Mark Cuban is a businessman, investor, TV personality and owner of the NBA’s Dallas Mavericks. The Cuban fortune came as the result of founding Broadcast.com, which was acquired by Yahoo! in 2002 for $5 billion in Yahoo! stock. Over the last five years Cuban has become even more of a pop culture icon as the result of appearing on the widely popular Shark Tank reality television series, where aspiring entrepreneurs pitch a panel of investors (affectionately called “sharks”) for funding.
Cuban is no stranger to the patent policy debate, and has gone on the record numerous times – including here on IPWatchdog.com – explaining that he thinks software patents should be abolished. In fact, in 2012 Cuban donated $250,000 to the Electronic Frontier Foundation (EFF) to create a position known as the Mark Cuban Chair to Eliminate Stupid Patents.
Recently Cuban has joined the discussion on IPWatchdog.com, commenting on a number of articles written relating to his activities and views (see here, here and here). I invited Cuban to do an interview for publication and he agreed to do an e-mail interview. On Monday, November 9, 2015, I e-mailed Cuban the questions. He turned around his answers almost immediately and even solicited follow-up questions. I sent him a few follow-up questions, which he responded to on Tuesday, November 10, 2015. Those follow-up questions and answers have been weaved into the Q&A where topically appropriate.
With the exception of our different views on software, which isn’t surprising, I find myself in agreement with Cuban on a great many things. Indeed, inventors can and should take to heart what he says about the importance of having a business and not just a patent. As I’ve said many times, just because you have a patent does not mean that a dump truck full of money will suddenly appear with lottery like winnings at your front door!
Before proceeding to the Q&A, it is worth noting that what follows is an interview, not a debate or argument. While I strongly disagree with Cuban on several fundamental issues (starting with the first question) the goal was not to allow disagreement to turn to argument. Rather, the goal was to have an open discussion about the issues so that Cuban’s views on various topics would come forward.
Without further ado, here is my interview with billionaire entrepreneur Mark Cuban.
QUINN: Starting broadly first, do you believe the patent system as a whole fosters or inhibits innovation?
CUBAN: I think for technology it inhibits it dramatically.
QUINN: Most presenters on Shark Tank get asked if they have a patent, and it seems that when there is a patent that covers a product they are given higher valuations for their startup. Generally speaking, do you believe having a patent that covers a product or service increases startup value? Why or why not?
CUBAN: I’m not the one asking. The other sharks ask, and it’s mostly for physical products. For many companies it shows the entrepreneur has no idea what they are doing and they have wasted valuable cash getting a patent before they know whether or not they have a legit business. Just because a patent is issued doesn’t mean the company will be successful. Often the cash wasted obtaining a patent could be better used elsewhere. The few times I ask, I want to know if it’s a situation where the money is wasted, or I’m concerned they may get sued by someone else, so having a patent offers some form of protection against the idiocy of the system. Patents drive litigation. Having a patent can give you a response to a suit. That is their greatest value in the tech industry these days.
QUINN: Burning through capital and wasting money is a big concern for any entrepreneur or startup, and sometimes pursuing a patent doesn’t make good business sense, that is true. But in your answer you seem to suggest that they need to first determine whether they have a legit business. Can you elaborate on that?
CUBAN: I can’t even begin to tell you how man times I get stopped by desperate people telling me how amazing their patented product is, but they went into debt to get the patent and have no idea how to make money with their product and pay off their debt. This past Sunday a guy wouldn’t let me eat, then he chased me into the parking lot. A patent by itself is worthless. If you don’t have a way to make money you have wasted thousands of dollars. To some people there is a patent pride of ownership. That’s fine. It looks good on a wall. Punchless patents, those with no revenue sources, create huge problems for the system. They become golden tickets for trolls. Which is why I think that if you can’t monetize your patent in a given period, it should be invalidated.
QUINN: What advice would you give inventors and entrepreneurs? Too often they run head first in without laying the appropriate business foundation, but for Mark Cuban the investor what would that appropriate foundation look like?
CUBAN: First, never use Inventor Services. The ones I have seen advertised are a joke. Second, because a lawyer tells you something is patentable doesn’t mean you should. Third, if you don’t know how you will make money from your patent, then it’s not a business. Know how you will create revenue or don’t start the business.
QUINN: A great deal of the proposed patent reforms are viewed by many as harming independent inventors and startups who need strong patent rights if they are going to attract investment and not be pushed around by larger entities. Do you share these concerns about patent reform? Why or why not?
CUBAN: No. I have invested in more than 150 companies and never has having or not having a patent impacted the final decision. Small businesses can and do become great without patents. The problem for little guys with patents is that no patent lives in a vacuum. Particularly with software and technology. There is always a work around and you can always find a patent that enables the big guy to sue the little guy. So with just few exceptions the current system doesn’t protect anyone. If you get major patent reform hopefully the big companies have less incentive to try to bully anyone.
QUINN: What kind of major patent reform would give large companies less incentive to bully? What abuses do you see in business and how could the situation be addressed?
CUBAN: Big companies have every incentive to bully right now. They have the money to litigate for years. No small inventor does. So the current system benefits the big bullies over the little inventor. The first step is to get rid of software patents or at worst change to 5 years. Let smart people compete rather than litigate. In this day and age of advancing technologies small companies can out perform the big everywhere outside the court room. Reduce litigation opportunities and you improve the little inventors and small and medium businesses ability to compete.
Part 2 to the challenge of making a change is that small inventors feel like their patent is the most valuable property they own. They would give up everything before their patent. As long as they assign magical powers to their own patents you are going to get comments like we see on your forum about protecting patent rights. But the reality is that a patent without a business is worthless. But no one wants to ever think their patent is worthless. They will fight to convince you of the opposite. That’s a huge problem as it applies to reform.
QUINN: In the past you have said that software patents should not exist. I have no doubt that is your honest opinion, but I wonder why you single out software patents in particular? Whether a process is carried out in software versus being carried out in hardware is really a design choice. Why should processes carried out by hardware be treated differently than those directed by software?
CUBAN: Code is code. Where it runs doesn’t matter. So it’s not different. I wrote software for 10 years. Not much, if anything, is completely original in software. Like Jobs said, it’s all a remix.
QUINN: I assume if you could make one change to the patent system it would be to eliminate software patents. Aside from the elimination of software patents, if you could make one other change to the patent system or patent litigation system what would that change be and why?
CUBAN: Getting rid of software patents or at worse limiting them to 5 or 7 years is a huge step forward. After that, if you don’t utilize the patent in a product or service, somewhat similar to how a trademark works, you lose it. I would also disallow patents created without knowledge of the other. If multiple people INDEPENDENTLY come up with the same or comparable idea within a given time frame then to me, it can’t be original.
QUINN: No one seriously disputes the fact that there are bad actors, sometimes referred to as patent trolls, involved in what can probably be best described as extortion like activity, as several federal courts have called it. Why do you think it has been so difficult for courts and Congress to figure out a solution that punishes the bad actors without punishing the masses?
CUBAN: No bad actor thinks they are bad and neither do their attorneys.
QUINN: Having listened to you over the years and read many of your comments on the patent system, it seems you are driven by business concerns associated with being held up by nefarious actors using patents as a weapon against startups in particular. While it may be obvious to many, can you explain why the threat of patent litigation, or litigation in general, is such a serious concern for startups?
CUBAN: The greatest risk every tech company faces after execution and direct competition is the unquantifiable risk of patent litigation. On the flip side, get rid of software and tech patents and inventors would still invent. Coders will still code. Entrepreneurs will still start companies. That’s what we do. The goal of creation, no matter what it is, drives people. Money is a great reward, but people will find a way to make their inventions, code, companies happen with out patents.
QUINN: I know we are never going to agree on software patents, but I’d like to take deeper dive on your answer about inventors inventing, coders coding and entrepreneurs starting companies. Fundamentally I know you are right. Creative people create, it is what they do. The question for me is whether we can get the level of creation we want from those creative people. I always use the example of Van Gogh. If he needed to work a day job he would have created a lot less and I think the world would be worse off for it. So I want people like that, whether inventors or artists, to be able to make plenty of money from the activity so that they do more creating. When it comes to software there is no doubt that people will create software even without patents, but what would that software look like? I can’t imagine IBM would have spent the billions of dollars investing to create Watson, for example. Granted, we have a one size fits all patent system, which is probably at the root of this problem, but I think you err in lumping all software together and treating it the same. The most useful software couldn’t be created without at least perceived ownership of the intangible rights.
CUBAN: Did Van Gogh get paid enough to live from his first painting or did he live at home with his parents 🙂 I don’t know. IBM isn’t going to let itself go out of business. They are not going to stop investing in Watson because if they do all those stock options management owns become worthless. How and why did creators create software before it was patentable? And what happens when machines create software and do it at light speed? They will create trillions of lines of code and parcel them automatically hoping to find the needle in the haystack that turns into something of value. Then what?
QUINN: In comments to several articles on IPWatchdog.com you said that you did not threaten to sue Wal-Mart on U.S. Patent No. 8,738,278, which covers what many are calling a hoverboard. You also suggested that you do not own the ‘278 patent, or have an interest in that patent. It does seem that you are somehow at least an adviser to the patent owner. What is your relationship with the patent owner and what, if any, interest do you have in the patent? Were you involved with the decision to bring suit against IO Hawk?
CUBAN: I have a non-contractual business relationship with him. I was not involved in bringing the IO Hawk suit.
QUINN: How do you reconcile funding the EFF Stupid Patent Chair, your dislike of software patents and your decision to heavily invest in Vringo? It seems your decision to invest in Vringo was substantially related to their patent infringement lawsuit against Google, is that correct?
CUBAN: It was a cheap hedge. The company asked for support. I told them the same thing. Other shareholders asked for support. I said the same. When markets act with stupidity I will often hedge by buying instruments that I would not otherwise buy. I think high frequency trading is an enormous market structure risk. I spend far too much money hedging my investments as a result. Same thing. I picked Vringo out of nostalgia. I thought the old Lycos patents had at least a chance. If there wasn’t a Vringo I would have put the money elsewhere. If patent law was not so bad I would have kept the money in my pocket.
QUINN: With respect to your Vringo answer, I don’t doubt that you are telling the truth, but can you understand why people might think this position undercuts your views on software and patent trolls?
CUBAN: No. It makes no sense that they don’t understand it. The system is corrupt and doesn’t work. There is no more important time to hedge.
QUINN: It seems based on your definition of patent trolls you turned into a patent troll when you invested in Vringo. I don’t personally think Vringo is a patent troll, but the optics seem bad. And while my wealth pales in comparison to yours I find it hard to believe that there weren’t equally enticing investment opportunities that wouldn’t have required you to go against your beliefs.
CUBAN: Of course Vringo is a troll. That’s exactly why I used them as a hedge.
QUINN: If you were elected President in 2017 whom would you nominate to run the Patent Office?
CUBAN: No clue.
QUINN: When I do interviews I also sometimes like to end with fun questions that tell a little about the person. If you are game here they are: Favorite pastime or hobby?
CUBAN: Playing basketball.
QUINN: Favorite sport?
CUBAN: See above, rugby is second.
QUINN: Has owning the Mavericks been everything you initially dreamed it would be?
CUBAN: Totally different but amazing.
QUINN: Favorite movie?
CUBAN: I love any and all end of the world disaster movies. No idea why.
QUINN: What historical figure would you most like to meet and why?
CUBAN: Steve Jobs. Never met him. Would love to ask him about patents and Xerox and the early days of apple 🙂
QUINN: The coolest invention of all time?
CUBAN: The semiconductor.
QUINN: The best fictional inventor, Emmett Brown (from Back to the Future), Q (from James Bond), Tony Stark (from Iron Man) or you can go off the board. Why?
CUBAN: Tony stark. He has fun with it all.
QUINN: Star Trek or Star Wars?
QUINN: If you could go back in time and give the 25 year old Mark Cuban advice what would it be?
CUBAN: Be prepared for everyone to ask you stupid questions about now in 25 years 🙂
Join the Discussion
54 comments so far.
AnonymousNovember 16, 2015 02:09 pm
Mark has a “let em eat cake” attitude. Mark, go undercover, change your name, and see what it’s like for the 99.9% of us, that are not in your financial and celebrity position. You might change your attitude.
Night WriterNovember 14, 2015 10:08 am
>>unless of course that government is on the payroll of SV corporate board members
LOL! !!! You would think that people like Mark would get it.
angry dudeNovember 13, 2015 10:49 pm
Night Writer @51
People are just people. Inventors compose a tiny portion of US population, and consequently, very few of the regular folks are aware of the fact that hiding important technical results and other useful discoveries will bring the economy down in the long run… actually in less than 20 years .. and their own living standards will follow
It is the job of the government to predict those things and act accordingly,
unless of course that government is on the payroll of SV corporate board members
Night WriterNovember 13, 2015 09:17 pm
>>Me thinks that those entrepreneurs have no trust in patents or copyrights for protecting their precious code and will eventually resort to some type of secure-boot embedded micro-controller with hardware-enabled code-decryption, or even custom-made asics (custom-made asics require huge manufacturing volume)
That is what a lot of people don’t get. Once you get to the hiding, then a lot of progress ends. Most of the software developers don’t understand that the reason they are allowed to discuss things on blogs and publish papers is patents. As soon as patents go for software, the companies will lock up the employees so they can’t share anything. (Plus there are a lot of other things the companies will do.)
AnonNovember 13, 2015 09:08 pm
The revolution is just beginning concerning digital printing.
IPKat (to counter the Dog here…) had a recent story on digital printing. October 30th if I remember correctly.
angry dudeNovember 13, 2015 08:09 pm
What about “digital printing revolution” ?
Thus far the preferred business model for US fabless semiconductor companies, even the huge ones like Qualcomm and NVidia, has been to have [email protected] team in California or elsewhere and to outsource actual manufacturing to huge foundries in Taiwan or elsewhere (which all require a lot of volume)
Any new trends for less capital-intensive low-volume and low-cost ASIC manufacturing ?
I’m all for it, bring it on….
AnonNovember 13, 2015 04:37 pm
Look for the digital printing revolution to make short work of that “custom-made asics require huge manufacturing volume” condition of yours.
angry dudeNovember 13, 2015 02:49 pm
Night Writer @ 41
“…the two entrepreneurs said the value was in the intellectual property which was software and the design of the drone.”
The company sells DIY kit for their flagship product:
“Get the X PlusOne airframe kit and control board! You’ll need to assemble the kit and add your own radio, power system, and battery to complete the package.”
Now, the mechanical design of the airframe and engine/propeller placement are easy to copy and can only be protected by patent.
For the “control board”, which is integral and indispensable part of this product, the story is different: aside from some obvious peripheral circuitry there is some type of real-time micro-controller or dsp processor executing controlling code.
Unless special precautions are taken, the code can be extracted and then reverse engineered (if market is big enough, which is not the case for them right now)
Me thinks that those entrepreneurs have no trust in patents or copyrights for protecting their precious code and will eventually resort to some type of secure-boot embedded micro-controller with hardware-enabled code-decryption, or even custom-made asics (custom-made asics require huge manufacturing volume)
These are just my educated guesses.
I would be very interested to know how exactly they play IP protection in those drones.
AnonymousNovember 13, 2015 10:11 am
It is “patently” NOT true that ALL patents can be designed around.
I CHALLENGE YOU (big shot), to design around this invention.
Night WriterNovember 13, 2015 09:44 am
Also, they had a skinny mirror, and although there were other reasons given for not investing in it, one of the biggest was that there was no IP. That could just be copied so why would they invest in it? The entrepreneur said something about brand, and the sharks just smirked at the suggestion that brand would mean anything.
So, I think we have Mark saying one thing and behaving in a different manner for his investments.
Night WriterNovember 13, 2015 06:53 am
I’d put it out that Mark is actually being a hypocrite. That Shark Tank regularly evaluates companies based on their IP (including software companies) and that Mark makes investment decisions based on IP.
I think the reality is that a lot of the people Mark deal with are product makers from others inventions. The XCraft is likely an innovator (full disclosure I did IP work for a drone company).
AnonymousNovember 12, 2015 10:47 pm
Proverbs: Money makes money
It’s not what you know it’s who you know.
Mark, you have both, so being successful for you is a slam dunk!
step backNovember 12, 2015 10:36 pm
Do you mean $300K ?
Night WriterNovember 12, 2015 10:00 pm
I just watched Shark Tank and Mark invested $300 for 5% in XCraft and the two entrepreneurs said the value was in the intellectual property which was software and the design of the drone.
I think Mark could be brought onboard with patents if he was just educated a bit more about them. And, they were very hesitant to invest in an exercise board because it was not patented and would surely be copied according to the sharks.
AnonNovember 12, 2015 07:51 am
Implicit in the actions is the notion of “honest infringer.”
That emotive ploy will be used to maximum effect in rhetoric and propaganda because of ignorance embraced.
To wit: there is no such thing as an “honest infringer” because direct infringement does not carry an element of intent, and there is no type of “Fair Use” harbor for patent infringement.
One aspect of weakening patent rights (which serves NO ONE in the long run), is the attempt to make patent infringement into some type of “light” just-pay-a-fine business transaction, and remove the power of exclusivity that has been the traditional source of a patent’s power.
The coined term of “efficient infringement” should be seen NOT as an answer, but as an instigator of the problems that beset the system.
With “efficient infringement,” the very purpose of the patent system is defeated because you remove (for Big Corp) the necessity of paying attention to the patents being published. You invite the attitude of “Patent Armageddon” and “get as many (even silly) patents as possible to nuke anyone in our way.”
I would also point out that the same people who wish to minimize the value of patents are the same people wanting huge (silly) portfolios AND are the same people who use the propaganda of “Tr011” to its maximum usage.
This is no coincidence.
Ron HiltonNovember 11, 2015 11:26 pm
You should interview Warren Tuttle next, to get some balance. He is the entrepreneurial guru of consumer products. He spoke to our inventors club here in Salt Lake City a few years ago. I would really like to hear more of his thoughts regarding how to bring together inventors (tech geniuses) and entrepreneurs (business geniuses). People who can do both are freaks of nature. But it is hard to get the two types of geniuses to work together.
angry dudeNovember 11, 2015 10:55 pm
Great points, patent quality is something that has to be fixed in the near future
But unfortunately, with hypocrites like Mark Cuban fixing patent quality issue won’t fix US Patent System, especially the litigation side of it.
googles and cubans of the world will continue to cry about evil patent trolls aka inventors suing honest companies and people, while at the same time filing their own non-enabled invalid patents (like Cuban owned U.S. Patent No. 8,738,278 which was previously discussed here in detail and found to be invalid)
staffNovember 11, 2015 10:14 pm
‘I think for technology it inhibits it dramatically’
In an historically significant patent case in England in the 1800’s, in its decision the high court described the accused infringer as “an ant on the shoulders of a giant”. That inventor giant was Alfred Nobel. American inventors will tell you Cuban is one such ant.
Patents do not inhibit innovation -only theft of.
Infringers like to speak of innovation, but they never speak of invention. That’s because they rarely invent anything except slogans, but instead rely on and build the their businesses on the inventions of others. They are basically horse thieves. They wait for you to establish a market then use their far greater resources to steal it from you.
This is a good time for America to reflect on the words of one of our founders and Presidents, James Madison. As he wrote in Federalist No. 43 regarding constitutionally recognized rights of inventors and that portion of the Constitution as proposed, “The utility of the clause will scarcely be questioned. The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law. The right to useful inventions seems with equal reason to belong to the inventors. The public good fully coincides in both cases with the claims of the individuals.”
It’s about property rights. What could be more American.
Property rights should not only be for the rich and powerful -campaign contributors. America’s founders: Jefferson, Franklin, Madison and others felt so strongly about the rights of inventors that they recognized and affirmed those rights to their creations and discoveries in the Constitution.
From ‘Section 8 – Powers of Congress:
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;’
They understood the trade off. Inventors are given a limited monopoly and in turn society gets the benefits of their inventions (telephone, computer, airplane, automobile, lighting, etc) into perpetuity and the jobs the commercialization of those inventions bring. For 200 years the patent system has not only fueled the US economy, but the world’s. If we weaken the patent system as have Congress and the courts since Mercexchange, we force inventors underground like Stradivarius (anyone know how to make a Stradivarius violin?) and in turn weaken our economy and job creation. Worse yet, we destroy the American dream -the ability to prosper from our ingenuity for the benefit of our families and communities. To kill or weaken the patent system is to kill all our futures. Show me a country with weak or ineffective property rights and I’ll show you a weak economy with high unemployment. If we cannot own the product of our minds or labors, what can we be said to truly own? Life and liberty are fundamentally tied to and in fact based on property rights. Our very lives are inseparably tied to our property.
For more information please visit us at https://aminventorsforjustice.wordpress.com/
or, contact us at [email protected]
AlNovember 11, 2015 09:52 pm
Software patents and a lot of electronics are really not handled well by a patent system that has its roots in the industrial revolution. I think a lot of posters see software in the same way as they would a mechanical device or an industrial process. Many posters also seem to lack distinction between an algorithm and code – in their most basic form, one is the structure of the process that performs the functionality, while the other is the written instructions. While software has functional elements, it also has elements which fall under copyright law. Yet, software is not adequately protected by either patent or copyright law. Each system covers a portion of software but not the entirety and there are gaps in-between the two.
Another problem with a lot of the circuitry and software patents is that twenty years of protection is the equivalence of indefinite protection in other technological fields. Furthermore, with the short lifespan of many software and tech products, application to grant (if any) takes an eternity.
Obtaining a patent is also a pretty big investment for many startups. Standard rates are $5,000 – $20,000 just for filing an application and then there are legal fees for patent prosecution. Even if a software company were to obtain a patent, defending it against alleged infringers could take years and minimally hundreds of thousands of dollars in legal bills. The potential rewards may be great but what startup has the resources to take the risks to go down this process? It is no wonder that some small companies seek out investors to fund litigation.
I see a lot of comments on strong protection, but I am not sure what that really means for software and I am not sure how it could practically be applied. The big question about the patent system is what is it actually incentivizing? Is it achieving its goals?
I have had multiple investors tell me that patents are a waste of money for small businesses. As an absolute position, I don’t agree but I see their point.
I am a believer that the patent system provides incentives to innovate but is it the only way to spur innovation? The current system (or even the pre-AIA system) is really not compatible with software
step backNovember 11, 2015 07:13 pm
I think Warren Tuttle @22 deserves some credit for suggesting that we look at this from the broad perspective of history.
Some 20 years from now, our children will look back and say, What were they thinking?
Did they not understand that undermining the US patent system will return the US back to its glory days of being a third world agricultural economy? Did they not understand that it was the race to be first under the Constitutionally approved US patent system that propelled America into the Industrial revolution and then into the computer age?
Did they not understand that America’s enemies want exactly the same thing that Mark Cuban wants which is to bring American inventors to their knees, to belittle and befuddle them with coded brainwash words and excess taxations (i.e. PGRs)? North Korea has its own version of a winner takes all “entrepreneur” –leader Kim Jong Un. He already owns 100% of the people, their spirits, their aspirations and their desires for a better life. Apparently Mark wants the same for America. The biggest Shark in the tank takes all. Sorry, he doesn’t get my vote. I’m out and he is dead to me. 😉
Gene QuinnNovember 11, 2015 04:58 pm
I understand where you are coming from. I didn’t take the comment that way, but understand your interpretation. Code is certainly not easy to write, at least if you are concerned with making it a useful software product that has appropriate security, actually works for its intended purpose, and you write it so that it has longevity and can be scaled/maintained.
For me I would accept that statement as true. Even assuming that it is true and taken in a light most favorable to the anti-patent crowd, it still doesn’t support them. In fact, it actually supports the pro patent position. Sure, there has been innovation without patents. But we know that without patents the level of innovation is exasperatingly low. Just look at all the countries where there are no patent system. Look at all the countries where there was no functioning patent system and compare them to those same countries after they adopted a patent system.
There is a lot to digest here and I suspect a few articles building on these topics in the future. Keep the thoughts and comments coming.
TNovember 11, 2015 02:24 pm
I would posit that the drug companies at least would have an issue with canceling a patent if it can’t be monitized within a couple of years…
Also, isn’t that what maintenance fees are for (besides enhancing the USPTO coffers) – to enable patent owners to make an individualized business-based judgment as to whether to maintain exclusivity or dedicate their patent to the public?
David SteinNovember 11, 2015 01:53 pm
This interview pulled out a good representation of Cuban’s viewpoint.
However, it’s disappointing that Cuban is just completely closed-minded. He is not taking the community seriously, and nothing that any of us could possibly say or write will ever change his opinion.
At any point in the conversation above (or in any previous conversation), did Cuban ever say: “that’s a good point, I need to think about that?” Can you even imagine him saying anything like that?
I don’t see much point in continuing to talk to him. The only thing that could change his mind is a shocking personal experience – like seeing several startup companies go bankrupt when a competitor like Zynga serially copies his ideas, and uses market power to make its clone the market leader. He will only consider changing his mind when his model of the world socks him in the pocket book.
So while I think that the interview is helpful, I’m not really interested in any further engagement. Our efforts are better placed elsewhere.
step backNovember 11, 2015 01:33 pm
I respect your view point while at the same time submitting that “Coders will still code” is coded language for belittling what inventors in the software-based arts do.
You can see the same exact thought pattern in the Alice oral arguments where Justice Kennedy proposes that he can walk into any Silicon Valley coffee shop, find a bunch of computer geeks, simply say “here is my idea” and then they will have it coded for him over the weekend on “a” generic computer. How totally clueless as to what happens on complex networked systems.
step backNovember 11, 2015 01:26 pm
Warren Tuttle @22:
I think you hit the big picture view from a historical perspective head on.
Except that in the future people will not wonder why innovation is mediocre. They will merely accept it as the normal.
Most people do not have the vision to see things as they might be and say, why not as opposed to seeing things as they are and accepting the status quo. I think that was part of JFK’s speech in justifying the mission to the moon back in the early 1960’s.
Mark Cuban is the kind of guy that doesn’t see an instant profit in going to the moon and thus he would quash right away.
However it was the profit-less quest to get to the moon that fostered the semiconductor business and ultimately the internet. Early integrated circuits (chips) were extremely expensive. Yet they made economic sense for missile based applications (including the moon shot) where every ounce cost you big bucks in rocket fuel. That is what got the semiconductor business off the ground and made it a multi-billion dollar word-wide industry.
What next grand slam will we be missing if everything is done merely for the quick in-sight buck?
Gene QuinnNovember 11, 2015 12:26 pm
I understand what you are saying, but we already sort of have this type of situation. If you don’t make your maintenance fee payments your utility patent will fall into the public domain early. This isn’t the exact same thing that Cuban is referring to here, but given how frequently maintenance fee payments are not made we already have that sort of situation.
He is also right that if you don’t use your trademark you lose it. Truthfully, I’d be all in favor of having patents treated more like trademarks in a lot of respects. For example, with trademarks the longer you own the trademark the harder it is to challenge the rights. For example, after issuance it is harder to cancel than oppose and after 5 years if the owner files for incontestible status then it is extremely difficult to challenge the trademark. Right now patents are endlessly challenged, and seemingly easier to challenge over time. So if we want to talk about harmonizing trademark law and patent law that is a discussion we should not be afraid to have in my opinion. Of course, as with all things patent related the critics will almost certainly want to apply the unfavorable trademark principles without any of the favorable trademark protections, which is simply a non-starter.
Night WriterNovember 11, 2015 11:29 am
I hope Cuban continues to engage us. I think it is important to get the perspective of someone that just wants to start a company and make something work.
Gene QuinnNovember 11, 2015 11:04 am
I think you are being a little hard on Cuban saying that coders will code. I tend to agree with him. Creative people create, it is what they do. I tell inventors that all the time when they are insisting upon hitting a grand slam home run with their first invention. Take a single. Hit a lot of singles. I’m also a fan of saying things like that to break it down into understandable chunks. I also think it gets to the fundamental differences, so I wouldn’t give Cuban a hard time for that. This is what we want, I think. We want to break it down to the fundamental to see where the disagreement begins.
I think the way to attack the “coders will code” argument is to acknowledge that it is undoubtedly true, but what kind of code (i.e., innovation) will be produced from the type of system that Cuban and others that agree with him want? Without the incentives in place I just don’t see any innovation that requires substantial funding. Cuban is probably right that at this point IBM would continue with Watson, but that is because they are so invested in Watson. Would they have been so invested in Watson if they couldn’t get patent protection? I think the answer is clearly no. You just couldn’t have invested the billions of dollars IBM did if you couldn’t own the rights. Jay Walker (Priceline.com founder) talks about that all the time. You don’t invest in what you can’t own.
So in a world without software patents I think you get low functioning, non-original software that goes outdated, isn’t maintained and presents security risks, among other things.
I also think it is interesting so see Cuban say that perhaps the solution is to cut down the patent term for software to 5 to 7 years. That is a different conversation to have, and one that might be worth having. It also shifts the debate away from full term patents versus no patents at all. It would also let us have a real conversation about whether it makes any sense to do that given the USPTO can and does take 5 to 10 years to issue software patents in many fields.
All in all I thought this was a great interview, perhaps one of the best I’ve ever done. It was substantive and I think very thought provoking, which was the goal.
Gene QuinnNovember 11, 2015 10:55 am
I think your characterization of Mark Cuban is incorrect. I thought his answers were very thoughtful, even if I do not agree with all of them. He certainly represents one of two mainstream views on software patents quite well. What he raises about the issues that will present when machines do the inventing is something I’ve written about in the context of pharmaceuticals. It will be a real issue that industry has to deal with.
In terms of him saying that not much software is original, that statement is probably more true than it is false. The way that many coders operate is to snatch (i.e., literally copy) code and then the either use it exactly or modify it for their own purposes. This is rampant in the software industry even when you hire coders to create what is supposed to be an original system.
I think the problem with having a software discussion is that each person has something in their mind that provides the context to what they say. It is unfortunate that the law presently treats simple financial software the same as it would treat artificial intelligence like IBM’s Watson. If Watson is not patent eligible then we might as well just close the Patent Office doors and move on to something else. But as long as the Courts will allow a simple App to be treated the same as the Star Trek omnipotent computer we are in the Twighlight Zone where nothing really makes sense and everyone talks past each other.
LD InventNovember 11, 2015 10:50 am
Mark Cuban: “if you don’t use your patent in a product or a service within a time frame of 5-7 years you lose it.” A sort of Eminent Domain in Intellectual Property. I would agree with it if we apply the same to capital owners who do not use their cash within 5 years for a product or service. Just tax it way. Easy to do, to the benefit of society and it provides an incentive to use the money. Oh no, not the money!!! Self professed capitalists really do not like a level playing field. Never have, never will.
Warren TuttleNovember 11, 2015 10:01 am
Good interview. Agree with many points. My main take away however: entrepreneurship and inventing are two entirely different skill sets. Just as we separate the chef from the front of the restaurant, the editor from the publisher, and so forth, inventors bring something unique to the table and often do not have the necessary business skill set to launch their own creations. This is never a zero sum game….which side is more important. Both are vital. Intellectual property is meant to protect the individual from the collective. If we want mediocre food, or literature…or for that matter innovation in the future, just take away the incentive from those truly creative folks who need to also prosper in some meaningful way from what they bring to the table. A strong patent system helps supply this critical incentive.
angry dudeNovember 11, 2015 09:55 am
Cuban says: “Not much, if anything, is completely original in software”
What a bunch of hooey !!!
Just looking at the nearest tech thing – smart phone in my pocket
First things that come to mind: microphone array sound pickup/noise reduction, speech compression technology to reduce bit rates, RF transmission/reception technologies – all those clever modulation schemes like CDMA that made patent-rich Qualcomm also money rich, voice recognition software, camera – all those image compression/manipulation patents like jpeg etc, GPS – lotsa clever software, wi-fi – lotsa software (and patent litigation too)… etc etc etc
It doesn’t matter that nowadays Apple packages all those technologies (some of them stolen from original creators) on a system-on-a-chip – a “hardware” device
For all practical purposes those can be considered “software” or algorithmic inventions
Cuban’s ignorance is astounding
Gene, maybe you can pick some smarter billionaire e.g. Elon Musk to talk about technology and patents next time ?
Warren TuttleNovember 11, 2015 09:36 am
Nice interview. Some really great points were made. I agree with many of them. This is my overriding take away, however: not all inventors have the skill set required to be entrepreneurs…just as few chefs are able to run the business portion of a restaurant…just as editors and publishers are on opposite sides of the aisle…..and on and on with so many examples throughout our vibrant economy. To tell a chef that anyone can take their recipes and copy their creative process, that their job is rather to simply start and run the restaurant, is someone akin to what Mark Cuban proposes. With this approach, some day soon in the future we’ll all wonder where the good food went. And if creative writers are to also become publishers of their own work, a lot of world’s greatest literature will be stuck in a desk drawer. Intellectual property ownership drives capital investment. It also protects the individual from the collective. It’s at the heart of capitalism. Take patents away and in 20 years you’ll see innovation mediocrity….the downside of the collective. The only innovation will be coming from folks with skill sets that do not foster great new product development, just mediocre ones No doubt, entrepreneurs are very important to our economy. Entrepreneurs who team with truly creative innovators that leads to strong patents is the winning combination that’s worked since the US was founded. It’s not a zero sum game where entrepreneurs should displace inventors…both in sync can change the world. And a strong patent system can be helpful to everyone’s interests.
Night WriterNovember 11, 2015 08:56 am
Yes step back, I think you hit the one statement in the whole interview that is dispositive. That is like Posner’s statement that engineers just do these things if you give them a pizza.
Amnon Michael CohenNovember 11, 2015 08:22 am
While I agree that Patents are not the key for wise inventors’ success, I think investors rather not respect the financial complications of the Inventor’s rights, but rather own the Invention. I first find the proper Commercial Partner, then go for the patent.
EGNovember 11, 2015 07:52 am
Astute comment about Cuban on his understanding of software. I’ll at least give him credit for finally being brave enough to have an interview with Gene, but that’s as far my credit will go.
TonyKNovember 11, 2015 07:51 am
IMO people like Mark Cuban have this opinion about software patents and technology patents because they only focus on the negatives the current state of the patent system produces. How about instead of eliminating the entire system we go about fixing it. I am saying the root cause of the problem is patent quality. And too often this debate about software patents does not acknowledge the patent quality problem. Here’s some thoughts.
1. Pay patent examiners more and get experienced engineers with relevant work experience to examine patent applications
2. Give an examiner more time to perform a proper prior art search
3. Here’s an extreme one. If the applications are found to be terrible by the patent examiner, lets provide a public feedback mechanism where the patent attorney can be graded. If done properly, this could improve patent quality from the get go!
4. Raise the price for a patent (for large companies) to pay for (1) and (2), and to disencentivize large companies from filing such large numbers of incremental nonsense patents.
4. Ensure patent filings are fully and properly enabled and fully meet USC 35 112. How about requiring software patents to include pseudo code?
There are many other ideas that have been proposed to fix the patent quality issue, but let’s go to the root of the problem and find practical solutions to adapt the system.
MarcNovember 11, 2015 07:32 am
The distinction between bio and software does not go to the greater or lesser need for patent protection. The fact is that a bio or pharma product generally has protection under one or very few patents while a typical IT product embodies thousands of patents. Thus the life sciences can use exclusion as a business model while IT needs to license or rely on mutually assured destruction. Those differences may well change over time as life sciences rely more on IT for drug discovery and the like and in any case they do not impart a greater or lower need for patents on one or the other discipline. They are different and folks with an agenda try to make the facile point that since thousands of patents are in an IT product they must each be less valuable than the one pharma patent protecting a drug. They then extrapolate that therefore all IT patents either need not exist or should be weakened. This is bogus matchbook economics. Anti-patent folks will latch on to theories like this no matter how thin in order to advance their point – that itself speaks volumes as to how bad their case is. Pro patent folks don’t help themselves by lending any credence to these arguments even passively. As a practical matter the one economic realty that exits regardless of the filed is that if you can’t protect investment in innovation you won’t invest. You don’t need to be a bio or software expert to know that.
step backNovember 11, 2015 05:09 am
“Coders will code“?
Wooha that is Diver Dan deep astuteness.
Ergo, Sharks will jump themselves
and Tankers will still be canTankerous.
Me thinks Cuban has as much understanding of how new, useful and nonbovious software-based invention comes to life as do the Mount Olympus Nine. In other words, totally clueless and proud to be so.
angry dudeNovember 10, 2015 10:19 pm
“Biomedical startups would cease to exist entirely, without patents.”
Correct. Same with Big Pharma.
In “software” space there will be greatly reduced incentive to come up with something new and publicly disclose it, and there will be tremendous effort to hide the results (by obfuscating/encrypting the code, hardware usb dongles, secure boot for embedded systems etc)
angry dudeNovember 10, 2015 10:06 pm
“…patents are essentially useless for small entities”
Could you kindly explain how large entities come to life ?
I’ve always thought that at some point all of them were small entities…
Once again, you keep spewing ignorance and never contribute anything useful to discussion
What is your “winning strategy” for software small entities to become large entities ?
SoftwareForTheWinNovember 10, 2015 09:36 pm
In the context of small entities, Cuban is right:
“Often the cash wasted obtaining a patent could be better used elsewhere.”
Exactly. Small entities are better served not going down patent road and spending that money elsewhere. Given the realities of patents in 2015, small entities will never be able to enforce any patent.
“because a lawyer tells you something is patentable doesn’t mean you should”
Lawyers make money taking on customers – not telling them how useless patents are to small entities.
“I have invested in more than 150 companies and never has having or not having a patent impacted the final decision.”
This is how many investors see it – patents are essentially useless for small entities.
“There is always a work around and you can always find a patent that enables the big guy to sue the little guy.”
Workarounds are just a fraction of the problem. The $costs that small entities face in enforcing their patent completely obliterates the usefulness of patents to small entities.
“So with just few exceptions the current system doesn’t protect anyone. ”
Here he’s wrong – 2015’s patent system not only PROTECTS LARGE CORPORATIONS – while at same time DISADVANTAGES SMALL ENTITIES. Double whammy.
“Big companies have every incentive to bully right now. They have the money to litigate for years. No small inventor does. So the current system benefits the big bullies over the little inventor. ”
KenNovember 10, 2015 08:50 pm
First of all, I acknowledged that my expertise is not on the software side (i.e. what Cuban and other software folks often presumptuously term “technology”). That’s why I sidestepped it for the moment.
I’ll note that “divide and conquer” can work both ways – i.e. the entire patent system could conceivably benefit from eliminating even just the “non-software” opposition.
Also, I’ll note that even if “on the merits” all fields were deemed equally deserving of patents (which I’m not disputing), the fact is that certain industries seem to “need” patents more than others. (Maybe “need” isn’t what policy should be based on, but I still feel it’s at least worth mentioning.) Biomedical startups would cease to exist entirely, without patents.
angry dudeNovember 10, 2015 08:31 pm
“QUINN: Starting broadly first, do you believe the patent system as a whole fosters or inhibits innovation?
CUBAN: I think for technology it inhibits it dramatically.”
In my world, innovation aka invention = promoting the progress of humanity (by publicly disclosing important results rather than keeping them as secrets)
Apparently Mark Cuban thinks that he is smarter than The Founding Fathers (and he bluntly denies 200 hundred years of US prosperity due to Patent System)
No need to read this Q&A further…
“The very first official thing I did, in my administration—and it was on the very first day of it, too—was to start a patent office; for I knew that a country without a patent office and good patent laws was just a crab, and couldn’t travel any way but sideways or backways” (another Mark)
AnonNovember 10, 2015 04:12 pm
It is clear that you spoke without knowing what you were talking about.
The truth of the matter is the opposite of what you post at 7: anti-software patent arguments are nothing more than anti-patent arguments – and apply (with only inconsequential changes) to ALL art fields.
It would be nice to have your own acknowledgement (the “divide and conquer” maxim is something you should understand before going down the path you went down).
KenNovember 10, 2015 02:43 pm
Night – I just wasn’t taking a position on that, because software isn’t my area.
Night WriterNovember 10, 2015 02:30 pm
>>Most of the arguments against software patents (whatever one may think of them) simply don’t apply to other fields.
In realty, they don’t apply to software. In reality, there is now principled way to differentiate software from circuits. I’d like an example of an argument that “works” for software but doesn’t “work” for another area.
KenNovember 10, 2015 01:35 pm
I wish Mr. Cuban would try to at least acknowledge that, whatever he may think of software patents, many non-software areas (e.g. biomedical) absolutely need strong patent protection in order to have any sort of entrepreneurial innovation. Thus, when folks like him support a *generalized* weakening of the system, they do great harm they may not even realize. Most of the arguments against software patents (whatever one may think of them) simply don’t apply to other fields.
DavidNovember 10, 2015 01:08 pm
Great interview – very interesting.
David SteinNovember 10, 2015 12:52 pm
A nice interview – but he didn’t answer the question about the elephant in the room:
How can a small company prevent a large company from blatantly copying their technology?
This problem is rampant, especially in software:
* Zynga thrives by taking an indie games that’s just come onto the market and gotten some traction, remaking it in nearly-identical form with a larger art department, and promoting it with a huge marketing budget.
* App stores are flooded with clones of popular apps. Search any app store for “flappy” or “2048” – hundreds of clones, virtually identical.
* The “European Founders Fund” and the Sawmer brothers creates international clones of every successful web service. Facebook, Airbnb, eBay, Pinterest, Zappos, Fab, Groupon – all face stiff competition, internationally, with pretty-much-identical knockoffs of their own services.
* Even large, established companies rampantly copy others. Facebook cloned Snapchat as “Facebook Poke.” Google cloned LiveNinja as “Google Helpouts.” And of course, Samsung copied the iPhone, both hardware and software, practically down to its nuts and bolts.
How is any tech company supposed to survive in an environment with such rampant copying? And why bother investing in any of them?
It’s deeply disturbing that in this interview, Cuban completely dodges the question. “How can small companies stop bullying by large companies?” “Take away the patents so they can’t get litigated out of existence.” Fine, that will stop large companies from squashing small companies with patents – but what about the other kind of bullying: rampant copying? Are there any solutions for that, or is it just hopeless?
A Rational PersonNovember 10, 2015 12:27 pm
I also agree with you about inventors needing to have a business plan. I would bet on an inventor with an “A” business plan and a “C” invention over an inventor with an “A” invention but a “C” business plan every time. A patent should be used as part of a business strategy; obtaining a patent by itself is not a business strategy.
Without a good business strategy, Mark Cuban is absolutely right, i.e., a patent is just a piece of paper that “looks good on a wall.”
Eleanor MeltzerNovember 10, 2015 12:14 pm
Great interview! It leaves the reader (certainly this reader!) with respect for both you and Mr. Cuban based on your mutual courage to engage in civil discourse on several controversial topics. Your interview is the best practical, public discussion I’ve yet read on the intersection of eligible subject matter, investment, and independent inventors. I definitely look forward to reading more!
Night WriterNovember 10, 2015 11:37 am
For software patents, everything is not a remix. I suspect that people like Steve Jobs may think that because most of what he did was take what was already out there and build a cool product for it. Steve did very, very little that was original in his second incarnation.
Also, I think with IBM you are not accounting for time. If IBM spends a billion dollars making Watson and another company can just take it for nothing or very little, then the IBMs won’t win out anymore. You get companies not doing anything and waiting for others and then copying. That is what it was like Carter figured out that the patent system was a way to end the malaise. And, yes the modern patent system comes from Carter.
Great to hear your views Mark! You might be interested to know that most patent attorneys say that the “reforms” continue to favor the big bullies.
A Rational PersonNovember 10, 2015 11:29 am
Congratulations on finally getting this interview. However, the two questions I wish you had asked Mark Cuban are:
1. Without patent protection, how does a small company compete with a software giant?
2. For example, if you are a small company and have developed software technology, what is to stop a big software company from copying your software technology, seeing what the software technoloy does, using their programmers to reproduce the functionality without see the underlying code for the software technology so there is no copyright infringement and then using their market dominance to prevent your small company from ever gaining a foothold in the marketplace?