The OT thread V1

[Simon]

IP doesn't protect the little guy because in almost all cases it is too expensive to protect it against the big guys (or anyone). Who has $200,000 to put out as a retainer to start the fight for a patent battle? Who has $2,000,000+ to win a patent case? That's the real world costs and it isn't anything any little guy can afford.

It does create value though and how you use that value and get it back is an important part of IP decisions for small companies.

[cockerpunk]

IP doesn't protect the little guy because in almost all cases it is too expensive to protect it against the big guys (or anyone). Who has $200,000 to put out as a retainer to start the fight for a patent battle? Who has $2,000,000+ to win a patent case? That's the real world costs and it isn't anything any little guy can afford.

It does create value though and how you use that value and get it back is an important part of IP decisions for small companies.

thats what start up capital is for. thats what the venture capitalist job description is.

typically good IP to start a company based on is based on white paper research which a university will patent. then they will sell that patent to someone who thinks it can actually work, and there is your start up. or sometimes the researcher who wrote the papers, and the patents, will buy the IP from his own university, and start a company around it.

another route is research at a government funded lab. like lawrence livermore, or oak ridge or something. but a similar path of white paper, to patent, to company.

and then you take that company, and tell everyone everywhere what you are doing in order to sell yourself to someone big.

this is the eco-system of technology development.



research costs big money. we are not talking about "oh i thought a new clever way to make a paintball gun valve close slightly quicker" technology development. we are talking "i have this idea for a new display technology and i've demonstrated that it does work" or "here is a new medical process that no one has ever done before and i can invision building a machine to do it" type research.

this type of research is funded by universities, NSF, NIST, government labs, etc, and protected by them. and then sold to venture capitalists or directly to larger companies. sometimes a university or group will license, but its less common.


sorry, i happen to be way too familiar with this and have been spending a lot of time researching the IP ecosystem of nano-imprint lithography.

[PBSteve]

I get pretty irritated that publicly funded research doesn't default to the public domain.

[Lurker27]

Gordon, I don't think it's fair to characterize vijil's position as "X-prizes replace patents".

I think that we can envision systems that are more logical the 20 year monopoly period currently established - one simplistic example would be for research costs associated with an invention to be logged (we already do this for tax credit) and then use that investment number as the basis for the monopoly period - I.E. the holder of the patent should be entitled to make some multiple of the research cost, rather than hold a monopoly for a set period of time. You could probably incentivize companies to release patents earlier in other ways.

Remember the intention of the patent system from a regulatory standpoint is to increase investment in innovation by making it worthwhile. The current system is not the only way to do this. And, I tend to agree with Simon's point - for small/micro entities there is practically no chance to actually enforce - the value is almost entirely in making yourself a viable acquisition target (as you said, without IP you've nothing to sell).

[Simon]

Soo, IP doesn't protect the little guy, it creates value and allows you to sell to a larger guy.

What if you don't want to sell? IP doesn't protect you. You have to have money for IP to protect you.

As a little guy you have to weigh up your end goal in deciding on what IP strategy to follow. I am very familiar with this, having done it personally as a very little guy, then as a larger (not large) company, and again now as a littler guy. Been involved with many IP strategies, many lawsuits (as a defendant and expert witness), and quite a few IP acquisitions and licensing.

[cockerpunk]

Soo, IP doesn't protect the little guy, it creates value and allows you to sell to a larger guy.

What if you don't want to sell? IP doesn't protect you. You have to have money for IP to protect you.

As a little guy you have to weigh up your end goal in deciding on what IP strategy to follow. I am very familiar with this, having done it personally as a very little guy, then as a larger (not large) company, and again now as a littler guy. Been involved with many IP strategies, many lawsuits (as a defendant and expert witness), and quite a few IP acquisitions and licensing.

it does protect the little guy. and its what creates his value in the first place. a company without patent protection on its process and right to practice is worthless. and, if you don't have patents covering your process, no one will believe you when you go shopping around for a buyer. so you have to have those patents, so you have your value protected, but can talk openly about it, in order to convince someone your technology works, and someone should buy you for it.

typically a start up does not actually have the means to commercialize a revolutionary technology. the goal is to prove feasibility of the technology, and then get bought. they usually do not have funding, or resources to set up large supply chains, that sort of thing. the guys with the capital are not interested in that typically too, they want to fund something till it works, then sell it, and move on to the next.


ryan, im not opposed to improving the patent system. it is a huge mass, and very inefficient, but we do need to reward and protect investment in R&D. we can't dump it. i for example, was a fan of the first to file change in our patent system. less "right" but way way way way cleaner legally.

[Lurker27]

I tend to agree with you. Although, overall I think the America invents act increases the advantages of being a well resourced corporation, first to file being a huge change.

[Simon]

Gordon, you are looking at the issue from one single direction, that is correct if that is the chosen path, but is very far from reality for probably the majority of all small companies.

it does protect the little guy.

No it doesn't. The only thing a patent gives you is the right to stop someone else practicing your invention. IF you can afford to. That is it.

If you have to sell a majority or all of your company in order to protect the IP, then you got screwed, it's not your company any more.

and its what creates his value in the first place.

Not true. It adds value, but only if you are looking to sell. There are many other factors to a companies value. A company without IP isn't valueless.

a company without patent protection on its process and right to practice is worthless.

False.

a company without patent protection on its process and right to practice is worthless. and, if you don't have patents covering your process, no one will believe you when you go shopping around for a buyer. so you have to have those patents, so you have your value protected, but can talk openly about it, in order to convince someone your technology works, and someone should buy you for it.

This is only at the point you are looking to sell or get investors. This is not the common situation for most small businesses. Again, you are looking at the situation from a very narrow view point that is relevant to your experience and industry, but not the majority of small businesses and start ups.

ryan, im not opposed to improving the patent system. it is a huge mass, and very inefficient, but we do need to reward and protect investment in R&D. we can't dump it. i for example, was a fan of the first to file change in our patent system. less "right" but way way way way cleaner legally.

Agreed totally. There has to be a reward for innovation, but the current patent system is very broken even with the recent changes. It has to become cheaper and faster to get patents and easier to protect them if it is going to help the little guy like it was originally intended to do. That is not the case currently.

[vijil]

Given that I'm a director in a small agricultural hardware innovation startup without any IP, and we've had serious investor and even acquisition interest despite said lack of IP, we're proof that Gordon is wrong on this. Our value lies in our relationships with major players, our expertise, our industry knowledge and our ability to move fast. We are a speed play. We've just been through an accelerator program in which we've discussed these issues at length with IP lawyers, investment funds and others.

Investors are primarily interested in market validation and the people involved. It depends on the industry of course, but IP is a clear third for most angel investors. I can say that because that's what they say.

And of course I wasn't suggesting that the X Prize as it currently stands would replace the system, no idea why you'd interpret me like that (though folks seem quite happy to spend more getting it than it's worth). I was using it as one example of possible alternatives, many of which already exist. Without government involvement, alternative systems would pop up and expand in alignment with what the market wants. Kickstarter is another example.

[Florypb505]

The patent issue really is market dependant.

Some markets are trade secret dependant other are patent dependant with a system that needs to be fixed.

I can see how it helps some companies gain value in certainly fields but it also can not matter to much in other fields.

When I was a tunneler we had about 6 billion dollars in jobs one year and the construction industry is one where you don't patent anything really, when your a contractor, you only have your trade secrets and connections to help you win jobs and make a profit. Also in that industry the amount of work you have and your ability to bid new work makes you a more valuable company for others to invest in or buy out.

Patents seem to only apply to manufacturing of industrial and consumer products or software based companies to an extent. These are also the products that need protection because the free market will always fall to the larger company who can mass produce the thing cheaper in the end.