Patently Insane

April 5th, 2006, 7:24pm by Jake

Two lawsuits are in the news that point to the absurdity of our patent system. In one, just filed, Netflix is suing Blockbuster for their DVD renting service, specifically about Blockbuster waiving late fees and allowing people to establish a list of the movies they want to rent. In another, just under way, TiVo is suing Echostar for infringing patents related to Live TV trick-play features such as pause and rewind. A third case was recently settled, whereas Research in Motion– best known for their Blackberry wireless email product– paid off NTP with $612 million in order to license some patents that had already been declared invalid.
It’s all so crazy. While the businesses may have had novel business plans, I see nothing about a pause button or a list that deserves patent protection. The patent system is such a big joke. As Kelvin pointed out we probably could’ve got a patent for scanning coupons from the screen of a Palm Pilot. Or even renting digital cameras for weddings. Maybe we should patent the idea behind Sandbank before someone else does it first. Must be easier than raising money to actually start a business.

13 Responses to “Patently Insane”

  1. Jake Says:

    Holy crap… TiVo won. Wow, I’m really disappointed that TiVo cancelled their lifetime service option, since that led to a premature sale of stock and the loss of a 50% or more gain since then. I’m disappointed by this, and I’d be torn even if I stil help stock. But this gives TiVo a big stick to go after Microsoft, Echostar, Motorola and others for licensing fees, so at least they’ll stick around and actually put out some new products.

  2. Kelvin Says:

    Insane. For my part, it wasn’t the cancellation of the lifetime subscription option that induced me to drop my stock (prematurely)… it was the fact that their business was so disappointingly bad. But in retrospect, their terrible performance was probably due to their competitors stealing their patented technology. Maybe they oughta sue Panasonic for making the VCR I had 15 years ago that also had the gall to employ a status bar, another patented TiVo technology.

  3. Jake Says:

    After trading as high as $9.65 after hours, TiVo is now back to $8, flat since Thursday’s close. I guess the market already priced in a victory.

  4. Jake Says:

    Strike that. I forgot that the market is closed today, so the $9.65 is the latest price. Wish Yahoo! had made that a little more obvious.

  5. Jake Says:

    Too late for RIM, but it looks like the days of patent trolls keeping innovative products off the market may be coming to an end. I’ve seen various accounts of this decision; this take presents it in a very straightforward manner. I read elsewhere that this was part of a conucrring opinion signed by 4 Supreme Court justices, which would not make it binding but should strongly influence lower court decisions anyways.

  6. Jake Says:

    I suppose it was just a matter of time before f’in NTP sued Palm. Patently insane.

  7. Kelvin Says:

    That I don’t get at all. Palm sells a phone that runs a POP client. How could that be infringing on any patents? Our SE t68’s had a pop client 4 years ago. I guess I have to look at the claim, but I was under the impression that NTP’s patents relate to push email, and it seems like they would have more of a beef with the push email apps that run on Palm OS (Good, Vista, Blackberry).

  8. Jake Says:

    Not only that, I thought that most of the NTP patents were thrown out during the RIM trial. The whole thing is a joke. Our patent/trademark/copyright system is completely broken, which is hurting innovation and harming both businesses & citizens.

  9. Jake Says:

    Looks like Barron’s upgraded TiVo today after a review by the Patent & Trademark office. Since TiVo is a gigantic holding for me (>10% of my portffolio), this is a happy day. Did anyone take my advice and buy TiVo when it recently dropped below $6? Here’s hoping it gets back to $10.

  10. Jake Says:

    Interesting that Barron’s credit’s themselves for upgrading it at $5.98, today’s opening price, instead of the post-earnings/post PTO decision price of $7-7.50. I call shenanigans!

  11. Jake Says:

    Wow. A Citi analyst thinks the Dish lawsuit is worth over $12/share to TiVo all by itself! Considering that TiVo has a decent business regardless, it suggests that TiVo is grossly undervalued.

  12. Jake Says:

    And on it goes. TiVo sued Verizon last year (or 2008), and Verizon has or will countersue. The brilliant part is that they own no patents in this field. So they borrowed patents from the most anit-innovative company in the history of mankind, Intellectual Ventures. The biggest patent troll the world is ever likely to see, this new “customer centric” business model guarantees that every patent lawsuit will now be twice the fun. Nuts nuts nuts.

  13. Jake Says:

    And one day later, TiVo lands their most significant court victory yet, which according to Sanford Bernstein analyst Craig Moffett and others, could spell total doom for DISH. There is speculation the fee could be anywhere from $1.75-4/month/subscriber. Or DirecTV could sign an exclusivity deal with TiVo and really knock Echostar for a loop. Lots of coverage. Oh, and the stock is up 60%. W00t.

    “[I]f one assumed that Dish Network would no longer be a viable competitor without a DVR offering – not an entirely unreasonable proposition – then DirecTV’s gain from exclusivity would be nothing less than all current and future satellite subscribers,” Moffett said. “Alternatively, DirecTV could merely threaten such an outcome… and thereby radically increase the urgency of settlement for Dish Network, forcing Dish to pay significantly more for any settlement. Higher licensing fees for Dish would create a significant price umbrella for DirecTV.”

    In any case, Dish’s delays in the case appear to have run their course, Moffett said, noting that “given the five-year history of Dish losses in the case, one can assume that Judge Folsom’s patience has long since worn thin,” referring to the judge presiding over the case in the U.S District Court for the Eastern District of Texas.


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