Patent Thugs

by on July 14, 2013 at 2:48 pm in Economics, Law | Permalink

From the NYTimes:

In the last five years, IPNav has sued 1,638 companies, according to a recent report by RPX, a patent risk management provider, more than any other entity in the patent field. “To get companies to pay attention, in some percent of the market, you need to whack them over the head,” Mr. Spangenberg said. “In our system, you can’t duel, you can’t offer to fight in the street, which would be fine with me.”

…Mr. Spangenberg is likely to open the conversation on a diplomatic note, but if you put up enough resistance, or try to shrug him off, he can also, as he put it, “go thug.”

He demonstrated what that sounds like in a brief bit of role-play recently, sitting in the apartment he is renting for the summer in Paris near the Arc de Triomphe. His voice dropped, the curse words flowed, and he spoke with carefully modulated menace.

“Once you go thug, though, you can’t unthug,” he explained, returning to his warm and normal tone. “Actually, you can unthug, but if you do that, you can’t rethug. Then you just seem crazy.”

Hat tip: Donald Marron (twitter).

Joe Smith July 14, 2013 at 4:17 pm

One can only hope that one day Mr. Spangenberg will make the mistake of going “thug” on a real thug.

anon July 14, 2013 at 5:40 pm

“thug…rethug”

No mixed strategies in patent trolling?

Joe Smith July 14, 2013 at 5:58 pm

Mr. Spangenberg is going to deeply regret that interview the first time he is cross examined about it by a competent lawyer.

Eric S. July 15, 2013 at 8:44 am

I highly doubt it, though I’d love to hear your explanation for why.

Joe Smith July 15, 2013 at 11:43 am

Because the thug comment can be used to build a case that Spangenberg’s real business model is extortion. Put Spangenberg in front of a jury and get him to confirm that his business strategy is to act like a thug and swear at people and you are half way home. If he starts to try to deny that he ever made the comments it only gets worse for him.

Gabriel Rossman July 14, 2013 at 8:34 pm

It’s a good thing for him that he hasn’t tried to thug, then unthug, then rethug because otherwise I’d notify him that he’s infringing on my patent: “A method for oscillating levels of thuggishness for purposes of maximizing frivolous patent royalties.”

Enrique July 15, 2013 at 12:02 am

In fairness to Mr. Spangenberg, the NY Times article also says this: <> So Mr. Spangenberg, patent-troll extraordinaire, is guilty of exploiting the system (by the way, whose fault is that?), but aren’t his patent shakedowns precisely what the Coase theorem predicts?

Enrique July 15, 2013 at 12:04 am

oops: here is the omitted quote I was referring to: Mr. Spangenberg agrees that the United States system is deeply flawed. “We’re using the courts as a marketplace, and the courts are horribly inefficient and horribly expensive as a market,” he said.

Kirk Lazarus July 15, 2013 at 12:08 am

Everybody knows you never go full [thug].

Andrew' July 15, 2013 at 5:53 am

But blackface is okay!?! I’ll never understand.

Ron Strong July 15, 2013 at 3:39 am

Let’s suppose an individual or small company comes up with a patentable idea that it is not fully capable of exploiting. Such entities would not have the resources to enforce payment of licensing fees for use of the technology they developed or to discover who is using their ideas without paying for them.

In such a case, the only avenue available to realize the value of the patent is to sell it to a company with the requisite skills, i.e., what we call patent trolls.

The business model of patent trolls is not the problem. The problem is that the US patent office grants way to many patents for ideas that should not be patentable for any of a number of reasons. The most typical of these is obviousness. Too many patents involve technologies that any decent practitioner could come up with. Amazon’s One Click is just one of such ridiculously obvious patents.

Andrew' July 15, 2013 at 6:13 am

The problem is that half a market in this case might be worse than a full market, and a full market might be prohibitively expensive if it costs $10,000+ for each of the million ideas incorporated into a bundled business but only one of those ideas can shut down that business and all the other businesses using the semi-obvious advancements that were patented in unexecuted (almost useless) raw idea form.

One click buying is obvious, but also what might be patentable is the back end, but that’s not what we seem to be doing.

Joe Smith July 15, 2013 at 11:53 am

A few years ago I had a look at the Netflix competition. One of the rules was that the winner had to sign a contract saying their method did not infringe any patents. I had a look and there were hundreds of patents on recommender systems (there may have been over a thousand). It would have been hideously expensive for anyone to try to work through all of those patents to see if any method actually infringed or not. I expect that many hi tech start-ups face the same sort of hurdle to progress.

The result is that the patents are ignored, there is independent re-invention and when someone who has invented a thing on his own is able to make a profit on it all the people who had the same idea but could not make a dollar on it hire a thug (his word) like Spangenberg to try to squeeze some money from the successful entrepreneurs. Software patents should be eliminated in their entirety – the costs to society far outweigh the benefits.

Hazel Meade July 15, 2013 at 8:54 am

Here’s how I think about patents:

A patent is a contract between the state and a private inventor. The private entity agrees to disclose how his invention works, in full and in detail, and in exchange, the state grants him a temporary monopoly on sales of the product. This allows other information on the technology to be made public so that other inventors can improve upon it, thus spurring innovation.

Hence there are not one but TWO ways that patents are used to promote technological innovation. A – the original inventor can derive profits from it, and B – other inventors can build upon it without having to waste time re-inventing the wheel. The current practice of patent law tends to focus on A, but ignores B. That is, there are many patents on things in which there really is nothing about the technology that is not disclosed by the surface features of the product, and thus nothing “in it” for the government in the contract. I include things like Amazon’s One-Click and Apple’s Pinch-Zoom feature. For sure, Apple could patent the particular *technical* mechanisms by which THEY implement pinch-zoom, but they should not be able to patent every possible method of implementing any kind of pinch-zoom feature, including those that they havn’t even thought of yet. (What if someone invents a new technology for detecting finger movements?) Same with “look and feel” type patents.

There has to be something that the private entity is actually giving up in exchange for the monopoly – namely information about how it’s product works. Otherwise, the government is just granting monopolies arbitrarily.

Andrew' July 15, 2013 at 10:33 am

If people are not using the patents that is prima facia evidence on two points that (1) the system isn’t working and (2) they aren’t really being infringed in the traditional sense.

asdf July 15, 2013 at 10:11 am

If your “plan” calls for a government agency to make complicated and controversial decisions on a mass scale when there are lots of well funded interests that want to influence them its doomed to failure.

Hazel Meade July 15, 2013 at 8:42 am

“Once you go thug, though, you can’t unthug,” he explained, returning to his warm and normal tone. “Actually, you can unthug, but if you do that, you can’t rethug. Then you just seem crazy.”

But a reputation for insanity will only enchange your credibility as someone not to be fucked with.

albatross July 15, 2013 at 3:14 pm

I don’t have much experience in this area, but my strong intuition is that “going thug” works mainly on unsophisticated people who are subject to being intimidated by the thug routine. I mean, would this routine work on, say, Microsoft’s lawyers? Or would they just laugh in your face?

My guess is that figuring out who the unsophisticated, easily-bluffed targets are is a big part of the craft of being a patent troll, in much the same way it must be a big part of the craft of being a mugger or running a protection racket. Muggers who accidentally target a lot of off-duty cops and martial arts instructors and professional boxers tend to move to another line of work pretty quickly. I imagine the same is true of patent trolls.

tom gallagher July 15, 2013 at 4:37 pm

Who knew there were so many patent infringing thugs out there?

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