Category Archives: rants

Will the Patent Pirates finally be Plundered?

The patent pirates have been plundering for way too long. And we should all be fed up. Since SI alerted you to the problem way back in 2006, in a post on how The Software Patent Pirates will Plunder Away, inspired by a post by Dave Stephens on the now defunct Procurement Central, which evolved into Stephen’s Business and Technology Nexus (which, unfortunately has not been updated since October 1, 2011, as Mr. Stephens is one of the original Procurement Gurus), not much has changed. Even though Mr. Obama declared war on the patent trolls on September 16, 2011 when he signed the Leahy-Smith America Invents Act into law, the pirates are still trolling the high seas of business in search of easy prey to pillage and loot.

To date, as covered in 2011 in SI’s post on how Patent Pirates are Still Plundering, patent trolls have cost investors over half a trillion dollars over the last 22 years (as reported in CNN Money). Half a Trillion Dollars. Think about that. This puts the Somali Pirates, who have figured out how to steal approximately 10 Billion a year from the shipping industry (according to the LA Times), to shame! (The patent trolls are pillaging almost 3 times as much as the Somali pirates from the safety of their penthouse suites!)

The trolls have to be stopped. They now account for approximately half of the roughly 4,000 patent cases a year in America. That’s 2,000 patent cases that are, for the most part, frivolous and unfairly extortive (as small companies cannot afford a lengthy legal battle and are forced to settle to survive). Fortunately, the Obama administration realizes that and has announced new actions and proposals for patent reform. These proposals, designed to reduce anonymity in patent litigation, improve review at the USPTO, give more protection to downstream users, and improve standards at the International Trade Commission, are definitely a step in the right direction. (SI agrees with the TLF that more is needed, but we’ll get to that later.)

Specifically, the administration is recommending the following legislation:

  • Require patentees and applicants to disclose the “Real Party-in-Interest”
  • Permit judges more discretion in awarding fees to prevailing parties in patent cases, providing district courts with more discretion to award attorney’s fees as a sanction for abusive court filings.
  • Expand the PTO’s transitional program for covered business method patents to include a broader category of computer-enabled patents and permit a wider range of challengers to petition for review of issued patents before the Patent Trial and Appeals Board (PTAB).
  • Protect off-the-shelf use by consumers and businesses by providing them with better legal protection against liability for a product being used off-the-shelf and solely for its intended use.
  • Change the ITC standard for obtaining an injunction to better align it with the traditional four-factor test in eBay Inc. v. MercExchange, to enhance consistency in the standards applied at the ITC and district courts.
  • Use demand letter transparency to help curb abusive suits, incentivizing public filing of demand letters in a way that makes them accessible and searchable to the public.
  • Ensure the ITC has adequate flexibility in hiring qualified Administrative Law Judges.

In other words, the proposals are to:

  • Make it public as to who is filing a patent suit,
  • why the suit is being filed,
  • and allow judges to penalize abusive, frivolous, filers with big legal bills.

This is a good start, but it’s not enough. First of all, as per SI’s post on why we need a “loser pays” bill for patent lawsuits, the filer of the frivolous patent should be required to pay a penalty that is at least double the cost of the suit, including the defence’s legal fees, damages, and court costs. (If the penalty won’t hurt, they won’t stop.) Secondly, despite the objection of cash-flush giants like Apple and Microsoft, we have to follow the lead of the EU and New Zealand and abolish software patents. The vast majority are complete and utter bullshit. The one’s that aren’t contain specialized business methods that could be patented separately (just like you can patent unique physical inventions and processes for extracting medicinal compounds from natural plants). (And SI is happy to see that the Technology Liberation Front agrees with this proposal.) Software is just code that encodes algorithms in a machine language that is compiled into a binary instruction set that runs the program. This is essentially a complex mathematical formula, and mathematics, like laws of nature, is NOT supposed to be patentable. And since many of the trolls have armed their arsenal with software patents, this would be the best way to strike back.

For more information on the challenges of taming the trolls, you can start by reviewing the recent report on Patent Assertion and U.S. Innovation from the National Economic Council and the Council of Economic Advisors.

Even China Knows that You Should Home (Market) Source!

SI has been telling you since 2007 that you should be Home Sourcing. SI has outlined the Advantages of Home Country Sourcing, shared a great post on Home-Shoring from the Manufacturing Innovation Blog, and given you another reason to source close to home. But have you listened? For the most part, no.

But you should, or this is another area where China is going to eat your lunch too. As per this recent article over on the Washington Post that asked if U.S. Manufacturing [is] Making a Comeback, a Chinese company has just set up a factory in the United States!

This January, Lenovo (which acquired IBM’s PC business in 2005), a Beijing-based computer maker, opened a new manufacturing line in Whitsett, N.C. to handle assembly of PCs, tablets, workstations, and servers. Why? According to Jay Parker, President for North America, it needs the flexibility to assemble units for speedy delivery. But, more importantly, the math adds up. Chinese wages are on the rise, the risk of loss to piracy (at sea) is increasing every year, and we have reached the point where the higher North American labour costs can be offset by savings on logistics. And Chinese companies know logistics costs as good as anyone. (As per Sunday’s post on China Packaged Goods, with a [major] stake in 16 global ports, thousands of shipping lanes, and a fifth of the world’s container fleet, China pretty much sets the prices for Ocean shipping these days.) A barrel of crude oil that was $27 in 1993 and $35 in 2003 is now $88 in 2013, inflation adjusted. That’s over a 3X increase since the early stages of the outsourcing craze. And China wages have increased so much in China over the last decade that a new study just found that labour costs are now 20% lower in Mexico. (Source: SCDigest) Plus, the wage gap between China and North America is expected to shrink to a mere $7 per hour by 2015! When you factor in logistics costs and loss due to theft, IP theft, and (ocean) piracy, that’s nothing! (Especially when the US is on pace to have lower manufacturing costs than Europe and Japan by 2015! There’s a reason Nissan, Honda, and Toyota are exporting from the US. That’s right, exporting from, not importing into.)

When you add it all up, and consider the production efficiencies that come from our ability to constantly innovate better processes, it just makes sense to bring (last stage) manufacturing back to North America. (Especially when the productivity of North American workers keeps rising.) Maybe you still outsource key components, but you certainly don’t outsource washing machine production, for example. The last thing you do is ship empty space or dead-weight.

The Cloud is Not a Crystal Ball Either!

Despite the fact that I’ve told you that The Cloud is NOT a Fluffy Magic Box, given you More Reasons the Cloud is Not a Fluffy Magic Box, reminded you Yet Again, the Cloud is NOT a Fluffy Magic Box, told you that The Cloud is Filled with Hail, and pointed out that The Cloud is Not a Magic Mirror Nor is it Omniscient, it seems that there is a new brand of silicon snake oil salesmen who want you to believe that that the cloud is a crystal ball that you can use to talk to people everywhere in the world.

Just yesterday someone informed me that a new company is going around trying to sell a cloud business phone system.* What the heck is that? And how does it work? Do I walk outside and shout up to the sky? What if it’s a clear sunny day and there are no clouds in site? Or the middle of the night and I can’t see the clouds through the fog? And how does it handle inclement weather?

And no, the doctor is not being silly. Given that we don’t know what cloud really is**, and that, with (tele)communications, you HAVE to know the origin point AND the destination point, how the heck do you send a phone signal into the cloud and ensure it reaches the right person. Presumably it is built on dynamic, replicated, peer-to-peer IP routing, which sounds great in theory, but may not even be legal in practice considering your business might be in a locale where your phone system has to be 911 compliant. Since no one would know where the signal is coming from, this type of system would never be 911 compliant!

Basically, as I pointed out in Dogbert Translates Cloud-Consultanese, they’re pulling a Dogbert hoping to find a Pointy Haired Boss who will believe their mumbo-jumbo and buy their silicon snake oil solution at a ridiculous mark-up before anyone else in the company realizes that significant money has been wasted on betaware that’s not even as good as products you can get for free (like Skype and Google Voice, for example).

You’ve been warned!


* They didn’t tell me the name of the company, presumably to protect the guilty and give them a chance to smarten up knowing that this absurdity really grinds the doctor‘s gears and typically results in a rant.
** If Larry Ellison has to ask What the Hell is Cloud Computing, that’s telling!

Ditch the Dashboards Before they are Your Downfall!

How many times do I have to tell you that (real-time) dashboards are dangerous and dysfunction, that dashboards really are dangerous and disfunctional, and that integrated dashboards are deadly? Seriously! How many times?

There’s a reason that Dashboards are one of the seven deadly software sins, and it has nothing to do with vanity or pride (as they are the idiot lights, after all). It has to do with sanity.

But still, I see ridiculous articles like this recent article over on Inbound Logistics on business intelligence in the supply chain that discusses reporting and real-time dashboards, neither of which have even the slightest connection to “intelligence”.

Dashboards have two big problems. First of all, as SI has repeatedly pointed out, they give you a false sense of security. The ship could be sinking but because the “pump performance” light is green, you think everything is okay. If the pump can only pump 158 Gallons per minute, but the ship is taking on 790 Gallons per minute, you’re not going to be in good shape for very long!

Secondly, they often give you a false sense of urgency. For example, the “on time delivery” light could be red, indicating that 30% of your shipments are late. If you’re a CPG executive worried about hitting your number, you’ll quickly calculate that this could increase your stock-out rate another 3% (based on an average stock-out rate of 8%) and decrease sales by 5% (as fast moving products sell more), go into panic mode, and start screaming at your suppliers, ruining the good relations that your Supply Management team had spent months building – when, in fact *every* delivery was on time. How could this happen? Let’s say the warehouse workers are slow and consistently get to supplier X’s shipment at 9 am, which is ready and waiting to be unloaded at the scheduled time of 7 am. Now, if the technology illiterate warehouse worker enters the receipt time at 9 am, even though the truck was there at 7 am, the binary logic dashboard will say the shipment was late (even though it wasn’t), along with every other shipment that really wasn’t late. However, you will have already ruined the relationship with what was likely a key supplier, who will likely quote you significantly higher at contract renewal time, because you assumed the system was right. And if demand is greater than supply, you might even be dropped as a customer, and experience a supply disruption as a result. And with every disruption comes a 40% chance of business failure within five years. In other words, SI is not exaggerating when it says that a single dashboard could ultimately lead to the downfall of a large organization.

So next time someone tries to sell you a sleek new dashboard, tell them to go back to the cloud they came from and shove it somewhere the sun don’t shine. Real intelligence comes from applications that let you slice and dice data, not from applications that give you cookie-cutter reports that were slapped together quickly by a low level coder who doesn’t really know your business.

No Matter Where You Stand, There’s Always Room for Improvement!

As pointed out in our recent post on Where We Will Find Solutions to our Supply Management Problems, Denmark may have taken fourth place overall in the Global Creativity Index, but it was only 14th in tolerance. Let’s hope it remembers this on the 20th anniversary of the
Maastricht Treaty Referendum which resulted in riots in the NØrrebro area of Copenhagan, which was the first time since World War II that police opened fire against civilians (and injured 11 demonstrators). Protests should be peaceful — on both sides.