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The iEconomy
October 8, 2012 7:52 PM   Subscribe

The iEconomy: Apple and Technology Manufacturing. Since January, the New York Times has been running a series of articles "examining the challenges posed by increasingly globalized high-tech industries," with a focus on Apple's business practices. The seventh article in the series was published today: In Technology Wars, Using the Patent as a Sword. Related: For Software, Cracks in the Patent System and Fighters in the Patent War.

Part 1: "An Empire Built Abroad" (January 12, 2012)
* How the U.S. Lost Out on iPhone Work (Previously on MetaFilter)
* Motion Graphic: The iPhone Economy

Part 2: "A Punishing System" (January 25, 2012)
* In China, Human Costs Are Built Into an iPad
* Graphic: Compliance by the Numbers
* The Lede Blog: Chinese Readers on the ‘iEconomy’ / Voices of Chinese Readers on the 'iEconomy'
* Poll Finds Consumer Confusion on Where Apple Devices Are Made
* The Lede Blog: Questions for Li Qiang of China Labor Watch
* Economix Blog: Facebook Chat About the 'iEconomy' Series

Part 3: "Protecting Profits" (April 29, 2012)
* How Apple Sidesteps Billions in Global Taxes
* Apple’s Response on Its Tax Practices
* Graphic: Shrinking Corporate Tax Rates
* Graphic: One Technique Apple Pioneered
Video: Charles Duhigg and David Kocieniewski Respond to Reader Questions and Comments

Part 4: "Retailing's King" (June 24, 2012)
* Apple’s Retail Army, Long on Loyalty but Short on Pay
* Video: Video: David Segal Responds to Reader Questions and Comments

Part 5: "The Impossible Made Possible" (August 5, 2012)
* In Wooing of Nissan, a Lesson for Tech Jobs?
* Graphic: Evolution of a Manufacturing Supply Chain
* Slideshow: An Automaker Migrates to Tennessee
* Room for Debate: Should the U.S. Seek More Tech Manufacturing?

Part 6: "Artificial Competence" (August 19, 2012)
* Skilled Work without the Worker: A New Wave of Adept Robots Is Changing Global Industry (This article is linked in this post.)
* Video: The Robot Factory Future
* Video: Business Day Live: Nissan's Lesson

Part 7: "A System in Disarray" (October 8, 2012)
* In Technology Wars, Using the Patent as a Sword.
* Graphic: For Software, Cracks in the Patent System
* Graphic: Fighters in the Patent War
posted by zarq (16 comments total) 29 users marked this as a favorite

 
Great post. I was thinking about just posting the NYTimes article, but this is much better. Thanks, zarq.
posted by homunculus at 8:15 PM on October 8, 2012 [2 favorites]


The opening line of the "For Software, Cracks in the Patent System":

When the nation’s patent system was born, many inventions were mechanical.

"Many" perhaps, but by no means all, or even a majority, according to this paper. In particular, some of the following patents sound remarkably "modern" (although not necessarily valid, by either modern or old standards):

Patent No. X1,377, to Samuel Randall on October 1, 1810, described a new way to teach writing. The concept is simple: lowercase and capital letters are permanently affixed to a board with spaces next to or below them. The student‘s imitation of the letters is written on the same board, but these letters may be wiped off. Thus, the student may practice writing letters over and over.

Similarly, Patent No. X1,642 also to Randall, claimed a new method of teaching handwriting, but this time using letters engraved in metal. Students would trace the letters onto paper placed over the metal. (Ironically, these two patents are nearly unreadable due to illegible handwriting.)

Patent No. X1,659, to Uri K. Hill on February 7, 1812, claimed a new musical notation, consisting of an improved way to lay out lines and represent notes (described as ―do, re, mi . . .) using different shapes. Hill was a composer of the time.

Patent No. X5,206, to Francis Kelsey on August 26, 1828, is for a method of managing bees. This included blowing tobacco smoke to render them docile, a practice still in use today and derided in the recent animated film Bee Movie. The patent also describes a method of harvesting honey by moving all the bees from one hive to another, leaving the first hive empty.

Patent X5,369, to Joseph Manning on February 16, 1829, described an improvement in the art of writing alphabetically called ―Lektography.

Patent No. X6,504, to Robert McCormick on April 21, 1831, described an improvement in the art of teaching violin playing. The patent included placing special characters on the neck of the violin to teach students where to place their fingers.

Patent No. X1,377, to Samuel Randall on October 1, 1810, described a new way to teach writing. The concept is simple: lowercase and capital letters are permanently affixed to a board with spaces next to or below them. The student‘s imitation of the letters is written on the same board, but these letters may be wiped off. Thus, the student may practice writing letters over and over.

Similarly, Patent No. X1,642 also to Randall, claimed a new method of teaching handwriting, but this time using letters engraved in metal. Students would trace the letters onto paper placed over the metal. (Ironically, these two patents are nearly unreadable due to illegible handwriting.)

Patent No. X1,659, to Uri K. Hill on February 7, 1812, claimed a new musical notation, consisting of an improved way to lay out lines and represent notes (described as ―do, re, mi . . . ) using different shapes. Hill was a composer of the time.

Patent No. X5,206, to Francis Kelsey on August 26, 1828, is for a method of managing bees. This included blowing tobacco smoke to render them docile, a practice still in use today and derided in the recent animated film Bee Movie.The patent also describes a method of harvesting honey by moving all the bees from one hive to another, leaving the first hive empty.

Patent X5,369, to Joseph Manning on February 16, 1829, described an improvement in the art of writing alphabetically called ―Lektography.

Patent No. X6,504, to Robert McCormick on April 21, 1831, described an improvement in the art of teaching violin playing. The patent included placing special characters on the neck of the violin to teach students where to place their fingers.

Other patents attempted to thwart counterfeiting, but did not involve the engraving plates or machines used in the patents discussed above.

Patent No. X2,301, to John Kneass on April 28, 1815, claimed the method of printing on both sides of a bank note rather than on just one side—not a particular way to do such printing, but any such double-sided printing. Patent No. 320, to J. Dainty on July 31, 1837, claimed a method of reducing fraud by printing numbers or letters on checks in a book so that each one would be different. Patent No. 871, to Ebenezer Watson on August 3, 1838, claimed ―engraving, printing or any way expressing the sum in large letters, words or figures on the face of the note . . . .The Patent Office examined Patent Nos. 320 and 871 prior to issuing such patents.

Patent No. X3,343, to Reuben Langdon on June 20, 1821, described a method of packaging yarn by putting skeins in colored labels to hold the yarn in a bundle and to provide information about the yarn. Though the patent was invalidated for lack of utility in Langdon v. De Groot, the method is still in use today in the sale of yarn.

One business method that involved a machine was a method of washing rags: Patent No. X6,448, to John Ames212 on April 6, 1831. The patent states: ―The improvement which I claim especially as mine is the process or method of washing, or cleaning, rags [with an adapted machine]. While the rags would eventually be used to make paper, a claim to simply washing something is not manufacturing, and is not limited to manufacturing. Instead, a human achieves the result using a machine to perform a non-manufacturing act, which we considered a business method.

Patent No. X4,610, to John Rives on December 22, 1826, describes a detailed lottery system, including different ways to number tickets, and the order of determining winners and giving prizes.

Many other business methods patents involve measurements, including laying out patterns on fabric. For example, Patent No. X9,860, to James Zwisler on July 1, 1836, claimed a method of drawing each part of a garment in such a way as to minimize wasted fabric.

Patent No. X7,698, to George Beard on August 5, 1833, described in part a method of laying out clothes based on measuring only one part of the body. The Franklin Institute was skeptical:

"The patentee must, we imagine, have made the notable discovery that not only men and women, but men and boys, are all made to one scale, in length, breadth, and thickness; a thing which had never before been dreamed of, and which, if correct, must lead to very important results. We see no reason, if this be the fact, why by sending to the taylor [sic] the exact length of the leg, or of any other member, we may not, without further trouble, have a suit of clothes made with mathematical precision."

While most of the measurement patents had some sort of end use in manufacturing, the patents themselves did not claim the manufacturing process, but only described the algorithms involved in measurement. One patent, Patent No. X8,867, to Samuel Stone on June 6, 1835, explicitly claimed ―the application of the logarithmic calculations as applied to the circle. Another, Patent No. X6,573, to Erastus and Thaddeus Fairbanks on June 13, 1831, described a method of weighing objects by counterbalancing weights on the opposite sides of a beam in a slightly different manner than other counterbalance scales.

Finally, perhaps the oldest financial engineering patent (excluding lottery methods) is Patent No. X9,118, to John Golder on September 26, 1835, which claimed an improvement in the ―art of finance by using a credit note that looks like a bond. The Franklin Institute commented on this invention:

"When wheels, levers, or pistons are in question, we feel as though we could talk familiarly and intelligibly about them; but when ―Divitial inventions and ―Accumulative Checks are upon the tapis, we are among foreigners and strangers whose language we do not understand . . . . Under these circumstances we must not be looked to for any explanation of the plan before us, but as some of our readers are versed in the business of stocks and loans, it is, therefore, presented to them for their consideration. Whether the foregoing is sustainable under a patent, does not depend upon its novelty merely, but more essentially upon the determination of the question whether the Art of Finance, can be classed among what are technically called ―the useful arts."


The patent and related comments are interesting for at least two reasons. First, at least one inventor thought financing methods were patentable. Second, leading commentators wondered (with apparent skepticism) whether ―financial arts‖ were useful arts, rather than asserting outright that they were not because of some clear meaning of the patent laws from their inception. Finally, Golder did not fly under the radar; he petitioned Congress for aid in enforcing the notes because the patent authorized them (though his plea makes Golder seem more of a crackpot than a serious financier). Either way, Congress did not act on his pleas to either enforce or outlaw his type of patent.
posted by Skeptic at 2:32 AM on October 9, 2012 [3 favorites]


Thanks for collating all of this. Taken together, it's a great piece of investigative journalism, and a good reminder of why we need strong, independent, well-funded news organisations.
posted by narcotizingdysfunction at 4:42 AM on October 9, 2012


I'm so glad to see all this attention on the broken US patent system. Between this series, some activism on the part of tech companies, and Richard Posner's spotlight there may finally be some will to reform the patent system in a way that will benefit innovation.

Related: Ben Lee, legal counsel for Twitter, recently wrote an op/ed for GigaOm Twitter: It’s time for patent trolls to bear the costs of frivolous lawsuits. It's in support of the SHIELD act, a proposal to make patent trolls pay legal costs if they lose their suit.
posted by Nelson at 7:30 AM on October 9, 2012 [2 favorites]


Wow, crazy post. It will take me a good long time to go through all this material. Thanks for sharing!
posted by Vindaloo at 7:32 AM on October 9, 2012


It's in support of the SHIELD act, a proposal to make patent trolls pay legal costs if they lose their suit.

The basic idea of the SHIELD Act ("Loser Pays" in patent litigation) is reasonable enough: it's how it works in most of the rest of the world. However, the fact that it is limited to the IT field stinks of pandering to special interests.
posted by Skeptic at 8:08 AM on October 9, 2012


Yeah I was about to link to this as well. I thought this was a pretty succinct example.
Mr. Ricci issued an ultimatum: Mr. Phillips could sell his firm to Mr. Ricci or be sued for patent infringements. When Mr. Phillips refused to sell, Mr. Ricci’s company filed the first of six lawsuits.

Soon after, Apple and Google stopped returning phone calls. The company behind Siri switched its partnership from Mr. Phillips to Mr. Ricci’s firm. And the millions of dollars Mr. Phillips had set aside for research and development were redirected to lawyers and court fees.

When the first lawsuit went to trial last year, Mr. Phillips won. In the companies’ only courtroom face-off, a jury ruled that Mr. Phillips had not infringed on a broad voice recognition patent owned by Mr. Ricci’s company.

But it was too late. The suit had cost $3 million, and the financial damage was done. In December, Mr. Phillips agreed to sell his company to Mr. Ricci. “We were on the brink of changing the world before we got stuck in this legal muck,” Mr. Phillips said.
"Many" perhaps, but by no means all, or even a majority, according to this paper. In particular...


I'm pretty sure posting giant excerpts is against the guidelines, especially when there is a link. Flagged as noise.
the fact that it is limited to the IT field stinks of pandering to special interests.
It couldn't possibly because that's where the problem is. I haven't heard the same complaining in areas other then software, at least not to the same extent. Probably because with something like with hardware or medicine in order to do a major release you need a ton of funding to produce anything. With software you only need the software itself, which might cost far less (both in time and money) then patent litigation.

The Vlingo thing is a perfect example. We don't know much the software itself cost to make (Especially since he studied voice recognition as an academic). But ultimately it cost $3 million litigate, and even though he won, his company was still broke and Nuance was basically able to steal his company.

All of that's great for parasitic patent lawyers, of course.
posted by delmoi at 9:13 PM on October 9, 2012


It couldn't possibly because that's where the problem is.

Nope. It's because that's where the money is. But it IS a general problem, believe me. It once was the bane of the nascent car industry, now it's the software industry, and tomorrow it will be whichever industry generates enough growth to attract the attention of these trolls. You IT guys should stop thinking you are such special snowflakes. There's no valid reason whatsoever to limit this to software, and that's why, in my opinion, the SHIELD Act will fail.

"Loser Pays" is the general principle here in Europe. I like it, it suppresses frivolous litigation, which I like just as little as you do.
posted by Skeptic at 11:28 PM on October 9, 2012


Well, one problem with Loser Pays, in general is that it would make risky for small startups to sue huge corporations which were ripping off their patents. It would cut down on both frivolous litigation, as well as legitimate litigation.

I'm totally fine with that when it comes to software patents, which I don't think should exist at all.

Really, what the patent system needs is some kind of initial arbitration. Experts could review the case (without the need to pay lawyers) and determine if it was frivolous or not. I don't like the idea of binding arbitration, where there's no appeal - but that process could serve as an initial filter. If the loser of arbitration wanted to continue on they'd need to pay for the whole process, unless they ended up winning.

In any event, the simple solution is to just get rid of software patents. If some obvious problem develops as a result, then you can fix that. Much simpler and quicker then trying to tweak around the edges of a broken system indefinitely hopping it will eventually stop sucking.
posted by delmoi at 1:29 AM on October 10, 2012


I'm totally fine with that when it comes to software patents, which I don't think should exist at all.

It all starts and ends with that, isn't it? "My industry is special, so it deserves special treatment."

Well, guess what? Your industry isn't special, and neither are its patent problems. I really don't have a horse in that race, that with working in a different field (mechanics) and in a continent where "loser pays" is the general rule (although often inconsistently applied). But I know enough of the history of the patent system to know the precedents and understand the possible unintended consequences of some changes. And I know enough of the lawmaking process to be very, very wary of an industry flush with cash throwing its weight around at the legislative level and asking for special treatment. It sets my contrarian juices flowing.

Really, what the patent system needs is some kind of initial arbitration. Experts could review the case (without the need to pay lawyers) and determine if it was frivolous or not.

And where would you get those experts? Would they be able to understand the actual scope of the patent claims?
posted by Skeptic at 2:09 AM on October 10, 2012


And where would you get those experts? Would they be able to understand the actual scope of the patent claims?

The same place you find patent examiners? Finding and hiring people with expertise in various fields seems like a solved problem, if you pay enough money.
posted by delmoi at 3:39 AM on October 10, 2012


The same place you find patent examiners? Finding and hiring people with expertise in various fields seems like a solved problem, if you pay enough money.

Well, exactly. And those people can already choose to become patent agents or attorneys, which already drives quite a strong demand for them: "enough money" may be more money than you expect. This is why the USPTO in particular has a lot of trouble holding onto its patent examiners for more than two years.
posted by Skeptic at 4:57 AM on October 10, 2012


Well, it's a side issue for making patents more efficient for non-software patents. As I said, I think software patents should be abolished.
posted by delmoi at 10:13 PM on October 10, 2012


Apple loses U.K. Samsung appeal; must run 'apology' ads
posted by homunculus at 3:37 PM on October 18, 2012


Numbers don't lie: Patent trolls are a plague. Recent research supports view that patent troll activity is rising -- costing America a fortune in wasted legal fees and lost jobs
posted by homunculus at 1:22 PM on October 21, 2012


Let’s Limit the Effect of Software Patents, Since We Can’t Eliminate Them
posted by homunculus at 11:38 AM on November 2, 2012


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