Posts Tagged: "patent troll"

What you think of Ryan and Acacia is almost entirely dependent upon the side of the aisle on which you sit; namely whether you are an innovator or a practicing entity. Even more specifically, those who are innovators but don’t have a voice loud enough to be heard by practicing entities are likely to believe that Ryan and Acacia are the answer to their prayers. Those practicing companies that simply want to make a product and sell it without regard to the underlying patents that might be in place are likely to believe Ryan and Acacia are the poster children for everything wrong with the patent system. But you can decide for yourself. Without further ado, here is the culmination of the interview with Paul Ryan.

Paul Ryan is a more common name than you might think. In the world of politics when one speaks of “Paul Ryan” they are talking about the Republican Congressman from Wisconsin who was Mitt Romney’s running-mate and would-have-been Vice President. But in the intellectual property world, particularly the patent litigation world, the name “Paul Ryan” refers to the CEO of Acacia Research Technologies. It is the later Paul Ryan that went on the record with me to discuss Acacia, patent enforcement, how large companies who are infringers disregard innovative independent inventors and more.

Recently the Federal Circuit, sitting en banc, denied Nokia’s petition for rehearing. The Federal Circuit decision is nevertheless interesting for its treatment of Section 337’s “domestic industry” requirement as it is applied to NPEs. Under 19 U.S.C. §1337(a)(2), relief at the Commission is predicated on the existence or establishment of an industry in the United States “relating to the articles protected by the patent.” This is commonly known as the “domestic industry” requirement. In turn, section 1337(a)(3) provides that an industry is considered to exist if there is in the United States, “with respect to the articles protected by the patent,” significant investment in plant or equipment, significant employment of labor or capital, or “substantial investment in [the patent’s] exploitation, including engineering, research and development, or licensing” (emphasis added).

Eastman Kodak Company, the once mighty technology juggernaut that has fallen on hard times and found itself fighting to get out of bankruptcy, has completed a series of agreements that successfully monetizes its digital imaging patents. Under the agreements, Kodak will receive approximately $525 million, a portion of which will be paid by 12 intellectual property licensees organized by Intellectual Ventures and RPX Corporation, with each licensee receiving rights with respect to the digital imaging patent portfolio and certain other Kodak patents. Another portion will be paid by Intellectual Ventures, which is acquiring the digital imaging patent portfolio subject to these new licenses, as well as previously existing licenses.

Unlike NPEs, defensive patent pools entities do not (at least initially) seek to generate revenues. Rather, they charge admission fees into the pool to fund IP acquisitions and the administrative costs to operate the pool. In sum, defensive patent pool aggregation is analogous to an insurance policy. But, where classic insurance lowers a company’s costs when accidents happen, patent pools are designed to reduce the likelihood of accidents (i.e., being sued for patent infringement) from happening at all.

This is very good news for defendants and for the patent system. If Rule 11 is actually enforced against those who sue without a reasonable basis the bad actors will be wiped out. It will also work to identify those who are REALLY the patent trolls compared with those who are patent owner who simply seek redress for rights that are being trampled. As long as the bad actors operate the patent system will remain in jeopardy because the popular press and critics of the patent system unjustifiably paint all non-practicing entities with the same brush. Meaningful and appropriate use of Rule 11 will deal with the bad actors, while distinguishing from those non-practicing entities that have reasonable grievances that deserve consideration rather that ridicule.

Right now the best business to be in at the moment is the patent enforcement business, at least if you are concerning yourself with low-risk monetization with high reward. Between the legacy issue of bad patents, patent auctions and the many who purchase patents, what has started to happen is that the patent system rewards those who have the finances and ability to game the system. But the problem is extraordinarily complex.

I fail to see how the increase in individual suits suggests in any way, shape or form that the AIA has failed. Because there was a spike in litigation leading up to September 16, 2012, and because the AIA by its express terms requires more patent infringement cases of smaller scope, patent reform has failed. Unbelievable! How can something fail when it is working as intended?

To be sure, all of the concerns over the patent bubble are legitimate, and as always, rational debate is beneficial to the healthy development of patent market. The lack of disclosure leads to the scarcity of data, and what comes with the scarcity are the incompleteness and obscurity, all of which lead to misinterpretation of the data and information. More importantly, misinterpretation, in turn, can lead to mispricing and market inefficiency when the misinterpreted data is applied to value patents for transaction. But is no systematic evidence to prove that NPEs behave differently than other players in the patent licensing market and patent sales market.

The theme of the annual meeting of the AIPF this year is “intellectual property as a corporate asset.” There are indeed presentations sprinkled across the two days of this meeting that relate specifically to this topic. Another recurring and equally treated topic is the use of the Internet in practice in a variety of contexts — attracting clients, networking generally and use of the Internet for investigations. Topics of particular interest included: (1) The Invisible Hand: Models for Monetizing Patents in the 21st Century; (2) Lies, Damn Lies, and Lawyers; (3) Contingent Fee Arrangements in Enforcing IP Rights; and (4) Economic Effect of Non Practicing Entities.

Indeed, the bill’s co-sponsor acknowledges and states “[t]his bill combats the problem of patent trolls by moving to a ‘loser pays’ system for software and hardware patent litigation.” However, the bill’s sponsors fail to explain what makes the frequency, risk, or social harm of “egregious” patent lawsuits any different than those of other “egregious” civil suits in America so as to single out patent right enforcement for a special treatment under civil law. In fact, the following graph shows that in the last four decades the number of patent lawsuits filed per year has risen at slower pace than other IP lawsuits or when compared to all Federal civil suits. Patent lawsuits now constitute a little over 1% of all Federal civil suits – the same fraction as that in the mid 1970’s.

Yesterday Congressman Peter DeFazio (D-OR) and Congressman Jason Chaffetz (R-UT) introduced the Saving High-tech Innovators from Egregious Legal Disputes Act, or SHIELD Act for short. If ever passed into law the SHIELD Act would ostensibly adopt a variation on the English Rule, where the losing patent owner pays the legal fees of the victorious patent defendant when there was no “reasonable likelihood” that the patentee would prevail in the litigation. If theAct required a claim chart upon filing, applied across the board to all those who would seek to manipulate the patent system and not just computer/software patents and defined “reasonable likelihood of success” I would be on board with both feet.  As it is, I am on board with one foot and hopefully that improvements can be made to this important piece of legislation.

A wholly owned subsidiary of Tessera Technologies has acquired a Tier One qualified camera module manufacturing business. While it likely wasn’t the only motivation, it would be naive, however, not to recognize the obvious reality that while this will significantly raise their bottom line it will also provide litigation advantages. Nevertheless, the reality is that Tessera and others shouldn’t have to explore manufacturing solely for the purpose of insulating themselves from ridiculous, asinine arguments by those in Silicon Valley who couldn’t innovate their way out of a wet paper bag. Having said that, if you are merely an innovator, patent troll, NPE or whatever you want to call it you really need to consider developing at least some manufacturing capabilities.

An assignment indicates who owns an issued patent or pending patent application. They are registered with the USPTO and available for public inspection. There is a special type of assignment called a “security agreement”. A security agreement indicates that a patent owner has used its patents as collateral for a loan. The security agreement says that the lender will get ownership of the patent if the current patent owner defaults on the loan. The security agreement also restricts what the patent owner can do with its patent so that the value of the patent is preserved. A patent owner might be obligated, for example, to pay the maintenance fees for an issued patent. Once the loan is paid off, the security agreement is released. If the loan goes into default, however, the ownership of the patent is transferred to the lender.

As a result of this announcement today, AOP will help Appsterdam accomplish the organizations mandate of supporting ongoing innovation and business success in the mobile app development community through research projects sent to its global, diverse and highly educated community. The Appsterdam Foundation attorneys and developers will work with AOP to conduct patent research, harnessing the global reach of the AOP community, which has been used by many Fortune 500 companies to locate prior art that can be used against patents asserted against them. While note every search conducted by Article One results in prior art that can be used to invalidate patent claims, many searches have found prior art that is then used in both federal court and at the United States Patent and Trademark Office during reexamination proceedings.