Kaiyzen Group

The lawyers are out in full effect again.  This time it is not the RIAA bringing the pain its the majors.

Nine major record labels have filed suit against Project Playlist to stop it from keeping a searchable index of songs and allowing consumers to stream music directly from the site.

The lawsuit points out that Project Playlist has begun optimizing its site for mobile devices.  This is definitely a move to push the labels over their edge as they are grappling themselves on how to sustain their businesses in the digital world.

Project Playlist appears to be hosting their servers through hosting provider ServerPowered.net which is located out of Florida.  No hiding in international territories for the Playlist fellows.

I was unfamiliar with Project Playlist before this news but after trying out the site I can see.., and agree.., why the labels are taking action.

PCWorld has a story about the House Committee on the Judiciary approving legislation intended to overhaul the U.S. Patent system.

The gist of the legislation is to make it harder to secure patents.., and easier to dispute them.

Overhaul in the patent system is becoming a pretty mainstream business topic in the past year.  Rediculous settlements like the one between RIM and NTP have the system looking for ways to limit/focus exactly what damages are to be considered in such disputes.

The USPTO has had their own internal reform efforts around boosting their workforce pretty drastically over the next few year.  People are correct in saying that simply increasing the number of examiners is not the answer and that we have to work at the root of the problem which is being stricter on patents that are actually granted.  Of course the hiring of more examiners is greatly needed since even with the new legislation in place since the influx of patents will not be decreasing with any legislation that is passed.

I am all for patent reform and love the aspect of making it easier to dispute them.  One thing that bothers me is the fact of how prohibitive it is to your startup business to chase down people infringing on your IP.  Usually as a startup you just have to send some cease and decist letters and hope the problem goes away.  All the while one of the big boys can infringe away knowing that by the time things would ever get settled they would just be able to settle and slap the people with a bit of $$ and go on their way.  Hopefully this reform will help speed up the process and possibly decrease the costs at the same time.  This will be key to spur innovation in the SMB sector that will lead to innovative new products/services.

Update: Ars has a great writeup on patent reform issues.  A great point in theirs is towards the bottom when they talk about the importance of restricting which locale you can file your complaint in, refering to the Texas Eastern District issue.

Headin down to Scottsdale for a few days, going to catch 3 Giants games while down there.  I am hoping for some great weather for the weekend to get some AZ outdoor activities in.  Most likely will be on a blogging break till mid next week.., a couple things of interest today:

Ebay settles with MerExchange over an ongoing patent battle with “buy it now”.  Link is to Wall St. Journal.., subscription required.

Sprint seems to be on the ropes now more than ever.  Will be interesting to see how the rest of ‘08 goes while AT&T and Verizon charge ahead taking massive amounts of customers away from the slumping telco.

More sub prime fall out.., AIG writes down $11 billion.., this after people tied to them and General Reinsurance Corp were found guilty and will stand trial.

In what is turning out to be a regular topic for me I wanted to post about a couple patent stories I have come across.  I have also added an IP category as I assume that there will be many more patent and intelectual property related postings to come.

The first story is related to patent reform and talks of U.S. courts possibly looking more closely.., and unfavorably…, toward business method and software related patents.

The story references the State Street Bank Case.., wikipedia link here.., that occured 10 yrs ago and is held up as the key case that opened the flood gates for software and business method related patents.

The second story talks about Sen. Jeff Sessions, a republican from Alabama, sponsoring a provision granting banks immunity against active patent lawsuits.  Data Treasury, a Texas company, holds a patent on digitally scanning, sending, and archiving checks.  The provision past last July by the judiciary committee and is scheduled for a vote by the full Senate this month.   The goal is to not block or invalidate the patent held by Data Treasury, but grant immunity to banks.  The argument is that paying a license on digitally handling checks, which is a core part to everyday banking, would cost the banks in the billions of dollars.  The proposal would have the federal government pay Data Treasury $1 billion over 10 years.  Not a bad payout.

These are both very interesting stories in the continuing saga of patent reform and anti software and business method mentality.  It is stories like these get to me mentally on whether or not I should be pursuing patents on some of the ideas I am working and solutions I am trying to solve. 

From one week to the next I flip flop.   I get excited that I am creating something unique and that I should call up the lawyers tomorrow to set a meeting to start to flush out the solutions and get the paperwork going on the provisional filings.  The next week I read stories like these and say f#$k it.., I will just create the solution, introduce to the marketplace, and not worry about protecting anything.., that I will just be wasting precious startup capital.

I watched this video over the weekend of Guy Kawasaki and three top angel investors talking about the angel investing process, how to approach them.., and what really turns them on when looking new projects.  There is a section where they bring up the topic of startups they look at and the value of patent filings before launching their companies.  There was quite a split in ideas that angels really dont care about patents.., BUT.., it it protects from competition.., there is some value there.

So this all circles back to the big questions…, should startups waste time and money filing patents to protect their ideas if they can just be reversed engineered.., outright stolen.., or overturned as generic/obvious and not upheld in a battle.

I have no answer for now.., still in flip flop mode.., at least until I take the plunge and file the first patent 

There is lots of stuff going on in the world of patents.  The USPTO under the onslaught of technology, and specifically software patents, is drowning in getting patents reviewed and approved or rejected.  People are complaining that the USPTO is hastily granting patents that are obvious and should be rejected.  Most notable and public of the obvious patents is the continued case of Amazon and their One-Click patent.

The Amazon story has been going on for some time.  A re-examination was filed by blogger Peter Calveley. If you search on Yahoo! for “amazon one click patent” you will get a ton o hits.

I am kind of torn on this subject.

In one area I am all for patents.  I am currently working on a couple and thinking about filing them.  I view them as a great value add and protection when entering a market where large players can easily steal and mimick your ideas and put you out of business before you can even get going.  This day in age.., especially in the tech sector, patents dont seem to provide too much protection.  It seems that companies will just infringe on your IP until you sue them.  By that time they will usually just slap you with some $$$ and continue on their way.  I recently had a couple friends work on a project with a handfull of patents filed.  They had a big tech company signed up as a beta and consulting project.  The customer declined to fully sign up to use their technology at the end of the project.., then turned around and re-engineered everything they had done and release a product as their own.  Its scenarios like this that make you think.., “why should I be wasting my time and $$ on this if someone is just going to rip me off anyways?”

On the other side of the fence.., I cannot stand patent trolls that just file patents, or acquire IP that they are never going to use and go around forcing people to pay them stupid sums of cash.  I equate these bastards to the squaters that take domain names, dont use them, then try to sell them for $10,000.  This practice needs to be stopped and I hope some of the patent reform will help out in this area.

The next few years are going to be interesting once some of these cases like Amazons are finalized and we are getting some more precedence from the reform act.  There are also some new companies and concepts around IP creation, valuation, and monetization.

One very cool company is Ocean Tomo.  These guys are doing some pretty cool things around IP portfolios.  From valuation, to testimony, to helping out during M&A actvities they have built up a fantastic suite of services.  The most interesting to me right now is their three trading indexes around patent value and growth.

Another new project that has started up that I just came across.., actually what prompted me to write this story, is Peer to Patent.  This is a fantastic project that I hope can get some traction and lots of exposure.  This project approaches patents in a similar manner that medical research is done.  It focuses on peer review as part of the filing process.  The notion is that you submit your patent, it is reviewed by a community of peers that are experts or pretty knowledgable in your field the patent covers.  The community can than comment and submit prior art regarding the IP.