President Obama Admits That Patent Trolls Just Try To 'Extort' Money; Reform Needed

from the didn't-expect-that dept

As we noted yesterday, President Obama is holding a “Fireside Hangout” via Google Plus today. In a bit of a surprise turn, he took a question about patents and patent reforms, with a specific question about software patents. And, his response was surprising. He admitted that there was a problem, and that there were some companies who were clearly not doing anything other than trying to “extort” money from others. Furthermore, while he pointed to the patent reform bill that passed in 2011, he also admitted that it really only went “halfway” towards reforming the patent system as far as it needed to go. If you click on the video, this takes place around 43:30 in the video.

He also used the question to address a few broader issues, including innovation, privacy, the internet and the rapid change of technology.

Question: High tech startups are an important engine of the American economy. When I go around and talk to other enterpreneurs, what I hear is that they’re afraid that if they become successful, they’re going to be targeted by patent trolls… What are you planning to do to limit the abuse of software patents?…

Obama: A couple years ago we began a process of patent reform. We actually passed some legislation that made progress on some of these issues. But it hasn’t captured all the problems.

The folks that you’re talking about are a classic example. They don’t actually produce anything themselves. They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them. Sometimes these things are challenging. Because we also want to make sure that patents are long enough, and that people’s intellectual property is protected. We’ve got to balance that with making sure that they’re not so long that innovation is reduced.

But I do think that our efforts at patent reform only went about halfway to where we need to go. What we need to do is pull together additional stakeholders and see if we can build some additional consensus on smarter patent laws.

This is true, by the way, across the board, when it comes to high tech issues. The technology is changing so fast, we want to protect privacy, we want to protect people’s civil liberties. We want to make sure the internet stays open. I’m an ardent believer that what’s powerful about the internet is its openness and the capacity for people to get out there and introduce a new idea with low barriers to entry. We also want to make sure that people’s intellectual property is protected. Whether it’s how we’re dealing with copyright, how we’re dealing with patents, how we’re dealing with piracy issues. What we’ve tried to do is be an honest broker between the various stakeholders and to continue to refine it — hopefully keeping up with the technology — which doesn’t mean that there won’t be some problems that we still haven’t identified and that we have to keep working on.

Some will reasonably be less impressed by the hedging at the end, but this is the first statement we’ve really seen that the administration believes that patent trolling is a problem (even to the point of referring to it as extortion). It’s also the first we’ve heard from the administration that they only consider the last patent reform bill (the AIA) a “halfway” solution. To date, the administration had acted as if passing that was fixing everything.

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Comments on “President Obama Admits That Patent Trolls Just Try To 'Extort' Money; Reform Needed”

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Internet Zen Master (profile) says:

Wait a second...

This part in particular stuck out to me:

The folks that you’re talking about are a classic example. They don’t actually produce anything themselves. They’re just trying to essentially leverage and hijack somebody else’s idea…

Does that line remind anyone else of a particular pair of Associations of America, or is that just me?

In all seriousness though, it’s nice to see that Obama is at least vaguely aware of the problems in the tech world…

That being said, the cynic in me believes that this is just Obama’s way of pandering to the internet, and he basically sees them as nothing more than another special interest group.

As the Zen Master says, “We’ll see.”

Anonymous Coward says:

Re: Qs

If you have followed this blog, you will know that several meetings sponsored by the patent office are being held. It doesn’t take a leap to guess that the patent office is being forced to get some input from “innovators”. The problem as usual is that the people in power are extremely pro-patent and their reporting of these meetings to the politicians will likely take one of several forms:

– Several misinformations are circling
– There was no specific consensus reached
– The consensus is “blabla.” platitudes and politician speak for nothing or close thereto
– A list of extremely specific details and therefore pure patent lawyer suggestions with no impact at all or an actual worsening of patent law!

As has been told in an older article it was earlier specifically about very narrow parts of patent law and any kind of broad critisism was being slammed as “off topic”. I think the politicians mean well, but the bureaucracy around them has huge conflicts of interest (mostly their job depending on a certain opinion, a future job depends on it or other favours from some companies down the line depends on it, just as they are very involved in judicial specifics and cannot see the forest for legal trees etc.).

I am sorry, but it will be a huge surprise if they can create something that fundamentally improves the system.

Anonymous Coward says:

Re: Extorter-In-Chief

Considering that the U.S. pays 10 times more for health care, on average than Mexico, but the U.S. Mortality rate is only 3-5 years, on average, better than Mexico, I think that maybe we should start looking at other options.

Just to point it out, Britain, France, German, Spain, Norway and Sweden all pay less in Health Care than the U.S. does and on average each country has people living anywhere from 5 to 25 years longer than people in the U.S. does…

Well, I think it warrants some thought.

Fact checker says:

Re: Re: Extorter-In-Chief

You need to check your facts A.C.
U.N. and WHO figures show that life expectancy in the US is about 78 years, compared to 83 for the highest countries like Japan, with UK and Sweden between 80-82. Clearly there is work to be done to close the gap, but your 5-25 years assertion is total bollocks.

Anonymous Coward says:

Re: Re: Re: Extorter-In-Chief

Really? Shoot. My mistake then.

Okay, I think I know where I got it wrong… I got the numbers mixed up and there’s a 5 year gap between the U.S. and places like Switzerland and Japan, but there’s also more than 25 countries who have a longer life expectancy than the U.S. (the U.S. is 40th), and Mexico’s life expectancy is only about 2 years less than the U.S.’s life expectancy, and the U.S. still pays 10x more than Mexico (Mexico pays something like 830 dollars U.S. a year while the U.S. pays around 8200 dollars or so U.S. per person per year for health care)

PaulT (profile) says:

Re: Extorter-In-Chief

Yep, so that when your mooching ass ends up in hospital without insurance, the people who are paying insurance don’t have to pay your bill. Unless you already have insurance in which case this doesn’t really make this an issue.

It’s always hilarious to me when Americans complain about this aspect. You’re already paying more taxes per capita than any other developed nation for healthcare, every taxpayer is already contributing to at least 3 healthcare systems (Medicare, Medicaid, VA) that they’re not personally entitled to, and yet many people aren’t covered at all and even those who are covered can be bankrupted. It’s amazing that some people are proud of that system.

btr1701 (profile) says:

Re: Re: Extorter-In-Chief

Yep, so that when your mooching ass ends
up in hospital without insurance, the people
who are paying insurance don’t have to pay
your bill. Unless you already have insurance
in which case this doesn’t really make this an
issue. It’s always hilarious to me when Americans
complain about this aspect.

It’s not the requirement to buy health insurance that’s the basis for the complaint. It’s the more fundamental question of from where the government’s legal authority to impose the requirement in the first place originates. Health care just happens to be the subject matter around which this issue arose.

Your comment indicates you’re not American, so if I’m mistaken and the following is pedantic, my apologies.

The U.S. Constitution proceeds from the assumption that government is a necessary evil and should be constrained whenever and wherever possible, and that of all the levels of government, the central (federal) government should be the most limited. Article I, Section 8 lists the powers of the federal government. Those are the only things the federal government is empowered to do. Amendment X reinforces that notion by saying that if a power is not specifically listed in Article I, Section 8, it does not belong to the federal government, but rather to the state and local governments.

Neither health care regulation, nor the power to compel citizens to purchase goods and services from each other are powers listed under Article I, Section 8, therefore any rational reading of the Constitution would determine that Obamacare and its purchase mandate are unconstitutional and at best, only the state governments could impose such requirements on the people.

Unfortunately, however, we’ve been in a state of lawlessness in this country regarding the Constitution since the late 1920s, when the Supreme Court started ‘interpreting’ the Commerce Clause so broadly and irrationally that virtually everything that exists and/or draws breath is deemed to ‘affect interstate commerce’ and therefore may be regulated under Congress’s Commerce Clause power. Which is how Obamacare in general survived constitutional scrutiny. Such ridiculous interpretations contradict the text and intent of the Constitution itself and the stated intentions of those who wrote it, but the powerful people who benefit don’t care.

Add to that the Supreme Court’s ruling that the purchase mandate is a tax, and therefore within Congress’s power to impose levies, and the corruption is complete, especially when you look back and find that during the debate over the passage of the Obamacare bill, everyone from Obama himself to Pelosi to Reid and on down was shouting to every camera they could find that the purchase mandate was not a tax, because they didn’t want to be seen as raising taxes on the middle class. Then the moment the bill is challenged in court, the administration claims it’s perfectly constitutional because it’s a tax.

The challenge to the purchase mandate (quixotic though it may have been) had nothing to do with who pays what for people who are uninsured. It had to do with the broader question of, if the federal government has the power to order you to buy health insurance whether you want it or not, is there anything it doesn’t have the power to do? If the government decides tomorrow that the car industry in Detroit is failing and the economy is in danger because of it, can it order every American who makes more than $70,000 to buy a car from GM in order to shore up the company? Under the Supreme Court’s Obamacare ruling, the answer is yes, it could.

PaulT (profile) says:

Re: Re: Re: Extorter-In-Chief

Thanks for the insightful explanation, and you’re right, I’m not American but I do have family there – my uncle is the only person I know who has ever been bankrupted due to medical bills. Nobody else I know has ever been faced with that possibility. So, there’s a personal element in there for me.

However, I would note that the mandate only exists as a compromise. If true single payer insurance or some reasonable facsimile existed – as it does in every other civilised country – then it would not affect the things you’re talking about any more than Medicare currently does. The mandate largely exists to appease those idiots bleating on about socialism when the idea of true public healthcare is raised, and it’s just a compromise to appease them. If people pushing for true healthcare reform had their way, the mandate wouldn’t be necessary.

Interestingly, when the healthcare debate in the US was raised, I watched a documentary about the foundation of the NHS. Every single idiotic argument raised by right wingers in the US was mirrored by the same arguments by UK right wingers in the 1940s/50s. They were wrong, and now the UK has a healthcare system that largely takes care of its citizens, and for all its flaws no politician would dare dismantle it. A shame that US citizens still lack preventative care and face huge bills because some politicians are repeating argument proved false60-70 years ago.

“If the government decides tomorrow that the car industry in Detroit is failing and the economy is in danger because of it, can it order every American who makes more than $70,000 to buy a car from GM in order to shore up the company?”

Hold off on the strawman arguments. Healthcare is a very different thing from private manufacturing – plus don’t forget that every American is ALREADY paying for at least 3 different healthcare systems with their taxes. People shouldn’t have to choose between necessary care and bankruptcy, and you shouldn’t have a system where people who can’t pay a ransom only get emergency room or charity care.

I would also note that you’re free not to buy the insurance if you don’t want to. You just don’t get the tax break that insurance payers get – but you still get emergency care on someone else’s dime either way.

ahow628 (profile) says:

Brrr, it's cold...

Obama is about the most blustery president we’ve ever had. The guy talks about the best game out there but I’ve yet to see him actually follow through with his principles.

Close Guantanamo? Just kidding!
Respect the constitution? Only further than 100 mile from the border!
Fix patents? We’re half way there!
Open and free internet? We’ll keep CISPA around JUST IN CASE.
Being a US citizen? We might need to kill you later, so don’t go too far.

staff (user link) says:

another biased article

?We passed some legislation last year, but it hasn?t captured all the problems,? Obama said during the Google+ Hangout, hosted on YouTube, in response to a question about what the government was doing to promote innovation ? and protect against what the questioner called ?patent trolls.?

This is just dissembling by huge corporations and their paid puppets. The purpose of their bill was only to help large firms steal and destroy their would be small competition. What they now propose will only make matters worse. That?s all that needs to be said about Obama. He?s either hopelessly duped, or just another crooked politician taking a pay off from big corporations.

Just because they call it ?reform? doesn?t mean it is.

?patent reform??America Invents Act, vers 2.0, 3.0?

?This is not a patent reform bill? Senator Maria Cantwell (D-WA) complained, despite other democrats praising the overhaul. ?This is a big corporation patent giveaway that tramples on the right of small inventors.?

Senator Cantwell is right. All these bills do is legalize theft. Just because they call it ?reform? doesn?t mean it is. The paid puppets of banks, huge multinationals, and China continue to brain wash and bankrupt America.

They should have called these bills the America STOPS Inventing Act or ASIA, because that?s where they?re sending all our jobs.

The patent bill (vers 2, 3, etc) is nothing less than another monumental federal giveaway for banks, huge multinationals, and China and an off shoring job killing nightmare for America. Even the leading patent expert in China has stated the bill will help them steal our inventions. Congress passed it and Obama signed it. Who are they working for??

Patent reform is a fraud on America. Congress and Obama are both to blame. This bill will not do what they claim it will. What it will do is help large multinational corporations maintain their monopolies by robbing and destroying their small entity and startup competitors (so it will do exactly what the large multinationals paid for) and with them the jobs they would have created. The bill will make it harder and more expensive for small firms to get and enforce their patents. Without patents we cant get funded. In this way large firms are able to play king of the hill and keep their small competitors from reaching the top as they have. Yet small entities create the lion?s share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, ?startups aren?t everything when it comes to job growth. They?re the only thing.? This bill is a wholesale destroyer of US jobs. Those wishing to help fight this bill should contact us as below.

Small entities and inventors have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Congress and Obama tinkering with patent law while gagging inventors is like a surgeon operating before examining the patient.

Those wishing to help fight big business giveaways and set America on a course for sustainable prosperity, not large corporation lobbied poverty, should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

Please see for a different/opposing view on patent reform.

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