09.19.08

The EPO Crisis and Microsoft’s Patent Trolls

Posted in Microsoft, Finance, GNU/Linux, Patents, Europe, America, FOSS at 6:54 pm by Roy Schestowitz

Patents news roundup

Most significant among the patents news is today’s demonstration, which we wrote about a few days ago and shall elaborate on over the weekend. The Stop Software Patent initiative has a summary accompanied by many photos.

On Thursday, 18 September 2008, staff members of the European Patent Office (EPO) demonstrated in Brussels for a reform of its supervisory board. Examiners are complaining about the broken governance of the Institution. Examiners do not trust neither members of the Administrative Council, neither their President Brimelow. A patent examiner confessed that most of them were against software patents but as civil servants they were not allowed to speak out publicly about their concerns.

This was also covered here, among other places.

The EPO staff are trying to make their voice heard by a series of actions against the undermining of the European Patent Organisation by its governing body and management (see below). In particular, on September 18th, a strike of EPO staff was observed by the vast majority at all four sites of employment, over 250 of whom travelled to Brussels to take part in a demonstration. The demonstration route went from Square Frère Orban to the Berlaymont, the seat of the European Commission.

Unrest does not prevail just in Europe. On we move to some problems concerning the US system, where NASA’s patents are outlined and then described for the unnecessary things that they are.

ReallyEvilCanine writes in to let us know that Ocean Tomo, the patent auctioning company has worked out an agreement to auction off a package of 25 NASA patents covering things like signal processing, GPS for spacecraft and sensor technologies.

There are some more thoughts about it here. [via Digital Majority]

Wow. Mike Masnick writes about NASA’s plan to auction off some of its patent portfolio to the private sector. When I read this I had to do a double-take: NASA has a patent portfolio?

This is absurd. The purpose of patent law is to promote the progress of the useful arts by giving inventors an incentive to invent. NASA engineers already have an incentive to invent: they’re being paid taxpayer dollars to do so. Accordingly granting patents to NASA is a pure dead-weight loss to the economy. It restricts the free flow of ideas with no offsetting benefit from improved incentives. Indeed, this is precisely why the copyrights on government-created works are immediately placed in the public domain.

Onwards we go to the most relevant target — one whose mode of operation includes predatory action against Free software, as opposed to a peaceful embrace or coexistence.

Yesterday we wrote about Nathan Myhrvold, the peripheral patent troll from Microsoft. Matt Asay describes his operation as a “massive patent pyramid scheme.” It’s not the first time.

Cisco and others have coughed up hundreds of millions of dollars to Intellectual Ventures, and have taken some steps to try to combat the company and its ilk. It’s a nice gesture, but Myhrvold and his investors apparently bring too much cash to the table, earning Intellectual Ventures the dubious distinction of being the world’s largest patent troll.

Speaking of financial pyramid schemes, Bill Parish wrote the following about Microsoft: “Sadly, many of these brilliant people have been blinded by the stock price and unable to see that Microsoft is also the key architect of the greatest financial pyramid scheme this century. It is not uncommon for participants in pyramid schemes to lose their emotional bearings. My close friends who work at Microsoft are particularly upset over my work and it is possible that even Bill Gates and Steve Ballmer do not realize the implications of their financial practices.”

“Myhrvold, much like his former employer and current investor, dislikes GNU/Linux…”Another smart mind, whose site is now “down for renovations and rethinking,” wrote this about Microsoft: “As with all pyramid schemes, it is important to get as close to tier 1 as possible. From a practical standpoint, usually only tiers 1 and 2 will derive significant long-term economic rewards from such schemes.”

Watching the assessments regarding Microsoft’s financial state (it is claimed to have lost a lot of money), one has to wonder what Microsoft might do next. Myhrvold, much like his former employer and current investor, dislikes GNU/Linux (see video). Some are even expecting lawsuits from this patent troll (Acacia, which is also somewhat associated with Microsoft [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11], has already done plenty of that).

Intellectual Ventures Getting Antsy; Expect Lawsuits Soon

So what is new in this one? Well, less than a year after raising a $1 billion patent hoarding fund, he’s out raising a new $2.5 billion fund. So it seems like he’s good at getting press and raising money — but not so much actually making money at this point (well, Myhrvold personally is doing fine, since the piece notes that he gets a 2% management fee, just like a VC). And that’s where the saber rattling comes in. The article notes that Cisco and Verizon have paid up between $200 and $400 million as licensees — though, to make it more confusing some of that is invested back into the fund for equity.

Cisco, which is a victim in this case and also a recent protester, actually sells hardware. So does IBM, as we pointed out very recently. There’s lots of money in this business.

To Microsoft, on the other hand, it’s hard to monetise such work differently. Due to competition, so-called “piracy” is a must to Microsoft. Free software is Microsoft’s #1 rival because it forces the monopolist to concede its margins or give away its software for free (gratis). It keeps Microsoft more humble. Here is a quote from 2007:

“It’s easier for our software to compete with Linux when there’s piracy than when there’s not.”

–Bill Gates

This one from the news is rather amusing.

Microsoft: 83 pct of Montenegro software pirated

Microsoft in Montenegro says that 83 percent of software in the Balkan country is pirated.

The company says illegal software cost the country US$7 million in 2007.

Microsoft paints itself as a victim, as if it couldn’t put an end to had it really tried harder. Microsoft loves (and sometimes even encourages) this so-called ‘piracy’. In this particular case, they try to warn the nations that it is the nations’ loss and therefore they should do Microsoft’s job. It takes some nerve.

The Xbox and Zune businesses, which were intended to formulate Microsoft’s entrance into hardware sales, have backfired badly, raking billions of dollars in losses. It’s interesting to find that, based on this new interview, Microsoft wanted to just buy Nintendo.

In the second part of an interview with The Guardian, Peter Moore has revealed that Microsoft considered buying Nintendo.

That would not be surprising.

“Usually Microsoft doesn’t develop products, we buy products.”

–Arno Edelmann, Microsoft Manager (2007)

The morbid patent obsession in the US is costing not only American businesses because Japanese global market leaders, in this case Nintendo, could suffer an embargo because of these ludicrous patents.

The U.S. International Trade Commission has agreed to look into Hillcrest Laboratories’ allegations that Nintendo infringed Hillcrest’s patents in making its popular Wii video game, the ITC said on Wednesday.

Are patents truly so wonderful? █

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