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IP, Patent, Walker Digital

The Patent System’s Intended Beneficiaries

The Wall Street Journal ran an interesting write-up about Priceline founder Jay Walker and Walker Digital’s aggressive patent licensing effort–a topic of prolific coverage here at Gametime IP.  The piece predictably swallows the anti-patent propaganda, referring to Walker as a troll and quoting from sources that completely misunderstand the operation of the patent system.  Consider this quote from Robert Barr of the Berkeley Center for Law & Technology at the University of California, Berkeley, and a former patent counsel for Cisco:

We’re not rewarding the people bringing products to market. That’s a net negative for the economy.

First, the patent system operates to reward invention thereby promoting industrial progress.  To paraphrase James Carville, it’s the invention, stupid!  Your reward for bringing products to market are sales.  The patent system ensures that you share your profits with those who invented the technologies exploited by your products.  Of course technology takers would prefer to use knowledge produced by the labor of others without compensating the creators, but the patent system is in place to prevent exactly that.

Second, how does Barr propose to prove that patent licensing represents a net negative?  Under the current system, which relies heavily on litigation, a large portion of licensing revenue flows to facilitators like law firms and other middlemen, making the situation is far from ideal.  However, Barr makes an unjustified leap to suggest this creates a net negative.  As Dale Halling observed yesterday, patent licensing facilitates division of labor between creators of technology and developers of products.  The secondary patent market facilitates division of labor by rewarding investors for identifying essential inventions than enable future product development.

As far as curing some of those inefficiencies, Walker’s work may ultimately prove essential.  Quoting from IP Navigation Group Chairman Erich Spangenberg, the WSJ piece concludes by pointing out that Walker’s aggressive commitment to patent enforcement may enable him to avoid the expense of litigation in the future.  Hopefully, a residual effect will benefit other inventors as well.

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Discussion

4 thoughts on “The Patent System’s Intended Beneficiaries

  1. Troll = someone who wants to make money solely off their ideas? If that were the case then Michael Faraday was a troll, Intellectual Ventures is a troll, as was/is any other pure researcher who devoted their time to discovery and solving problems.

    Posted by Austin Hicks (@austinjhicks) | September 5, 2011, 4:27 pm
  2. “First, the patent system operates to reward invention thereby promoting industrial progress.”

    Ahhh, so I guess it was “industrial progress” that was promoted in Ultramercial’s app.

    Setting that aside for a moment Pat, you seem to be operating under some sort of a misunderstanding as to someone having said other than what I just quoted you as saying. They do not deny that is how the system is setup today, but they simply feel (as most people who actually understand wtf is really going on with patents) that we need less psuedo (and the actual) promotion of the useful arts and need to promote manufacturing and jobs to go with it. Not people who aren’t doing that getting paid to “think and write”. Fact is, ideas are worthless without execution, and that should be reflected in our lawls just as it is in our reality we’re in today.

    ” The patent system ensures that you share your profits with those who invented the technologies exploited by your products. ”

    Yes, and the question is, “why the f would you ever want to do that?”. Because it is ret arded on its face. Unless … you guessed it, the inventor is actually using the invention in commerce as well and is suffering sales lost.

    ” However, Barr makes an unjustified leap to suggest this creates a net negative”

    There is no “leap” required to notice that paying someone to write up an idea and do nothing else is ridiculous. Ideas are a dime a dozen in today’s age, its the execution that matters.

    “facilitates division of labor ”

    I can only imagine the “labor” that took place to produce Ultramercials “inventionlol”. What was it, 5 minutes in front of a computer? Wow. Man, I hope he didn’t hurt his back!

    The fact is, you have people doing srs reasearch into the useful arts so they can make new products to generate, you guessed it, sales, and you have what some people call “wankers” both involved in the patent system. What is called for is a better way to separate the two.

    Posted by 6 | September 18, 2011, 3:04 am
    • First of all, it’s disingenuous to equate filing a patent application with simply “writ[ing] up an idea.” If an application fails to describe and enable a useful invention, it should be rejected.

      Of course execution matters, but that’s beside the point. Patents allow abstraction of knowledge from the rights to apply knowledge. The market rewards those who successfully apply the knowledge. Licensing rewards the first to create the knowledge in the first place (or, at least, it did until Friday, but that’s another conversation).

      Posted by Patrick | September 18, 2011, 7:18 am

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  1. Pingback: Name Your Own Price On A Full Patent Troll | Bloggo Schloggo - October 27, 2011

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