A patent decision to remember

I learned from Groklaw.net that there has been an incredible decision at the Federal Circuit of Appeals concerning patents. In CLS Bank v. Alice Corp., the court issued an en banc ruling, that, if left to stand, will likely wipe out more than 320,000 business method and software patents. This isn't just my own estimate. This is an estimate by one judge who wrote a dissenting opinion attached to the courts decision.

One judge even expressed concern about a "free-fall" in the patent system, that the decision will destroy an enormous amount of wealth in terms of patents. What is interesting to me is that the judge seems to pay no mind to the public domain, to the soil needed for innovation. Losing these patents and more like them, means that business owners won't have to wake up in the middle of the night worrying that they could go bankrupt defending against a troll.

I'm sure the losing party, Alice Corp., has already filed an appeal or is planning to. The question remains as to whether or not the Supreme Court will hear the appeal. Given the breadth and the scope of the decision, it is likely that SCOTUS will hear it. On the other hand, if certiorari is denied,  the SCOTUS could easily let those patents fall.

Patents are a form of regulation. Many conservatives have complained about regulations, but they don't talk much about patents. I never hear them saying that it would be a good idea to severely restrict the number and increase the quality of patents. To compare, if we removed 320,000 patents from the marketplace, that would be like removing a million plus pages of regulations from the market.

These "idea patents" are written in vague, broad language. The language is so broad that the patents offer no specific way to build the invention, providing no effective limit on the enforcement of the patents. The Constitution prohibits vague laws. Why is there an exception for patents?

I wouldn't be surprised to find that many investors who are aware of the ruling are taking short positions on publicly traded companies with a large software and business method patent portfolio. That would include companies like Microsoft, Apple, and Nokia. Patent trolls like Intellectual Ventures and Acacia would become much less of a threat. Most interesting of all is the patent portfolio of MPEG-LA. What will become of them and their threats against VP8 and Ogg? What about patent protections for DVDs and Blu-Ray?

This is one incredible decision that should be allowed to stand. I hope it does.

Mind Games

In the olden days, we had an Atari 2600 with a joystick for a game controller (don't ask me how that term got coined, I don't know). We played all sorts of games from Pong to Tank Battle, a game I could never seem to win with Dad. We finished each gaming session with sore thumbs and palms, but we had fun playing.

I've been away from gaming for a long time. I guess I'm just not that into games, but this post on Slashdot caught my eye. The Neurogamers Expo? They could be paving the road to playing mind games as they experiment with and perfect the the brain computer interface.

Here is what makes their work significant. To start, they could enable an entirely new workforce formerly incapable of working on computers. For example, Iraq War veterans who have suffered hand injuries that prevent them from typing could type and move a mouse again. They may even become so proficient with their minds while working on their computers, that they can outperform people who can type and move a mouse by hand.

I believe that the brain computer interface will become far more efficient that what we use now. Keyboards and mice will be with us for a long time to come, but they will be supplanted and eventually replaced by the brain computer interface.

This is the dawn of the commercially available brain computer interface. Are you ready?

Why can't we brick our phones when they're stolen?

Australia and England do it. But we don't. The land of Oz has seen mugging and robbing for smartphones take a dive when phones are required to be bricked when a customer reports the phone to be stolen.

Our personal electronics have become little gems. They are full of personal information, music, and expensive functionality that you won't find in lesser devices. Smartphones fetch good money on the black market.

There has been a lot of hand-wringing over the phones and their theft, yet the carriers and the manufacturers have shown little desire to fix the problem. My wife had a phone stolen once and I asked T-Mobile to brick it, but they would not. Why not? They did not give a reason why.

This is a story that many journalists have reported on. Even today, The Register in *England* is running a story about smartphone theft in the U.S. It seems that the New York Attorney General is asking the major manufacturers why they can't build a "brick my stolen phone" feature into their gear.

I think he's asking the wrong party. He needs to go to the carriers for the answers. Why?

Look at the subsidy built into the phones. Buy an unlocked iPhone and you're talking $500-700. Even a new Samsung Galaxy S III will cost more than $500 at retail. Now if you buy with a two year contract, you're going to pay substantially less, but you're on the hook for two years. The value of the hardware is peanuts compared to the money the data plans bring in. The economics are simple, phone companies have absolutely NO incentive to brick a stolen phone. Zero.

Who are the carriers looking out for? Certainly not us, because they really can't resist the lucre of the data plan. The carriers are looking out for the CEO and the board of directors, plain and simple. These very important people need to pay for maintenance on their summer home in Spain when they're not on vacation.

So the Attorney General of New York is going to get some info from the phone makers. Then if he's smart, he's going to talk to the carriers because the manufacturers are just doing what the carriers ask. If he doesn't start working on the carriers to change their policies, he may be tacitly acknowledging that stolen phones are a profit center for the carriers.

So here's something to consider. Every phone has an EIN printed on it and burned into the hardware. Why is it that the carriers are not matching EINs for stolen phones? It's not that hard to call all the carriers and ask them if the phone has been stolen. Carriers could be required to identify the phone as stolen. We could even have a national registry of stolen phones that makes it easy to track them down, or to at least verify if the phone was stolen before purchase.

Carriers have the ultimate power and responsibility for the phones they sign up for subscriptions. But they are not acting like responsible corporate citizens when they fail to help the rightful owners track down their phones and help prosecute people who buy stolen goods. Apply the pressure to the manufacturers and the carriers, then the market for stolen smartphones will dry up.

Subtle evolution of the car

I've been driving for oh, I don't know, 30 years. During that time, I've had the opportunity to witness many innovations and subtle improvements in the humble automobile. I'd like to share some of them with you, with a glance towards the future.

I can remember my first car, a 1973 Chevy Malibu sedan. I loved the way the colors of sunset would bounce off the hood. It was pretty ho-hum. No air conditioning, I had to install my own sound system and it could barely hold 80mph on the freeway (yes, I was a leadfoot).

It was easy to see what was going on under the dash. Wires, tubes and shafts everywhere. The interior was devoid of the creature comforts we have become accustomed to. In the back seat, there were only lap restraints for seat belts.

I have some fond memories in that car, but I can honestly say that I don't miss it.

I remember when anti-lock brakes came out. It would be a long time before I bought a car that had them, but I read Car and Driver magazine, so I knew of their benefits. I learned how to pump the brakes when I needed to stop in slick conditions or if I could hear the tires squeal in my older cars. Learning that skill was also a source of relief when I encountered the need to use it.

I have had the opportunity to use anti-lock brakes in my current car, a 2007 Honda Civic sedan. I am glad that they are there. They have saved me some serious coin and from personal injury. It is a curious sensation to feel the pedal pulsating as I applied all the pressure I could muster in the moment to keeping the brakes on.

Another feature I like about current cars is the automatic everything. I have a key fob that locks all the doors. If I have any doubt that I locked the doors, even when the car is on the third floor of the parking structure, I can just be near the car, press a button on the fob, and the car would honk to let me know it was locked. This could be science fiction 30 years ago. But it is our reality.

The stock sound system in my car is better than anything I might have bought in the 80s. Thanks to computer drafting and engineering systems for car design, the speakers can be designed to match the acoustic properties of the interior of the car. The sound system in my car is not even the top-end system and yet, it still sounds great.

I'm rather nostalgic about family road trips. I can recall what we used to do to keep the kids occupied. Dad would give $5 to the first kid to spot the highway patrol. We'd play that license plate game where we look for all the letters of the alphabet. We'd sing songs together. I guess those days are gone.

With the rise of the SUV, we see the "living room on wheels". LCD screens in the seatbacks to play movies for the kids. 5.1 surround systems for music, complete with on-board storage for all of our music. Some are even running Windows for a complete package. I would never buy a car with Windows running on it, anywhere. I know enough about Windows to know that it doesn't belong in a car.

Electric cars have been a dream for a long time, but now they are close to reality for many of us. Just plug in at home and at work and your commute is covered. You may not be seeing gas pumps for very long anymore.

The most interesting innovation to come is the self-driving car. Google got the ball rolling and has a car that has seen several hundred thousand miles. There are at least 20 known examples of cars that drive themselves. Will kids born in the last decade learn to drive like the current crop of drivers?

I can imagine a life where the trip to California is spent playing with the kids instead of driving the car. On the same trip, we could take a nap, listen to music, watch a movie or just watch the scenery fly by. I'm sure my instincts will be on fire for awhile, but after that, we can learn to trust the car.

Can We Innovate Out of this Recession?

God only knows how many words have been typed to identify the cause of this recession. I believe that by the time we get to the end and can look back, we will see that this was a depression. In 1929, property values fell more than 30%, but in a longer span of time than we have seen between 2006-2009. If that is a measure of a depression, then we were in one.

So how are we going to get ourselves out of this one? Are we going to go the way of painful cuts in social services and civil services like police, fire and education? Austerity has been tried, to no avail.

Before the last midterm elections, President Obama suggested that the spirit of American innovation can lift us out of this recession. America has had a very long history of innovation leading the way for this country. But it can only do so as long as the powers that be are willing to let it. Unfortunately, there is very little room for innovation without risk of incumbents blocking or shelving the new ideas that could be implemented to lift our economy.

There is a lot of talk about the change in tax policy over the last 30 years. It is clear that tax policy has favored those who have money over those that don't. Tax policy has given rise to enormous efforts to send manufacturing offshore. As a result, very little in the way of new manufacturing has been brought here. Andy Grove, a former Intel executive, has pointed out that as we send our manufacturing offshore, we're giving away our ability to innovate.

But there is a subtle change that hasn't been noticed by the mainstream media: the consolidation of intellectual property into the hands of a few very powerful players. Some of them you've heard of: Apple, Microsoft, Viacom. But there are a few very large players you may not have heard of until today: Intellectual Ventures, MPEG-LA, Acacia.

Of the former group, they make things we'd like to use as consumers. iPads, Windows, and 2 1/2 Men (well, maybe not). Of the latter, they don't make the things you want to buy. They make them more expensive.

How did this happen? Quite a few books have been written on the subject, but in a nutshell, this country has draped itself in intellectual property as a religion that has turned into a boa constrictor for our economy. Over the last 30 years, we have slowly turned the screws to the public domain and the industrial commons by increasing the power of intellectual property laws and making it harder to challenge the validity of patents without going to court. it has become a tragedy of the anti-commons.

A typical patent lawsuit defense can cost anywhere from $3-6 million and that is just a start. This is significant barrier to bringing innovations to market. The high cost of patent litigation has also given rise to patent trolls. Patent trolls make no products so they are immune to counterclaims and public backlash. But they make a lot of money by threatening to sue, and offering settlement terms for an amount lower than the cost of litigation.

As we make intellectual property laws stronger, we increase the cost of downstream innovation and eventually, we find that we're falling behind other countries in terms of innovation. We are simply  so mired in litigation, both at the patent office and in court, that we don't have time to solve the really big problems humans face. This is because patents have perverted the incentives for innovation.

Of course, falling behind other countries is less of a problem if you can foist your intellectual property regime onto other countries. We do this in exchange for access to our markets and to pry open access to the markets in other countries. The US has "free trade" agreements with many other countries that achieve the goal of imposing the US patent regime on the partner countries.

Each of these agreements is guaranteed to protect doctors, lawyers and other professionals while exposing middle class manufacturing workers to direct competition with lower paid foreign workers. But more importantly, they require the other country to use the same intellectual property rules that we use here.

Apple, Intel and a few other manufacturers take great comfort in these agreements. So much so, that they can safely move their manufacturing operations to other countries without worry that their products will be copied unlawfully. That, to me, explains the decline of the American economy.

Despite many attempts at patent reform, Congress has not arrived at a solution to the problem of misplaced incentives. Michele Boldrin and David Levine have suggested the elimination of patents altogether. In a report released by the Federal Reserve Bank, Boldrin and Levine make a powerful case for eliminating patents and the market perversions they induce.

Our intellectual property regime only works for a privileged few. Until our intellectual property regime works for everyone, innovators will have very little power to help our economy. Moreover, intellectual property regimes must respect the public domain, something our current regime fails to do.

Moderation as a way of life

It is interesting to notice the incredible excesses in the news. The wealthiest people in the world are spending millions on a personal residence, some with many more than one home. Jay Leno has a famous car collection that many people admire. In some cases, spending money on a pair of shoes doesn't feel like spending money until the shoes cost several thousand.

I'll never forget the articles I used to read in Car and Driver. In every issue, they had a review of some fantastically expensive car that no one working there could afford. Maybachs, Mercedes, Bentleys, Lamborghinis, Ferraris, all incredibly fast, opulent and exclusive. I remember asking the question with a Google search about how long it would take for a car that could attain 262 mph and hold it, to run out of gas. Someone answered: 11 minutes.

How much is enough?

I answered that question for myself. I like chocolate. I admit it. But I know what it does to me. I used to eat plenty of it when I was a kid. I'd gather the empty pop bottles in the house and put them in my wagon, then I'd head up to Bill's Liquor on PCH and Marine. I'd get a few bucks and then blow it all on candy.

As an adult, I developed a sense of moderation. In a past job, I worked at a retirement home. The average age of a resident there was 82 years old. Children and grandchildren of the residents would bring boxes of candy to their parents and grandparents.

5, 10, and 15-pound boxes of Sees Candy came in multiples and they would pile up. Many residents would just give the candy to the receptionist and she would send it to the kitchen. There was so much that often, they put it in the freezer in the main kitchen where meals were prepared.

But when they brought it out for staff, where did they put it? On a file cabinet right outside of my office. I was tempted, there was no doubt. But I noticed something that concerned me. I knew that once I got started, it would be hard to stop. I could see that many of the employees partook in the goodies. I could also see that many of them were overweight.

I couldn't do that. I have a self-image that requires me to be thin. That's just the way I am.

To satisfy my urge, I found a shortcut. I would wait until I happened to be at the box of chocolate at the same time as someone else who was actually going to eat some. Then in front of the other person, I would open the box, waft the luxurious smell up to my nose and take a big, deep breath. "Aaaahhhh! I'm done!" Then I'd close the box and go inside my office to work.

I don't know what effect this had on other employees, but this is what I needed to do to restrain my temptation. Just smelling the chocolate was enough for me. I wanted to do this while the other employees were there to keep me accountable. A good whiff of the chocolate turned out to be  enough for me.

Today, I understand a bit more about myself. I still eat chocolate. But I like my chocolate dark, almost semisweet and in very small quantities. I just have a little bit each day.

I moderate my chocolate because I remember how I felt after eating too much when I was a kid. Even as a young man, I ate too much, but I also noticed my limits and honored them. I noticed then, that eating several candy bars didn't make me feel any better than having a few small bites.

There's an interesting scene in Babylon 5 where a confrontation ensues. During the confrontation, a telepath, a human with mind reading capabilities, offers an opportunity to his opponent to strike  him. "Hit me........again.......again". After about 5 punches, the telepath asks the opponent about his experience. 

"How did you enjoy that? Was the first punch better than the last? Was the third punch better than the first? When will you be satisfied that you've had enough?"

I never forgot that. Of course, I'm paraphrasing above, but the point is not lost on me. How much is enough?

That is a question each of us have to answer, whether it be money, houses, gadgets or food or anything else, for that matter. The answer each of us find has profound effects on where we place our priorities and how we treat other people to answer that question. What is your answer?

Linux - a different frame of mind

In the news today, I read that all of the Windows laptops on the International Space Station have been wiped to make room for Linux. This is a very interesting development considering that Windows XP was even allowed to be on any equipment aboard the space station.

I remember when I made that switch myself. In June of 2007, I made the switch from Windows XP to Ubuntu. I had been playing with Ubuntu and several other distributions for months just to see what it was like. I decided I was going to switch and never look back.

During that time while playing with Linux, I checked all of the major applications for the major functions that I wanted to do with Linux. Productivity was easy with Open Office because it can read and write MS Office documents. Fortunately, the Free Software community had spent years decoding the Microsoft Office file formats to make them work with Open Office. Open Office used it's own document format, the Open Document Format, a format that was designed to last for centuries, not just until the next upgrade. I now use LibreOffice.

I found Rythmbox, Amarok and Banshee to be very serviceable music players. Eventually I settled on Rhythmbox since it integrates well with Gnome-Shell and I happen to prefer Gnome to the other desktops. I can play most popular formats so it's easy to work with.

Web browsing was easy with Firefox on hand. Firefox is standard issue with all of the major Linux distributions. It has suited me well until I found that Google made a version of Chrome for Linux. Worthy of note here, is that the Chrome installation process will add a new repository to the list of software sources so that Chrome stays up to date.

And then there was Beyond Compare, my favorite file manager. Beyond Compare makes it easy to manage directories and move files around. If you have two directories with similar contents, you can use Beyond Compare to easily sync the folders and files with worrying about overwriting newer files. This is also great for removing duplicate file and directory sets.

With the exception of Chrome and Beyond Compare, it is rare for me to download software from a website to install on my computer. Most software installed on my computer comes from repositories - places on the Internet where binary files that can run on my computer are stored. The repositories are consulted when new updates become available. Each repository is checked to ensure that it has not been tampered with and gives me the peace of mind that the software will just work.

There is something else really interesting about Linux. The update process works for *everything*. As long as the packages are installed properly, the system keeps a list of all software installed and checks for updates for all of the software, not just Ubuntu.

Linux is not just an operating system, it's a philosophy. The philosophy that I find so appealing is that my work on Linux begins with the least amount of privilege needed to get the work done. If I need to make any changes to the system, I run sudo in Bash or I will be prompted to enter my password from the desktop. The privilege is temporary and only applies to the process at hand, no others. Once the changes are made, the privilege goes away and I can be confident that even if I were to encounter a virus, it would not be able to take over my system.

Since I've made the change to Linux, I have found that I can just focus on my work and not on my computer. That's why I'm never looking back to Windows and can't imagine going back.

Reseller Nation

In the United States more than 200,000 patents a year are issued and each patent has a potential life of 20 years. Most patents are written in broad, vague language that make it almost impossible to build the invention that is claimed just by following the instructions in the patent. This vague language also provides a very blurry boundary for the claims. For the most part, they're idea land grabs.

On the other hand, we have automatic copyright of anything and everything that is written. Each copyright is good for 70 years plus the life of the author. The copyright enforcement regime is incredibly stringent for the consumer, but not for the creator or rights holder. Copyright holders have the power to determine the technology choices available to view or hear protected works. Copyright holders are nothing if not gods in the eyes of the courts.

It is pretty amazing how much power has been given to the rights holders and how little accountability is imposed on the same.

In 2003, The SCO Group sued IBM for copyright infringement. They claimed that IBM had copied code from UNIX into Linux without authorization. After years of motion practice, discovery and many press releases on the part of SCO in the vain hope that IBM would settle, the case has not gone to trial yet. Worse, while that case was in process, SCO was sued by Novell over the copyrights.

In the end, SCO lost a jury trial against Novell where the jury found that SCO did not own the copyrights. What this means is that SCO sued IBM over copyrights it did not own and now there is a teetering pile of counterclaims just waiting for SCO when the trial gets back on calendar again. So far, everyone involved has lost money and everyone on SCO's side has, for now, escaped personal liability for their actions.

Prenda Law seems to be a newcomer that has been making the news lately. Prenda Law is yet another copyright troll that has been tracking Bittorrent users with nothing more than an IP address and suing them for downloading porn, shakedown style. "Just give us the money and we won't publish your name." They have been having a rough time in court lately, mostly because the judge is onto their game.

Even Viacom and Fox have no compunction when it comes to issuing bogus takedown notices to YouTube for content they do not own. There is almost no penalty for their actions, yet, they are costing legitimate businesses real money.

Patent trolls are starting to enter the national consciousness. In polite circles they are known as patent assertion entities. Examples abound, but the largest and probably the most famous is Intellectual Ventures, founded by Nathan Myhrvold. Intellectual Ventures is probably the most feared patent troll on the planet due to its size and patent portfolio.

Patent trolls issue a strong defense against the derogatory term and insist that they are doing good for the country and for innovation. They also take advantage of the uneven evidence burdens placed on patent holders and defendants who have no prior knowledge of the patent (hint: the defense has a a very high burden to prove that a patent is invalid). How else could patent trolls explain the need for thousands of shell companies they set up to collect royalties?

The USPTO has in recent years has operated at or near a 90% approval rate for all patent applications. With so many patents issuing, the USPTO is creating a patent thicket that inhibits newcomers from bringing new innovations to market and still make a profit. To do so, you must gain the support of a deep-pocket incumbent with a legal team that executes very thorough patent searches to clear the rights to bring a new product to market. Even after an expensive patent search, it is still possible to be sued by a patent troll.

These conditions give rise to a patent troll business model that is similar to the copyright troll. "Look, we're not asking for very much money if you settle. Sure it's a lot of money, but fighting us could run into millions. Just sign here, cut a check, and we'll go away."

Patent trolls are killing jobs by raising the barrier to market for any newcomer in almost any market, but with particular respect to the technology market. Small businesses are being sued for using scanners, email and wi-fi. Patent trolls are not promoting innovation. They are cashing in on the innovations of others.

Copyrights and patents combine together to form a very high barrier to market for many potential newcomers. I used to work for a firm that washes windows where I was tasked with creating a customer relationship management system. We decided to embark on this project after we found that what we were already using didn't work for the company (but the developer was very happy with vendor lock-in).

For about a year at the window washing company, I worked with another developer to build a new customer relationship management system. When it was nearly done, my boss asked me how much it would cost to bring it to market to sell to other companies. I hazarded a guess at about $500,000 and that was just to start. I don't think he ever got that off the ground, but he did continue to clean buildings and windows as before, he just had a better system to work with.

With so many barriers in place, there is really only one thing left to do for most people if they want to sell a product. They can resell a product produced by someone else who will then assume the liability for the same. When I say "liability" it is obvious that I'm talking about legal liability. While consumer safety is a considerable liability, patents and copyrights must be cleared before a new product can be brought to market. Now there are so many unknown rights holders waiting in the wings, that clearing all rights is nearly impossible or at least, very expensive.

Few people starting a small business can bring a new product to market if they have to clear all that and then pay suppliers and fabricators to put it all together. Better to join a franchise or a multi-level marketing organization. Care for a glass of Noni juice? If not, there is always eBay.

Franchises are all the rage these days as any shopping center will attest. In a franchise organization, all the rights to business processes and media have been cleared, so all you have to do is follow the manual and the business should just run by itself, right?

That leaves very little room for the true innovators. Most of the innovation these days is a result of serendipity, or an "itch" to fix a problem. Often, innovation and know-how takes place on the shop floor where things - real things - are made. But if you should bring your own innovation to market, you may find that the ghost of Jerome Lemelson has decided to sue your company.

So where do we go from here? A thorough re-examination of our copyright and patent systems is in order. If we want to bring the jobs home, we need to lower the barriers to the marketplace by either reducing the scope of protection and the penalties for infringement, or remove them altogether.

An examination of intellectual property rights should also include a measure of the effects of patents and copyrights on downstream innovation and creative works. If you ever thought regulation was a problem in the marketplace, then intellectual property rights should come under that fold. Intellectual property protection is another form of regulation, but business seems loathe to talk about that.

Until we have that discussion, I don't expect the economy to improve much over the long term.