One of my favorite sayings is “Those who can’t innovate, litigate.” Many patent defends claim the patent system protects small inventors, but it more often seems as a way for large businesses to stifle competition. Look at recent lawsuit announcements and it’s a who’s who of no longer relevant companies who ceded their market leads by failing to continue innovating with market.

Apple has seemed like a company more focused on innovation. Even as Jobs proudly announced more than 200 patents related to the iPhone, Apple appeared to want to seriously compete in the mobile space by offering a more compelling product.  Those 200 patents did little to stop the many patent lawsuits lodged by marketplace losers against Apple including most recently Nokia (think, what was the last good Nokia phone).

Now Apple, rather than continuing to fund and innovate on the iPhone, has sued HTC, the maker of many Google Android phones, over several patents.  HTC and Google Android have been stealing much of Apple’s thunder in the mobile space and are both growing very rapidly (thanks, in part, to Google’s free and open-sourced operating system allowing HTC and other phone manufacturers to innovate and create compelling phones). Apple apparently thinks its worth spending millions of dollars on lawyers to sue HTC rather than spend that time and money making an even better iPhone.

Apple suing HTC, and by association Google, is a thinly veiled way of saying they’re scared of competition. Yes, Apple has a legal right to sue over patent infringement (even though most patent lawsuits are not over willful infringement but because two companies came up with the same idea but one patented it first), but what is gained from these lawsuits, aside from making lawyers richer. Rather than out-innovate and compete in the marketplace, as is object of capitalism, Apple would rather sue to keep quality products out of consumers hands. Enjoy that AT&T 3G. We might get stuck with it.

After my IP class last week, a classmate and I continued our debate.  He said something that stuck with me: “Companies won’t leave money on the table.”  But in many cases, companies do leave money on the table. Sometimes the risk isn’t worth the reward, but sometimes it’s sheer stubbornness.

I mentioned Farhad Manjoo’s article about why there is no iTunes for a movies a few weeks ago.  The reason, according to Manjoo, is there are too many contracts to renegotiate and too many people to get permission from to make an all-you-can-download movie service cost effective.  This is not because it’s actually expensive to make (all those BitTorrent sites seem to manage). It’s because the variety of rights holders demand too much money.  Rights holders over value their copyright (or patent other cases).  They demand more money than someone can make selling another product (like a download service).  Instead of getting paid, nothing gets done or sold, meaning everyone leaves money on the table.

Want a nice, clean consumer example? iTunes introduced variable pricing for music at the demand of the record companies.  Record companies could choose a lower 69 cent price, the regular 99 cent price, and a $1.29. Few chose the lower price, pushing popular and new songs to the higher $1.29.  Early results show the labels are losing money from the decrease in sales – unit sales have dropped to the point where actual revenue is lower than when prices were 99 cents. Don’t say they weren’t warned.

The examples are numerous, from newspapers threatening Google even though its sends them tons of free traffic to monetize to Warner Music demanding more money from YouTube and music games like Guitar Hero, ignoring the huge promotional benefit they get from both.  TV shows like the Wonder Years can’t appear on DVD or TV because of the over-priced music. Other shows have changed the music, from Dawson’s Creek to WKRP in Cincinnati.

In the patent world, having too many patents in one area is called a patent thicket and can make it hard for research because it requires so many different licenses (and too many companies over valuing their intellectual property) that it becomes cost-prohibitive to research either from licensing or lawsuits.  Some companies collect their patents to allow products to be made, but these patent pools often do more harm than good. This is even hampering drug research:

Peter Ringrose, chief scientific officer at Bristol-Myers, has said there are more than 50 proteins possibly involved in cancer that the company was not working on because the patent holders either would not allow it or were demanding unreasonable royalties.

Yes, I went there. You might die because greedy companies refuse to take money.

In all seriousness, intellectual property not only gives monopoly rights to a single entity, but it also comes a sense of entitlement that seems to hurt the rights holder and everyone down the supply chain, including consumers.  This is because rights holders significant over-value their own intellectual property.  Much of the value from content comes from how it reaches the consumer, whether on DVD, TV, or some innovative package.  Pricing yourself out of these products does not make your content more valuable – it devalues it because consumers don’t experience it.  Companies are leaving money on the table, not just from the initial royalties, but from the future revenue made by future sales of products based on new fans or new innovations.

Patents and intellectual property are meant to incentives innovation. One person or company gets a limited monopoly on their innovation as reward for teaching everyone else how to do what they did. If that’s the case, why do we need separate government incentives for businesses?

Patents and intellectual property, allegedly, solve one problem but cause another. Even if they create an incentive to produce a new product (which some studies dispute), the resulting product will be more expensive because of the patent.  That shrinks the market and societal benefit. Instead of relying on this exclusionary practice, why not let the market take care of innovation through competition (the basis of capitalism, right) and use government incentives, such as low interest loans, grants, or tax breaks, to build new markets.

The market is enough. Competition forces companies to out innovate each other; they have to keep costs down and value high otherwise customers will find the bigger and better thing.  We’ve seen this work in the fashion industry, restaurant industry, and even in the drug and software industry before both were allowed patents (which courts only recently allowed).  People will always need better technology, drugs, and gadgets and smart companies can and do succeed without strong-arming intellectual property.

But what about things the market won’t support? This is where we already have an incentive system in place: government incentives.  Think about how much the government already pays out for scientific research. A third of drug research money comes from the federal government, but drug companies also get valuable patents and then charge taxpayers monopoly prices for a drug they already paid for.

The key difference is government incentives bring prices down while patents push prices up. For example, alternative fuels are an important leap in technology and currently very expensive and inefficient. It’s not that companies don’t want to do the research, several have formed already. The problem is new fuel systems are too expensive for the market. Oil and coal are cheaper. Patents can’t help this industry when no one wants to pay for it.  With government incentives, instead of patents, the price these companies charge would be lower, expanding the market. As the market grows, the technology improves, prices drop, and eventually the market becomes cost-effective and self-sufficient. Government incentives over.

The same can be applied to drugs. Let designer drugs for weight loss and ED be the cash cows for private firms, but use government funds to develop malaria and HIV medication. The main customers for these drugs are poor and can’t afford the monopoly prices being charged, so let’s think of the greater good, and by greater good, I mean long term financial benefit. If we cure all the illness in poor areas, those people will be able to work and eventually join the global economy. China and India can tell you how that’s a good thing.

Government incentives accomplish what we want patents to accomplish.  Unfortunately, patents are not pushing innovation, but following innovation. After alternative fuels get tons of government incentives and handouts, alternative fuel companies will patent their technology and prevent competition from making the technology better faster, even when taxpayers made the businesses viable in the first place.  If patents were enough, we wouldn’t need the government incentives we have now. And if we need those incentives, why should taxpayers pay twice?

Just in time to discuss in the intellectual property class I’m way too excited about (and likely way over my head), a terrible decision has come from the Federal Court of Appeals vastly reducing the requirement to prove infringement on design patents.

Design patents cover the visual design of an object rather than its function like regular, utility patents and covers products like jewelry, furniture, and computer icons and fonts.

The decision changes the standard to prove infringement from “point of novelty” to the “ordinary observer” test where a patent is infringing if a ordinary person rather than an expert thinks the design is unique.

The silver lining in this case is the patent holder Egyptian Goddess lost the case even with the reduced burden of proof. But as we’ve seen with the current patent system, reduced burden of proof leads to more patents, more lawsuits, more money wasted, and more innovation lost.

Yeah, be prepared. I’m in IP mode for the next 10 weeks.

Ralph Koster outlines the tangled web of patents covering the popular world of music-based video games.  A patent thicket describes when several patents cover a single product, owned by several different groups.  Music based video games like Guitar Hero and Rock Band are finding themselves mixed up in a web of lawsuits.  First Konami is suing Harmonix for patents on music games, even though Harmonix has its own assortment of music game patents (including a patent on a “game controller simulating a musical instrument”).  Konami previous made GuitarFreaks and is looking to get back into the music game genre since Harmonix help make it such a success (more than Konami ever did).

Let’s not forget Red Octane and Activision, the team still responsible for Guitar Hero (which Harmonix headlined before getting bought by MTV). They’ve been licensing patents from Konami while getting sued by Gibson who also has patents on music games even though they sold likeness rights to the game for toy Gibson guitars. And let’s not forget Harmonix had sued Activision over unpaid royalties (now bargaining instead).

All the lawsuits shows none of this is about innovation, but is about greed and strong arming bargaining positions for more licensing fees.  That’s not what the patent system is supposed to be for.  The more these companies fight over music game patents, the worse consumers will be as the games will be more expensive, if they can even afford to be made.

Almost every website on the web has a new patent to fear. A Singapore company, Vuestar Technologies, claims to own a parent on “Internet searching via visual images” leading the company to sue thousands of websites that use images to link to other pages, Slashdot reports.

According to the company’s website, Vuestar wants other sites to license the technology and pay more than $3,500 in fees from most sites excluding, governmental agencies and charities. The company also says it will specifically target Microsoft and Google.

This patent is another ludicrous patent (and likely a publicity grab that I am helping out with) and another example of an abuse of the patent system. Linking through images is very basic HTML technology. Even if Vuestar has some creative way of doing this, the prior art of just about every web page ever should be enough to invalidate this patent. But thanks to the USPTO’s insane efficiency, this could take a couple of years. I’ll be in regular touch with my lawyer until then.

There are lots of sexy political issues, usually following whatever George Clooney is promoting that week, and sadly patent law is not one of them. Intellectual property issues and patent law is too complex to be highlighted on billboards, and from the public’s perspective, doesn’t affect our lives too much. But the more I learn about these issues, the more I realize how much America’s patent system is hurting us economically and intellectually.

But in my research and discussions with people, I found myself challenged as to describe my position. I am not specifically anti-copyright or anti-patents and wish there was a term to describe my political position so I knew what to call the Facebook group.

I would like to recommend Pro-Innovation as the term.

Pro-Innovation has that positive marketing spin, being for something rather than against something else. And innovation is good, and in truth, the intended purpose of a patent system. Unfortunately, for all the conventional wisdom, there is no evidence that more patents helps innovation, rather it hampers innovation more than helps.

The Pro-Innovation position looks to bring back American intellectual property laws to their minimalist state as dictated by the Constitution “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Meaning any patent or copyright is granted only to promote the development or more and better stuff and only granted for a limited time (70 years after the creator dies seems a little long).

This is an extremely complex issue that I will be tackling more on Prodigeek, but I wanted to throw my suggestion in the ring. I have already trademarked Pro-Innovation and expect a quarter every time somebody says it.

Geeks aren’t the most important political voting bloc, but we have several important issues few candidates care to address.  These technology issues have major implications on technological development, the economy, and individual rights.  These are the issues most concerning to the under-appreciated geek bloc.

7. Expanding broadband

The fact that companies still advertise dial-up should concern everyone.  Europe and Asian countries have extensive broadband connectivity, even wireless technology which the United States has been unable to deploy in cities only.  The United States ranks 13th in broadband subscribers after Korea, Japan, and several Scandinavian countries with little strategy in how to expand access.  In fact, our government continues to fudge our own broadband numbers, even after other agencies have shown these numbers to be false.

6. Spyware, malware, and virus. Oh my.

All the spam, phishing scams, and crap software make the internet a scary and dangerous place.  All the information and technology available to the common person is locked behind firewalls, security warnings, and the fear of very website you visit and file you download.  While cautious is healthy in any scenario, the amount of people using the internet for evil makes for an unpleasant place to surf and enjoy.  And as the internet and computers consume more and more of our lives, these problems will only get bigger.  Both technology and the government have a vicious war ahead, which if the present is any sign, is destined to be as successful as the War on Drugs.

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Patent law really sucks these days.  Unfortunately, the insanity that is our patent system doesn’t get a lot of publicity.  The major issue is companies are patenting everything they can to either sue everyone else or protect themselves from lawsuits.  Patents and copyrights are meant to encourage innovation, not be used to scare off competitors.

So explain how Amazon patenting customized 404 error pages deserves a patent?  The Supreme Court ruled over a year ago that eligible patents had to be novel and not "obvious" to people of "ordinary skill" in the related field.  Amazon couldn’t have invented customizing 404 error pages.  That technology already exists and is very easy to edit even for beginning web developers using several hosting tools.  Amazon’s patent seems to make the process more complicated than just using the basic server services, so really they’re just patenting a harder way of doing something everyone does already.

This also reminds me that most blogs (and websites) violate another patent, held by notorious patent troll firm Acacia.  Acacia controls a patent over the "posting a JPEG to a website."  That’s why I plan on switching completely to PNGs.

So if you see calls for my legal funds, you’ll know why.