AN FRANCISCO, May 1 - A Silicon Valley mystery has been solved.Posted on 05/02/2005 1:34:44 PM PDT by Ernest_at_the_Beach
By JOHN MARKOFF
AN FRANCISCO, May 1 - A Silicon Valley mystery has been solved.
The mystery involves a set of electronic commerce patents purchased, after heated bidding, in a dot-com bankruptcy auction by a Texas lawyer last December. They were acquired, it turns out, on behalf of the Novell Corporation, the giant software and computer services company, a company official acknowledged on Friday.
Many executives in the computer industry and at Internet software and services firms had expressed concern that the patents could be used to extract payments from their companies.
The portfolio consists of three fundamental patents covering the basic technology of business-to-business electronic commerce as well as several other patents and a range of patent applications, said Robert Glushko, one of the inventors.
Bruce Lowry, a spokesman for Novell, said the company had acquired the patents for defensive reasons and did not plan to seek licensing revenue from them. He said the company had chosen the secretive approach at the auction "for competitive reasons."
The patent issue is a contentious one in the computer industry because companies increasingly use intellectual property - patents and copyrights - both to protect markets and to attack competitors. Moreover, a secondary market is emerging for intellectual property acquired by individuals and corporations not involved in the original inventions.
"The patent system is curious, in the way patents get created and then often don't get enforced," said Jack Russo, an intellectual-property lawyer at Russo & Hale in Palo Alto, Calif. "They sit there as ticking bombs. You don't know the scope until they land in court."
In Novell's case, a specific concern stems from its activities in open-source software - programs developed and enhanced through collaborative contributions from their users. In November 2003, Novell acquired SUSE, a German firm that had developed a popular version of the open-source operating system Linux for corporate computer users. The acquisition shifted Novell away from its proprietary Netware operating system, used by corporations for networking.
Novell is clearly trying to avoid finding itself entangled in a case like the one brought against I.B.M. by the SCO Group, a Utah company, in March 2003, asserting that I.B.M. illegally contributed code to Linux from the Unix operating system. SCO had obtained the licensing rights to the Unix operating system and contends that Linux, a variant of Unix, violates its rights. It sought $1 billion in damages in the case, which is pending.
The Novell gambit in its patent acquisition applied a bit of auction-house stealth in a court of law. Mark X. Mullin, a lawyer for a Dallas law firm representing a company identified as JGR Acquisitions, purchased the Commerce One patents for $15.5 million on Dec. 6 in Federal Bankruptcy Court in San Francisco.
His last-minute intervention followed an unusual bidding contest between two intellectual-property venture firms in which Nathan Myhrvold, a former Microsoft executive, is involved: ThinkFire Services, where Mr. Myhrvold is chairman, and Intellectual Ventures, a private fund founded in 2000 by Mr. Myhrvold and Edward Jung. Mr. Myhrvold would not shed any light on the two ventures' competing interests in the patents.
Several people in the industry had guessed that Novell might have been the purchaser after the company disclosed one-time patent-related expenses in its first-quarter financial report on Feb. 22. "These patents were purchased consistent with our published policy statement to use our patent portfolio to defend against those who might assert patent claims against open-source products marketed and supported by Novell," Bill Smith, Novell's vice president for investor relations, told financial analysts in February.
At the time, the company declined to discuss which patents it had acquired through a subsidiary. The company acknowledged last week that it was the secret buyer after a reporter inquired about the purchase.
Mr. Glushko, one of the inventors of the technology, congratulated Novell on its stance, but warned that such defensive acquisitions would not solve all of the issues confronting the industry over intellectual property.
"Novell did the Web services world a great service by keeping these key patents out of the hands of patent trolls and intellectual vultures," said Mr. Glushko, a former Commerce One software designer who is now an adjunct professor at the University of California, Berkeley, in the School of Information Management and Systems. "But the problem won't go away unless the patent system is reformed to prevent anti-innovative and anticompetitive acquisitions of patents."
Commerce One, founded in 1994 and based in Santa Clara, Calif., developed software applications for electronic commerce. In 1999, it acquired a small start-up company, Veo Systems, which had developed electronic commerce technology based on set of protocols known as Extensible Markup Language, or XML. The idea was that a publicly available technology like XML would help electronic markets grow rapidly.
Mr. Glushko said that as a co-founder of Veo he had contributed the ideas in two of the core patents to industry standards groups, a move that may have placed those ideas in the public domain. Mr. Glushko contends that those contributions make the patents harder to enforce. But a representative of Commerce One in the bankruptcy proceeding said his firm had explored that issue and determined that the patents were enforceable.
Since the sale of the patents, there has been at least one challenge, by a company that asserted Commerce One licensed some of the patent technology before the assets were sold in bankruptcy court. That shift in stance has led some intellectual property specialists to express caution about defensive claims like the ones Novell is making related to the Commerce One patents.
"You have to have a bit of skepticism," said Josh Lerner, a patent expert and professor at the Harvard Business School. "On the one hand, many companies see business opportunities relative to selling open-source software. At the same time, the open-source movement is clearly a threat to many proprietary business models."
More fallout from the SCO - IBM lawsuit.
No one I know in the software industry would describe Novell as follows: "the giant software and computer services company."
Novell is not a major force in the industry. Commerce One is basically dead. Lots of issues in patent law, not just software but also in biotech, industrial manufacturing. Not much need for patent reform that I see. All domains of the law are subject to abuse and they tend to work themselves out. I hate lawyers, but this is not an area of major concern.
Their purpose has transmogrified into being a mere vehicle for lawyers to erect royalty toll booths for derivative, non-innovative "business methods."
When some companies can patent the "One Click Purchase", and other companies exist that sell no products--they make money from patent lawsuits, I'd say that our patent system is broken. It is a well known fact that most patents applied for are granted without research by the patent office since they are massively understaffed. It is also well known that patents are being granted for every trivial change to a product. Not too long ago a patent was granted for the wheel (using clever language). The US patent system is completely broken (it was never intended for intellectual properties or to be used to describe trivial aspects of products). Unless our patent system is revised, the number of lawyers each company will have to employ to stay legal will increase until our industries are paralyzed.
bump
Most patents applied for are not granted as applied for, but with significant changes and restrictions. So much for that well known fact. For the most recent year that statistics are available, there were about 350,000 applications and only around 180,000 patents issued. Note that the 180,000 issued is of the entire body of applications, not just those received in 2003. So really about 10% of applications result in an actual patent and most of those are narrowed during the process.
If the patent system was not created to protect intellectual property then why does it exist. If you object to process patents, then let the court work them out. Few have been issued and fewer defended with success. Patents are critical to many industries, especially pharma, bio-ag, microchips, chemical, and others.
Blast, foiled again!
Check your Constitution. Article I, Section 8, Clause *, grants Congress the authority "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". Do you see anything in there that says "except for business methods, trivial aspects of products, or anything else that pisses off burzum"? Nope, I didn't see that, either.
The Patent Office has never, and will never, grant a patent "without research". They still examine every application with great care and professionalism. They certainly have some catching up to do in the software area, and sometimes invalid patents are issued. That's what courts are for. The U.S. patent system is partly responsible for almost every major technological advance in the last 100 years. Trashing it would be the height of stupidity.
Thanks for the info!
Added to Keyword "Intellectual Property"
http://www.freerepublic.com/focus/keyword?k=intellectualproperty
No patent is ever issued "mysteriously". Every piece of correspondence is in the file history, including interviews, conferences, etc. It would only be mysterious if you couldn't read English. If a patent is issued, and there is invalidating prior art out there, anyone is free to file a petition for re-examination of the application without ever seeing the inside of a courtroom.
There is also no way that a "legitimate" patent can be "stolen" by anyone. Patents are strictly creatures of national sovreignty: a U.S. patent does nothing to prevent a Chinese company fromn producing and selling in China, just as a Chinese patent is worthless in the U.S.
If you're advising your clients to stop filing patent applications, you're inviting them to give away their R&D expenditures. Doesn't sound very prudent to me.
One of my Church members was in an investment group whose own R&D procured the patent for boil in the bag rice. This was back in the 70's or so.
They heavily marketed to all the major US food processors but none would buy into it.
After the patent expired, boil in the bag rice came out under many labels.
Let me add one note...Im not indicting patent attorneys..I think we need MORE good patent attorneys...especially at the patent office.
We also need alot more budget to hire some good patent examiners...the staff is woefully undermanned IMO.
Thats where Im going with this point...not to abolish the patent office for Gods sake.
Sorry about the crabby tone. You know, I really need to cut down on the caffeine...
My point about "stealing" patents was that a U.S. patent was never supposed to protect you outside the U.S. If you want to be protected in China, you better file in China. That's not a U.S. patent system problem, it's a business decision problem.
If the "bogus" patent you describe is still out there, it will never be enforced given the prior art you describe. Examiners, even careful examiners, sometimes make mistakes. From what you say, that one would be gone on summary judgment in short order.
I thought AOL bought Netscape years back. If so, they are still one of the big boys.
Of course right after I post I realize I'm an idiot and cannot read.
Novell is a tiny bit player in the industry at this point. Only decaying systems still use Novell. Not sure how these guys can keep a straight face by pretending this has nothing to do with future litigation.
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