Archive for the ‘Patents / IP’ Category

Sympoz Launches Programs on Starting Companies

One of our portfolio companies, Sympoz has announced the launch of their programs targeting startup entrepreneurs.  Even better, the series stars some of my favorite people in startup land:  my partner Brad Feld, along with Brad Bernthal of the University of Colorado Law School and Mike Platt , partner at Cooley LLP.  We teach you everything that we know in this comprehensive video series.

Thinking about doing your first startup? Perhaps you’re a startup veteran, who has the bumps and bruises to prove it, looking to jump back in?

Let us help you maximize the opportunity and do it right.

Brad’s class, How To Light a Spark & Set Your Startup on Fire, is FREE for a limited time.  Brad has lived the startup story over and over. He offers straight-shooting advice: Does your idea have market potential? Is it the right idea for you? Brad’s raw and pragmatic advice will lead you to consider the competition, examine your motivation and be honest about your level of passion and commitment.

Brad Bernthal and I, who have for several years taught an oversubscribed course at the CU Boulder Law School, are joined by Mike in teaching, The Nuts and Bolts of Starting a Company. In this class, which includes over 4 hours of instruction for just $29.99, we join forces to teach you things your lawyer and venture capitalist may not want you to know. How to turn an idea into a company. Who to partner with. How to seek out money and what to do with it when you get it. You’ll learn what to put in your pitch deck, what not to say to a VC, and 15 common mistakes that will kill your startup before it gets off the ground.  And a lot, lot more…

For those of you who have read Venture Deals, consider this a great summary of some topics in the book, but more heavy on the business side of equation, with the benefits of interactivity between you and the instructors.

Sympoz classes are perfect for busy people; you can watch the professionally produced, HD videos anytime, anywhere on the planet, from any Internet-connected device, as often as you want. The Sympoz learning platform seamlessly blends discussions into the class experience, enabling you to ask questions of, and participate in conversations with your class community, including your instructors.

So, what are you waiting for? Join us in class!

Who’s Suing Whom?

Great picture of who’s suing whom in the Telecom world.  Man, I love patents…


October 6th, 2010     Categories: Frustrations, Patents / IP, Technology    

Techdirt Absolutely Crushes the Patent Debate

Under the “I wish I had written that article” category for patents, Techdirt completely takes to task the notion that letting the USPTO create a ton of extra patents will create more jobs.

I won’t insult the author, Mike Masnick, by trying to summarize it.  It should be read in its entirety here.  In short they’ve called out folks who are trying to rewrite patent history in order to gain personal advantages today. 

October 2nd, 2010     Categories: Entrepreneurship, Patents / IP, Policy    

More Support for the Destruction of Software Patents

If you are a regular reader of either this blog or Brad’s, you know that we hate business method and software patents.  Lately, perhaps even more frustrating than the patent system itself, we’ve been particularly annoyed by several articles that claim that these types of patents are good for innovation.  Of course, none of the authors of these articles disclose that they have personal gains associated with keeping and / or enhancing the current system, but I won’t regurgitate the entire debate today. 

(If you missed it, please see this WSJ Op-Ed responding to the idea that we should increase the amount of patents granted, or this post which attempts to fairly describe the results of a Berkeley patent survey which has been purposely misconstrued by some authors). 

Today, however, I’m happy to highlight a recent article from leading patent scholars John Allison, Mark Lemley and Joshua Walker entitled (the) “Vast Majority Of Software Patents In Lawsuits Lose.”  In summary, they said:

We designed this study to explore the effects of repeat play on litigation behavior, contributing to a literature on the economics of civil procedure as well as the substance of patent law. But what we found was dramatic and unexpected: The patents and patentees that occupy the most time and attention in court and in public policy debates — the very patents that economists consider the most valuable — are astonishingly weak. Non-practicing entities and software patentees almost never win their cases. That may be a good thing, if you believe that most software patents are bad or that NPEs are bad for society. But it certainly means that the patent system is wasting more of its time than expected dealing with weak patents. And it also suggests that both our measures of patent value and our theories of litigation behavior need some serious reconsideration.

This is fascinating for several reasons.  The most important is that these patents, which cost a lot of money to file and receive and even more should litigation occur aren’t worth much.  Even economists (who traditionally seem to love patents of all types) should agree that there are a tremendous amount of deadweight losses associated with the current regime. 

The survey also gives insight in how to deal with patent trolls and non-practicing entities.  The survey suggests that if one is able to support the litigation costs to fight a troll, they have a very good chance of winning.  Unfortunately, due to the massive costs associated with troll litigation, 90% of more cases settle.  But perhaps this changes over time if this latest article becomes influential. 

Bottom line: a lot of folks have felt that most software patents are of poor quality.  This is the first study that backs up this intuition with real data.  This survey indicates that the social benefits of software patents are low ( and maybe even net negative value).  When you throw in the abuses and opportunistic behavior from patent trolls and NPEs into the mix, it’s more clear than ever that this system is completely broken. 

I’d highly encourage you to read a great summary from Techdirt on the survey

September 26th, 2010     Categories: Patents / IP    

A Balanced Summary of the Berkeley Patent Project

Recently, I wrote a strong rebuke of one author’s interpretation of the recently released High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey that came out the day after Bilski was decided.

I was particularly upset in that I believe the author was intentionally distorting the facts of the survey for his own benefit.  Given how important patent policy is to this country’s innovation economy, I was amazed how a professor at a major University could be so cavalier with the facts of his own survey.  It was also disappointing that the first and best analytical study of its kind was being degraded by false interpretations.  If you feel like seeing the back and forth, feel free to check out his article and our collective comments). 

While I was away recently, Pamela Samuelson, (who was also one of the authors of the survey) gave her interpretation of the survey.  Her article is entitled Why Software Startups Decide to Patent …. Or NotI realize that I’m  a bit biased from view of software patents in general, but Pam’s analysis is much more neutral and balanced and therefore much more instructive in its teachings.  I will also point out that many of my comments of the prior article are supported by Pam’s analysis.

My partner Brad wrote an excellent summary of Pam’s analysis and is a must read for anyone who is interested in the subject.

Well done, Pam.  I really look forward to your future work based off the survey. 

July 31st, 2010     Categories: Education, Patents / IP, Policy    

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. 

June 29th, 2010     Categories: Frustrations, Law, Patents / IP    

Crowdsourcing Patent Research – Article One Partners

I was recently introduced to Article One Partners, a crowdsourcing website that is dedicated to uncovering research related to the validity of patents. Just because a patent has been granted by the USPTO does not mean that it should have been – in fact, nearly half of all patents litigated to judgment are eventually determined invalid.[1]

Article One provides a community that researches the validity of patents. Their researchers are often able to discover non-digitized evidence (such as textbooks and plaques) that could be directly related to a patent. They reach millions of researchers and subject matter experts from across the world, who speak dozens of languages. Since evidence that is related to a patent’s validity can be in any language from anywhere in the world, this is particularly compelling. Who knows what exists in Columbia that might directly relate to a patent in the United States?

Article One’s clients post requests for research of specific patents, which then appear on their website. The community of researchers sees these requests and looks for evidence related to the patent. The individual researchers that find the best evidence get paid between $5,000 and $50,000. Clients learn more about their patents and potentially save money, while individuals can make a lot of money. Everyone wins.

I can definitely see Article One being used as an extra layer of diligence in the VC community, especially bio-tech or medical devices.  For software, well I’m just hoping patents go away.

The other interesting use case is around defending against patent assertions which are becoming more common for early-stage, venture-backed companies. This service provides a tool in exploring the validity of the patents that have been asserted and provides quite a bit of leverage.

I have written before about my hatred of software patents, and frustration with the patent system in general. Platforms such as Article One Partners allow the general public to get involved (and be rewarded!) for ensuring that the patents that are out there are legitimate.


June 23rd, 2010     Categories: Patents / IP    

76% of Venture Capitalists Believe that Software Patents are Important (NOT!)

If you are a regular reader, you know that Brad and I hate software patents.  We’ve worked hard both publically and behind the scenes to try to affect change.  Our general thesis is that the software patent ecosystem (as it stands today) is harmful to innovation – the very premise of the patent system in the first place.

Recently, there has been a lot of press about how VCs value software patents.  The statistic is that “76 percent of startup managers report that venture capital investors consider patents when making funding decisions” and it being used as dispositive that VCs value patents and because VCs understand innovation, software patents are good.  It’s been thrown around by our very own USPTO, as well.

I wanted to vomit when I saw this statistic, because my 12 years in this industry has anecdotally taught me that nothing is farther from the truth.  Informed VCs realize that software patents, at best, are defensive mechanisms from poor behaving trolls and other entities and are an unfortunate expense when one would rather be hiring engineers.**

The statistic is gleaned from the recent paper by Stuart Graham, Robert Merges, Pam Samuelson and Ted Sichelman entitled “High Technology Entrepreneurs and the Patent System: Results of the 2008 Patent Survey”.

I was on a panel last week with Pam regarding software patents, open source and innovation at a conference sponsored by the Silicon Flatirons. While I’ve always found Pam to be very thoughtful and smart, I was prepared to dispute her report which indicated folks like me cared about patents.

I couldn’t have been more surprised and happy with her comments about the subject, namely that the report does NOT say anything about what VCs think about patents, rather the report indicated that this what what entrepreneurs PERCEIVED VCs to think.  (Huge difference).  If you go back and read the quote, it’s technically correct, but it’s being used in public both written and verbally that the vast majority of VCs support software patents.

Now, let’s look into the entrepreneurs that were surveyed about this perception of VCs.

88% of software startups that the study identified and queried (through Venture Expert and Dun and Bradstreet) did not respond to the survey.

There was generally a 1/3rd 2/3rd mix of companies between Venture Expert to D&B. It appears to me that none/few of the D&B companies are venture backed. (My proof is that very few D&B companies reported to aspire to be acquired or go public, which most/all VC-backed companies hope for this).

So the actual sample size of the venture-backed software startups is very small.  Pam indicated that they did research on the non-responders (the 88%) and don’t believe that they differ materially from those companies who respond.  But one can’t rule out that selection bias affected the report, as the 12% could have had a bone to pick, or something different about them that could not be picked up in the study. 

Also there is another thing worth considering:  only 75% of the software respondents actually answered the question regarding perceived importance to VCs, which does suggest that the other 25% may have skipped this question because they didn’t perceive patents to be of importance to investors.

That suggests to me that patents were deemed unimportant to financing for close to 200 of the software respondents who did not answer that question, although they answered many other questions more completely.

So bottom line?  No VCs were actually polled to come up with this statistic.  A small number of companies responded and might be over weighted to D&B companies as opposed to VC-backed companies.  So when you hear that stat thrown around, know the truth behind the numbers and feel free to show them the way, if you are one of those fighting the “good fight” against software patents. 

** I realize that there are cases where software patents might be valuable, but the vast majority of the time, they are a deadweight loss on innovation and our economy.  In a coming post, I’ll actually talk about times when I think they are appropriate. 

May 6th, 2010     Categories: Patents / IP    

Saving Money in Patent Litigation

My friend Jill Bowman is blogging a series about saving money in patent litigation.  In her words:

“I’m going to do something unusual.  I’m going to write from the prospective of a client while using the knowledge that I’ve gained as a patent litigation attorney.  I’m going to discuss what I would do if I were paying the lawyers to win a typical patent case.

My goal is to help companies pick the best attorneys for the job, ask the hard questions and demand the accountability from the lawyers that will reduce litigation bills without compromising the ability to win the case.”

I look forward to the series, as Jill is always thoughtful.

May 4th, 2010     Categories: Entrepreneurship, Patents / IP    

Why Copyright Law is Stupid – A New Series

I’ve written about why lawyers frustrate me, why FAS 157 (Topic 820) sucks and why the current state of patent law stinks.  In each case, I’ve tried to not just be a critic, but be part of the solution.

Specifically, I wrote an entire series on how law firms could change their ways to not piss me (and their clients) off and have been very active within the NVCA and personally trying to change the way that software patents work

As for FAS 157 (Topic 820), if you can’t beat them, join them.  Today it was announced that I’ve been invited to a “blue ribbon panel” organized by the Financial Accounting Foundation (FASB) to help determine the proper valuation techniques of private companies.  Either I’ll have a positive effect, or I’ll have a ton of fodder to bitch about.

But enough of that – what’s next?  Well, I’ve decided my next target will be copyright law.  There are a ton of things wrong with the current state affairs, none greater than the fact that most of the doctrine was developed before electronic media and what has come since has been a knee-jerk reaction to lobbying efforts by large content owners.

I’ll whet your appetite with  specific cases that want to make me scream:

1. ASCAP has used copyright law to go after royalty fees from girl scouts who sung popular songs around campfires;

2. Book publishers claim that Google copying their works in order to search them is a copyright infringement.  If held true, all Internet search would be subject to copyright law and effectively banned;

3. There is no clearing house for performance rights meaning that I can own a piece of music, but am limited to where I can actually play it unless I negotiate individually with the content holder; and

4. Incidental uses of content subject the user to infringement claims.  A woman recorded her 13-month old son dancing to Prince’s “Let’s Go Crazy.”  The video (all 29 seconds of it) was posted on YouTube and immediately was subject to a DMCA takedown notice.  Google complied.  The mother is now suing Universal (the entity that owns the song) for violation of fair use laws.  (Good for her). 

But these are old news and frankly, there are bigger fish to fry which I’ll get into during the series.  These are just tastes of how the archaic ways of copyright laws have not kept up with the times.  (And no, I’m not going argue that Napster was legal). 

February 26th, 2010     Categories: Patents / IP