Posts Tagged: "intellectual ventures"

Last week ZDNet ran an article about how Kaspersky Lab took on and prevailed against Lodsys, one of the more notorious patent trolls operating presently. Lodsys first appeared on the scene several months ago when it started chasing Apple App Developers and demanding that they take a license to the Lodsys patent portfolio, and then later going after Google Developers who provide Apps for the Android operating system. Essentially, the model followed by Lodsys is to sue everyone, big and small and everywhere in between. Lodsys purchased its patents from Intellectual Ventures, who as they were amassing a giant patent portfolio lead the industry to believe it was for the benevolent purpose of taking patents out of the hands of patent trolls, thereby insulating them from such lawsuits. IV has at times found it easier to sell patents to willing patent trolls or has used various shell companies, but also now files lawsuits of their own.

Patent and technology firm, Intellectual Ventures (IV), recently brought a new complaint against computer security company, Symantec, claiming that the company infringed on three of its patents. To be specific, the complaint alleges that three of Symantec’s products (Replicator, Veritas Volume Replicator, and ApplicationHA) “actively, knowingly and intentionally” infringed on three separate IV patents. Symantec was also sued as part of a different complaint by IV back in 2010, along with Trend Micro, McAfee, and Point Software Technologies.

There is a tremendous amount of unrealized (“un-monetized”) value in the patent portfolios of many large companies. Yet, for one reason or another, such companies have chosen over the years not enforce their patents in court or through a licensing campaign. In recent times, however, a few of these companies have, one-by-one, started to transfer their patent rights to patent holding companies that are quite willing to enforce those patents. What does the large company receive in return for its patents?

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 deal will give GSK exclusive rights to BENLYSTA, which is a human monoclonal antibody that inhibits B-cell activating factor (BAFF) approved for treatment of systemic lupus erythematosus. It is believed that BENLYSTA has blockbuster potential. According to Human Genome Sciences, the principle patents covering BENLYSTA will generally expire between 2016 and 2023 in the United States and between 2016 and 2021 in the rest of the world. For 2011 sales of BENYLYSTA were approximately $52 million, but there is great optimism that the drug will become a blockbuster as it continues to gain market share and as it may ultimately be approved for treatment of other autoimmune diseases.

Raymond P. Niro is patent litigator with tremendous experience and a reputation that is larger than life. To some he is a champion of independent inventors and small business community, frequent clients of his. To others he is nearly the definition of evil. It was as a consequence of a lawsuit one of his clients brought against Intel in 2001 that the term “patent troll” was coined. He has been trial counsel in literally hundreds of intellectual property cases, and since 1996, has won verdicts and settlements for his clients totaling more than $1 billion. On March 12, 2012, he went on the record for this exclusive interview.

In short, today’s smartphone patent wars are simply “back to the future” when it comes to how disruptive new industries are developed. Every major technological and industrial breakthrough in U.S. history — from the Industrial Revolution to the birth of the automobile and aircraft industries on up to today’s Internet and mobile communications revolutions — has been accompanied by exactly the same surge in patenting, patent trading, and patent litigation that we see today in the smartphone business. This is how the rights to breakthrough new technologies have always been distributed to those best positioned to commercialize them — to the benefit of the whole nation in terms of new jobs, new medical advances, and new products and services.

The types of returns promised to investors and the types of benefits offered to participants are also quite different from garden-variety non-practicing entities, as are some of the tactics used in organizing the entities and in asserting the patents. Finally, the scale itself is simply mind-boggling. Mass aggregators operate on a scale and at a level of sophistication and complexity that would have been unimaginable a decade ago. They have taken the prototype strategies pioneered by a prior generation of non-practicing entities and changed them into some of the cleverest strategies yet seen in the intellectual property rights field.

So here we are, many years later and IV’s philosophy seems to have changed. No longer is litigation a poor way to monetize patents, but rather IV sees itself as having a responsibility to litigate. The self-righteousness of IV’s claims is why they engender such distrust, even bordering on hatred. For so long they came in peace and now that they have the leverage they seem to be playing a different tune, and using patent litigation with greater frequency. They accumulated patents over time, sometimes getting as much as $50 million from companies like Google, eBay, Sony, Intel, Microsoft, Apple, Nokia and others, ostensibly for the purpose of obtaining a defensive patent position. Oh how the tables have turned.

To me a patent troll is not just someone who has acquired a patent for purpose of licensing or bringing a lawsuit, but rather one who is engaging in some kind of unfair business practice. The telltale sign of a patent troll is one who is abusing the patent right in order to shake down a defendant for payment. This type of behavior is typically exhibited by non-practicing entities who are not innovators, but rather acquire patent rights. However, the act of bringing specious claims to provoke a settlement would, in my opinion, be just as bad if brought by an innovator.