Many of us remember the line from Shakespeare's King Henry IVth: First, let's kill all the lawyers! That has now been replaced by let's kill all the bankers, mortage brokers, investment bankers, etc. Certainly, the current financial malaise will make things more difficult for entrepreneurs and their start ups.
But there hopefully is a bit of good news on the patent front. But first, for those who have not had the "pleasure" of having a patent infringement suit filed against them, let me give you a little background. A company files a patent claiming that they "invented" supply chain management technology. Perhaps in 2001. What's wrong with this picture? Supply chain management technology has, of course been around since the 1960's or 1970's. These BS business methods patents were allowed by the U.S. Patent Office for a few years and there are many more out there. There is also a big business emerging for legitimate patent "buyers" like Nathan Myhrvold and his new company, Intellectual Ventures, which purchases patents from owners and then goes after infringers.
Fred Wilson posted the following Blog this week regarding an important ruling on software and business use patents–the bane of some of my portfolio companies.
Entrepreneurs 1 – Patent Trolls 0
Well it looks like we got a win yesterday when the Court of Appeals for the Federal Circuit ruled that software and business method patents must meet a two pronged test that should serve to render many of these patents useless. I am not a patent lawyer and there is a debate in the comments tothis Techdirt post that suggest there's still a lot of debate about how big of a deal this ruling really is. I've emailed my favorite patent lawyer to get his opinion.
We can use all the help we can get. Our portfolio companies have been spending hundreds of thousands of dollars per case in recent years fighting off patent trolls who acquire software and business method patents and then sue for infringement. It's a huge tax on the startup/technology ecosystem and it's hurting innovation. The whole thing has soured me completely on the patent system. I think there shouldn't be any software and business method patents at all, but I think that's not likely to happen anytime soon.
Hopefully the courts and the patent office are beginning to see the problem with software and business method patents and rulings like we got yesterday are a hopeful sign.
A VC in Vacationland 
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