyering, and take up snake-handlin' preaching. More credibility for you, more yearning in that gathering to hear your yammering, more pure entertainment for us, with added kicker that you might die sooner from intaking venom than extruding it. Contemplate.

     

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    Lonnie E. Holder, Oct 31st, 2008 @ 4:29pm

    Re: Re: Re: response to Michael Feigin, Esq.

    Anonymous:

    I agree with the "eyelets" comment. Also note that this court was en banc, with only two real dissents. Ten of twelve judges are clearly for limitations on these types of patents.

    The hand writing has been on the wall for several years that patent protection is being limited. I have no doubt that this decision will be used in combination with KSR and Leapfrog v. Fisher-Price to seriously limit patent scope. Though a practitioner myself, I see these limitations as a good thing, particularly when we go back in the bounds of patent law originally intended by Congress rather than that stretched by trolls, plaintiffs, and settlements.

     

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  25.  
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    Day is Night, Oct 31st, 2008 @ 6:33pm

    Why I hate this blog so...

    Perhaps it's the elitist approach of this blog: The "patent law inhibits innovation" rubbish that bothers me so.

    Perhaps it's the sucking of the teat by less than average men, who blindly agree that owning a patent is naughty--because it is difficult to create something and even more difficult to patent it.

    And these lesser men do not like to work hard. Dare I say they would rather copy and replicate and ripoff than innovate.

    Mr. Masnick forgets the key behind patents: They exist to promote innovation. Protect individuals from corporate greed and laziness. Encourage creation. Reward brilliance.

    Mr. Masnick lives in the Valley. He obtains information from drinking buddies and VC hangers-on. He does not seem to be capable of digesting the information for what it is.

    He merely parrots.

    You, Mr. Masnick, of all people, should thank the Stars above for patents, trademarks and copyrights. Otherwise people like me would simply copy your work, rename it under our own banner, sell advertising to promote it, and profit handsomely from it--without asking your permission to do so.

    However, we would in all likelihood rename it.

    Our title:

    www.MindlessLegalBanter.com

     

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  26.  
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    Back to the mailroom, Lonnie, Oct 31st, 2008 @ 6:44pm

    Re: Re: response to Michael Feigin, Esq.

    Lonnie:

    Idiot. Patents protect dummies like you from greedy businesses who otherwise would steamroll over dummies like you to capture marketshare and leave dummies like you on the side of the road, dead for all to behold.

    Understand the reason behind patents. Try hard. Harder. Even harder...

    ..forget it.

    Dummy

     

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  27.  
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    Lonnie E. Holder, Oct 31st, 2008 @ 7:04pm

    Re: Re: Re: response to Michael Feigin, Esq.

    What are you whining about Dummy? I am a registered practitioner. I see both sides of the argument. Let me summarize my position succinctly:

    o In general terms, I believe patents are good for innovation. There is research to back this up.
    o Patent quality from the USPTO has been poor, and truly awful patents have been issued that should never have been issued. However, the USPTO got Bilski right.
    o While I am enthusiastic about quality patents from my companies, I am unenthusiastic about a bad patent from anyone, because they cost me time and money.
    o Periodically the USPTO needs reminded of what the statutes mean. The CAFC and the Supreme Court have been doing so since about 2005.

    Dummy, you should understand the reason behind patents. Try harder. Harder. Even harder...

     

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  28.  
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    Lonnie E. Holder, Oct 31st, 2008 @ 7:10pm

    Re: Re: Re: response to Michael Feigin, Esq.

    Dummy:

    Incidentally, why do you hide behind an anonymous name? Too afraid to have people know who you are?

     

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  29.  
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    angry dude, Oct 31st, 2008 @ 8:44pm

    Re: Why I hate this blog so...

    "However, we would in all likelihood rename it."

    Oh NO

    The only valuable IP Mikey has is his techdirt.com domain name

    While the content of his blog is utter shit and nobody would want to put his name on it, the domain name is valuable because it attracts some internet traffic, and traffic means $$$ in todays world
    If Mikey is so insistent on abolishing all IP he really should give us all an example and give up his domain name techdirt.com

    Hey Mikey, how about putting your domain name up for a public auction and donating all proceeds to the needy people ?
    I might bid couple grand, maybe even more...

     

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  30.  
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    DanC, Oct 31st, 2008 @ 9:58pm

    Re: Why I hate this blog so...

    Mr. Masnick forgets the key behind patents: They exist to promote innovation. Protect individuals from corporate greed and laziness. Encourage creation. Reward brilliance.

    Perhaps if you actually bothered to read the blog, you could form an intelligent opinion. Patents exist to promote the progress of science and the arts. They don't exist to "protect" anything. Innovation is the goal - protectionism is merely the method. And if it can be shown that the current patent system hinders rather than serves that goal, then it should be modified or removed. That's the point being made in the articles and comments.

    You, Mr. Masnick, of all people, should thank the Stars above for patents, trademarks and copyrights. Otherwise people like me would simply copy your work, rename it under our own banner, sell advertising to promote it, and profit handsomely from it--without asking your permission to do so.

    The sheer number of times people bring up this attempt at a "gotcha" is bordering on pathetic at this point. He's given explicit permission for anyone to do exactly what you just stated, multiple times:

    http://www.techdirt.com/article.php?sid=20070412/183135#c612

     

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  31.  
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    He say what?, Oct 31st, 2008 @ 10:09pm

    The point is irrelevant because it's been brought too much? Huh?

    My point is this:

    Dan took the wrong position on a story because he was ideologically driven to do so. That type of blindness is dangerous.

    Ask any reporter. Had he done this at a business newspaper or magazine, and this was his beat, he would have been fired and the publication would be printing a retration.

    In the Wild West of Self-promotion and blogging, he simply calls for a mulligan.

    I also found it interesting that his so called sources were attorneys on the losing end of the decision, who easily convinced Mike that they had won.

    Mike's story was picked up by Techcrunch, Venturebeat and a host of other blogs. None of which have editors familiar with the subject matter.

    The result: Misinformation thrown about the web for an entire day. Until Mike wrote this story.

    Wonder if the "I fucked up story" gets picked up by TC and VC.

    That's stupidity. Inexcusable stupidity.

    But that's the guy driving this bus. A short bus, mind you.
    With Dan C. in full headgear riding in the front seat, with his lunch money pinned to his shirt.

     

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  32.  
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    Anonymous Coward, Nov 1st, 2008 @ 11:25am

    Re: Mike's fans = Child molesters, law school dropouts, Asian driving instructors, serial killers, and Anon Coward

    Ad hominum attacks make you look like you have the whits of a piece of cheese.

    You never went to law school and your reading comprehendsion is near baboon like. That is not a complement. If you were actualy reading the two articles you would see that Mike in the first article is discussing likely consequences of the law in the case that it is interpreted one way.

    In this article he is discussing other possible interpretations.

     

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  33.  
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    Anonymous Coward, Nov 1st, 2008 @ 11:29am

    Re: Re: Re: Re: response to Michael Feigin, Esq.

    *I* Personaly agree with most of your position Lonnie. But really that's a low blow. Anonymity is a right in this country. You should not attack someone for remaining annonymious

     

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  34.  
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    Anonymous Coward, Nov 1st, 2008 @ 11:32am

    Re: Why I hate this blog so...

    Why do you read it if you hate it?

     

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  35.  
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    Anonymous Coward, Nov 1st, 2008 @ 11:33am

    Re: Re: Why I hate this blog so...

    And what would you do with the domain name? Ruin it so that whatever new name Mike's blog takes gets more important then this name?

     

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  36.  
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    Grammar Robot, Nov 1st, 2008 @ 11:34am

    Re: The point is irrelevant because it's been brought too much? Huh?

    I don't quite understand your point. Please improve your grammar and try again

     

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  37.  
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    DanC, Nov 1st, 2008 @ 11:59am

    Re: The point is irrelevant because it's been brought too much? Huh?

    The point is irrelevant because it's been brought too much? Huh?

    Maybe if you actually stuck with the same name and referenced what you were talking about, you might make some sense. But it appears that your only purpose is to spread insults under as many names as possible.

    The result: Misinformation thrown about the web for an entire day. Until Mike wrote this story.

    Wonder if the "I fucked up story" gets picked up by TC and VC.


    I guess I was asleep the day newspapers and magazines banned all retractions. People are allowed to refine their views and take a second look at things. This isn't a news site, it's an opinion blog, a point you seem all to willing to ignore. And the responsibility for repeating any of the articles on the site resides with those who choose to reference them.

    All you're really saying is that you don't like the way blog sites work, which is your prerogative. Blogs pick up stories from other sites, including other blogs, and comment on them. If you don't like the stories a blog chooses to post, a reasonable person would either a) stop visiting the site, or b) provide an argument on why the article is wrong.

    The third choice is to engage in the juvenile game of spreading insults and lies, and make a general nuisance of yourself. It doesn't really accomplish much of anything other than making yourself look uneducated or immature (not unlike angry dude). That approach seems incredibly stupid.

    But that's the guy driving this bus. A short bus, mind you.
    With Dan C. in full headgear riding in the front seat, with his lunch money pinned to his shirt.


    Thanks for the insult. It shows that you don't really have an agenda beyond being an annoyance.

     

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  38.  
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    Lonnie E. Holder, Nov 1st, 2008 @ 2:16pm

    Re: Re: Re: Re: Re: response to Michael Feigin, Esq.

    AC:

    I am generally fine with anonymity, but when someone makes personal attacks on someone else behind the curtain of cowardice (against me or anyone else), then I will always ask why they are ashamed of admitting who they really are (though they should be ashamed).

     

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  39.  
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    Michael Feigin, Esq., Nov 1st, 2008 @ 5:09pm

    Re: Re: Re: response to Michael Feigin, Esq.

     

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    Michael Feigin, Esq., Nov 1st, 2008 @ 5:11pm

    Re: Re: Re: response to Michael Feigin, Esq.

    I have one word for you: Vonage.

    Vonage had great marketing and no IP. $400 million a year is down the drain. They had 2 million phone lines at one time.

    Had they spent even a few million a year on IP, they might still be a viable company. Without IP, I estimate you have about a 3 year lead on the competition. If you're making money (or in this case, taking in money), they will copy you and do it better. If they have IP, they'll also be suing you out of existence.

     

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  41.  
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    Mike (profile), Nov 1st, 2008 @ 5:23pm

    Re: Approach the bench - and bend over Mikey

    First, you get hand-fed your initial take, simply because you're a gullible chump, and the losing lawyers cheered you into it, since you're blindly ideological about the fluid body of law.

    Hmm? I'm curious about the assertion. No one "fed" me anything. I wrote up my initial story because it popped up in an RSS feed, and then I went and grabbed the decision and read it.

    In fact, the only person who sent me the story before I finished my write up and published it was MLS, the patent attorney here who almost always argues against me.

    Then, you start out a post saying you're now going to backtrack, and proceed to bury your embarrassing delusions and frothing that led to your first complete misinterpretation, with - surprise - more delusions and frothing.

    I know I explained this to you already, but let me try again: you are free to disagree with me, of course, but if you want to appear credible, it helps to actually point out why you disagree with me and then back up that argument with reasons, examples, research etc. To simply insult me without any reasoning makes it clear that you have no argument.

    Mike you just need to change your subject matter

    And when you are my boss, I will take orders from you. Until then, I would suggest you don't order me around.

     

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  42.  
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    Mike (profile), Nov 1st, 2008 @ 5:31pm

    Re: Why I hate this blog so...

    Perhaps it's the elitist approach of this blog: The "patent law inhibits innovation" rubbish that bothers me so.

    Curious as to why you consider it "elitist" to present evidence from many, many, many different sources that shows, in fact, that patents do inhibit innovation.

    Is it elitist to have facts supporting your opinion?

    Is it elitist to be correct?

    If so, then I guess I am an elitist.

    Perhaps it's the sucking of the teat by less than average men, who blindly agree that owning a patent is naughty--because it is difficult to create something and even more difficult to patent it.

    No one has said it is easy to create something nor easy to patent it, so if this is your complaint, it actually says much more about your reading comprehension skills than it does of anything on this site.

    However, I will take it under advisement that those with reading comprehension problems may falsely believe I have said the above.

    Mr. Masnick forgets the key behind patents: They exist to promote innovation.

    Again, your reading comprehension skills are lacking. I have made this point repeatedly. In fact, it is the basis of everything I write around here. Patents exist to promote innovation. If they did that I would be fine and happy. The problem is that there is substantial evidence that they do not, in fact, promote innovation.

    Protect individuals from corporate greed and laziness.

    No, the patent system has never been about that, though I know plenty of ignorant folks who think it is.


    Encourage creation. Reward brilliance.

    No, again, this is incorrect. It is the market that is designed to encourage creation and reward brilliance. The patent system is generally a market limiting service, not a market enhancing one. So it actually punishes creation and brilliance in too many cases.

    You, Mr. Masnick, of all people, should thank the Stars above for patents, trademarks and copyrights. Otherwise people like me would simply copy your work, rename it under our own banner, sell advertising to promote it, and profit handsomely from it--without asking your permission to do so.

    I encourage you to do so. This site is not protected by copyright or patents, and our business model is not based on either as well. So if you take our content and rename it and promote it, that will only end up helping us in the long term. So please, go right ahead.

    You most certainly do not need permission to do so.

    I'm guessing that you won't admit that your own reading comprehension problems got in the way here and that you've just been caught out as being wrong.

     

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  43.  
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    Mike (profile), Nov 1st, 2008 @ 5:35pm

    Re: Re: Why I hate this blog so...

    If Mikey is so insistent on abolishing all IP he really should give us all an example and give up his domain name techdirt.com

    As per usual, angry dude displays his willful ignorance. It's willful because we've explained this to him before, and because anyone with about an ounce's worth of common sense would have understood it without it being explained to him, let alone after it's been explained to him multiple times.

    Yet, since he's obviously a bit slow to catch on to things like basic logic and reasoning, I will explain it once more. If angry dude makes this mistake again, I will assume that he simply is functionally unable to understand basic logic.

    I have stated, quite clearly, multiple times (sometimes to you, in fact) that I am not insistent on abolishing all IP. So I'm not sure why you would even set up a strawman like that. I simply want to do whatever possible to encourage innovation, and remove the barriers to innovation.

    As for the Techdirt.com name, that is a scarce good. I am only in favor of freeing up infinite goods for the sake of innovation.

    But you understand that, right?

     

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  44.  
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    Mike (profile), Nov 1st, 2008 @ 5:46pm

    Re: The point is irrelevant because it's been brought too much? Huh?

    Ask any reporter. Had he done this at a business newspaper or magazine, and this was his beat, he would have been fired and the publication would be printing a retration.

    You have to yet to have shown what was wrong about my initial story. Instead, you just insulted me.

    You also seem to have this odd opinion that because *I* have an opinion, that shouldn't be allowed. Welcome to the world wide web. Everyone is allowed to have an opinion, no matter how stupid yours might be.

    So why should I need to retract my opinion, which I explained with clear reasoning? Especially since the only real dissent from that opinion comes from you, who has backed it up with... insults?

    And if you think reporters haven't screwed up stories and keep their jobs, you don't read the business press much. In fact, I'd say much of the news coverage and analysis of this particular story matched my own analysis of it. Yet, we haven't heard that the AP reporter who wrote about it has been fired.

    The NY Times quoted me on it as well. I haven't seen that reporter fired.

    I also found it interesting that his so called sources were attorneys on the losing end of the decision, who easily convinced Mike that they had won.

    I'm not sure how you found that interesting, as they were not my sources. After my initial story (which wasn't based on any sources) almost all of the lawyers I spoke to were big supporters of the patent system. I only spoke to one lawyer on the other side.

    That's stupidity. Inexcusable stupidity.

    No, what is inexcusably stupid is throwing around insults without having any facts to back up your point.

    You can still turn it around if you back up a point. Otherwise we'll just have to conclude that it is, in fact, you that is inexcusably stupid.

     

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    Mike (profile), Nov 1st, 2008 @ 5:52pm

    Re: Re: Re: Re: response to Michael Feigin, Esq.

    Vonage had great marketing and no IP. $400 million a year is down the drain. They had 2 million phone lines at one time.

    Had they spent even a few million a year on IP, they might still be a viable company.


    Alternatively, if others weren't allowed to patent obvious stuff, Vonage might still be viable. Also, if they had realized how the market was changing. Vonage ran into two problems: bad management and bogus patents from others.

    Without IP, I estimate you have about a 3 year lead on the competition. If you're making money (or in this case, taking in money), they will copy you and do it better. If they have IP, they'll also be suing you out of existence.

    They won't necessarily do it better. In fact, quite often we see that the originator does much better long term. The problem here is that you seem to view innovation as a one-and-done sort of thing.

    Real innovation is a continuous process, and the company with the head start can usually innovate faster than any copy cats.

     

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    Lonnie E. Holder, Nov 1st, 2008 @ 6:26pm

    Re: Re: Why I hate this blog so...

    No, again, this is incorrect. It is the market that is designed to encourage creation and reward brilliance. The patent system is generally a market limiting service, not a market enhancing one. So it actually punishes creation and brilliance in too many cases.

    I was in only modest disagreement or even agreement with most of what you said until you made this statement. I disagree, absolutely. The market is NOT designed to encourage creation and reward billiance. If anything, it is exactly the opposite. In the absence of IP, the market will reward copying because copying, particularly in the manufacturing arts, will always be cheaper than innovating and creating.

    The studies that have shown that pharmaceuticals (among others) benefit from IP are but one telling indication. It can take up to $800 million to develop just one drug. Once the drug is on the market, the inventor will quickly be pushed out by the copier, and the loss could easily be $700 million or more.

    Essentially, any capital intensive endeavor that requires substantial upfront investment to create a mechanism will always be more expensive than reverse engineering that same invention. The market will reward the copier, not the inventor.

     

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  47.  
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    Lonnie E. Holder, Nov 1st, 2008 @ 6:41pm

    Innovation vs. Invention

    Real innovation is a continuous process, and the company with the head start can usually innovate faster than any copy cats.

    I have no idea what the distinction is between "innovation" and "real innovation," but when it comes to invention, that tends to be a discrete process rather than a continuous one. Some inventions have taken decades to perfect. Others only a few years. A few inventions may have taken mere days or weeks, but in the mechanical, chemical, pharmaceutical and biological world, I am guessing that on average invention tends to take years. Hardly seems "continuous."

    The fact that invention is frequently discrete in certain arts, and the fact that invention can take years, and the fact that copying is often (though not always) easier than inventing, means that in any art where the time and cost to copy is significantly less than the time and cost to invent, lack of intellectual property will essentially spell death to inventions that fall in that category in that art.

     

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  48.  
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    Willton, Nov 1st, 2008 @ 8:04pm

    Re: Re: Why I hate this blog so...

    No, again, this is incorrect. It is the market that is designed to encourage creation and reward brilliance. The patent system is generally a market limiting service, not a market enhancing one. So it actually punishes creation and brilliance in too many cases.

    I agree with Lonnie here: for someone who claims to study economics, this is woefully wrong. The only people the market rewards are those who provide the most value at the lowest cost. A copyist can provide the same value as an original creator at a lower cost at almost all times. The market will flock to the copyist.

     

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  49.  
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    angry dude, Nov 1st, 2008 @ 10:38pm

    Re: Re: Re: Why I hate this blog so...

    "As for the Techdirt.com name, that is a scarce good. I am only in favor of freeing up infinite goods for the sake of innovation.

    But you understand that, right?"

    No I don't, and nobody would (except for your loyal techdirt lemming punks)

    So, the obvious combination of two English words you picked for your domain name is a scarce good so you should enjoy it all by yourself...
    But my novel and unobvious patented invention (on which I spent 5 years of my life) is an infinite good (once it's published as a patent for everybody to read), so everybody out there can just copy it free of charge.. for the sake of innovation of course...

    Nice.........

    No dude, please preach your BS to somebody else

     

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  50.  
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    Mike (profile), Nov 2nd, 2008 @ 1:12am

    Re: Re: Re: Why I hate this blog so...

    The market is NOT designed to encourage creation and reward billiance. If anything, it is exactly the opposite. In the absence of IP, the market will reward copying because copying, particularly in the manufacturing arts, will always be cheaper than innovating and creating.

    I would suggest a lesson in economic history might help here. The market rarely rewards mere copying. It tends to reward innovation quite a bit, however. I would suggest the works of Joel Mokyr and Robert Friedel would be of use to you here. Mokyr's work may be especially enlightening.

    The studies that have shown that pharmaceuticals (among others) benefit from IP are but one telling indication. It can take up to $800 million to develop just one drug. Once the drug is on the market, the inventor will quickly be pushed out by the copier, and the loss could easily be $700 million or more.

    And here I'd suggest you look at the work of Merrill Goozner who shows that $800 million dollars to be a total myth, made up by an industry exec looking to extract more monopoly rents thanks to the gov't. In actuality, it takes significantly less.

    As for "the inventor" being pushed out of the market by the copier, this is also not true (but nice try!). As we've shown in the past, even after drugs go off patent, the brand name drug commands *SIGNIFICANT* premiums and continues to make the original company quite a lot of money.

    Finally, I would suggest that a thorough understanding of infinite and scarce goods would allow you to realize there are models by which companies could make billions by embracing a rather different pharma development model that doesn't require patents.

    Essentially, any capital intensive endeavor that requires substantial upfront investment to create a mechanism will always be more expensive than reverse engineering that same invention. The market will reward the copier, not the inventor.

    Again, this is rather untrue, but nice of you to state it as a certainty. Markets quite often reward the leader, not the copier -- and, there are always business models where it won't much matter if there's a copier. In fact, in a good business model, the copier only helps you out.

     

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    Mike (profile), Nov 2nd, 2008 @ 1:13am

    Re: Innovation vs. Invention

    The fact that invention is frequently discrete in certain arts, and the fact that invention can take years, and the fact that copying is often (though not always) easier than inventing, means that in any art where the time and cost to copy is significantly less than the time and cost to invent, lack of intellectual property will essentially spell death to inventions that fall in that category in that art.

    I recognize that it may be difficult to think creatively about business models, but it's rather depressing to see you make this mistake repeatedly.

    Oh well... more opportunity for the companies that aren't blinded by myths like yours.

     

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  52.  
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    Mike (profile), Nov 2nd, 2008 @ 1:16am

    Re: Re: Re: Why I hate this blog so...


    I agree with Lonnie here: for someone who claims to study economics, this is woefully wrong. The only people the market rewards are those who provide the most value at the lowest cost. A copyist can provide the same value as an original creator at a lower cost at almost all times. The market will flock to the copyist.


    Except, historically, they do not. As someone who mocks me for not understanding economics, I would suggest you might want to study up on your economic history. And then come back and admit that you were wrong.

    Copying is rarely a successful strategy -- especially in any dynamic market, which covers most markets these days. There are some arguments that it works in static markets, but there is growing evidence that even there it is not true.

    Innovation is what leads markets, and that's a continuous process.

     

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    Mike (profile), Nov 2nd, 2008 @ 1:20am

    Re: Re: Re: Re: Why I hate this blog so...

    So, the obvious combination of two English words you picked for your domain name is a scarce good so you should enjoy it all by yourself...

    It is not the combination of two words that we were talking about. It was the concept of a domain name. That is a scarce good.

    Given you rather stunning inability to comprehend rather elementary concepts, I would have to say that the fact that you hold a patent is about the most damning condemnation of the patent system I have seen yet.

    But my novel and unobvious patented invention (on which I spent 5 years of my life) is an infinite good (once it's published as a patent for everybody to read), so everybody out there can just copy it free of charge.. for the sake of innovation of course...

    I know I've suggested this in the past, but it might help for you to actually read what we write once in a while. If you have a truly innovative concept, then make money with it in the marketplace. If you want help coming up with a business model, feel free to hire us. Clearly, you need the help.

     

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    Willton, Nov 2nd, 2008 @ 12:11pm

    Re: Re: Re: Re: Why I hate this blog so...

    Except, historically, they do not. As someone who mocks me for not understanding economics, I would suggest you might want to study up on your economic history. And then come back and admit that you were wrong.

    And where would I find said economic history? If I'm so damn wrong, then surely you could explain how the history of economics proves as much. A generalized assertion like the one above shows me nothing.

    Copying is rarely a successful strategy -- especially in any dynamic market, which covers most markets these days. There are some arguments that it works in static markets, but there is growing evidence that even there it is not true.

    Really? Copying is not a successful strategy? Tell that to the generic pharmaceutical industry; I'm sure they'd love to hear how their business model of copying and selling the drugs of other manufacturers is a failure.

    Innovation is what leads markets, and that's a continuous process.

    Perhaps, but invention is a very descrete process, and that is what we are trying to encourage.

     

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    angry dude, Nov 2nd, 2008 @ 2:15pm

    Re: Re: Re: Re: Re: Why I hate this blog so...

    "If you want help coming up with a business model, feel free to hire us."

    Mikey, I wouldn't hire you to clean my toilets, much less to come up with a viable business model for a technology startup in the current environment

    Thanks but no thanks dude

     

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    Lonnie E. Holder, Nov 2nd, 2008 @ 4:05pm

    Re: Re: Re: Re: Why I hate this blog so...

    Mike:

    I must admit to a bit of puzzlement here. First, you say that copying is rarely a successful strategy. Then, you say that "innovation," rather than invention, "is what leads markets." It is possible that innovation leads markets, but that then implies that a copier would in fact be more successful if they were more innovative. Not better than the inventor, but more innovative.

    I must admit that I actually agree with that, which is part of the reason that I find some of these comments disturbing. A better marketer of a bad product often wins out over a poor marketer of a good product.

    Case in point:

    If I say "new car quality," who do you think of? Don't peek!

    More than likely, you think of Toyota.

    Now, who does J.D. Power & Associates say leads in new car quality?

    If you were thinking of brands, rather than manufacturer, then Lexus is #1, by quite a distance.

    If you were thinking of manufacturers, you should say Ford, then Hyundai, then Toyota. Yet, Toyota's commercials continue to refer to Toyota's "legendary" quality. Legendary, all right, because the times are changing. However, they have lots of money and marketing power and even though they have some of the most boring cars on the market today, they continue to eat more market share.

    Now, who is the most inventive car company? Don't even bother to guess Toyota. Innovative, yes. Inventive, yes. The most inventive? Probably not. Inventive is hard to measure for a variety of reasons, but I would guess that either Hyundai, Honda or Ford is the most inventive. Toyota continues to be the innovative company, but their creativity lacks.

    Now, Toyota and Hyundai and Ford are all interesting for another reason. They all copied each other, while either inventing or innovating, depending on their expertise.

    Toyota copied GM and Ford, and is now either #1 or close to it. Hyundai copied Toyota, and look where they are. Hyundai is not very inventive, but they are innovative. Copiers make good!

     

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  57.  
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    Anonymous Coward, Nov 2nd, 2008 @ 4:17pm

    I would suggest a lesson in economic history might help here. The market rarely rewards mere copying.

    Toyota seemed to do okay with this strategy. Generic drug companies absolutely thrive on making cheap versions of drugs with expired patents. Is it innovative to make a copy of a drug with an expired patent? I do not think so. Just application of known engineering arts to produce something already known.

    And here I'd suggest you look at the work of Merrill Goozner who shows that $800 million dollars to be a total myth, made up by an industry exec looking to extract more monopoly rents thanks to the gov't. In actuality, it takes significantly less.

    However, I noticed that you did not deny that numerous studies indicate that IP is beneficial for invention in the pharmaceutical industry.

    As for "the inventor" being pushed out of the market by the copier, this is also not true (but nice try!). As we've shown in the past, even after drugs go off patent, the brand name drug commands *SIGNIFICANT* premiums and continues to make the original company quite a lot of money.

    You are comparing apples and oranges. The inventor still commands "SIGNIFICANT" premiums because they were making the drug for 20 years, and doctors became accustomed to prescribing that medication. Consider what would happen if a drug was copied after only a few months on the market. The inventor would not have a significant market presence and the generic would be well known almost immediately. Companies such as mine essentially demand generics, if they are available.

    Finally, I would suggest that a thorough understanding of infinite and scarce goods would allow you to realize there are models by which companies could make billions by embracing a rather different pharma development model that doesn't require patents.

    Here is the marvelous thing about patents, anyone is free to follow a business model that does not rely on patents! Is this great or what? Thus, if someone wishes to use a business model that relies on a strategy that avoids patents, and can be successful doing so, they are free to choose that path at any time.

    Essentially, any capital intensive endeavor that requires substantial upfront investment to create a mechanism will always be more expensive than reverse engineering that same invention. The market will reward the copier, not the inventor.

    Again, this is rather untrue, but nice of you to state it as a certainty. Markets quite often reward the leader, not the copier -- and, there are always business models where it won't much matter if there's a copier. In fact, in a good business model, the copier only helps you out.


    Markets also quite often reward the follower, not the leader. I came from such an industry. If you neglect to protect your IP, then everyone will copy you. Customers choose the supplier with the lowest cost, and will abandon your product without hesitation if they think they will save a few dollars. The copiers did not help us at all, they took business that we created with our inventions.

     

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    Lonnie E. Holder, Nov 2nd, 2008 @ 4:22pm

    Blinded by the Dark

    Mike:

    The fact that invention is frequently discrete in certain arts, and the fact that invention can take years, and the fact that copying is often (though not always) easier than inventing, means that in any art where the time and cost to copy is significantly less than the time and cost to invent, lack of intellectual property will essentially spell death to inventions that fall in that category in that art.

    [Insult deleted.]

    Mike, I have not been insulting you. Try not to stoop to such levels.

    Oh well... more opportunity for the companies that aren't blinded by myths like yours.

    Sorry, but I have been in industries where this exact thing has happened. But, obviously you know about those and think that is okay. Also interesting that invention in some of those industries has slowed, along with innovation, as the original inventors were driven from the market by non-inventive copiers.

    Also, as I noted before, anyone is free to use a strategy where they exploit their inventions without the benefit of intellectual property protection. I think it is marvelous that people have those options available to them.

     

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    Mike (profile), Nov 2nd, 2008 @ 9:54pm

    Re: Re: Re: Re: Re: Why I hate this blog so...

    And where would I find said economic history? If I'm so damn wrong, then surely you could explain how the history of economics proves as much. A generalized assertion like the one above shows me nothing.

    I pointed them out directly above in this very thread. I didn't realize I needed to repeat them again. But you might want to start with the works of Joel Mokyr. Robert Friedel is another good one. Both write about the economic history of innovation.

    Really? Copying is not a successful strategy? Tell that to the generic pharmaceutical industry; I'm sure they'd love to hear how their business model of copying and selling the drugs of other manufacturers is a failure.

    Which companies are bigger? The generic makers of the makers of new pharmaceuticals? I'm not saying you can't build a business copying, but it's a much smaller business. You excel by leading the field, not by following.

    Perhaps, but invention is a very descrete process, and that is what we are trying to encourage.

    Actually, it's not. Study after study after study has shown that real innovation is an ongoing process, not a distinct process.

    It's a myth to claim otherwise. I would suggest you look at the work of Michael Schrage to understand this one better.

     

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    Mike (profile), Nov 2nd, 2008 @ 10:00pm

    Re: Re: Re: Re: Re: Re: Why I hate this blog so...


    Mikey, I wouldn't hire you to clean my toilets, much less to come up with a viable business model for a technology startup in the current environment


    Your loss. Luckily the companies that make your life better are willing to pay us, so be happy that you benefit indirectly. Good luck with your own efforts though. Given your opinions expressed here, I would say that you're going to need it.

     

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  61.  
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    Mike (profile), Nov 2nd, 2008 @ 10:09pm

    Re: Re: Re: Re: Re: Why I hate this blog so...

    I must admit to a bit of puzzlement here. First, you say that copying is rarely a successful strategy. Then, you say that "innovation," rather than invention, "is what leads markets."

    I should clarify, as I did to Wilton above. I'm not saying that copying can't make some money, but the big success stories are never about mere copying. They're all about innovating.

    It is possible that innovation leads markets, but that then implies that a copier would in fact be more successful if they were more innovative. Not better than the inventor, but more innovative.

    That makes no sense. If they are a copier, then they are not being innovative. If they are innovative than what's the issue? After all, doesn't that promote the progress?

    A better marketer of a bad product often wins out over a poor marketer of a good product.

    You seem to be one of those who falsely doesn't believe marketing is part of promoting the progress. Note the promoting part... A good marketing effort is part of innovation, because promoting the progress means getting it out in the market in a way that people want. The market doesn't care in the slightest what *you* think is the best product. It DECIDES what the best product is.

    So I disagree. If the product wins, then the market has decided it's better. There's no such thing as a good product that doesn't win in the market place. That means it's not a good product, no matter how much you think otherwise.

    Now, who is the most inventive car company? Don't even bother to guess Toyota. Innovative, yes. Inventive, yes. The most inventive? Probably not. Inventive is hard to measure for a variety of reasons, but I would guess that either Hyundai, Honda or Ford is the most inventive. Toyota continues to be the innovative company, but their creativity lacks.

    I would imagine that a lot of Prius drivers disagree with you, but that's another story.

    However, again, you seem to be making this weird distinction that somehow we need to protect "inventors." The patent system says no such thing. It says to promote the progress of science and the useful arts. That's innovation in my book.

    Now, Toyota and Hyundai and Ford are all interesting for another reason. They all copied each other, while either inventing or innovating, depending on their expertise.

    And isn't that what we want? Let the companies in the market build on the work others have done, and create better and better products.

    That's a fantastic scenario.

    Toyota copied GM and Ford, and is now either #1 or close to it. Hyundai copied Toyota, and look where they are. Hyundai is not very inventive, but they are innovative. Copiers make good!

    Not at all. Hyundai was quite innovative in its manufacturing and marketing, making it so that it could introduce a lower cost car. Good innovation there.

    I'm not sure what the problem is here.

     

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  62.  
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    Mike (profile), Nov 2nd, 2008 @ 10:18pm

    Re:


    Toyota seemed to do okay with this strategy.


    If you believe Toyota's strategy is mere copying, then you are totally clueless. Seeing as I don't believe you are totally clueless, I'll give you a chance to retract that remark. To suggest that Toyota is not innovative is ridiculous.

    Generic drug companies absolutely thrive on making cheap versions of drugs with expired patents

    They aren't market leaders by any stretch of the imagination.

    However, I noticed that you did not deny that numerous studies indicate that IP is beneficial for invention in the pharmaceutical industry.

    Actually, do a search. I have discussed this at length. And, for this to make sense, I need to be absolutely clear: I believe that IP is ridiculously bad for the HEALTHCARE industry and for our HEALTH and the WIDER ECONOMY. I think that it has created monopolies that have allowed pharma companies to be built up in a very inefficient mechanism.

    Without IP you would have BETTER solutions to healthcare, that would not involve inefficient monopoly rents. You would (a) have non-pharma solutions catch on much faster (read Andy Kessler's book to understand why) and (b) a very different market structure for healthcare and insurance (if healthcare is viewed as the business of keeping you healthy, then healthcare providers who should get paid for keeping you healthy would be hard at work creating pharmaceuticals themselves and *giving them away free* knowing that they benefit the healthier you are).

    You are comparing apples and oranges. The inventor still commands "SIGNIFICANT" premiums because they were making the drug for 20 years, and doctors became accustomed to prescribing that medication.

    Actually, that's rarely true. Studies have shown that doctors quite often prescribe the generics. It's individuals who request the brand names. And the fact that the brand might have more difficulty establishing itself means fewer monopoly rents. That's more efficiency.

    Why are you so against economic efficiency?

    Here is the marvelous thing about patents, anyone is free to follow a business model that does not rely on patents! Is this great or what? Thus, if someone wishes to use a business model that relies on a strategy that avoids patents, and can be successful doing so, they are free to choose that path at any time.

    If only that were so. But it's not. Because patents allow you to BLOCK a wide variety of business models. If I build a better wireless email system, I get sued by NTP. That's not allowing marketplace competition.

    The problem with the patent system is that it does not allow real market competition.

    Markets also quite often reward the follower, not the leader.

    If the follower is a better innovator and does a better job getting the product to market, that's GOOD.

    The copiers did not help us at all, they took business that we created with our inventions.

    So you guys made bad business decisions and the market punished you for it. That's how it's supposed to work. I don't see the problem here.

     

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  63.  
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    Mike (profile), Nov 2nd, 2008 @ 10:22pm

    Re: Blinded by the Dark

    Mike, I have not been insulting you. Try not to stoop to such levels.

    It wasn't an insult. I was pointing out a fact that I can understand that it's difficult to understand new business models, but despite the fact we've explained some of them to you, it's disappointing that you continue to exist that such business models cannot exist. It is, in fact, sad, that folks such as yourself cannot see them.

    Sorry, but I have been in industries where this exact thing has happened. But, obviously you know about those and think that is okay. Also interesting that invention in some of those industries has slowed, along with innovation, as the original inventors were driven from the market by non-inventive copiers.

    You always talk in hypotheticals. I'd love, just once, for you to actually give a real example so that we can respond. You show me an industry that claims there's less innovation going on, and I'll show you someone who incorrectly defined their market.

    Also, as I noted before, anyone is free to use a strategy where they exploit their inventions without the benefit of intellectual property protection. I think it is marvelous that people have those options available to them.

    And I explained why that's not true, and why patents block those business models. It's not the first time I've explained it, and I imagine not the last.

     

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  64.  
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    angry dude, Nov 3rd, 2008 @ 3:15am

    Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    "Your loss. Luckily the companies that make your life better are willing to pay us, so be happy that you benefit indirectly."

    You mean BSA and CPF members ? We know that
    Then why do you get offended each time I mention that you are on a corporate payroll, or to put it the way it is, you are a paid corporate stooge playing independent journalist ?

     

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  65.  
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    Mike (profile), Nov 3rd, 2008 @ 4:06am

    Re: Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    You mean BSA and CPF members ? We know that
    Then why do you get offended each time I mention that you are on a corporate payroll, or to put it the way it is, you are a paid corporate stooge playing independent journalist


    Well, first, I don't get offended. I just find it amusing that you continue to falsely accuse me of being on the payroll of both when I quite clearly oppose the goals of both organizations. I have never received any money from either, and considering the way both seem to react to my conversations with them, I doubt that's going to change any time soon.

    Secondly, when confronted, you once even admitted that I am not a paid stooge, and you just said that because you had no real argument against what I said. I'm not sure why you keep repeating this lie. I don't see why you think it's any more credible the more you repeat it.

    Finally, I have never claimed to have been an independent journalist. What is true is that I do not write based on anything but what my opinion is, but this is a blog that helps represent my company. We don't do any PR or advocacy work, so I'm not sure why you insist that we do.

    I guess, considering your inability to understand pretty much anything we talk about it shouldn't be surprising that you can't understand these simple facts either.

    On top of that, considering that you're an admitted liar, I don't see why we should trust anything you say. In case you've forgotten, for years you used to claim you held many patents, and then when you actually (or so you claimed) got your first patent approved, you celebrated that here. So, one way or the other you were lying -- something we've asked you about in the past, which you ignore.

    Again, all I can conclude from this is a true condemnation of our patent system, if they are giving out patents to admitted liars with serious reading comprehension deficiencies, and a weird compulsion to insult anyone who actually has something sensible to say.

    It would be great if one day, just once, you actually (a) added something constructive to the conversation or (b) tried to apply reason instead of insults. I'm an optimsist of course, so I still believe that there must be a bit of human being in there somewhere. One day, perhaps, we'll see it.

     

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  66.  
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    Lonnie E. Holder, Nov 3rd, 2008 @ 5:35am

    Re: Re: Blinded by the Dark

    Mike

    It wasn't an insult. I was pointing out a fact that I can understand that it's difficult to understand new business models, but despite the fact we've explained some of them to you, it's disappointing that you continue to exist that such business models cannot exist. It is, in fact, sad, that folks such as yourself cannot see them.

    Oh dear, I believe I have somehow made myself misunderstood. Let me attempt to clarify my viewpoint on business modesl.

    Any business model that does not violate existing laws and proves to be profitable is a good business model. Red Hat exists and seems to be doing fine. Anyone with an invention (the poor man's stable camera) is free to patent the invention, if if it patentable, or to not patent and use other business models.

    There are dozens, hundreds(?), thousands(?) of viable business models. While there are many ways to approach these models, certainly one of the choices that must be made is to use intellectual property, or not use intellectual property. For example, Red Hat has chosen to use intellectual property. They have 16 patents and nearly 100 patent applications, along with dozens of trademarks. I suspect they probably have numerous copyrights as well. However, Red Hat could also have chosen to avoid using intellectual property, and that would have been fine as well, as long as it was working for them.

    You always talk in hypotheticals. I'd love, just once, for you to actually give a real example so that we can respond. You show me an industry that claims there's less innovation going on, and I'll show you someone who incorrectly defined their market.

    Solid state lasers. The original producers were highly inventive and dynamic until the original patents ran out. Then the copiers did exactly that, copied, at much lower price, and the original producers left the market. The copiers have invested very little in advancing solid state lasers. Solid state lasers still provides a lot of sales, but the only development (of which I am aware) is being funded by the military. Civilian solid state laser development seems to have stagnated. Even the medical laser folks are using designs that date back to the 70's and 80's, and while they have made improvements to the electronics and the packaging, the optics seem to be virtually frozen in time.

    Also, as I noted before, anyone is free to use a strategy where they exploit their inventions without the benefit of intellectual property protection. I think it is marvelous that people have those options available to them.

    And I explained why that's not true, and why patents block those business models. It's not the first time I've explained it, and I imagine not the last.


    Patents do not "block" a business model. If your business model is "blocked" by a patent, then you have a bad business model that relies on someone else's legal rights. Each patent "blocks" one particular invention. If you have a business model that requires the use of a patent that belongs to someone else, then take a step back and invent something your business model can use that avoids that particular patent. I have explained this before, as have others, and I imagine I will need to explain it again.

     

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  67.  
    identicon
    Anonymous Coward, Nov 3rd, 2008 @ 6:38am

    Re: Re:

    If you believe Toyota's strategy is mere copying, then you are totally clueless. Seeing as I don't believe you are totally clueless, I'll give you a chance to retract that remark. To suggest that Toyota is not innovative is ridiculous.

    Excuse me, slip of the fingers. Toyota initially became successful by mere copying. They used their initial copies to leverage themselves into a leadership position, which was highly innovative, and eventually switched from copying to inventing. However, their current designs are continuously described as "boring" by many car design critics.

    Generic drug companies absolutely thrive on making cheap versions of drugs with expired patents.

    They aren't market leaders by any stretch of the imagination.

    I do not agree with that. I think that some generic drug companies are extremely successful and do quite well with their business model of copying pharmaceuticals on which patents have expired. Teva Pharmaceuticals is one such leader. Their 2007 sales were nearly $10 billion, with facilities in numerous countries and 28,000 employees. They exemplify the way the system is supposed to work. They innovate a lot, invent little, and consequently their development costs are insignificant compared to a company like GSK. However, their low overhead also means that their drugs can be offered at an extremely competitive cost.

    Actually, do a search. I have discussed this at length. And, for this to make sense, I need to be absolutely clear: I believe that IP is ridiculously bad for the HEALTHCARE industry and for our HEALTH and the WIDER ECONOMY. I think that it has created monopolies that have allowed pharma companies to be built up in a very inefficient mechanism.

    Without IP you would have BETTER solutions to healthcare, that would not involve inefficient monopoly rents. You would (a) have non-pharma solutions catch on much faster (read Andy Kessler's book to understand why) and (b) a very different market structure for healthcare and insurance (if healthcare is viewed as the business of keeping you healthy, then healthcare providers who should get paid for keeping you healthy would be hard at work creating pharmaceuticals themselves and *giving them away free* knowing that they benefit the healthier you are).


    lol...I should have known you were going to provide a careful response to my comment.

    Okay, mixed bag here. I agree with part of what you said (the details are somewhat unimportant, but I think we have an over-reliance on pharm; while I have not read the book, I have seen that myself - I use a lot of non-pharm to treat a couple of conditions I have, and the results have been stunning; I also think there are other negative side effects to IP), but I partially disagree.

    The one thing I am unable to quantity, and to reconcile, if it comes to that, is whether pharmaceutical IP is a positive or negative for the health care industry. Studies show that certain drugs would (under our current system) never have been developed without IP. I believe I have quoted those studies in other posts on this web site, or over at Against Monopoly, but I can easily find them again if you are interested.

    However, your careful comment still is interesting. Pharmaceutical intellectual property may well have been instrumental in the development of certain drugs, but is the health care industry better or worse for the development of those drugs. Quite an interesting viewpoint that I had not considered (assuming I understand your viewpoint). I confess that I do not know the answer.

    Actually, that's rarely true. Studies have shown that doctors quite often prescribe the generics. It's individuals who request the brand names. And the fact that the brand might have more difficulty establishing itself means fewer monopoly rents. That's more efficiency.

    I bow to your greater knowledge. My doctors typically prescribe the brand names. I typically ask whether a generic is available or whether another suitable drug is available in a generic form.

    Why are you so against economic efficiency?

    I am not against economic efficiency. I am for strategic economic efficiency. Economic efficiency in a short time frame does not necessarily translate to economic efficiency in the long term. This statement is easily proven and has numerous examples. It seems contrary until examples are worked through. I believe that we may reduce the prices of current inventions faster without intellectual property, but I also believe that we will have fewer inventions per time unit in the future as a result. I suspect we will ultimately end up with the same number of inventions, but they will come at a slower pace, in some industries, which may or may not be economically efficient.

    Here is the marvelous thing about patents, anyone is free to follow a business model that does not rely on patents! Is this great or what? Thus, if someone wishes to use a business model that relies on a strategy that avoids patents, and can be successful doing so, they are free to choose that path at any time.

    If only that were so. But it's not. Because patents allow you to BLOCK a wide variety of business models. If I build a better wireless email system, I get sued by NTP. That's not allowing marketplace competition.

    Well, I guess by that token, the Foreign Corrupt Practices Act also BLOCK a wide variety of business models. I guess racketeering laws BLOCK a wide variety of business models. I guess the fact that the strip mall at the intersection of highway 31 and State Street is completely full BLOCKS a wide variety of business models.

    What do capitalists do? They are like Marines. They adapt, improvise and overcome. They can either sit around and whine about how unfair the world is, and help Kimberly-Clark sell more Kleenex(R) brand facial tissues, or they can figure out how to adapt, improvise and overcome. Does this lead to the best market efficiency? I suggest that the only evidence we have is anecdotal and we do not know.

    Let me ask a different question. Let us say that market response to an invention is to create an alternative invention that avoids the first. Now, let's further say that any market where a business model that is prevented from using one invention and where the market is expansible to encompass an unlimited number of inventions will always lead to an unlimited number of inventions.

    Let us also propose the inverse is true. If a business model is not blocked from using an invention, then it will use that invention and will not seek an alternative invention.

    Okay, in the second scenario, all business models will use the first invention, and will create great market efficiency around that invention. The market will beceome highly efficient for that one invention, however, we have no evidence that the market has maximized efficiency, and we can have no evidence that a market has maximized efficiency because we have no comparison point.

    Now, in the first scenario, some business models will use the first invention, some will use the second invention, some will use the third invention, ad infinitum, and some may use no inventions at all.

    Okay, there is one problem with this scenario. Market efficiency will not be maximized for any one invention. However, the market will determine which of the inventions provides the optimal efficiency for the market. Thus, the market will eliminate some business models using some inventions, and the inventions that remain, or those models that provide a market solution that do not rely on any invention, and market efficiency will be maximized.

    This market efficiency must be seen as optimum (again, as opposed to product or invention efficiency) because consumers had a choice between multiple options and chose the option that best met their needs, essentially voting for the optimal invention.

    Further, since the market selected the most optimal solutions for the market, the non-optimal solutions recognized their market loss and had an opportunity to either modify their invention to conform to market expectations, or recognize their invention was not the optimal market solution and to leave the market for another market - or acquire the rights to the optimal solution.

    In any case, the greater array of choices and a more optimal market solution can be attained by intellectual property rather than permitting the market to stop with the first, probably non-optimal, solution.

    The problem with the patent system is that it does not allow real market competition.

    If people use one invention to spur themselves on to another, real market competition will occur.

    Now, I will grant you that there are exceptions. A patent can be so broad as to halt further development of a really good invention for an inordinate amount of time (Watt's patents, the Wright Brothers patents). However, it actual practice this has been rare. Further, in some cases an overzealous use of IP can lead to anti-trust suits and other negative things for the patent holder. I think we have seen that one good invention quickly leads to another, frequently competitive invention that avoids the ground covered by the first invention.

    Markets also quite often reward the follower, not the leader.

    If the follower is a better innovator and does a better job getting the product to market, that's GOOD.

    However, if the follower has no desire or ability to be an inventor (Italian pharmaceutical companies, as an example), then when the source of invention dries up, so do they.

    The copiers did not help us at all, they took business that we created with our inventions.

    So you guys made bad business decisions and the market punished you for it. That's how it's supposed to work. I don't see the problem here.

    Then invention stagnated in the that market after the inventors left. The market got what it deserved.

    Now, an interesting, non-efficient market cycle.

    Invention. The invention is improved upon and developed, with substantial IP along the way. The IP expires. Copiers take over the market, and the inventors can no longer afford to stay in the market. The copiers reduce prices until only one or two copiers can remain in the market. Eventually, the remaining copiers realize that competition has been reduced and they raise prices again, once again leading to market inefficiency (you probably recognize this scenario - it was one of my economics case studies). Eventually, the market recognizes the inefficiency and either a new inventor enters the market, or more copiers re-enter the market if the cost of entry is low. If the cost of entry is high, market inefficiency is sustained at a level just below that of entry level for a new competitor, and everyone wonders why the price of a particular item has increased.

    I just love those case studies.

     

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  68.  
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    Lonnie E. Holder, Nov 3rd, 2008 @ 7:41am

    Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    I should clarify, as I did to Wilton above. I'm not saying that copying can't make some money, but the big success stories are never about mere copying. They're all about innovating.

    lol...I am unsure of whether I grant that or not. Teva is essentially a "mere copier." Do they innovate? Well, their forte seems to be reverse engineering of known drugs once the patent runs out. They are a huge success story, though many people have never heard of them. Do they innovate? I do not know. I guess that depends on how you define innovation. They have certainly done quite well with their business model of copying drugs with expired patents. They do very little advertising directly to the public.

    It is possible that innovation leads markets, but that then implies that a copier would in fact be more successful if they were more innovative. Not better than the inventor, but more innovative.

    That makes no sense. If they are a copier, then they are not being innovative. If they are innovative than what's the issue? After all, doesn't that promote the progress?

    Who says a copier is unable to be innovative? However, they do not need to be innovative to save money. They also do not need to be innovative All they need is less overhead, and since reverse engineering an approved drug will always be cheaper than developing the drug in the first place, the copier just needs to copy well.

    Interestingly, though generic acetaminophen is substantially cheaper than Tylenol, and neither the generics or Johnson & Johnson have innovated the product, Tylenol still holds a substantial share of the market. J&J points to really good marketing for keeping market share, which must be true because the generics are hugely cheaper (no advertising costs).

    A better marketer of a bad product often wins out over a poor marketer of a good product.

    You seem to be one of those who falsely doesn't believe marketing is part of promoting the progress. Note the promoting part... A good marketing effort is part of innovation, because promoting the progress means getting it out in the market in a way that people want. The market doesn't care in the slightest what *you* think is the best product. It DECIDES what the best product is.

    You are correct. I am one of those who does not believe that marketing, by itself, promotes the progress. Now, if you are saying, as you did, that good marketing can be important for an inventive product to be successful, I do agree with that. However, great marketing of a bad product just progresses people into buying something they quickly discover they do not want. Unfortunately, a lot of people may have purchased the product without realizing they were buying junk, and by the time they "recognized" the product was junk, the product was no longer being marketed; the marketers had already made their money and moved on.

    So I disagree. If the product wins, then the market has decided it's better. There's no such thing as a good product that doesn't win in the market place. That means it's not a good product, no matter how much you think otherwise.

    Yes, and no. Betamax was technically better than VHS, but VHS won out. The reasons are complex, but Betamax was a superior product that lost in the market to the inferior product. You may spin this one any way you wish, but technical superiority did not give Betamax the win. They did fight a long hard battle before they lost!

    Yet another technically superior product that did okay until Betamax and VHS came along is laser disc. There is still a significant following for laser discs, and eBay has a thriving market for them (along with the now-defunct Betamax).

    I would imagine that a lot of Prius drivers disagree with you, but that's another story.

    Then we found out that Paice had already "invented" what Toyota invented, but that's also another story.

    However, again, you seem to be making this weird distinction that somehow we need to protect "inventors." The patent system says no such thing. It says to promote the progress of science and the useful arts. That's innovation in my book.

    Hmmm...well, the patent system says that a patent grants the right to prevent others from making, using or selling the invention as defined by the scope of the claims for a period of 20 years from the date of filing of the patent (if it is a utility patent). I think what the patent system says is quite fine.

    Now, Toyota and Hyundai and Ford are all interesting for another reason. They all copied each other, while either inventing or innovating, depending on their expertise.

    And isn't that what we want? Let the companies in the market build on the work others have done, and create better and better products.

    That's a fantastic scenario.


    Thank you, I think so too. Is it not amazing that ultimately they did all this in an environment that is just loaded with IP, and yet these companies are not whining about how patents are "blocking" their business models. They adapt, improvise and overcome. I just love capitalism and invention.

    Toyota copied GM and Ford, and is now either #1 or close to it. Hyundai copied Toyota, and look where they are. Hyundai is not very inventive, but they are innovative. Copiers make good!

    Not at all. Hyundai was quite innovative in its manufacturing and marketing, making it so that it could introduce a lower cost car. Good innovation there.

    Initially Hyundai was purely a copier, and not a very good one. I lived in South Korea in the 1970's and 1980's. The first Hyundais were poor Toyota Corolla (and some other Japanese version) copies. They were junkie and clunky and very plain. By the 1980's, Hyundai had finally started to move from copier to innovator. Incidentally, my statement above was poorly written. Hyundai started life purely as a copier. Then they start to innovate, which gained them some market share. Now they are inventive and using their inventions effectively. I expect with continued investment in product development and inventions that they will be a market leader in a few years as Toyota becomes more stagnant, unless they turn something around.

     

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  69.  
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    angry dude, Nov 3rd, 2008 @ 8:11am

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    "Again, all I can conclude from this is a true condemnation of our patent system, if they are giving out patents to admitted liars with serious reading comprehension deficiencies, and a weird compulsion to insult anyone who actually has something sensible to say."

    Ha, Mikey makes no f****** sense again and again

    Young fella, perhaps you need a little patent education, and not just that...
    Patent process is not like presidential elections
    You can be a convicted child mollester serving life in prison and still PTO has to give you patent if you invented something novel, useful and unobvious
    As usual, you moronic comments insult everybody's intelligence
    Have a nice day

     

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  70.  
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    nasch, Nov 3rd, 2008 @ 8:12am

    Re: Re: Mike's fans = Child molesters, law school dropouts, Asian driving instructors, serial killers, and Anon Coward

    your reading comprehendsion is near baboon like.

    I love this! If you see me use this in the future remember that imitation, flattery, etc. :-)

     

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  71.  
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    Willton, Nov 3rd, 2008 @ 10:04am

    Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    So I disagree. If the product wins, then the market has decided it's better. There's no such thing as a good product that doesn't win in the market place. That means it's not a good product, no matter how much you think otherwise.

    Someone appears to have forgotten the Beta-Max and VHS battle: Beta-Max was widely considered a better format than VHS, and yet the business practices of VHS, or the makers thereof, were able to win the market, despite VHS being an inferior product.

     

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  72.  
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    angry dude, Nov 3rd, 2008 @ 10:22am

    Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    Come on, dude

    Mikey doesn't know the difference between Beta-Max and VHS

    He doesn't know the difference between early Macs and PCs running DOS either..

    He probably should go out and rent the movie "The Pirates of Silicon Valley" just to fill some gaps in his historical perspective

    The other movie he definitely needs to watch is "Flash of Genius"
    He already commented on that one without even seeing it (!!!)

    Don't you love those PR hacks ?

     

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  73.  
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    Anonymous Coward, Nov 3rd, 2008 @ 10:25am

    It has always been understood, ever since software patents were first found to be valid, that the patents must tie the software to a physical device. This results in the "on a computer" language in software patent claims.

    There are *some* software patents which have omitted the "on a computer" bit. These were drafted by incompetent attorneys and may not be considered valid anymore as a result of this ruling (and likely would never would have been considered valid if the USPTO were not asleep at the switch and if not for the existence of state street). But they are an infinitesimal minority.

     

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  74.  
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    DanC, Nov 3rd, 2008 @ 10:46am

    Re:

    It has always been understood, ever since software patents were first found to be valid, that the patents must tie the software to a physical device. This results in the "on a computer" language in software patent claims.

    There is a two part test to determine process patentability. Either the process must be tied to a "particular machine or apparatus" (a general-purpose computer does not qualify) or the process "transforms a particular article into a different state or thing".

    So, the simple "on a computer" language in many patents is not sufficient to ensure patentability. If the software runs on a general purpose computer, it must meet the second requirement of transformation in order to qualify.

     

    reply to this | link to this | view in thread ]

  75.  
    identicon
    DanC, Nov 3rd, 2008 @ 10:58am

    Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    Someone appears to have forgotten the Beta-Max and VHS battle: Beta-Max was widely considered a better format than VHS, and yet the business practices of VHS, or the makers thereof, were able to win the market, despite VHS being an inferior product.

    Beta-Max was a higher quality product, true. But the majority of consumers decided that a longer recording time was more desirable than picture quality. As such, the market decided that VHS was a better product to meet consumer demands than Beta-Max.

     

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  76.  
    icon
    Mike (profile), Nov 3rd, 2008 @ 11:56am

    Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    Someone appears to have forgotten the Beta-Max and VHS battle: Beta-Max was widely considered a better format than VHS, and yet the business practices of VHS, or the makers thereof, were able to win the market, despite VHS being an inferior product.

    Not at all. It's a myth that we've debunked in the past that Beta was a "better" product. Better was determined by the market, and the market found that VHS was better because it did what mattered: record for more than an hour, something beta did not.

    http://mises.org/story/407

    That article also tackles the myths of other "worse" products winning in the market.

    Just because a few geeks declare one product better doesn't make it so. If it doesn't serve what the market needs, it's not a better product.

     

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  77.  
    icon
    Mike (profile), Nov 3rd, 2008 @ 11:59am

    Re: Re: Re: Blinded by the Dark

    Lonnie, don't have time to respond to all of this right now, but will try to get to it later.

     

    reply to this | link to this | view in thread ]

  78.  
    identicon
    Lonnie E. Holder, Nov 3rd, 2008 @ 1:24pm

    Re: Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    Not at all. It's a myth that we've debunked in the past that Beta was a "better" product. Better was determined by the market, and the market found that VHS was better because it did what mattered: record for more than an hour, something beta did not.

    This statement is all about perspective. Betamax was a better product technically. However, Betamax would originally only record for one hour, and when VHS was able to record up to six hours, Betamax, which eventually would be able to record up to five hours, was officially doomed.

    Interestingly, Betacam, a closely related derivative of Betamax, contested VHS in electronic news gathering, and the market chose Betacam, which ended up becoming a de facto standard. I assume that standard is changing with digital formats, but I am unsure.

    So, if we are speaking of better in terms of technical performance, Betamax was the superior product. However, recording time was a significant want by consumers and consumers, as they will, chose the feature that was important to them. In terms of market performance, VHS was the superior product.

    However, this gets us back to the original point. A superior product may be rejected by the market for a variety of reasons. Betamax succeeded in one market because of its technical superiority, becoming a standard, and failed in another, because of inability to record more than one hour in its initial formats in spite of being the better recording format.

     

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  79.  
    identicon
    What I really meant to say was..., Nov 3rd, 2008 @ 5:06pm

    Mike More about getting in last word than being accurate

    You gotta love bloggers.

    Mike spends 10 minutes researching a topic he later has to backtrack on, and then spends hours clarifying his fuzzy point of view to people who call him out on his inaccuracies.

    Lonnie: Go away. Start your own blog. Either one is fine. But please, in the name of God, disappear. You are a stalking troll whose previous claim to fame was reviewing books on Amazon.com.

    Creepy.

    Mike: I can assure you that you would have been fired for getting the story wrong if you worked for any major publication.

    As for your comment regarding opinions: I suggest that NO one should be entitled to an opinion without understanding the facts---first.

     

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  80.  
    icon
    Mike (profile), Nov 3rd, 2008 @ 5:46pm

    Re: Re: Re: Re: Re: Re: Re: Re: Re: Why I hate this blog so...

    However, this gets us back to the original point. A superior product may be rejected by the market for a variety of reasons. Betamax succeeded in one market because of its technical superiority, becoming a standard, and failed in another, because of inability to record more than one hour in its initial formats in spite of being the better recording format.

    Again, I disagree that Betamax was the "superior" product. Clearly, the market felt otherwise.

     

    reply to this | link to this | view in thread ]

  81.  
    icon
    Mike (profile), Nov 3rd, 2008 @ 5:49pm

    Re: Mike More about getting in last word than being accurate

    Mike spends 10 minutes researching a topic he later has to backtrack on, and then spends hours clarifying his fuzzy point of view to people who call him out on his inaccuracies.

    I spent significantly more than 10 minutes on it, and I was already rather intimately familiar with the arguments related to Bilski, so this would be a rather inaccurate statement on your part. However, unlike you, I won't presume to point out that you should be fired for it.

    Mike: I can assure you that you would have been fired for getting the story wrong if you worked for any major publication.

    Which is why the writers for the AP, the NY Times and Wired -- all of whom had a similar interpretation -- have been fired? Oh wait... they weren't. You are wrong.

    As for your comment regarding opinions: I suggest that NO one should be entitled to an opinion without understanding the facts---first.

    Good luck with that strategy. Though, again, I understood the facts quite clearly. You have yet to point out a SINGLE fact I got wrong.

    But thanks for playing.

     

    reply to this | link to this | view in thread ]

  82.  
    identicon
    Lonnie E. Holder, Nov 3rd, 2008 @ 7:26pm

    Re: Mike More about getting in last word than being accurate

    Lonnie: Go away. Start your own blog. Either one is fine. But please, in the name of God, disappear. You are a stalking troll whose previous claim to fame was reviewing books on Amazon.com.

    Just exercising my 1st Amendment rights. I am absolutely SURE you do not wish to abridge them.

    As for your comment regarding opinions: I suggest that NO one should be entitled to an opinion without understanding the facts---first.

    I absolutely agree. However, none of your comments were facts, they were all opinions.

     

    reply to this | link to this | view in thread ]

  83.  
    identicon
    Lonnie E. Holder, Nov 3rd, 2008 @ 7:32pm

    Betamax - The Superior Product

    Again, I disagree that Betamax was the "superior" product. Clearly, the market felt otherwise.

    If a tree falls in the forest and no one is there to hear it, does it still make a sound?

    You are speaking of relative superiority, as defined by the market, versus absolute superiority. Yes, the market said VHS was superior. Picture quality was lower. The cassettes were too big. Yet, VHS won out. Why?

    I missed a reason earlier. First, the original recording time was one hour. Clearly insufficient even with superior picture. Sony got the recording time up to five hours later, but reason #2 was a killer. Sony got greedy and neglected to license their technology, limiting options. So, Sony had the better technology, but a poor understanding of the market; recipe for failure.

     

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  84.  
    identicon
    Willton, Nov 3rd, 2008 @ 9:21pm

    Re: Mike More about getting in last word than being accurate

    As for your comment regarding opinions: I suggest that NO one should be entitled to an opinion without understanding the facts---first.

    Says the guy who cites no facts to support his opinions.

     

    reply to this | link to this | view in thread ]

  85.  
    identicon
    Telecom Engineer, Nov 3rd, 2008 @ 10:38pm

    Re: Michael Feigin, Esq.

    I would like to pull this discussion back to the case at hand if possible. With regard to that, Michael Feigin, Esq. quotes Justice Mayer as saying:

    Business method patents, unlike those granted for pharmaceuticals and other products, offer rewards that are grossly disproportionate to the costs of innovation. In contrast to technological endeavors, business innovations frequently involve little or no investment in research and development

    I think Justice Mayer has really hit the essence of the problem. As a telecom engineer and developer, I have no love for patents, but have to deal with them daily. Usually, it is trying to work around bad patents that should never have been issued,which do nothing but stifle innovation.

    The Vonage case is a clear example of a company being unfairly destroyed by a bad patent. One company I am familiar with had a business model that was similar to Vonage. Once the case broke, they were forced to outsource all of their termination services to a 3rd party, so their network is now strictly VoIP with no TDM anywhere. Mind you, nothing changed, but they now have added expenses to work around a ridiculous patent that had no right even being granted. Neither the patent holder or society benefits from this kind of stupidity on the part of the US Patent office or the courts that allow it.

    This is an example of the kind of thing Justice Mayer is getting at. The patent was "easy". It would have been created anyway. It didn't require patent protection, even though it may have been novel at the time. If something is "easy" to develop, it will happen independent of patents during the normal course of business. In cases such as Vonage, patent protection is nothing more than a parasite on innovative services.

    In contrast, there are other software patents, such as voice codecs and compression algorithms, which required substantial development effort, and would not have been done without patent protection (They required releasing into the public domain in order to get ITU acceptance and vendor interoperability). Those are "difficult", just like the $800 million drug research, and need to be given their rightful place. If a distinction isn't made along this line, it will be impossible to ever get a reasonable policy.

    I think Justice Mayer has hit on exactly the right issue, and I believe you are mistaken Michael Feigin, Esq. to dismiss this obviously enlightened opinion so quickly. To those of us who are not lawyers, we agree whole heartedly with what she is saying, and want to see this kind of thing coded into law. In my opinion, this is the most interesting statement to come out of the decision, and I hope future courts look at this idea seriously.

     

    reply to this | link to this | view in thread ]

  86.  
    identicon
    Lonnie E. Holder, Nov 4th, 2008 @ 5:25am

    Re: Re: Michael Feigin, Esq.

    Mind you, nothing changed, but they now have added expenses to work around a ridiculous patent that had no right even being granted. Neither the patent holder or society benefits from this kind of stupidity on the part of the US Patent office or the courts that allow it.

    At the risk of starting yet another battle, I need to point out that your ire is misplaced. The USPTO grants patents based on laws and rules established by your Congress, 35 U.S.C. and 37 C.F.R. The USPTO interprets these laws and rules in the Manual of Patent Examination Procedure, or MPEP. The MPEP is modified for several reasons, but one is how courts interpret the laws.

    The intellectual property community (owners, practitioners, etc.) have proposed reforms for years that Jon Dudas, Director of the USPTO, has ignored, pursuing his own agenda instead. Perhaps the biggest reform, and maybe the best, is peer review of patent applications, and a post-grant period where the public may submit information on patent applications and patents, the goal being that patents on inventions that are not novel will either not be granted, or will be eliminated.

    In the meantime, I make periodic comments on PatentFizz, hoping that someone will pay attention when the USPTO is unaware of appropriate prior art, of point out how the USPTO was hoodwinked by an inventor when a patent issues.

    If something is "easy" to develop, it will happen independent of patents during the normal course of business.

    The problem always is, who will determine what is "easy" and what is not? One of the problems the USPTO must deal with continually is hindsight. The solution is always easy after you see it.

    I think Justice Mayer has hit on exactly the right issue, and I believe you are mistaken Michael Feigin, Esq. to dismiss this obviously enlightened opinion so quickly. To those of us who are not lawyers, we agree whole heartedly with what she is saying, and want to see this kind of thing coded into law. In my opinion, this is the most interesting statement to come out of the decision, and I hope future courts look at this idea seriously.

    Please repeat after me. If I want to change the law, I must get CONGRESS to change it. Future courts can only adjudicate on the facts of the current case. CONGRESS must change the law. If you want to do something about business method patents, you must talk to your CONGRESSional representatives.

     

    reply to this | link to this | view in thread ]

  87.  
    identicon
    CreepyLonnie B. Creepy, Nov 4th, 2008 @ 4:46pm

    Mike: Please show us your resume

    Lonnie:

    You are borderline stalking. Please, do America a favor and disappear. Perhaps consider finding a human friend out in the open air. Someone not made of Latex who resides above your mum's fruit cellar.

    Mike:

    Why must you insist on answering everyone who disagrees with your story--again and again and again.

    You doth protest too much. You have lost respect of those readers who actually agree with you. Enough already.

    Lonnie:

    God just spoke to me through the fillings in my teeth. She said she wishes your father wore a condom that one night and now the rest of us suffer your boring, tiresome ramblings.

    God is considering sending Jesus back to earth just to kick you in your bloated rear end.

    You are a big bag of hot gas.

    Stop talking. Now. Please.

    Sincerely:

    Everyone you've ever met, or ever will meet.

     

    reply to this | link to this | view in thread ]

  88.  
    identicon
    Lonnie E. Holder, Nov 4th, 2008 @ 8:34pm

    Re: Mike: Please show us your resume

    I think you need some serious professional help.

     

    reply to this | link to this | view in thread ]

  89.  
    identicon
    LonnieBSilent, Nov 5th, 2008 @ 4:44pm

    Mike: Please show us your resume

    How serious?

     

    reply to this | link to this | view in thread ]


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