Wednesday, November 13, 2013

Just in Case you Thought Patents protected the small from the big.

Originally from OpenSource Way
I strongly object to all forms of software patents. I also believe other patents need to be reformed or even outright abolished.  When I tell people this I usually get a lot of pushback.  One of the arguments I hear is that Patents are there so that big companies can’t “steal our ideas”.  Obviously, I disagree.  And last week’s revelation about Microsoft’s 2 Billion dollar patent profits from Android Phones illustrates my point.

The problem with this argument, I think, is people’s view of how new inventions come about.  I think we all have a collective image of a quirky scientist working away in a tiny lab in almost complete isolation. Another image is some small start-up company spends years of time inventing some revolutionary new gadget or process.  In both cases, you might feel that it would be unfair for a big company to swoop in and “steal” their work and make a bunch of money off it.

It is these images that, I think, drive public support for patents.  But in reality these are exceedingly rare cases.  In reality almost all inventions are either small improvements on existing products, and\or was the result of teams of people working for an already large corporation or public institute.

Instead, what happens more often is that big companies use their patents to file lawsuits or threaten to file a lawsuit to keep would-be competitors from offering better and lower cost products.  That is what is happening with Microsoft.  Just the threat of being sued by Microsoft has scared businesses to collectively pay Microsoft 2 billion dollars in tribute every year.

What effect does this have on competition?  Well, first of all, it’s going to scare companies from getting into the smartphone business.  Less competition is going to drive up cost and drives down quality.  Secondly, any company that wants to get into the smartphone business will have to make sure that they have the money to either pay the patent tribute or hire an army of lawyers to defend itself in court.  Thus raising the start-up costs and further driving away potential competition.

Now think back to that quirky scientist and start-up company with a revolutionary gadget.  Let’s say they come up with a software patch that makes the android phone’s battery last longer.  Now let’s say they try to sell it as a patch for Android.  Uh oh, here comes Microsoft claiming that the software violates a Microsoft patent.  Now the company can’t sell it, even though they may have come up with the idea completely separate from Microsoft.  So now, instead of patents protecting the inventor from big business, it is big business that is protected from the little guy.

You might think that my scenario from above is contrived.  But that is exactly what happened when General Electric sued the small medical imaging company, DR Systems.

The patent in the case, entitled “picture archiving and communication system employing improved data compression,” was issued to Fairfield, Conn.-based GE in October 2003. 
DR Systems and GE compete in the market for Radiology Information Systems (RIS) and Picture Archiving and Communications system (PACS).
RIS is used by radiology departments to store, manipulate and distribute patient radiological data and imagery. The system generally comprises patient tracking and scheduling, result reporting and image tracking capabilities. 
Of course it isn't just small companies.  Large companies waste a lot of time suing each other as well.  Patent trolls are a major problem in the computer and software industry.  There are now entire companies whose sole existence is to file or acquire software patents and then sue everyone in sight.

Of course, big companies aren't immune to all this patent absurdity.  Google and other Android makes are being sued by their smartphone competitors.

Google probably knew this was coming. When it lost out in the Nortel auction, the company's top lawyer, David Drummond, complained that the Microsoft-Apple patent alliance was part of a "hostile, organized campaign against Android." Google's failure to get patents in the Nortel auction was seen as one of the driving factors in its $12.5 billion purchase of Motorola in 2011.
Rockstar, meanwhile, was pretty unapologetic about embracing the "patent troll" business model. Most trolls, of course, aren't holding thousands of patents from gigantic technology companies. When Rockstar was profiled by Wired last year, about 25 of its 32 employees were former Nortel employees.
The suits filed today are against Google and seven companies that make Android smartphones: Asustek, HTC, Huawei, LG Electronics, Pantech, Samsung, and ZTE. The case was filed in the Eastern District of Texas, long considered a district friendly to patent plaintiffs.

The problem of these patents gets even more absurd and harmful.  Monsanto has taken to suing small time farmers for "patent infringement" because they planted seeds that they cultivated themselves.

According to the report, Monsanto has alleged seed patent infringement in 144 lawsuits against 410 farmers and 56 small farm businesses in at least 27 U.S. states as of January of 2013. Monsanto, DuPont and Syngenta together hold 53 percent of the global commercial seed market, which the report says has led to price increases for seeds -- between 1995 and 2011, the average cost of planting one acre of soybeans rose 325 percent and corn seed prices went up 259 percent. 
In the case of "Bowman v. Monsanto Co.," Bowman allegedly replanted second-generation seeds that had been purchased legally from a licensed Monsanto distributor instead of buying new seeds. Monsanto claims that in doing so, Bowman was essentially stealing its product. Monsanto has won battles in several lower courts.

Can you believe that?  If you purchase corn seeds and save 10% of your crop to replant next year, you're committing a crime!  I don't know if this patent absurdity can get any worse than this.  Whether it is a tech corporation like Microsoft extracting 2 billion from potential competitors, or Monsanto controlling small time farmers, patents are more likely to benefit the powerful at the expense of the small and the greater economy.
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