Ending patent wars will be a huge boon to the tech industry

 

Tech

Earlier this month, Apple suffered an importantlegal defeat in its battle over patents with Samsung.

It’s good because Apple’s claims were frivolous; its patents were questionable; and its use of litigation to hold back a competitor set another wrong precedent for the industry.

Because of these patent wars and patent trolls, technology companies are divesting huge resources to defend themselves rather than advancing their innovations. This is the equivalent of nuclear arms race and is a lose-lose situation.

Apple and Samsung have been at war over patents for many years. In the last round in 2014, a jury ordered Samsung to pay Apple $119.6 million in damages for infringing on three Apple patents. These weren’t game changing innovations; they were simple and common smartphone features.

One patent described how to turn a phone number into a link that could be clicked on, another protected the “slide to unlock” feature, and another was a slightly different way of autocorrecting spellings.

A three-judge appeals panel agreed with Samsung that there was substantial prior art for the first two patents and these should never have been granted. They also concluded that Samsung didn’t infringe on Apple’s autocorrect patent.

If reason prevails, this ruling will stop the smartphone patent wars.

 

What’s best for innovation is a thriving ecosystem in which companies build on each other’s ideas and constantly reinvent themselves—instead of trying to slow each other down in the courts.

It’s bad enough when big companies with deep pockets battle each other, but for young companies, lawsuits can be fatal.

Fledgling innovators have to live in constant fear of a big player orpatent troll pulling out a big gun and bankrupting them. For startups, this is a greater concern than someone stealing their ideas.

This begs a bigger question: do we even need patents in an era in which technology is advancing so rapidly that it makes entire computing platforms obsolete in less time than it takes to be awarded a patent?

My colleague, Stanford Law School professor Mark Lemley says that when used correctly, patents can be valuable because they generate real technology transfer.

But patent litigation, such as what Apple resorted to, rarely does the world any good.

“In this case, they’ve spent years, countless court resources, and literally over one billion dollars in attorney and expert fees to produce a net fee award of $158,400—and ironically, this went to Samsung,” Lemley says.

He notes that in an earlier case, Apple won a significant amount of money that it may or may not get to keep depending on what the Supreme Court rules. “Other than that, not much has changed as a result of the lawsuit”, he concludes.

In a new paper, “Patent Licensing, Technology Transfer, & Innovation”, that Lemley co-authored with Robin Feldman of University of California Hastings, the key finding was that patents are only useful when they deliver innovation to consumers that they would not otherwise get.

This happens in the pharmaceutical industry when a company is allowed to exclude competitors for a fixed period of time to recoup its sizable investment in research. Value is also created when a university transfers know-how along with a patent and when an infringer copies from the patent owner.

However, if a patent isn’t helping innovation get to consumers, it is not helping society.

Lemley and Feldman found that that patent litigation and licensing demands for existing patents only happen after the defendant has developed and implemented the technology, particularly when patent trolls are involved. And they cite several studies which show that patent trolls now account for the majority of patent lawsuits that are filed.

If a patent isn’t helping innovation get to consumers, it is not helping society.

This means that other than through university technology transfer, hardly any innovation is being created by technology patents. Therefore, it may be best to abolish them, particularlysoftware patents—which have long been clogging up the patent office.

Universities are very defensive about patents; they argue that they need these to protect their ideas and inventions. This may be true, but it leads to yet another question: should universities be profiting from license revenue obtained from research that was publicly funded?

Regardless of the answer, for the larger cause of innovation, it is clear that patents are not fulfilling the purpose for which they were intended. The often-cited defense ofpatents, that patent rights encourage inventions that would not otherwise occur, is no longer grounded in reality.

Wooden justice gavel and block with brass

Patents were created by the founders of the United States for a purpose: “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.”

These notions, and the concepts behind them were very important when technology moved very slowly and required the types of investment and protection that medical discoveries and pharmaceuticals do.

There may be rare instances where unique software algorithms need protection. But all of this can be achieved through copyright laws and trade secrets.

In this era of exponentially advancing technologies, the only protections that really matter are speed to market and technological obsolescence. The underlying technologies are changing so fast, that by a time a patent is filed, it loses its innovation value.


Does Your Board Need a Tech Expert?

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Only six percent of the directors overseeing the world’s biggest banks have any technology experience. That figure, from an Accenture report, is surprising given that the banking industry is increasingly digitized. Yet banking is not alone. Technology is transforming the rules of businesses and reshaping industries in just about every sector.

So, what role should a board play in deciding on technology investments and shaping businesses in the digital age? And more specifically, what does this mean for staffing a company’s board?

 

The answer to these questions depends on two factors: whether technology is a strategic differentiator for the business, and the nature of the industry and market structure in which the company operates. These questions help define the degree to which a board should be involved in the key technology decisions; whether by expert technology representation on the board (via a board seat), by relying on the advice of an external consultant or committee, or by simply delegating to the company’s (internal) executive o these questions depends on two factors: whether technology is a brand important.

How to Bring on Technology Expertise

Once a board gains clarity on these two key questions, it must decide exactly how it should bring technology expertise into the board room. In broad terms there are three options covering the spectrum of board involvement from which to select. Each has its pros and cons:

The board delegates technology tasks to management. This option has the benefit of keeping technology responsibility and expertise in-house with the day-to-day company managers (assuming the senior management does not itself outsource or delegate to outside consultants), who are closer to the particular and unique facets of the underlying company structure, processes, and competitive attributes. However, this alternative carries the risk that the board over-relies on internal management, and has limited ability to check and challenge management’s information, especially when the board’s own (independent) technology knowledge is limited.

The board draws on independent advice but does not create a board seat. In this case, the board solicits its own technology knowledge, and relies on a third-party to provide regular and objective views on technology trends and their impact on the business. The third party could be an outside consultant or advisor, or a committee of independent technology experts who report directly and only to the board. This approach is relatively light-touch and like the first option only works if technology’s impact is largely peripheral to a company, and not at the core of how the company does business and derives profits. The downside of this approach is that it can fuel mistrust and cause consternation and disagreements between internal and external know-how, which can in turn complicate board decision-making. Another problem is that the external experts often offer more generic advice because they don’t the nuance of the business context gleaned from daily management oversight.

The board creates a seat for a tech expert. Aside from enabling direct, independent board oversight and the ability to challenge management assumptions, this approach helps ensure that company strategy encompasses technology trends. The challenge is to find board candidates whose technology expertise enhances board discussions, but who also have the broader business knowledge to contribute to the full range of board room debate and decision-making. Such candidates may be hard to source. More fundamentally, as technology talent tends to skew young, the quest for technology expertise, will likely force boards to confront their more deeply embedded strictures requiring traditional operational experience, corporate tenures, and minimum age requirements.

Staffing corporate boards for a global business is a perennial challenge. However, for 21st century corporations, this issue is increasingly complicated by technological transformation. Effective board staffing must grant due consideration to the three core responsibilities of a board of directors: defining the company strategy; succession planning; and setting the tone from the top, with a particular focus on corporate governance and company culture. Ultimately, technology expertise should seek to enhance the execution of these duties.

 


US government files appeal in New York iPhone unlocking case

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The US government has appealed against a ruling by a New York magistrate who ordered that it cannot force Apple to unlock one of its iPhones as part of a drugs investigation in the city.

The move is part of a legal and public relations campaign by the Department of Justice to show that Apple has willingly assisted law enforcement in dozens of similar previous cases, and is therefore technically able to help gather evidence.Apple, claims the DoJ, has only recently begun arguing that it isn’t legally required to do so.

It’s also part of a broader chess game in numerous US courtrooms between America’s largest company and its government as each tries set a precedent on whether private companies can sell “warrant-proof” technologies, such as newer iPhones.

That clash will come to a head in southern California this month when Apple and the FBI meet in federal court to debate whether Apple should be required to weaken security settings on the iPhone of one of the San Bernardino shooters.

The government’s case there was dealt a potential setback when Magistrate Judge James Orenstein ruled against the government on 29 February in a different phone unlocking case.

The government seeks to undo that.

In its filing on 7 March, the government points to several cases, including one in 2008 – the iPhone’s second year on the market – in which Apple guided federal investigators on the type of language to use in its court order if it wanted the company to pull data from a locked phone. Apple technicians, with federal investigators at their side, complied, the filing said.

“Apple is not being asked to do anything it does not currently have the capability to do,” the company says in its filing. “This case in no way upends the balance between privacy and security.”

But Apple argues that the facts, technology and its understanding of the law have changed over time.

On a practical level, the government’s appeal in the Eastern District of New York may only determine whether the Justice Department can still force Apple to crack open older iPhones before modern security updates. In 2014, the company introduced a new operating system that made it impossible for the company to pull data from a locked device without the user’s passcode. The phone in the New York case wasn’t updated to the more secure software.

Meanwhile, Apple says it no longer wants to be in the business of serving as the middle man between law enforcement and its customers’ phones. Additionally, it is trying to head off the government’s increasing reliance on an old, vague law known as the All Writs Act as a way to facilitate surveillance. The statute, with origins in 1789, gives American courts broad authority to make sure their orders are fulfilled.

n the past, the government used All Writs against Apple to make them do something they technically could already do: pull data off a locked phone.

In the San Bernardino case, the government has persuaded a federal magistrate that Apple should be ordered to author software that would make it easier for the government to unlock newer, more secure phones. Apple is appealing.

Even some lawyers sympathetic to law enforcement – including Republican members of Congress, and attorneys for telecom giant AT&T – say this may be granting the government too broad of an authority under All Writs. In a sense, they argue, the government could get a judge to force companies to remake their product any time it conflicts with an investigation.

Speaking of Orenstein’s previous ruling in Apple’s favor, the company said, “Judge Orenstein ruled the FBI’s request would ‘thoroughly undermine fundamental principles of the Constitution’ and we agree. We share the Judge’s concern that misuse of the All Writs Act would start us down a slippery slope that threatens everyone’s safety and privacy.”

The government has asked a different judge in the eastern district to review the case.

Google’s Project Fi mobile network is now open to everyone in the US

Google s Project Fi mobile network is now open to everyone in the US The Verge

 

Project Fi is ditching the invite system. 10 months after Google unveiled its own mobile network, which lets consumers pay only for the amount of data they use each month, the company is opening access to everyone inside the United States.
“With Project Fi, we deliver fast wireless service with the flexibility to use it where you want (even internationally) and a monthly bill that’s simple and easy to understand,” wrote Simon Arscott, Fi’s product manager, in a blog post. “Today, we’re excited to be exiting our invitation-only mode and opening up Project Fi so that people across the U.S. can now sign up for service without having to wait in-line for an invite.”
For the next month, Google is discounting the Nexus 5X down to $199 as an inexpensive way to get started with Fi, which only works with Nexus smartphones. Project Fi connects to the cellular networks of both T-Mobile and Sprint, switching between the two to offer customers the best possible coverage. Google is also pushing Wi-Fi and public hotspots in a big way with Fi; over 50 percent of current customers connect to public hotspots using Fi’s “Wi-Fi Assistant” on a weekly basis. As for cellular data, Google’s Project Fi subscribers are impressively lean in their usage, averaging 1.6GB of data each month.

Facebook exec jailed over encrypted WhatsApp data says Brazil’s police treated him with respect

Senior Facebook executive Diego Dzodan, who was recently released from a Brazilian jail due to a disputed court order demanding data from the company's WhatsApp messaging service for a confidential drug-trafficking investigation, speaks at the Massachusetts Institute of Technology (MIT) in Cambridge, Massachusetts March 5, 2016. REUTERS/Mary Schwalm

Senior Facebook executive Diego Dzodan, who was recently released from a Brazilian jail due to a disputed court order demanding data from the company’s WhatsApp messaging service for a confidential drug-trafficking investigation, speaks at the Massachusetts Institute of Technology (MIT) in Cambridge, Massachusetts March 5, 2016. REUTERS/Mary Schwalm

 

(Reuters) – A Facebook executive who spent about 24 hours in a Brazilian jail this week said authorities treated him with respect and that the incident will not slow the company’s expansion in Brazil.

Diego Dzodan, a Facebook vice president based in São Paulo, was arrested on Tuesday due to a dispute over law enforcement demands for data from the company’s encrypted WhatsApp messaging service for use in a secretive drug trafficking investigation.

He was released on Wednesday after an appeals judge overturned a court order to arrest him.

“I was treated with a lot of respect,” Dzodan said at a Saturday conference on Latin American business trends organized by students at the Massachusetts Institute of Technology’s Sloan School of Management.

He said Facebook has no access to data that travels over the its secure WhatsApp messaging service, making compliance with the request from Brazilian officials impossible.

“The way that information is encrypted from one cell phone to another, there is no information stored that could be handed over to authorities,” he said.

His remarks came during a Q&A session after a half-hour talk on Facebook’s approach to innovation. He also said his detention would not affect the Silicon Valley company’s plans for the Brazilian market.

“We are extremely committed to Brazil. Brazil is a huge market that really likes Facebook,” he said. “We are very focused on the long term.”

Brazil’s law enforcement officials have said little about their demand for data from the messaging service acquired by Facebook in 2014, saying it could compromise an ongoing criminal investigation.

A Facebook spokesman on Wednesday that the company was pleased that Dzodan had been released, describing his detention as “an extreme, disproportionate measure.”

The incident came as technology companies face mounting pressure from governments around the world to help them eavesdrop on users and censor data. Apple Inc and U.S. law enforcement officials are in a standoff over unlocking the iPhone of a shooter in the San Bernardino, California, attacks.

(Reporting by Jim Finkle in Cambridge, Mass.; Editing by Tom Brown)

 

New Story :Microsoft mulled an $8 billion bid for Slack, will focus on Skype instead

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When Slack announced new voice and video services earlier this week, the enterprise messaging startup signalled a move into territory dominated by the likes of Microsoft’s Skype. But it looks like this is not the only moment when the two company’s paths have crossed in recent times.

Microsoft eyed Slack as a potential acquisition target for as much as $8 billion, TechCrunch has heard. But an internal campaign around making an offer failed to drum up support. Microsoft co-founder Bill Gates and CEO Satya Nadella were among those unconvinced by the idea, with Gates pushing instead to add more features into Skype to make it more competitive with Slack in the business market, our source says.

Slack’s momentum in picking up new users — it currently has 2.3 million daily active users, 675,000 of them paying — makes it a competitive threat for others who are hoping to lead in enterprise collaboration services.

It’s no surprise that as of last year, Slack had already had 8-10 acquisition offers.

The person at Microsoft leading the charge on Slack was EVP of applications and services Qi Lu. Lu, according to his Microsoft executive profile page, oversees all productivity, communications, education, search and other information services at Microsoft, and he also “sets the vision, strategy and overall direction of the Applications and Services Group,” including R&D for Microsoft Office, Office 365, SharePoint, Exchange, Yammer, Lync, Skype, Bing, Bing Apps, MSN and the Advertising platforms and business group.

We understand that Lu had envisaged a Slack acquisition for as much as $8 billion, an interesting figure given some other news this week about the startup. Slack was valued at $2.8 billion in its last announced funding round of $160 million in April 2015. However, weand others have heard that Slack is raising another round of between $150 million and $300 million. Our sources have pegged the valuation for the fundraise at $5 billion; others put the figure at between $3.5 billion and $4 billion.

You can imagine why the idea of a Slack acquisition would bring out both supporters and critics at Microsoft.

On one hand, Microsoft has built and acquired a number of other companies in the area of enterprise collaboration, including SharePoint, Yammer, Lync and Skype. In other words, the tools are already there for Microsoft to build its own Slack competitor without resorting to buying the startup and integrating yet another company into the mix.

On the other hand, Slack has captured mindshare in the enterprise space in a way that Microsoft and others have not managed to do. Slack’s a simple onboarding process that gets employees communicating with each other quickly. One of its key features has been the way it has integrated with so many other apps. Those who use it can quickly call in files from elsewhere with short codes to discuss or monitor the progress on projects with colleagues, or possibly just to entertain each other a little.

The platform has expanded over time with more integration-based functionality, such as ordering anUber or Lyft from within the app. Slack has been pushing its cred as a platform by investing into a developers’ fund and launching a new app directory at the end of last year. It celebrated its two-year birthday inFebruary and now has 2.3 million active daily users, with 675,000 paid seats. The company says it’s seeing more than $64 million in annual recurring revenue from its freemium business model.

Skype itself has been adding features into its platform to enhance its functionality for consumer and business use. They include group video calling on iOS and Android, enhancing Skype for Business to more platforms and even a Skype integration with Slack.

“At Skype, we are committed to breaking down communication barriers and getting the world talking,” the company noted when it announced a preview of the Slack service. “This is why we make Skype available on multiple platforms and continue to explore more ways to help you stay connected.” That may also be a way to lay groundwork for even more dynamic functionality ahead.

There is another coincidental overlap between Lu and Butterfield: both worked at Yahoo at the same time. Butterfield ran the Flickr photo service that he co-founded and sold to Yahoo while Lu was EVP of engineering for search and advertising.

Both Microsoft and Slack declined to comment for this story.

Additional reporting Matthew Lynley.

 

 

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