Bilski Redux and Why You Shouldn’t Believe Everything You Read

The Bilski decision came down yesterday and I’m still in a state of complete denial.  Basically, the court punted on the difficult issues and while denying Bilski his patent, they didn’t do anything to help the horrible state of the patent ecosystem that we have today. 

(For a great summary of the case, check out the Groklaw summary). 

To make my stomach even more upset, today I was alerted to an article authored by Ted Sichelman entitled “Why Bilski Benefits Startup Companies.”

In short, Sichelman points to a study that he was involved with and tries to come to the conclusion that these types of patents are good for startups. 

To quote him:

“in a recent survey of startup firms, the Berkeley Patent Survey—which I conducted with Robert Merges and Pamela Samuelson of UC Berkeley School of Law and Stuart Graham (now Chief Economist at the PTO)—startup executives reported that nearly 70% of venture capital firms and 50% of angel investors said that patents were important to their investment decisions.”

While I vehemently disagree with the article, what I found most interesting was a commenter who used a prior post that I wrote on why the study that Shichelman was involved in may be flawed.

Sichelman attempts to refute my post in the comment section, but fails badly.

First of all, it seems clear to me that Sichelman has intuitions on patents based on his experiences and has used the data to fit his theories, rather than using the data in an unbiased way to figure out what is really going on with patents and startups.

I make this assertion based on a couple of observations:

1. Everytime he speaks about patents, he begins with the story of his one experience with a startup company and how patents may have helped.  I’ve had dinner with Ted and I’ve heard the story.  I’ve also seen the story pop up in every situation he discusses patents.  A sample size of one does not make a scientific set. 

2. Sichelman’s co-authors are no where to be found when he comes up with his conclusions.  Ted acknowledges that he doesn’t speak for his co-authors, but very easily uses the word “we” when discussing the study and “his” conclusions.  The blog post that I wrote refuting some parts of the conclusions of the study were not all my own ideas – they were the thoughts of his co-author Pam Samuelson who herself said the article really doesn’t say anything about VC attitudes toward patents.

It’s really clear that Sichelman has a bias that was probably preconceived on a data set of one (his startup) and not supported by his fellow authors who have not backed him up publically.

Furthermore if you read his comments on my blog post, his rebuttals don’t hold water as well.  (And you’ll want to read the comments for this part of this post to make any sense).

1. Response rates – just because you are the most comprehensive study doesn’t make the study necessarily any better.  It might, it might not.  I could be the world’s tallest midget and that still doesn’t get me much (no offense to midgets, sincerely).  I never definitively said the sample size was too low, rather it’s not rock solid clear that it was the right size or targeted the right companies.  It’s not an easy thing for them to do, granted, but we shouldn’t just accept the number “1300” being thrown out and assume that this is sufficient.  And per Sichelman’s own admission in his comments, only about 175 of the respondents were VC-backed startup companies.   This is not a large number.

2.  Only 75% answered the patent question and Sichelman says this is acceptable.  This is not.  In fact, others involved with the study have specifically questioned where the answer rate was a piece of data in itself.  Again, I’m not saying definitively this is data, rather the way Sichelman uses data like this as “proof” is not dispositive. 

3. Results biased toward non-venture backed companies.  Sichelman again presents a non-compelling argument.  First, 2/3rd of the sample size, according to his co-author Pam Samuelson were D&B companies, not VentureExpert companies.  Secondly, him trying to convince readers that I only have a sample size of 25 current portfolios is either poor research on his part about me, or ignoring the facts.  I’ve been involved in VC for over a decade and with well over 250 companies, which alone is larger than his sample size of 175 companies.

4. (My Favorite) – Just because we didn’t survey VCs doesn’t mean that we don’t know what VCs think.  To quote him:

“VCs were not surveyed directly – Although it would have been more reliable to survey VCs directly, unfortunately, our time and resources were limited. Nonetheless, there is little reason to believe that the reports of executives at startup firms regarding the views of VCs during the financing process—which is lengthy and involved—are inaccurate. Rather, executives are presumably well-aware of those items that VCs found important during due diligence.

Basically his response is:  “we couldn’t afford to interview VCs, so we just guessed by asking entrepreneurs.”  This is totally bogus and backed up by Pam Samuelson herself in recent remarks at the University of Colorado law school.  This only talks about perceptions that entrepreneurs have of VCs.  This says nothing about what VCs think.  To think that one study group can be substituted for another study group and presented as fact discredits the valid parts of the paper.  This is just bad science.  If it was good science, we’d just ask parents about what their kids really thought about things. 

In summary, it’s been a rough day thinking about what could have been with Bilski.  I’m getting a ton of backchannel about the politics behind the decision, which just makes me more upset.  To try to capitalize on the poor decision with articles like this just makes me more disappointed about the system and the supposed “experts” who pretend to know much more than they really do. 

  • Ted,

    You are missing the point. Any person who thinks that a social science study “speaks for itself” is not schooled properly in scientific method. This isn’t chemistry and even that is hard to decipher sometimes.

    We can go back and forth and I think my points that I made previously still stand despite your attempts otherwise.

    1.Your authors aren’t standing behind you.
    2.One of your authors was the genesis of my posts. The data was hers and she agreed.
    3.For you to assume that this is just my opinion also means you’ve done NO study of what VCs really think. There are many of them who feel the way I do and I would be willing to bet you anything that a majority of early-stage VCs agree with me. I’m the one in the ecosystem, on the NVCA board and on portfolio company boards. To think that I form these opinions in a vacuum is really short sighted of you.
    4.As for preconceptions, I agree. I have them. My biases, as a lawyer have been for strong patents. I’ve done a complete 180 degree turn after being in the real world and seeing how these things really work.
    5.And as for anecdotal assertions, I’m sorry but your tired story of “this one time, at a startup” is the whole basis of your argument. We may both be guilty of the same thing, but I have a lot more stories than you.

    Like I’ve told you, I think that good minds can have different opinions, that’s fine. We don’t agree on patents. That’s fine. What I am really disappointed with is you attempting to make the “findings” of your study much more black and white than the grey matter it really is. It’s very, very clear to anyone who has done real statistical research (as I did in undergrad) that there are holes in it. I’m not say throw it out. On the contrary, I’m saying be more objective and open to the possibilities that there aren’t “patently obvious” (pun intended) conclusions from it. I’m sure you’ll agree if and when we hear conclusions from your colleagues.

  • Ted and Jason,
    Your claims are not mutually exclusive. It is possible that
    a) given the state of current law patents are relevant to many VC investment decisions, and
    b) many VC's would prefer that the law is fixed in a way that invalidates certain categories of patents and makes the value of a given patent pool more clear in an investment decision.

  • Pingback: A Balanced Summary of the Berkeley Patent Project | Mendelson's Musings()

  • Anonymous

    nFounded in 1921 Gucci is perhaps the most famous and prestigious Italian fashion men bagnn The company originally started out making luxury leather goods including luggage and handbags for which it is still justly famous crossbody bagnn For decades Gucci was beset by internal wrangling between family members which brought the company to near bankruptcy until in the 1990’s the company nnsuccessfully re-launched itself, bringing in Tom Ford as Creative Director who was to prove a revolutionary success in creating a new image, cheap coach bagnnmuch increased turnover and an upturn in the company’s leather nnhandbagnn Our Gucci menswear collection includes a comprehensive range of Trainers, Shoes, Shirts and outlet nnonlinennOur official online store offer you the most vogue and well-known new gucci handbags with unique design.Want to be attrative and charming? You definitly can nnnot miss these pretty gucci handbags . Latest style,discont price,free & fast shipping,enjoy shopping here!n

  • Anonymous

    In order to make your choice a bit easier, you can look at different fashion magazines that often have different fashion reviews of different fashion nndesigners. On the internet, you can also find web sites that are dedicated to the subject of online fashion reviews that can have links to the sites, so that nnyou could order the products online. That way it is easier to look through the collections of the different fashion designers.nnAnd, of course if you wish a high quality product, then you should look for world famous brands. coach carryallnnOne of the best known fashion brands is Gucci. Gucci is one of the oldest fashion houses that have different collections today.nnThe Gucci house started as a pretty small leather goods store. The first Gucci boutique was opened in 1921; it became famous right away. Today, it is hard to nnfind a person who doesn’t know about the house of Gucci and their fashionable collections. Today, al of the world’s capitals has Gucci boutiques. In London, nnParis, Madrid, and New York, and other places, you will find at least one Gucci boutique.nnThe Gucci group also owns different brands like Yves Saint Laurent and Fendi. classic guccinThis of course increases the number of Gucci collections. So, you can find products dealing with fashion perfume, and accessories under the Gucci label.nnIn the accessory collections, you will find a number of Gucci outlet onlinenn Of course, most of these collections are meant for women, but there is also different Gucci men’s bag. One example of Gucci men’s bag is the Gucci men’s nnwaist bag. It isn’t a very popular accessory in European countries guccinn But, it is not the only thing in the Gucci men’s bag collection. Another portion that represents Gucci men’s bag collection is Gucci D-ring messenger bag nnand wallets collection. In this sector of Gucci men’s bag, it is probably the biggest kind of products.nnBut, of course Gucci’s women’s bag collection is larger than its Gucci man’s bag collection. There are so many Gucci women’s bags that it is hard to count nnthem all.n

  • Anonymous

    u00a0French fashion Longchamp u00a0 bags, which LONGCHAMP LE u00a0 PLIAGE most everyone’s u00a0 favorite, the use of canvas and leather, simply because of u00a0 its folding design, even more portable. Is the best u00a0 selling brand Longchamp (Longchamp u00a0 Sale) style. Hao Hao famous wave girl Kate u00a0 Moss also promising longchamp handbag design Oh,nCharm never seen longchamp Oh, do not generallyn