Tag Archives: IPR

Are Patent Trolls the next China?

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“Just like during the last 20 years it has been wise to move all the production to China, right now it is wise to sell IPs to NPEs. One day the threat will be reality and there are no other options available any more.”

Without any doubt there has been a lot of discussion related to NPEs or patent trolls. Their positive role in patenting has also been mentioned in some articles. After all they are one of the very few entities who are willing to buy patents that may be interesting in the future but only in the future.

But who are the organizations selling their patents and why are they doing so?

That is not hard to answer, there are several institutions who are willing to do so. And for a good reason. This may not be the case globally, but enough to be a fact over large geographical and cultural areas.

Take Finland as an example. It has been stated that granted patents are a good thing and an excellent measure among others how research institutions and universities are performing. Patents can also be listed in CVs and are merit to its inventor. It is especially very tempting when an individual does not have to pay the filing costs. In the long run very few patents actually generate any money for the institutions owning them. The overall costs for filing and holding a patent just in Finland for 20 years costs currently 8650 euros plus fees and patent drafting costs. Single patent easily costs 15 000 euros in minimum for its holder.

And a single patent is no merit for a respectable research institution who would like to enter licensing business in a significant manner. Some patent families may enable that but most not. Once we start talking about patent families in several countries, the costs are easily in the hundreds of thousands of euros or dollars per year. Which would indicate that the income should be higher, hopefully in the millions per year. Which usually is not the case.

In these examples I am leaving out the need and the burden to be able to defend one’s patents against infringement if under attack. Which adds to the costs – I’ve heard that lawyers usually get paid for their work. And that universities and research institutions are not in the litigation business. At least in Finland. They admit that openly as it is not part of research nor teaching that still (barely) is in their main focus.

We also have a lot of startups and small businesses who are trying to push their technologies and products forward. They especially need to have their work protected through patents. If for nothing else, to be investable for the investors. And if the business does not grow fast/big enough, there’s always the option to minimize the losses by selling the patents.

So when someone tries to sell a patent or a patent portfolio, NPEs are a good or perhaps the only option.

Sometimes they are used as  a strategic option as it is possible to build bigger patent portfolios and lessen the chance of an attack against a single, vulnerable company. We have seen a lot of evidence about such strategies when large corporations sell or out-license major parts of their patent portfolios to a newly formed or an existing company. Whose only task is to take care, license and defend those patents.
So it is good that there is someone out there willing to buy all these patents nobody finds valuable short term. Or is it?

Currently US patent office grants roughly 500 000 patents every year. I have not checked the latest numbers, but it is easy to guesstimate that in minimum NPEs acquire thousands to tens of thousands of patents per year. Even individual deals have included thousands of patents. NPEs also generate their own patents as we have shown in previous blogs.

After a (long) while they end up owning a lot of patents, more than today. I.e. there are entities out there who own patents that are just waiting to be able to cash their investments in a way or another. And they are not doing it just for fun, they are doing it for the business that other businesses fund directly or indirectly.

Some of such ways may be less worrying than making humanitarian help impossible, harder or just cost more, but it still begs to ask and answer if the whole patenting model overall is sustainable.

What comes out of the equation when everyone has the incentive to sell to patent trolls?

Is it like with China’s factories that everyone sees them as the best or the only option to do any production at all? After a while there is nobody else capable of producing anything or with limited capacity at best. Will it be the same for the patents that some NPEs end up owning most of the patents and actually control the markets through a common “nuclear threat”. Either you belong to one of the (future’s) major patent camps or pay dearly. If you belong to a group, you just pay a little less.

There are a lot of examples in the history that have resulted in such polarized systems. Soon to be ex music-mega-mogul-industry being one of them. The big ones control the rules and the prices.

Will it be the same for patents within the next 10-20+ years? I hope not, but I am afraid it will be the case. Unless the system is changed in a way or another when patents are once again more about inventions and building a better future. Producing exciting things than just plain business and maximizing profits.

Wishful thinking.

Before we stopped actively working on the Project Troglodyte, we found out there is not enough interest about the topic (or threat seen big enough) in Finland nor in Europe. It seems that in the US the view is changing and counter measures are planned. Very similar to what we have discussed in Troglodyte and Zygomatica during the last two years. Luckily some of the US projects and instances get the resourcing we never had.

In today’s Finland too many companies and institutions are focusing on cutting costs and turning (especially IT) experts with ideas into couch potatoes. Which seems to be a governmental goal, planned or unplanned.

If there is no interest, there are no resources. In the current economy everyone in Finland is just trying to cope and don’t need new ideas that cannot be built. Also in this scenario NPEs are a good thing and they are entering Finland that was seen improbable just a year or two ago.

Just like during the last 20 years it has been wise to move all the production to China, right now it is wise to sell IPs to NPEs.

One day the threat will be reality and there are no other options available any more.

Learn to live with the trolls or change the thinking where greed is not the only good. Perhaps it just needs a fancy name and big headlines?

Biochar 1: Background

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“Biochar is not the miracle cure-for-all that some advocates claim. However, we still consider it a critical technology to be researched for poor countries.”

Authors: Jakke Mäkelä, Kalle Pietilä, and Viv Collins. [Originally published in www.project-troglodyte.org

The production of biochar is being advertised as one of the most important low-cost high-impact technologies. See, for example, Open Source Ecology. The premise is relatively simple: biomaterial such as wood (or, ideally, wood waste) is heated in a kiln which does not let in oxygen.

The wood then breaks down into three components, with ratios depending on the temperature: charcoal, oils, and volatile gases. The gases can be fed into the heater, meaning that the process can keep itself running once it has been started. The oils can be used as clean fuel sources. Overall, the process can thus enable far more energy production than is needed to run it.

Most of the carbon is thus sequestered into the charcoal, with little carbon dioxide emitted. The CO2 that was taken up by the plants is thus fixed in the charcoal, which can for example be buried, never releasing the CO2 into the atmosphere. This can thus be a low-tech solution for carbon sequestration.

The “bio” part of the term comes from the possibility of combining the charcoal with nitrogen-based fertilizers, resulting in a very effective yet stable fertilizer. The theory is that the charcoal binds the fertilizer, preventing it from being leached too quickly by rain. This benefit has so far not been proven adequately, but at worst the charcoal should be a neutral element in the soil even if it does not give additional benefit.

We are doubtful of some of the most wide-eyed claims being made about it, and there are very strong skeptics of the process, especially at larger scales (see e.g. Climate Justice Now). The downsides are fairly obvious: the charcoal production will release particulate pollutants as well as possibly other toxins, unless it is done very efficiently. Also, at extremely large volumes the process would stop making ecological sense, as large plantations would have to be grown just for this purpose. At some size scale, the process would become ecologically completely counterproductive.

However, at smaller size scales the technology could have local health benefits, by providing a cleaner-burning fuel. The burning of unclean wood products in poorly designed kilns produces high indoor pollution levels and can be a health risk (FAO; this article however considers better stove design to be the key, and remains neutral about any relative health benefits given by charcoal).  Others (World Bank) consider that moving to cleaner and inexpensive charcoal would have clear health benefits.

Biochar is not the miracle cure-for-all that some advocates claim. However, we still consider it a critical technology to be researched for poor countries.  Whatever the actual value of the technology is, it would be pointless to allow spurious IPR to slow the progress.


Figure 1. Basics of biochar. Source: http://www.biochar-international.org/technology

Technology

The EFA article above describes a combination of a kiln that carbonizes agricultural waste into biochar, and an energy efficient briquetting machine that makes charcoal briquettes that can burn in ordinary stoves. Some of the biochar is used to make fertilizer and some to make briquettes.

For more on biochar, see International Biochar Initiative.  The current state of the art is described in the IBI production web page. The size scales can vary by a huge amount, from industrial-scale installations producing 1 ton per hour to small installations producing 500 kg a day or less.

The technology is described in the IBI technology web pages. The most critical general comment is this:  “But biochar technology is more than just the equipment needed to produce biochar. Biochar technology necessarily includes entire integrated systems that can contain various components that may or may not be part of any particular system.”

This is something to worry about. From the humanitarian IPR point of view, there is one crucial question: could spurious IPR be used to block development of large-scale biochar burning? In particular, could it block development of such technologies aimed at developing countries?

The IBI technology page mentions five specific goals for future R&D:

  1. Continuous feed pyrolyzers to improve energy efficiency and reduce pollution emissions associated with batch kilns.
  2. Exothermic operation without air infiltration to improve energy efficiency and biochar yields.
  3. Recovery of co-products to reduce pollution emissions and improve process economics.
  4. Control of operating conditions to improve biochar properties and allow changes in co-product yields.
  5. Feedstock flexibility allowing both woody and herbaceous biomass (like crop residues or grasses) to be converted to biochar.

It is #4 that we should be most worried about. There should be easy work-arounds and multiple technologies for the other areas (in which patents can be found just by searching for “biochar”). It is in practice not possible to block the development of new kiln types because alternative designs can always be used. A single troll patent for #4 could, however, stop the whole system. We will be analyzing this area in future postings.

 

Jakke Mäkelä on Google+

Epilogue: Troglodyte is not dead even though it is buried

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This is a comment related to Jakke’s post about ramping Troglodyte down as a project.

When I face a mirror, I see the person to blame. My personal input was never on the required level.

I have a lot of started ongoing studies, but it is really tedious work. I believe one shouldn’t report much before knowing the results. It is also a reason why one needs to be fully committed. In spirit I am, but seemingly not in flesh. Not enough.

I have an excuse. That excuse led me to a project with a monthly salary. Hopefully we can build something great there.

Money and salary is the dilemma we have faced several times with Jakke and Niko during the last two years. There is so much work to be done, helpless to help and projects to start. And still we are in a situation where we all have to decide what is important and what is not.

We do it everyday, each of us.

An old car salesman told me 29 years ago that money is such an old innovation that everyone must have it by now. Or by then, since it is almost 30 years later now. There must be even more money to go around.

But in the areas of Humanitarian IPR or Humanitarian Work we don’t see it. Perhaps we need more old car salesmen there.

We and many others are not asking for much or for something impossible. But even that is too much. Big part of it is due to institutional problems (not challenges) buried in the way how they behave. We have touched those in our previous posts.

The system(s) need to see the money coming back and multiplying on its way. Human life is not money, even if it multiplies over time. The systems do not encourage to focus on something that would be important and could be done. They focus on what can be done and what makes money.

Yes, I am whining and am selfish.

I am not desperate enough or driven enough to forget everything else and drive just this one thing. I am in too good a position that food and shelter are not my problems. I too am thinking how to accumulate wealth to get me over the next dry season.

My dry season is related to work with salary, not a physical draught with famine.

I am ashamed, it is only the image in the mirror and the ones near me that I value high enough.

It is not impossible to try and continue to change the status quo. To use effort and money to build something good and humanly valuable. Something that is not valuable only in monetary terms and measured in monetary terms.

Such work takes time.

We, together with APO and humanitarian IPR, are on a path to something we do not know where it leads us. It does not have a name.

We just know we can do more.
And we will.

I am sure we are not alone.

We will continue to change the thinking one sentence and a comment at a time. It just takes longer.

Once in a while we have regular jobs, but the face in the mirror reminds us that we have possibilities to do something good with the tools we have been given and have gathered.

For us it is evolution over revolution, affecting the system with its democratic rules. Respecting our societies and everyone around us.

I don’t think the world is ready yet, we have potential for so much more.
All of us.

What is humanitarian IPR?

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While looking for a new career path, I am finding that the term “humanitarian IPR” resonates. Why? In part because it is useful to look at things no one else is looking at (Blue Ocean strategy).  In part because it would be nice to apply whatever skills I might have in IPR and innovation to something socially meaningful for a change.

A definition is needed. For lack of a better guideline, I consider the UN Declaration of Human Rights to define the limits of what is acceptable. Any patent that could severely infringe on these rights, especially in the case of highly vulnerable people, would be “humanitarian IPR”.  The term as I use it is in principle value-neutral. Humanitarian IPR can be abused, or it can be used benevolently.

But there the simple part ends.  It is extremely difficult to define what “infringe” means in practice. One really needs to look at the purpose of a patent rather than just its content, which is terrifyingly difficult or impossible.

Should humanitarian IPR be put into a category of its own? Intellectual property is already divided into at least two major segments: patents and copyright. Inventions and works of creative art are so different that it makes no sense to apply the same rules to them. (In this context, it doesn’t matter whether one finds copyright ridiculous or not. They are different, and need different rules). Many countries also have various kinds of petty patents, innovation patents, design patents, and so on the cover cases which do not need the full utility patent arsenal.

A full revamp of the IPR system is probably what is needed, but if that cannot be realistically achieved, could it at least be possible to carve out niches for which the rules are different? Something like this has been hinted by Richard Posner in a blog posting. Most interesting quote:“Although there are some industry-specific differences in patent law, for the most part patents are “one size fits all,” so far as length of protection and criteria and procedures for the grant of a patent are concerned. In contrast, copyright protection tends to vary considerably across different media.”

The huge advantage of a separate niche

Having a well-defined niche for humanitarian IPR could allow new types of funding modes specific for that segment. The Nobelist Joseph Stiglitz has written an article “Prizes, not Patents”, proposing“a medical prize fund that would reward those who discover cures and vaccines. Since governments already pay the cost of much drug research directly or indirectly, through prescription benefits, they could finance the prize fund, which would award the biggest prizes for developers of treatments or preventions for costly diseases affecting hundreds of millions of people.”

Furthermore,“Especially when it comes to diseases in developing countries, it would make sense for some of the prize money to come from foreign assistance budgets, as few contributions could do more to improve the quality of life, and even productivity, than attacking the debilitating diseases that are so prevalent in many developing countries. A scientific panel could establish a set of priorities by assessing the number of people affected and the impact on mortality, morbidity, and productivity. Once the discovery is made, it would be licensed.”

I will later be analyzing cases in which this kind of a system could be useful. A large one-off prize to the patent owner, in exchange for placing the patent in the public domain, could end a lot of the difficulties in one blow.

Reality check

There are two problems here. The first one is acerbically discussed in  “The Case Against Patents” by Boldrin and Levine (summarized in The Atlantic). Whenever there are holes in the patent laws, large companies and their lawyers will gravitate toward those holes. Litigation will change, but its amount will not.

For the humanitarian IPR problem, the hole would be in defining what is humanitarian and what is not, with large players hopping across the boundary in whatever direction best suits them. But even this could be better than the present situation, in which there are no restraints on what can be patented.

Perhaps even more seriously, I see a psychological issue that makes Stiglitz’s argument less convincing. If development aid money is used to give prizes to Western companies rather than developing countries, what kind of psychological effect will that have on the donors? Will they be even less willing to donate the 0.7% of GDP that is now a target but almost never reached?

Or, would a selfish interest (supporting local R&D) actually make them more willing to donate? It could go either way.

There are more open questions than answers in this area. That is why it would be a worthwhile subject to pursue.

 

Jakke Mäkelä on Google+

Rikkidirektiivi ja IPR

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Populistisesti sanottuna: me maksamme nyt, mutta meidän teollisuutemme kiskoo rahat lisenssimaksuina takaisin kreikkalaisilta laivanvarustamoilta vuonna 2020.

[Paikallisia aiheita vaihteeksi. Raskaampi IPR-materiaali on jatkossa osoitteessa www.project-trogolodyte.org. // Local news for a change. Heavy IPR material at link above.] 

[English version: here]

Rikkidirektiivi on  hyväksytty EU-parlamentissa. Vuoteen 2015 mennessä Itämerellä kulkevien laivojen polttoaineen rikkipitoisuuden on laskettava nykyisestä yhdestä  prosentista 0,1 prosenttiin.

Kiista on kärjistynyt vahvasti kahteen leiriin: ympäristönsuojelijat (joihin itsekin lukeudun) vastaan teollisuus. Kenenkään ei nyt kannattaisi hehkuttaa ainakaan ylimielisesti; päinvastoin on ymmärrettävä, että vastapuoli ei ole kokonaan väärässä. Ympäristön ja terveyden kannalta direktiivi on positiivinen; Suomen talouden ja työllisyyden kannalta se on negatiivinen.

Kuinka positiivinen tai negatiivinen? Kaikkiin tarkkoihin arvioihin on syytä suhtautua skeptisyydellä, koska kyse on äärimmäisen monimutkaisista asioista, mutta suunnilleen:

  • Direktiivi säästää henkiä. Uskoi luonnonsuojelijoiden tarkkoihin lukuihin tai ei (50,000 ylimääräistä kuolemaa vuodessa), niin jotain terveysvaikutuksia rikki- ja hiukkapäästöillä joka tapauksessa on.
  • Suomi kärsii taloudellisesti. Uskoi teollisuuden tarkkoihin lukuihin tai ei, (600 miljoonaa euroa vuodessa tai 12,000 työpaikkaa), jo terve järki sanoo että laivaliikenteestä riippuvainen Suomi kärsii suhteessa enemmän kuin moni muu Euroopan maa.
  • Kyse ei ole pelkästään EU-päätöksestä, vaan Kansainvälinen merenkulkujärjestö IMO on itse hyväksynyt rajat jo 2008. EU:n direktiivi sinällään tuo vain vähän uutta tähän laivateollisuuden itsensä hyväksymään rajoitukseen. Jos direktiivi tuli täytenä yllätyksenä, joku on nukkunut sikeästi.
  • Raja koskee vuonna 2015 vain SECA-aluetta eli Itämerta, Pohjanmerta, ja Englannin kanaalia sekä USA:n ja Kanadan rannikoita. Muualla maailmassa alempaa raja-arvoa aletaan soveltaa aikaisintaan 2020 ja viimeistään 2025. Tätä voi pitää epäreiluna: niiltä alueilta vaaditaan eniten, jotka jo nyt ovat pääsääntöisesti pyrkineet hoitamaan päästöt asiallisesti.


Suomen hallitus on lupaillut teollisuudelle 30 miljoonan euron tukea rikkipesureiden nopeaan asentamiseen, mutta suora tuki ei luultavasti onnistu EU-kilpailusäännösten takia.

Jos direktiiviin olisi varauduttu ajoissa, olisi voitu menetellä tavalla joka hyödyttäisi kaikkia. Nuo 30 miljoonaa olisi tukiaisten sijaan voitu sijoittaa tuotekehitysohjelmaan, jossa olisi kehitetty aivan uudenlaisia superhalpoja plug-and-play rikkipesureita. Tavoitteena olisi suodatin, joka olisi mahdollista asentaa maailman rähjäisimpiinkin laivoihin.

T&K-tukia eivät samat kilpailusäädökset koske, ja 30 miljoonaa ei näin tärkeässä asiassa olisi suuri panostus valtiolta.

Itse asiassa juuri tuo muulle maailmalle annettu 5-10 vuoden viivästys avaisi mahdollisuuksia. Vuonna 2020 (tai 2025) asia tulee muille (esimerkiksi Välimeren) maille eteen aivan yhtä suurena “yllätyksenä” kuin meille nyt. Varsinkaan laman aikana Välimeren mailla ei ole varaa suuriin  julkisiin T&K-panoksiin, vaikka siellä asiaan herättäisiinkin.

Yksi mahdollisuus tulisi patenttijärjestelmän oikeinkäyttämisestä. Asiaa tuntemattomille ja IPR-skeptikoille (joihin itsekin lukeudun) sana “patentti” kuulostaa helposti möröltä. Mutta juuri tässä patentointi ja innovaatioiden suojaus on paikallaan: mahdollistamaan suuret panostukset nyt, mahdollisuudella saada rahat takaisin lisenssimaksuina. Patentit ovat voimassa 20 vuotta. Näissä T&K-hankkeissa olisi tärkeää patentoida kaikki mikä liikkuu.

Populistisesti sanottuna: me maksamme nyt, mutta meidän teollisuutemme kiskoo rahat lisenssimaksuina takaisin kreikkalaisilta laivanvarustamoilta vuonna 2020.

Ruman ja sydämettömän kuuloista? Onhan se. IPR on rumaa.

Epäeettistä? Ei. Tähän IPR-järjestelmä on juuri tarkoitettu, piti siitä tai ei. Tällä ei myöskään sorreta pieniä keksijöitä, koska ei toimivia pesujärjestelmiä kukaan autotallissaan tee. Kyse on suuren luokan koneista, ja tarpeeksi laaja-alaista osaamista on vain suurilla tekijöillä.

Näkemykseni saattaa kuulostaa epämääräisen vastenmieliseltä kaikkien mielestä. Mutta näin kuitenkin tekisin. Voi olla että nyt on jo myöhäistä, ja se on valitettavaa.  Seuraavaa ympäristönsuojelun “yllätystä” vastaan, mikä se sitten onkaan, voisi sen sijaan alkaa jo nyt valmistautua tällä tavalla.

 Muita ympäristöriitoihin liittyviä kirjoituksia: Vastakkainasettelut.

Jakke Mäkelä on Google+