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Ep. 88: Patent wars escalateGoogle just acquired Motorola's mobile patents. HP just decided to give WebOS the heave-ho, putting its patents in play. Congress is debating fundamental rule changes in the patent system. So it's time to revisit the patent and invention discussion on...
Everyone welcome to reporters' roundtable our show on a single tech topic each time. Some topics as we have discovered lately are so big they take more -- one should do this is one of them we are going to discuss today. Patents. Now I got one -- I puts up on Google plus -- got one in my area followers that to me. I'm so sick of this discussion but this discussion is so interesting and -- best. And so complicated. That we just had to bring it bring it back again especially -- with with what is happening with global buying Motorola mobility and all the patents as they acquired in that transaction. And -- to do this discussion justice the only thing I could possibly do. Let's bring back. And -- Patel. Formally managing editor of engadget. Two do. The way I think about the show is when we did the show back in May with you I -- Molly was patents won a one we were all just kind of at least from my perspective and I know that. -- -- -- much more advancements I am. Trying to educate ourselves and how patents work here when it comes to technology. Since then a lot has changed I learned a lot are Inca a lot of patent stuff has been in the news and I want this show to be more like patents three at once and you -- Thank you so much for joining it's again really appreciate. Thanks and yeah I hope I can. I can do three of one level analysis where will you -- before the show started so just keep it up and I know that turning on the camera sometimes you know. Yeah I got physics and -- -- now and those you'll be five. And before we get into the show though. You when we lasted so much -- change not just in the world patents but for you moving when we last -- -- the managing -- -- gadget. Now you're working on look -- what looks like a transit transitional product this is my next preparing for the launch of some new thing tell us just a little bit about that because I think -- Really excited about. -- so right now are writing it this -- it's there's sponsors there. And 1214. -- people map. A lot of us came from engadget Josh -- -- on the order Joanna stern. -- stricker who we have in Europe. And soon. This is my next you know different its word press clawed its was just what we're Colin how we're not running ads on it and what we're working on his -- new property which we called the verge. Our new center of washing out in partnership with -- nation. Which has not been kind enough to -- to partner in Austin and found us -- -- of running -- got a really great. I -- -- they've built we're really excited about what to do and how we use its its elsewhere is an Internet -- -- -- technology. -- because in the fall and our logos out there -- and kind of Siewert there's a vibrant growing four which is. Kind of reminds us about how excited you and we were all about technology and her kids and wanted to bring that back and be serious about what it means it. To be -- -- to virtually cutting edge thing. Be serious about being excited. The sounds seriously. What what I'm saying is answers. I can't wait to see that's not seem -- -- as somebody who has done companies that have built their own CMS's. Well actually I don't know what you guys are doing that but good luck and I'm I'm I'm looking forward to the content and and watching -- struggle with a home -- EMS. Content management systems as -- one. Com. All right so I want to get into this discussion up patents. Again the key news hook here. Is Google's acquisition of Motorola mobility the -- division of Motorola that was -- in fact responsible for. Though mobile phone. The brick phone and -- -- after that. That however is not the biggest news in mobility of the last few days the biggest -- in mobility last few days. Was and Hewlett-Packard saying the you know that web OS operating system that we bought when we bought palm. Forget about. It if -- that it exceed. That money is actually we're not gonna use that there -- companies that acquisition for anything we're going to either discontinue or spin off for license this product. But its operating system and -- the game to Apple Google and Microsoft and whoever -- -- -- It's your -- right well as -- as -- and after. Everywhere and trying to distract I apologize. In I figured He says with that I think that is the biggest news is that HP it's -- it's not -- news it's. Its consumer tech news it's HP decided to be totally different kind of company and they're spinning off -- PC business Goddard third. Abandoning their mobile efforts which were the most I think similar seriously considered mobile efforts. By any vendor you know -- -- to -- -- -- Microsoft. That's great rock license or software in mobile we're gonna build an integrated solution that was -- big deal manage -- Over billion dollars to depart invested several more billion dollars over the past year. And they just decided they couldn't do. And that's that's a huge story in -- one of the things it on palm was for sale but -- months ago one of the things people thought. I would make common entry attractive acquisition. Was that it has huge patent portfolio in HP has not yet said what they're gonna do that -- Trulia. Right they might license webos to might sell the code of -- but the patents it acquired from home it hasn't set -- I know whether I think there -- personal systems report. Get licensed are sold out none of that is clear -- Mark my words they make more money by selling those patents than they ever would have by selling webos hardware. You know maybe. ID patents -- now patents are -- are going for what. And let's talk about this this the Motorola Google. Business. So Google acquired. Motorola mobility for earth -- was twelve and half billion dollars. Toderat and a billion and that the patents then if you do the math on that the patents that they acquired were about 400000 dollars patent -- It it it depends on how you book you're gonna experts and they had seventy if Motorola has 171000. In an additional 7500. Pending applications. So if you just erecting its -- -- -- -- 171000. It's 5101000. -- And if you just do a whole thing's 40000 foot which is kind of near the going rate that's sort of what what the Novell patents went for an auction and want total -- in fact I think I read somewhere maybe economists its exact same number down to dissent that to a page from Motorola's patents as the buyer and -- So but is that it is actually less than Apple paid for the patent just by -- 150000 dollars a pop. Yes that's an arsenal in -- they do that ignited in a consortium with rim and Microsoft and -- companies aren't so we're we're gonna get into -- -- -- -- -- don't yet exist yet evaluation individual patents. That's that's ever ridiculous way of looking right and it's you -- the broad portfolio is good but what it is is -- -- it's like. It's like buying a regular -- and there's one Eminem and you really want. You know and use don't know if it is in there -- there's golden ticket buyer of and that's -- it's not each patent individually is equally valuable let me that that's -- that's about. -- and an effort okay we're gonna come back to that but let's talk about what's happened lately and in addition to the or perhaps in response to the Motorola -- -- you wrote a story a great story. About the broken patent system on this is my next can you kind of summarize that for those of us. Those are readers who have read the whole thing in that process through -- all at what's your what's wrong on that those very well thought out though. I -- -- -- perspective on the system in our conversation about the system. Is not that. Yeah it might be totally right I think that -- become the conventional wisdom. In response to things like Apple suing Samsung or HTC or Microsoft C Motorola or. Motorola actually sued Apple first rate instead -- pleas judge saying that we're not infringing always facts but we -- declaratory judgment saying infringement patents it's a crazy man right. I'm or Oracle suing Google over -- In -- response to that is well you should just compete in a marketplace. You're using patents to dodge real competition the patent systems -- broken and fundamentally broken and there's -- a lot of when I sized conventional wisdom might call it lazy -- nationalism because I see it repeated -- analysis. Now I'm not saying the underlying thought. -- -- -- Totally true or -- there might not be -- way to fix it but what I wanted to get -- -- editorialists. Is to show that -- and we have a system -- understand how it works it's 230 years old the first. I head of the patent office was Thomas Jefferson framing this is how -- -- patents. And you know that the fundamental principles of the patent system haven't actually changed in that 230 years we've been built a body of law around it the -- -- issued rules. The dual -- court decisions and your company -- each other and -- -- -- issues new new laws new decisions and that are then re. Interpreted further and further but -- the fundamental level we have actually gone back and said well let's define what software patent case. Right in -- to find a real laws around software patents should be or let's take into account. The industry -- -- faster than a technology industry moves faster than it did when we last -- foreign patent laws and said everybody it's twenty years. But maybe only if framing we -- software it's like you're building a new engine part you have to pay for two -- -- -- distribution of physical goods maybe you don't need twenty years to recoup your investment in building new invention because you're just doing software. In we have been asking these questions and answers -- -- so. You know what I was -- and she was. It doesn't do us any good to just start screaming about her -- dismissed from your front and a broken and we should throw out that's our -- He can -- and of the you can accomplish. Right now America ran out and you can go to congress and they got it yes check out -- patent office yes throughout title 35 United States code and you know what these guys -- -- we want. I don't -- I think what can happen is you can say look software is different. Technology is different and we have to reform the patent system set to take into account the unique properties of software to take any county properties -- tech industry. -- you know it's -- -- right thing restaurant 4000 words trying to do it. I've no idea how successful but it felt good my heart is a piece. -- I think now people -- didn't think about it. Well I I think it it was Adam that's all watershed that discussion now is since that'll actually -- a patent seven reading some of the patent blogs. Yes and yes there are -- blogs out there mostly people by. Very very thoughtful -- legal professionals and -- you know I'll put some links to them in in the show notes. And -- You made it accessible to to. A more. Technological. Audience verses the legal audience I think that was a very that was a service so congratulations. And thank you for that. As -- address. Now. Let's go before we -- dive back into some of the legal issues and where this battles being fought which -- some. To some extent on Capitol Hill I -- talk more about cool and Motorola mobility. Why. Really why do you think that Google made that acquisition. -- you know -- a few theories. You know -- to policy was that that this is an accident version us -- -- -- He said there's only three and Gibson is here. As sort of track with them and I think the most -- the most interest in want to meet is that. You know the real problem for entered ecosystem. Is not necessarily Apple or Microsoft suing partners. -- -- -- is a problem. I think the real problem was Motorola saying. Well we have all these patents. We might series she's -- collect a license and -- -- as well he's you know Motorola's patents. Are forward GSM technologies are for cell technologies narrows that -- or the sultan. And they made the first all digital so rich so I think the bigger problem for Google was. When I'm Motorola -- start attacking Android manufacturers. And I think that. Provided a ton of leverage from Motorola in the steel and from rural shareholders like -- I can who really wanted to see greater vulnerability was has not been doing well as -- company. So I think there's there's a piece of it that's what will acquire a huge patent portfolio that reaching used to countersued Apple which countersued Microsoft where. If my -- so if you this companies -- Google directly. I'm but I think there's another big piece of that which is will react to actually protect. Samsung HTC from a company like Motorola that is not doing well is mean and or manufacture. And wants to use -- other Internet pictures to gain some additional bit of market performance and I think Motorola's management board sought an opportunity justice clearly this is as anybody. I think it's a -- and I you know I can't tell you maybe or maybe -- they just really makes sense. For all Lido key that viewed as -- for a cable locks industry. And -- -- he's betting twelve billion dollars bundling cable -- structure -- they only talked about patents the partners only talked about defending under -- dollar statement supporting it. The buyout and I really think that it's it's not. It's at least equally defending -- from the outside. As it is defending injury from inside it and that's a really interest in kind of dynamic at work it is a very -- thing. Way to look at things because on the one hand -- If what you're saying holes than -- Google is doing is protecting Android and protecting Android developers and hardware manufacturers. It on the other hand by buying Motorola mobility which is make cell phones. There are competing directly with the handset manufacturers and -- -- you square those two things. You know I have no idea. To be honest you know he's a rescue before -- Apple didn't you read it kind of hilariously Apple's main licensee is a Mac OS the original Mac -- Was Motorola at one point -- and they can do it. Palm could never do it to try to license Apollo -- Sony and others. It it's really every found a Google sells through Motorola is -- -- it's taking away from Samsung. And that problem as hard -- and -- it they're saying they're gonna run Motorola's independent division but it. You know eventually. You want all the smartest guys in countries talk to each other especially -- building the same product. Concise yet eventually I think -- underage -- we'll just become Motorola and what we'll just have to see how that works. Well essentially we could go on and on about the strategy Google strategy in in getting Android phones out there and certainly it's been very interesting and fundamentally different from from Apple's where Apple -- the high end and slowly slowly slowly works its way down Google. Through its partnerships -- -- more Microsoft approach which is licensed licensed licensed and get as many products out there even if it causes a degree of fragmentation and it's in -- working which is what's interesting about. Now. What's also interesting about this is I read a post. -- Leo. By Allen -- says what's clear through through this needs talking about a recent Google acquisition of -- 1029. IBM patents. Is that Google has ended its previous -- -- -- unilateral patent this armament policy and it's truly know what I used to hear from Google and then we'll talk about Chrome in the Chrome OS and even Android to an extent and their their job engine all the stuff. They would talk about putting this development. Making it available and holding the patents and promising not litigate against them. Basically protecting the IP and making available to everyone. And now it appears that -- is reversing that and taking a more. Aggressive stance with patents is that what's happening here. United we can only say that with certainty if Google starts suing people. And negative -- aggressive stance right distance to say what -- -- collecting royalties. For him. I just haven't done -- yet what interest in with the Merrill acquisition. Is that they've. You know in addition to buying a handset division and a portfolio of patents they've also -- two lawsuits right yeah if there and they're now in litigation with. Apple and -- in litigation Microsoft over. And you know they also purchased a collection of royalties they receive -- -- industry others radio access talking before you know they're they're licensed through. Three GPP which is a three -- organization -- licensed through the GSM organization. And you know they Motorola Q is in receives royalties on radio technology -- every other manufacturer. So. It's not that they -- -- they've abandoned a policy it's this acquisition. Has put them in a different place in -- until -- -- run out and start suing people. You know I don't think they've changed -- aggressive stance. But this changes the make up of what to do with -- portfolio and I think inheriting two lawsuits is gonna really change what they do that Julio. Because here. We don't know -- -- really planning to run -- -- -- it's gonna be you have fully independent subsidiary words emerge right into Google you know we don't know quite yet. But -- at some point -- case might change to Apple vs school -- and that becomes a big deal that via and are there any. He -- in addition to this wouldn't have this broad. Portfolio -- -- so many key patents that you know of that though Google acquired in this acquisition. That are are fundamental and everybody's paying attention to. You know the ones they're the ones that are asserted vs Apple and the ones were that are certain verses like substance that there's an overlap. I wouldn't call them in check point 21 and say this is once -- -- -- Obviously none of -- of one case but there is one way of thinking about it is there are the radio patents. Which. You know that they determine -- industry is these are the essential patents for the operation a cellphone. I and so that's what they're -- what kind of important affect their patents were morose as you can't deal with -- and -- licensing fees and yet you're the royalty rates paid. And everybody pays and then there's what are called are nonessential patents. Which you know interest -- sort of a quirk of linguistics for actually a more important ones right because those -- the ones -- required to license. -- -- As you know when Marie when -- join -- reorganizations. They're required to license essential patents you know that's how standards and made it's what's all get together and program to build a three G radio. Everybody you know let's pull our answer every licensed across these are essential patents are -- regent -- so Motorola. Pastor concrete contractually obliged to licensed. To nonessential patents are thus more important. Because Motorola is obligated to license them if you infringed and they you know that -- -- you. -- -- you and pretentious stopped you for making your -- Okay so just a little bit now this American life a public radio production at which which public radio company did it but this American life -- -- is the show recently called -- patents pack. Which was fantastic I believe everybody in the tech industry -- to -- you listen to the show and down. -- did what you did did they get it right here and especially about intellectual ventures which they really it took a -- to. You know they got it right and I'm counting on carefully I love the show. Not as great show I love this American life and that's a great program in -- stipulate how we love America -- okay but it did they get me as I say I think they got two very important things. One I think they went in with the same conventional wisdom which is a patent systems broken and it's killing innovation. And they use intellectual ventures named as an example. Thesis that they had -- -- Yet at weekends -- -- their overall argument now the thing about intellectual ventures is that. It is great story about -- analyst lectures and weird shady company in don't want anybody to think -- -- support what they do is I think -- users strange. -- and potentially damaging. But the thing about intellectual ventures and other companies is -- -- our PX is very very similar is that they are response to a market condition that we've created through asserted you know reading assistant feature. And it's at this negligence as it happens. -- negligently regulators just right there are parents out there there's valuable property their inventions there we created. The system. Right and we haven't made it easy for people to buy and sell them we know we've made it easy if you -- to collect them. And yet when you get two point where you say well. You know what and to build a -- you actually do you know it's to build a -- -- -- I found you need a bunch of patents -- -- Well there's a reason that if you're rich guy. You know in -- In the time I'm at -- -- parents house scotsman and -- last site we're driving here. And I passed a strip of Lakefront property is actually true story strip of lake front property owners in Wisconsin but I thought looks crappy. Affleck had the money I would file that property and I would sell it off -- developing a little bit outsell its eyes that are and that's what and Marshall ventures as it's very naked. Buy low sell let's via all the patents -- and and then threaten people and or hold people and or you know you want to do with Apple Microsoft and Google -- -- it will look. You know we've got all these patents probably need we've pulled them together will issue -- -- blanket license to all of -- -- protected from now I can -- stand. I I I think you're being. You're you're putting real estate developers and casting and an extremely bad light by lumping them in with patent developers. But it's -- and defended his property as much help but there's a difference here yes its property and I do to their but there's a difference here which I -- keys out if I can't. Thicken and turn the worst got -- right which is. There's a protection -- going on here. And I use that word knowing what I'm talking about here where and it's not just -- its artists' intellectual ventures when you've got companies like intellectual ventures the Google. Microsoft. Sitting on an Apple sitting on these giant patent portfolios and you've got a small company who may -- has a product that them. Needs patent protection needs you know -- an arsenal behind -- and or to go further. These guys now have got to affiliate with one of the big patent holders. To get the protection otherwise they're they're totally exposed and -- would change the dynamics of entrepreneurship because we've got these giants' super powers. Buying up all these patents. Well you know. Stated there's. A few things there and there were -- one Apple Microsoft for not assert. Suing independent software developers know they're gonna start suing each other on behalf of protecting this company which is -- yeah -- but Apple and Microsoft that. I think you know this is like old school international relations -- -- Microsoft's long ago realized. That. You know they they -- mutually assured destruction to -- -- each other in a sign. Numerous patent cross has spent the most famous woman ever sign. Was when -- spill gates. Came on stage at MacWorld instead we're investing 150 million dollars in the company and we're gonna right -- -- -- and then you the last -- -- ignored us and percent patent cross license. Right I -- -- -- Microsoft they're not gonna -- each other. They know that's damage. Captain of Google's patent young and it's disruptive. They're gonna see Google put you know what's funny is that Apple might actually haven't yet -- they've -- Android partners for building hardware. -- -- very different. Right and when they sued Google -- I think. We can have a conversation. They're not gonna -- -- -- independence offered offers because they build platforms right. And they want developers to come to their platforms that they get a reputation pursuing developers and scan them. So I -- and I -- about Apple and science. Even if they know what they're doing their portfolios -- million -- ventures and I see what you're saying about the protection angle but again its -- like property asset and -- -- it's. It's not that you have the property that's offensive it's how you use it. And what makes an odd in -- lectures shady is -- -- using it the same way. Real property developer. Would build a strip -- there are squeezing all of the value on the patent without giving any of the value so people around it's about about all the downtown real estate and sound and bill to strip mine people -- freak out. I'm not only if I -- all the patents the world and said. Look I've got all these patents are broadly it's -- all these technologies I want independents offer developers a common. Here's -- a list of everything and you can license it out at different rates and we're gonna be very transparent about this we're gonna make short -- -- protected. I think He -- -- in different -- -- it's really just a question of how his company runs itself and what they're actually doing. You know requiring lots of property in America is usually. We don't usually frowned -- -- it's strange it would frown on in this instance well -- and again I'm not I think and I want to make this actually clear. -- -- -- -- -- -- -- -- -- -- -- -- -- Very question -- -- ethical things with their patent portfolio but I see them as a response to you. A market that doesn't have and exchanged for real history -- -- would have. You agree with you up on that for -- clinics question it appears in in looking at the slogan reading up on this. If you look at the way. Patents work in this country gets in the world intellectual ventures seems inevitable doesn't it. Yeah I don't mean that lets you and every other c'mon let's let's say you -- every patents this which is okay He let let's let's due -- -- promising. Every other commodity like that we see in in the world has a functional exchange where people can traded market value for things copper orange -- whatever you know what every one -- call. -- -- -- -- Right in and because they don't they don't have a functional change that that's. A company like an auction ventures is incentivized to everything and say -- -- changed who you participate in a market where that really gatekeeper is we brought all exits now that's bad I -- -- anybody argues that's bad especially the way that they're doing it if they did it in a different way or more interest in more. Then I think people have -- different conception of -- are we in the middle of a patent bubble because of all this activity. The value I'm patents that that not the value but the price being paid for patents rising because analysts. Unite I think we're in the middle of the mobile -- of you know that patent Timorese are always -- patents are now able community. They give you the right to prevent other pupils from practicing an invention that's really all that gives you does give you to -- -- users are required to make anything. It gives you to write to prevent others -- thinks so that's really important. In you know and other fields like Biotech I think is a big one pharma. And you know. The patent bubble is real and it's there it's been part of the industry forever what we're seeing now is the tech industry realizing that -- -- use. If you use these tools as well to be suited to all -- -- competitive landscape so. How big this -- -- grows -- -- -- -- I think this is just sort of part of it and it's. The only real question for consumers is -- -- iPhone gonna cost more are -- gonna cost more. These at the end of the day it's just it's in group were just aligning costs. Right and if you're an app developer -- its usual patent infringement. -- He can pay for it by increasing the costs. And that sucks you not gonna say it's a good thing but that's the truth. I'm yet there's not a reason in the world where every app cost 99 -- I know be nice if every app always cost enhancements -- -- Apple wants that I want and I'm -- every listener wants that. Yeah that's outlaw. Insert and that's the real question about the patent is not whether Google should -- this morning your Apple should send this -- -- litigating its. When you these costs are to filter that consumers when we see a real facts. Now. We want one of the things we haven't gotten to yet which I want to get to before we have to wrap up here is what's going on in our government with regards the patent and there's -- there's some very interesting laws and -- proposals going to congress right now. There is this thing called the America -- -- act. Which just passed the house and I believe is going through the senate now. Which if I understand it correctly. Changes the way that patents work and is being couched in sold. To. Us as a good thing for entrepreneur horse but. I've been talking to some venture capital -- -- likenesses. This is a problem Gary -- particular has been talked about this call He wrote until this -- a travesty for information -- innovation economy. And one of the key things at the very interesting. Quirks here and American patent -- that people may not be aware they're two different ways to file patent -- to determine priority of who has -- One is first to invent and the others first to file and and they're the pretty self evident. If I have a patent. And in most of the world of the person who gets that patent for. -- our last example in a screwdriver or new hinge is the first person. 25. -- to filed a patent with the patent office in the United States. It's the first person to invent that patent and you can determine that through in a legal proceedings. They're just discussing moving from first and then -- -- law here to first to file and that has fundamental. Ramifications and how. Entrepreneur awards pursue and attack their patents that are you -- -- with this distinction or talk about this for bit. Yeah we talk about it I am -- -- the big reason for the change. And I'm sure in our current political climate this isn't being discussed is that. We're harmonizing our -- to -- the world because we're signatory. You several trees to govern intellectual property. And you never signature of the trade related to national. Protection and trim it's -- trips and many of -- -- -- but it didn't yet the trips agreement. Governs a lot of this stuff artist -- each year agreements government want this stuff so. There's -- -- broader reasons in the world you know eventually the goal. In this is. -- this is world intellectual property. Organization goals. Is that you'll be able to file. A patent anywhere in the world and CE now in use the same application and every other company and every other country I am so every -- ever also brought -- first file. There are a lot of problems the first to file. I'm you know creates a race. I'm so filed applications that because there's a racing -- speed and quality are usually opposition so few if you -- -- speed you'll -- quality. And I think. You know -- watered it and she says that we CNET in Canada. You know these changes are -- and here -- -- in in the in the long run. I don't think the American tax act is -- -- But protecting marriage act who's gonna protecting inventions -- it -- it doesn't these these are changes you need to participate in a world scale it's ever else's first to file. Whatever -- -- first to file you know Josh remember about Android He said it doesn't matter a change people always game system. In the that's a funny way of thinking about it maybe it's because we're all tech nerds -- video games we think about gaming systems and and and and breaking rules but. You know the legal system. Creates incentives right now and that's how we govern America and people are always -- trying to maximize the value in any system so you can say well. You can -- first to invent. But that's just gonna make people invent you know they're they're in a race to invent things and there's an argument over when you didn't when things were invented the first to file at least clarifies when you get -- Right here's here's the date so. You know how that incentive works in practice is. We don't know how -- -- we -- around the world and around the world no government has. Has sought to change it since it implementing it so who -- I think the real changes we need. And what should be discussed. And -- top of the show. Is suffer -- technology that's how we actually work in fact American business American. The American technological landscape. Odd because when you have companies racing around saying we know we -- and twelve point five billion dollars buying Motorola -- oldest technology companies in America. That's what that might be a problem and we should discuss how how he's actually worked instead of -- you refers to members dispersed file because. You know that that's of its its in one sense a big change -- in one sense it doesn't matter compared to bigger problems. So you think assault -- -- the ability to patent software is. That the fundamental issue here is technology that. Yet you know it's we've tried it we actually case eight and was talking at the very beginning to show called cyber source. Was just heard -- the court appeals for the federal circuit. Which is the main patent court United States. -- change the definition -- can claim software. In a -- right and what you're used to be that the patent office that you can't write -- And yet suffers staff we have had that -- -- patents and a way patent owners got around it basically were saying well. Software programs computer computers a machine software changes machine so soft -- makes a computer a new kind of machine. This is this if this is the waiting on Iraq. And so they -- -- instead of writing a piece of software that. Takes -- adds five in five -- hand they are right. Computer in a machine readable medium storage medium that contains the code to do this in this -- And you know -- -- outside go to the supreme court's that's cool let's wait that's right -- you write software changes computers in the specialized machines we can patent machines. Dot. In the -- finally. Now twenty years later the federal circuits as great anyway that's ridiculous wish into -- ideally we -- -- and courts to figure out their mistakes. I don't think we should be waiting for the -- you know the appellate court system and the Supreme Court to -- patent forced its way. I think we music. You have real legislation. About what you know nobody's ever defined this is a software. You know if you pick up the iPhone and say while Apple hasn't you know patent on how to touch screen works. Well you've gotta draw the border between how the touch screen operates -- -- your fingers -- -- filters out you know what your fingers are trying to do and you know what these gestures mean. And in the code behind it all it's a uniter and you're pinching so zoom this image and that's candidates a lot of layers of technology it's a mixture of hardware and -- I -- -- -- facilities that there are about 250000. Patents and every mobile phone. And it's given that there's probably 250 doubt there's an -- million inventions in and I think a lot of it definitely perspective as we take a lot of this for granted in and we don't restore -- -- A tablet. From Latinos and Asian companies it's selling for 200 dollars in its peace crap. But at the same time it's a piece of crap that you know builds on all this innovation that's going -- right in Europe and Iran -- That's that's a state of your product it's the most advanced things -- -- That Apple to build great in. It's -- to not take it for because it's there you can buy some peace and everything works everything's quota for obvious right. -- but everything is only obvious and -- and -- -- -- you know the incense was novelty. In a reward novelty and so there's -- there has to be balanced between. You know people invent things off for and they and they really do -- indeed deserve -- to have those inventions protected so they can gain a return from that. But the amount of time we give them. That could generic S of the invention and all that stuff that we have to talk -- so. It's so -- we have a problem here in our patent system which is it takes a very long time to get patent approved judging from some horror stories I've been reading and researching this podcast. The patent office occasionally makes what appear to be capricious -- just bone headed decisions on. -- granting or denying patents. So it seems to be a bit of a crapshoot for an inventor or an entrepreneur or. Meanwhile people are filing more and more patents and if we go to first to file they will compile even more our belief. So we're -- -- leading to if we've got -- -- him on the one hand a bubble of valuation on patents on the other hand -- looking towards collapse of the system to be able to support. Patents. How do we reconcile these issues and -- I want to Begin to wrap up in figuring how we move forward here. In making a an invention system and ringer -- the patent system and -- system that works for. Companies other than Google and -- the. -- -- When -- a couple of fundamental principles. We just sort of have to think about. Why is -- if you get reduced IP protections you just get rid of the patent system what you end up incentivizing is copy. And and not cut into and I I hear the argument loud and clear that some people will be driven to create. But -- Had the sad fact is it will always be cheaper to copy and people always do the cheapest thing and you'll have to -- walk through best. To see. There's a lot of incentive to create cheap cheap products but little margins that you know there are -- cheap right in. Nobody likes the quite frankly I don't indictment ecology and as if -- -- the patent system the drive to copy. Who become very high in the rewards for copying compared -- as you can you can look at the best that you can make a copy of it nothing -- I in the people who are making you know the -- things the new listings most innovative things. There incentives to do it will go down because the copycats will come right there incentive to share. Their invention and register -- down -- rely more on secrecy and legal protection and openness. You know running when -- asked climax with CES in January sexy guy employing -- Iraq. Yeah -- -- and Angel investors puzzle -- He said whenever you can you are accompanied CSI asks do you have a patent. And they say -- -- -- CS and if they -- no -- we have to go get one on anything about your product right away. Because when you put your hardware and best buy. Best residents say well crap when it is and -- popular -- we're reliant on a single source. And they're gonna turn around and Belkin or go to their in house brand insignia and copy it in Internet out editor -- companies are big. Internet cut your costs dramatically they're gonna they're gonna undercut you and -- gonna go out of business for having good idea that somebody else is able to copy. And that's like that's a business reality -- and people need that protection so I think throwing it out is that. Questions about changing the system are all questions about where to remove costs so in a patent lawsuits are expensive prosecuting patents expenses. Now what we can do is we can massively fund the patent office right we can dump resources into it to make sure that it take shorter than 36 months get a patent and in that 36 months -- far more on average twenty hours of review which is nothing right. We can we should dump money into office we have ceremony comes. Right now that you -- money doesn't exist. So we leave that money in the sort of the antagonism is the system write -- call that its program our patents and then when you see you. The parties can still bear the costs -- the inefficiency was just so icu. You -- me back we go to court where each -- on the way and we'll figure out what cancer -- my pants and I think that debt burden of costs I think the real problem here's -- -- Apple afforded who can afford to push the real problem is the independence offered offers exactly -- independent hardware makers can't afford it. But if we take the costly from them -- have to put them back into the system somewhere. Right and you know if you want to raise taxes. To fund the -- put more resources and patent system hey yeah I'm all for it ballot never gonna let you know -- -- good -- crazy yeah that's right. I -- the -- used to make patents tremendously expensive which might solve your first to file right. You know it's it's you had tremendous incentives it first to file the files my iPad applications but it's really expensive. Suit filed patent application and let's let's add a penalty -- you -- application doesn't grow and spread his you waste our time we really gets one -- But that those are better conversations. And then. You know is -- so -- and fix. So -- to wrap up now there are. The companies we discussed -- not the only ones that sit at our sit -- on the portfolios of patents. Kodak I believe is trying to sell its patents -- Xerox of course we discussed IBM briefly. Are there any other big. -- move CC coming up any of the patent companies that you see. Acting. In this ongoing. Bubble. You know there's -- -- I think depending on. How Cisco fares in a transformational and -- -- consumer stuff they're in trouble and we might see. You know if if they decide they can't -- -- -- company which has yet to be -- We might see its investors -- because that's that's real value in their -- down. I'm generous -- -- -- I think about Kodak and contracts are really seeing example -- this track was once a hallowed American brand Wei who I am in now they've become like to control -- -- products on any good. And what -- how does a lot of patents from twenty years ago. That implicate sensors and fountains. In tablets Alice published all this imaging technology and they're going after companies are using stuff. And this is it's that same feeling that we you know robots in -- ventures it's there's a strip. Right this is. You take hinder the carcass of this great company. And you're squeezing every last drop -- value out of it must offensive possible way you're sink new and we couldn't track -- Us so we're gonna ghosts you Apple. Over the camera the odds and and we're gonna you know we're gonna tax innovation content which is -- union or whoever Motorola's got an eight megapixel camera -- -- -- -- -- -- I'm. That's that's offensive to people but if you look at it it's also -- tracks -- all this time and money into its. I in the you know there's a real intentions they didn't exist before. And they're actually from the collective value out of that time and effort and resources particularly because -- company is no longer viable creating products. Writes all the -- -- all the time and resources there is a waste of life -- now the question is can you do in a way isn't quite as offensive. And -- try it if I -- here's a question of the idea their patent. I don't think being offensive or nothing offensive is a financial decision unfortunately. Exactly it's something -- like to kvetch about. You I thank you so much for joining us now where can people find your stuff now and in the future. So right now I mean this is my next dot com I promise I don't only always -- about patents in this strident tone and sometimes I read about actual actions and and then in the future will be at diverged. Aren't well will -- your stuff on the virtual -- -- now this is my next. Thank you so much for joining us again this is a great discussion. Hopefully will be more than three months. Or whatever was since. That we come back depends but I believe it will be a topic that we return to again -- -- Mara -- -- by Dell and shore at a and it. Dell has patents -- I'm sure they do would be don't get me started on Dell I loved Dell really company -- -- Started by slapping mother boards together and -- anyway whatever. They did evidence started out at -- at Michael Dell's dorm room in Texas and He would buy parts from elsewhere and -- slapped him on absolutely brilliant businessman. And yes they haven't since then they have invented equivalents that just say yes. Com now. -- -- -- listening next show I don't think it's gonna be live IM heading down to it speaking of patents I'm heading down two Xerox park. And I'm gonna get a tour from a guy who -- Xerox park of the labs there and they were going to talk about. The state of invention not necessarily legal invention patents for the state of entrepreneurship and invention in Silicon Valley from the guys at park who Ehrlich right in the heart of it. On the -- great show. Don't miss that park I -- knowing that it's actually advertise right and -- staff at some Steve Jobs -- to park inside the alto inside graphical user interface. Because that stuff was owned by Xerox. She didn't actually just copy it for the Mac right you -- give me shares in Apple Xerox due to trade value for the ability to use -- technology. So that's. It that's important -- right otherwise you would just gonna copy it and no we're never remembers your -- Cents is a little something. I think people might remember Xerox but not for the computer vendors that you know it would -- -- the outset of the stars and that's true and doctorate of anyway don't miss that show that's next -- and reporters' roundtable. And you I again thank you so much for joining us. Thank several you'd rather have -- and senators. That's slash gallery strike a note and read it and I believe me I -- like to be yelled -- and you're -- -- -- and you're welcome back into -- haven't -- about some other topic. I promise actual gadgets in -- -- the problem. That'll be next and thanks again nothing's ever for watching don't -- next week's show again if you have questions or comments about the show. You can send that to -- -- at cnet.com and the blog for this podcast is cnet.com slash reporters dash roundtable dash podcasts -- But that's who have there's tons and tons of of Reading -- on this topic and I'm gonna put the links to -- in. That blog post which will be upon shortly through Washington's -- Are against thanks thank Steve for producing -- -- for joining us we'll see honestly I.