When Patents Attack: How Patents Are Destroying Innovation In Silicon Valley

from the can-we-be-done-with-this? dept

This week's episode of This American Life is absolutely worth listening to. The TAL team has been doing more and more amazing investigative reporting work in the past year or so, and this week's episode is called, "When Patents Attack!" which was apparently a last minute change from the much more bland and misleading "Invention Peddlers." The episode was done by Planet Money's Alex Blumberg and NPR's Laura Sydell and there's a written version of the story on the Planet Money blog, which covers most, but not all, of what's on the audio version (and, yes, it's nice that the story refers to Techdirt as an "influential blog," though it looks like they may have only done that in order to have someone they could "quote" calling Intellectual Ventures a "patent troll").

The episode does a nice job showing how much Silicon Valley hates patents -- and highlights how it's got nothing to do with people wanting to "steal" ideas, as patent system defenders will claim, but because ridiculous, broad, meaningless patents get approved all the time. The story quotes patent holders themselves who say they have no clue what their own patents mean and that they're "embarrassed" to have their name on such things.

Most of the story is focused on Intellectual Ventures, of course. And it does a wonderful job basically debunking all of IV's usual talking points (though, honestly, they could have gone farther on a few of the debunkings). IV does its usual song and dance. As it does any time a reporter wants to write about it, IV shows off its "lab," which is where lesser reporters start to swoon. The TAL team quickly points out that absolutely nothing from the lab has ever come to market. Instead, it points out that IV seems to make all of its money from shaking down companies. IV tries to push back and uses the story of "Chris Crawford" as proof that IV is really about supporting inventors.

So, the TAL team digs into the story of Chris Crawford and his patent. And it basically disproves everything that IV claims, and shows, yet again, that IV is nothing but a giant patent troll shaking down companies for cash. First, they look at the patent in question, 5,771,354, for an "Internet online backup system provides remote storage for customers using IDS & passwords which were interactively established when signing up for backup services." Yeah. Online storage. Patented. But not just by Mr. Crawford. TAL talks to David Martin, who analyzed Crawford's patent, and notes that there were over 5,000 patents that were issued for the exact same thing. Not slightly different. The same thing. This is a massive failure of the patent system and the USPTO (which doesn't appear in the story, which is fine, because they would have just given the usual meaningless statements). Another person looked at Crawford's patent, and points to a ton of prior art.

And this is IV's go-to patent in proving it supports innovation.

The piece discussed trying to track down Crawford and the patent. Crawford cannot be found, but it doesn't matter, because he's got nothing to do with the patent. He sold it to one of Intellectual Ventures' 1,300+ shell companies, who transferred it to another shell company, who transferred it to another shell company (still owned by IV), who then "sold" it to "Oasis Research." Oasis Research, like many patent trolls, is a shell company for its owners, who are hidden away. There's simply no way to officially know who owns Oasis Research. And that's because the entire point of Oasis Research is to act as a shell and a shield for its real owners (almost certainly a few patent attorneys). TAL goes to the fake, totally empty, "offices" of Oasis Research, in Marshall Texas. They're in a building with a bunch of other such "companies." They all have empty offices with no employees and certainly aren't doing a damn thing for innovation. They have offices so they can sue in every patent troll's favorite court system: the one in East Texas.

Of course, it turns out that Intellectual Ventures still has an economic interest in the patent -- which is pretty typical. For years, IV wouldn't sue directly, but instead handed off its patents to these kinds of shell companies (the ones it used to claim its mission was to eradicate) and then collect a cut of any of the money made.

One of the more amusing (though, depressing) scenes in the episode (which isn't in the written version) is when the TAL team starts asking some very basic (you would think) questions about the lineage of ownership in Crawford's patent. They talk to Peter Detkin, the former Intel patent attorney who coined the term "patent troll" in talking about Ray Niro (not mentioned in the episode)... but who went over to the dark side in a big, bad way by co-founding Intellectual Ventures. Detkin appears to suffer from a massive bout of cognitive dissonance in trying to pretend that IV is not doing the exact same thing that he claims he hates. The TAL team shows him the USPTO's standard page showing the changing patent assignments, and Detkin basically starts to stutter that he's "unfamiliar" with this particular thing. He literally states:
Detkin: I won't be able to tell you, probably, from looking at this. I mean I'd have to talk to... I'm not even an expert in... You're looking at the USPTO website? I haven't looked at this particular website in a while. I don't know how it's organized....

Alex Blumberg, from TAL: Wait... are you telling me that you're the... (long pause)... you run a patent company and you were the head counsel at Intel in the patent department, and you don't know what the Patent Office website is... you don't know how to read this...?

Detkin: (Frustrated) Look, I can look at this if you want, but I haven't looked at this particular website and I don't now how it's organized, and I'm not exactly sure what it is you're trying to get at... and I'm happy to answer questions, but if you're going to cross-examine me on the record about a patent website, I don't quite think that's fair...
Soon after that you hear IV's PR person jump in and try to stop the interview. Yeah. Detkin claiming he can't understand the USPTO website is just classic.

Anyway, the whole thing is worth a listen. I'm hopeful, but doubtful, that something useful might come of this. When the Planet Money team recently exposed the massive government waste in the form of the dollar coin minting laws, it actually resulted in a bunch of politicians springing into action. I doubt that will happen here, because we just went through about seven years of battles concerning patent reform, and what came out of it was watered down nothingness. Of note: Intellectual Ventures fought hard (and potentially dirty) against patent reform... until it suddenly switched camps, once the reform was watered down so much as to be useless.

The key takeaway, though, is just how incredibly damaging the entire patent system is to actual innovation today, and how pretty much everyone in Silicon Valley recognizes it -- but many are afraid to speak out about it, because they fear getting targeted by flat out bullies like Intellectual Ventures. Our government keeps talking up the importance of innovation and job creation... and then leaves us saddled us with a patent system that does everything possible to hinder innovation and destroy companies. I'm glad that mainstream outlets like This American Life are covering the story. I just wish I were more optimistic that it would actually result in some kind of change.

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  1. identicon
    Matt, 4 Oct 2011 @ 11:24am

    Re: Re: Re: Re: No, decline is due to manufacturing has moved to China.

    Two examples of how IP wasn't a major concern before mass exodus litigation began in the 90s.

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