Investors Speaking Up About Patents Harming Innovation

from the good-for-them dept

One of the key things that we hear from people who defend the patent system is that patents are necessary for raising money from venture capitalists, and that investors won't invest if you don't have a patent. We've debunked that claim plenty of times, showing some of the most respected investors around who are equally as fed up with the problems of the patent system as we are. One of the most respected venture capitalists around these days is Fred Wilson. I have a friend (who once worked for a Wilson-funded startup) who insisted that should he ever start a company, he'll go talk to Fred, and if Fred won't invest, he'll know something's wrong with the idea. Over the past few years, Fred has been growing gradually more and more agitated by the problems the patent system causes, and has spoken out about it numerous times, with his latest words clearly showing his anger, as he says "enough is enough" when it comes to software patents specifically, mostly in response to the Lodsys lawsuits:
The whole thing is nuts. I can't understand why our goverment allows this shit to go on. It's wrong and its bad for society to have this cancer growing inside our economy. Every time I get a meeting with a legislator or goverment employee working in and around the innovation sector, I bring up the patent system and in particular software patents. We need to change the laws. We need to eliminate software patents. This ridiculous Lodsys situation is the perfect example of why. We need to say "enough is enough."
Fred isn't missing a chance to bring this up repeatedly, and he recently made the same point on a panel discussion with two other very highly respected investors, David Lee and Chris Dixon, who agreed about the problems of the patent system (with slightly different takes on it than Fred):
The key part from Wilson, again:
"The basic problem with patents is that you're trying to assign property rights to something that doesn't deserve property rights. The fact that these property rights end up in the hands of financial owners as opposed to the original inventors just exacerbates the problem. The basic problem is that Chris [Dixon] and a bunch of engineers can be sitting at Hunch designing some amazing new feature and somebody unbeknownst to them has a patent on this feature and never actually implemented it and can now screw them over… It’s just not right, it shouldn’t exist."
Dixon points out a key part of the problem is that so many patents are clearly obvious to anyone skilled in the art. He notes that any competent engineer could create what's found in the vast majority of software patents, and notes that the examiners simply aren't competent enough to recognize what's obvious. Dixon, who is both an investor and a long-term entrepreneur, certainly knows these things. What's amazing to me, honestly, is how few people in Silicon Valley actually think patents are a good idea any more. The system has become so distorted that most of the people they're supposed to benefit the most don't want them, but feel compelled to get them due to the system. What a massive amount of waste, leading to a mess that holds back innovation.

Wilson makes one other statement that I thought was interesting.  He compared patenting software to patenting music, noting that neither makes sense.

Filed Under: chris dixon, fred wilson, investors, obviousness, patents, software patents

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  1. identicon
    Anonymous Coward, 9 Jun 2011 @ 9:15am

    Re: an investor and a long-term entrepreneur (he should know) --- is he Madoff ?

    "Lets face facts guys, if there was prior knowledge then that would most certainly be used for the making void of these patents, it would be easy to show prior knowledge if in fact it existed. Trivial in fact to do."

    It's trivial to find prior art for the vast majority of software patents. It's hard and expensive to actually challenge the patents. That's why it's not done.

    For the record, I am a successful software engineer of over 25 years, I have started two very successful software businesses, and I have invented a few new, useful, and non-obvious software techniques.

    I've ever patented anything. This is for two reasons:

    First, software patents should not exist, period -- software is a mathematical process, explicitly unpatentable. Not only that, software patents have done, and continue to do, great harm to the software industry.

    Second, obtaining and owning a software patent is a distraction and expense that gives you no real market advantage if you want to be in the business of making software (rather than playing the system). Once you have the patent, you have to police it to make it pay. And once you're doing that, you're in a different business. You're spending less time doing what you really want to be doing: writing great software.

    Practically speaking, the software business moves so fast that, if you're doing it right, you've already extracted most of the money you're going to within the first couple of years of the product life cycle. Then, you're on to other, better things before your competitors have gained any real advantage from your "invention" anyway. Patents bring nothing to that sort of party.

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