Legal Issues

by Mike Masnick




NTP Co-founder Finds New Patents To Threaten Companies With

from the fun-fun-fun dept

Soon after RIM decided to settle their lawsuit with NTP for over $600 million, just as most of the NTP patents were being rejected by the patent office, we noted that other patent owners would be emboldened to go on similar fishing expeditions. Apparently, at least one of them decided to hire the NTP lawyer himself to do so. Mousky writes in to point out that a Canadian company, Belzberg Technologies, has hired Donald Stout, the lawyer who teamed up with Thomas Campana to form NTP as a patent holding firm. Belzberg looks like a similar situation. They hold a broad patent that they believe covers all electronic stock trading -- and they now want everyone to pay up. This again highlights a problem with the patent system. If, as Mr. Belzberg claims, "without that technology there wouldn't be any electronic trading," then that suggests that, without such a patent, no one else would have figured out how to trade online -- which seems highly questionable. Yet, with the way the patent system works, he now gets to tell other companies that they need to pay up -- most likely for something they came up with entirely without Belzberg's patents. As the internet took off trading online became an "obvious" next step of the technology -- but because one guy filed such patents, he now gets to waste lots of people's time and money on such patent threats. Again, we wonder how this promotes innovation.

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  1. icon
    Mike (profile), 22 May 2006 @ 3:45pm

    Re: Speaking of fun-fun-fun

    A patent does not have anything to do with whether someone WOULD HAVE figured it out. Someone apparently DID figure it out and PATENTED IT.

    Which of course goes against the very purpose of the patent system. The purpose is to put in place incentives to innovate where the market does not provide sufficient incentives. So, yes, the fact that someone else would have figured it out is absolutely key to the argument, because it makes it clear that there's NO GOOD REASON for the government to hand one player an inefficient monopoly.

    Mike also argues against the fundamental notion that the first to develop should win the rights to the monopoly based on some vague notion that this prevents "innovation" (pirating).

    First, it's not a vague notion, but one well supported by research. Innovation is an ongoing process. Adding monopoly control at the first step hinders the later steps. That's not "vague" is shown in the research, which I've pointed out here, and which you like to ignore because you're a patent attorney.

    However, Mike never considers the economic loss of two companies trying to make two versions of the same thing and then one of them going belly up at the end of the day (think VHS vs. Betamax if you can) or at least neither reaching a good economic critical mass. Its called a Nash equilibrium or market coordination problem for wannabe economists (and wannabe lawyers) like Mike.

    This is both false and misleading. We've discussed repeatedly the inefficiencies of standards competition, which Rob (the guy writing the message above) would know if he actually had read us for some time, rather than showing up and pretending he knows everything we think (and then, when we point out where he's wrong in his assumptions, he resorts to personal insults).

    A lack of a standard has little to do with patents, and much to do with the standardization process. So, Rob's point here is pretty much meaningless. However, in the specific case he made (VHS vs. Betamax), there was very little economic waste, as he implies. Instead, the competition was fierce and quick, leading to a defacto standard in very short order. To suggest that VHS never reached a good economic critical mass is laughable to anyone who has ever been to a Blockbuster or bought a VCR.

    What's most amusing to us is that Rob keeps claiming our position is Marxist, yet here he is saying that we're better off economically with a centrally planned economy where the gov't chooses before hand who gets the monopoly. Funny, that seems a lot less capitalistic to us than letting the market sort it out.

    In fact, in the VHS vs. Betamax case, too many people say that the Betamax was somehow "better," but that was wrong. It wasn't better in the main selling point that matter: how much it could hold. The VHS could hold much more video, and that's why it won out. However, no central planning politburo could have predicted that ahead of time, yet that's what Rob would prefer, apparently, rather than letting the market sort it out.

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