Comment by rayiner | Hacker News Reader

Comment by rayiner | Hacker News Reader

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I don't know if its unfortunate or a change in the kind of startups being created. I worked at a startup that patented its technology. We were (and the company still is) competing in the wireless sector, specifically military radio technology. Our competitors were Raytheon, Rockwell, etc, companies we could never compete against as a product company, because of their manufacturing prowess, deep industry network, etc. So we developed technology and patented it for licensing. A lot of the market dynamics that makes patents of questionable value for software startups were not present. Our technology cost millions of dollars and took years to develop. We had a fairly large (couple of dozen engineers) interdisciplinary team. Capital costs were high (hardware spins are not cheap, equipment is not cheap, testing was not cheap). There was no opportunity to "pivot." It was impractical to protect our IP with copyrights (we delivered firmware source).

I think at the end of the day, there has to be some protection against unfair competition, even if its not the existing patent regime. On the recent story about SpaceX, someone mentioned that SpaceX keeps trade secrets instead of patents because the Chinese would copy the technology via the patents. That's a form of IP and the concern of copying is the same concern patents address. Even if Elon Musk dislikes patents, he also dislikes Chinese companies ripping them off.

As VC moves into more areas, like life sciences, medical technology, energy, etc, you will see more patents. It's unfortunate if it leads to meritless patent litigation, but the VC's aren't interested in people ripping off their portfolio companies either, so I doubt you'll get strong push back from them on the subject of reducing the amount of patenting within the industry.

That said, the amount of litigation has clearly gotten out of hand. Patent litigation shouldn't be more common than say shareholder litigation or antitrust litigation, etc.

I'm in a somewhat similar situation (patented wireless technology startup), so I have to ask: were you actually able to get the big companies to license your technology? Did you need to get market penetration to get them to listen to you, or did they never listen at all? I'd love to be able to license our technology to a larger company instead of doing things the hard way. Putting together a startup is not the easy way, although it seems to be easier than trying to navigate the inside of a large company to find the right person to be an internal champion for your product.

Basically, I'm asking, "what does a successful wireless licensing path look like?".

My experience with trying to find the right decision-maker at large companies has been daunting. I mean, I play soccer with about 10 engineers & managers from a large military radio company (rhymes with Paris) and not one of them could even point me to the right division to talk to, much less the correct decision-maker. With companies where I don't know anyone, I don't even know where to start.

So, our startup is aiming to hit niche markets, like amateur radio, just to get a product out there and start some buzz. How did you do it?

Why don't you shoot me an email (in profile)?

I think at the end of the day, there has to be some protection against unfair competition

Would you define "unfair competition"?

"Unfair competition" is a blanket term for various civil torts: http://en.wikipedia.org/wiki/Unfair_competition#Commercial_l.... It include things like spreading false information about a product or price fixing. I think copying technology could be fit into tort framework instead of a property framework as with patents. Instead of filing a suit saying: "I own this patent and he infringed," you'd have to file a suit along the lines of "he gained an unfair advantage by copying technology I spent a lot of time and money developing."

One of the nice things about torts is that they are very flexible. Common law judges have a lot of flexibility to look at actual controversies and tweek the rules to get the "right" results. Judges don't have any of this flexibility under the existing patent regime. The Patent Act says that basically anything is patentable, so judges have to follow the intent of Congress. Some important backstops against patentability, e.g. the exclusion of algorithms and laws of nature, are judicially-created, and moving patent law to a tort framework would give courts more leeway to create these sorts of exceptions in response to practical concerns.

Which of those offenses do you feel Raytheon, Rockwell, etc were guilty of?

I didn't say they were guilty of anything. I mentioned them to establish the nature of the market dynamic. Without some sort of protection for IP, product companies rule. And when it comes to hardware products, that means companies that have manufacturing/logistical expertise rule.

Without some sort of protection for IP, product companies rule. And when it comes to hardware products, that means companies that have manufacturing/logistical expertise rule.

Well, how is that unfair? Or are you saying it isn't? If it isn't unfair, then why bring up unfair competition?

"Unfair competition" is a term of art for a class of torts. The term arose because certain business practices were historically seen as underhanded or unfair. These days we'd talk instead in terms of market failures or inefficiencies. E.g. the torts of "passing off" or "trade libel" decrease economic efficiency by sewing misinformation in the market. Copying capital-intensive R&D implicates the free rider effect, and thus a tort aimed at keeping companies from copying technology instead of inventing their own would fall under the umbrella of of unfair competition.

Circling back, it's not "unfair" that product companies have natural advantages in the market. Arguably, it's not desirable for product companies to be able to further leverage their advantage by being able to copy designs and technologies from other companies. That let's them compete "unfairly" by letting someone else take the expense and risk of doing research then undercutting them by getting the results of the research for free. I think it's a good thing to have companies like ARM that focus on creating designs, but without some sorts of protections, companies like Samsung that focus on manufacturing and end-user products would be able to steamroll over those companies by copying their designs.

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