Recently I did an interview with Gene Quinn, which was published on IPWatchdog.com. See Exclusive Interview with Ray Niro, Mr. Patent Litigation. During this interview we discussed important issues and the undeniable reality that innovators are frequently and unjustifiably maligned for enforcing patent rights granted to them by the United States government.
During the interview Gene asked me about bad actors within the industry. Our exchange, in part, went as follows:
QUINN: It strikes me that there are some really bad actors out there that give everybody in the industry a bad name… Have you given any thought as to what could be done with respect to the bad actors without penalizing everybody that’s just engaged in legitimate business?
NIRO: Well, you raise an interesting point. There are clearly bad actors. And generally the bad actors fall into the category, I don’t think you can quantify based on what they’re seeking in damages. And I’ll circle back to that in a minute. I think you quantify on the basis of whether or not they truly represent the interest of inventors. I see an NPE as someone who’s created to help inventors. I don’t represent companies be they NPEs or whatever you want to call them, that are associated with inventors unless their model methodology is to help inventors. You do have a bunch of opportunists. Some of them are publically traded now. They’re playing a numbers game. They got—I don’t want to mention the company, but I think you can figure it out. That has a methodology of a bunch of people in horizontal across the board who’s job it is to generate revenue for the company. And their report card gets graded on how much revenue they generate. And they’re not as selective in what and how they enforce —they’re playing a numbers game. They don’t really care whether they win, lose, or draw, they get some lawyers to represent them and if I bring ten lawsuits and one turns out to be okay, that’s good for me. That methodology is bad. Because there isn’t a careful legitimate evaluation of the merits of the claim. They also happen to be the same kind of people that in my view are disconnected from the inventors. Their interest is not in helping an inventor.
This exchange provoked an anonymous comment, essentially challenging me directly. The comment stated:
Maybe it’s just me, but I find Mr. Niro’s statements regarding ‘bad actors” that are “playing a numbers game” to be very disingenuous. I say this, having been on the receiving end of a letter on Niro, Haller & Niro letterhead, alleging infringement of a number of patents owned by Innovatio IP Ventures. A quick google search would reveal exactly how much of a numbers game this is for Mr. Nero, with the overall goal being nothing but forcing quick licensing agreements. If such a numbers game that the attorney sending out the letter forgot to do a find/replace in the body of the letter to swap out the target company’s name, so that the first letter we received was addressed to my company but referenced an entirely different company throughout the letter. For what it’s worth, I think that Leahy/Smith got it exactly right in the AIA. NPE’s can still enforce their rights, but no forced joinder just because multiple independent parties are alleged to have infringed the same patent. I have no sympathy for the NPEs — the deck is still stacked in their favor. Let them fight each of their infringement cases one at a time.
There is nothing disingenuous about the licensing and enforcement of the Innovatio IP patent portfolio. Nor is this effort about “forcing quick licensing agreements” on questionable patents. The earliest of the Innovatio patents resulted from the pioneering work of Ronald Mahany and Robert Meier of Cedar Rapids, Iowa, in the early 1990s. Mahany and Meier are widely considered to be the “Fathers of Radio Frequency Local Area Networking Technology” – commonly referred to as wireless local area networking (“WLAN”) or “Wi-Fi.”
There are 31 patents in the Innovatio portfolio, which cover inventions relating to the operation of WLANs. Certain of the Innovatio patents have already been successfully litigated. In 2009, Broadcom, which previously owned the Innovatio patents, settled patent infringement cases with its competitor, Qualcomm. As widely publicized, under the parties’ global settlement, Qualcomm paid Broadcom $891 million for a license to Broadcom’s patents and granted Broadcom cross-licenses to Qualcomm’s entire portfolio of patents. And the validity of some of the key Innovatio patents has already been upheld in ITC proceedings and on appeal to the Federal Circuit.
So, this is not a portfolio of patents designed to bring nuisance suits or to force nuisance settlements. Infringement is widespread – virtually every company in the U.S. operates wireless networks, either for their own internal business operations or as a value-added “hotspot” service to their guests and patrons. Many companies that use Wi-Fi in their business operations (for corporate network connectivity, in warehousing and inventory management applications, in “smart energy” environments, and elsewhere) have already accepted licenses under the Innovatio portfolio and not for a minimal fee.
Common hotspot-type infringers are hotels, restaurants, coffee shops (you name it), which provide free or for-fee Wi-Fi service so customers can use their computers, smartphones or other wireless devices on the business’s premises. When Innovatio attempted to negotiate a license with one hotel chain for $2 million, the chain said it had more than 500 individually-owned members and that Innovatio should “collect $3,500 from each of them so, they would each pay their fair share.” Now, I suppose (in the hypothetical world that your commentator lives in) it would have been better if Innovatio had negotiated a license for $200 million, so each franchisee would pay $350,000. Then no one could complain that it’s just “a numbers game” to force “quick licensing agreements.”
This whole anti-Innovatio campaign really reminds me of the propaganda the tort reformers put out about the McDonald’s hot coffee case. Poor McDonald’s being sued for serving coffee that was too hot. But when all the facts came out, they painted quite a different picture: (1) hundreds of people had been injured by McDonald’s service of coffee that was deliberately made scalding hot, (2) McDonald’s knew the risks but continued to serve the scalding hot coffee anyway, often to people driving cars or trucks and (3) the victim in the highly publicized case suffered first, second and third degree burns and endured multiple surgeries.
So I say to you Mr. Anonymous, get all the facts out before stones are thrown. Innovatio has the right to license and enforce its patent portfolio developed by pioneers in Wi-Fi. And by selecting a reasonable (not excessive) royalty, it is not engaging in a numbers game any more than any patent owner does who has to address widespread infringement.