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December 11, 2010

Quiet Broken

For a decade, Intellectual Ventures has been amassing a fortune in patents, both by purchase and by invention. IV has been quietly licensing. The silence was broken Wednesday, when nine security-software companies who refused quiet negotiations were slapped out loud with a lawsuit.

IV claims 30,000 patents and applications. IV claims to have quietly raked in $2 billion over the years.

The Wall Street Journal reported that: "technology companies on Wednesday received troubling news that some had feared for years: Intellectual Ventures LLC has started suing." Perhaps not troubled enough.

Do you really think that IV would assert junk patents? Do you think that IV is incapable of due diligence? Do you think that IV is greed incarnate, that its licensing requests were unreasonable? Do you think that a company with investors reportedly including Microsoft, Intel, Cisco, and Google, is a scam artist?

After misreporting on the high side (20% to 30%), WSJ corrected itself to state that "about 10% of the employees of Intellectual Ventures LLC are lawyers." Such subtle propaganda these reporters indulge in. What exactly does Rupert Murdoch, media magnate owner of WSJ, have against patents, other than his portfolio is thin?

The sound of silence broken here is "ka-ching" for patent litigators and their service providers (nudge, nudge, wink, wink). If nothing else, IV has created its own economic stimulus program.

Posted by Patent Hawk at December 11, 2010 3:32 PM | Patents In Business

Comments

Contrast this with the gloom and doom of other patent blogs...

Posted by: Pedantic Pete at December 11, 2010 4:40 PM

... and really, 2 billion spread over 30,000 patents (though likely widely divergent in revenue/invention) is in any case an average of only 67k per in licensing fees.

Looks like the world's smallest "rake" to me.

Posted by: Steve M at December 12, 2010 10:13 AM

If 2 billion were the maximum licensing potential of those patents, that would mean they'd have licensed the entire market and there would be nobody left to sue for infringement.

Since they clearly have lots of people to sue for infringement, I would say 2 billion is only the beginning.

Anyway, it doesn't matter how much they make per patent. All that matters is that it exceeds what they paid for the patents (it does, by an order of magnitude) and that what's left over pays their bills.

Posted by: IANAE at December 13, 2010 7:27 AM

IANAE--so you don't believe they paid at least, say, 50k/patent?

Any links you know of, or some other basis you have, for what they paid for them? I don't recall reading anything stating so; though I haven't closely followed the company.

Would companies; or even "starving" individual inventors; really let their IP go for this cheap?

Thanks.

Posted by: Steve M at December 13, 2010 9:40 AM

"IANAE--so you don't believe they paid at least, say, 50k/patent?"

They say in press releases and in at least one complaint that they paid "hundreds of millions" for them. Assuming they mean all of them, that's something like $7k-30k per, depending on how many hundreds of millions they spent.

Would companies or individual inventors let their IP go that cheap? Why not? Suppose you have a patent, and it's just sitting there not generating any money at all. You probably don't have the wherewithal to license it out, and maybe you couldn't license it anyway (or do so economically) without the other 30,000 patents you don't own. No matter what you paid to get it, selling it for $10k is a much better deal than holding it for no benefit.

Of course, all these are averages. I'm sure some cost them more than others and some generated more licensing revenue than others.

Posted by: IANAE at December 13, 2010 10:16 AM

"Do you really think that IV would assert junk patents? Do you think that IV is incapable of due diligence? Do you think that IV is greed incarnate, that its licensing requests were unreasonable? Do you think that a company with investors reportedly including Microsoft, Intel, Cisco, and Google, is a scam artist?"

Yes, no, yes, no, yes.

Posted by: 6000 at December 13, 2010 1:58 PM

"... and really, 2 billion spread over 30,000 patents (though likely widely divergent in revenue/invention) is in any case an average of only 67k per in licensing fees.

Looks like the world's smallest "rake" to me.
"

Lulz, no, more like pennies for some I'm sure.

The links that you speak of do exist, at least in the form of evidence of massive patent hordes being sold off for pennies per patent when companies go belly up.

Posted by: 6000 at December 13, 2010 2:03 PM

"After misreporting on the high side (20% to 30%), WSJ corrected itself to state that "about 10% of the employees of Intellectual Ventures LLC are lawyers.""

Another 80% are legal staff and support teams therefor.

Posted by: 6000 at December 13, 2010 2:06 PM

Thanks IANAE.

Surprising that some let their patents go so cheap.

You; or anyone; want to take a stab on something related; which I don't recall ever seeing discussed on the patent/IP blogs:

What legal effect/s, if any, is/are there on patents not asserted (though infringers were known or could have easily been identified) for many (3, 5, 7, more?) years; yet are then sold to others (i.e. as here; to IV), who then assert them?

Does the buyer get to start the "laches clock" all over again?

We see this done of course with companies; often with little or no protectable IP like Facebook and Groupon; for defensive purposes.

What's to stop companies with "old," "laches-blocked" patents from "selling" them to, say, shell corps for purposes of assertion?

Any cases on point?

Posted by: Steve M at December 13, 2010 5:16 PM

"Does the buyer get to start the "laches clock" all over again?"

Lulz I doubt it. Gl with that argument. Remember, this is equity we're talking.

Posted by: 6000 at December 13, 2010 5:25 PM

Without being an expert on the topic, my money would be on taking the opposite of what 6000 says.

The equity consideration involves both parties. IV cannot be precluded from action before they have ability to act.

How is that law school ap going 6000?

Posted by: Pedantic Pete at December 14, 2010 4:32 AM

"IV cannot be precluded from action before they have ability to act."

Get a grip - caveat emptor

Posted by: O'Rilly at December 14, 2010 5:08 AM

Because "caveat emptor" just goes so well with the entire principle of equity...

Posted by: Pedantic Pete at December 14, 2010 6:24 AM

Re: "Does the buyer get to start the "laches clock" all over again?"

I don't recall ever seeing a case on point, although it has been suggested by others that a buyer "stands in the shoes" of the seller.

Also, pulling info together from other sources, it looks like IV paid upwards of $1.2 B to acquire those 30,000 patents and their $2 B in licensing fees.

Posted by: Patrick at December 14, 2010 7:52 AM

So the NPE are finally making good. Seems like just yesterday when they were called "patent trolls." I predict that it won't be too much longer before NPEs become fully mainstream and everyone wants a piece of their (quite lucrative) pie. In fact, "trolling" may soon become a common part of the business strategy and operations of many or most major companies. Wouldn't surprise me.

Posted by: patent litigation at December 14, 2010 1:04 PM

Look pendantic, we know you're a tard but you don't have to prove it on such a regular basis.

"So the NPE are finally making good. Seems like just yesterday when they were called "patent trolls." I predict that it won't be too much longer before NPEs become fully mainstream and everyone wants a piece of their (quite lucrative) pie. In fact, "trolling" may soon become a common part of the business strategy and operations of many or most major companies. Wouldn't surprise me."

That's because you're a tard :(

The more prominent they become the more likely legislative action becomes. So long as they are few in number and slink in the shadows they can claim they're not having too bad of an effect.

Posted by: 6000 at December 14, 2010 1:12 PM

Nice 6000,

Except that wasn't me that posted that happy bs - it was "patent litigation".

But thanks for thinking of me.

Posted by: Pedantic Pete at December 14, 2010 2:23 PM

I posted first regarding you being a tard, pete, and then to him being a tard.

Ya tard.

O, and patent litigation, I note even Eugene joined the side of the anti-trolls. You better bet your bottom dollar that people are starting to take note of and despise modern trolling. When even your old-gaurd is none too happy trouble is a brewin.

Posted by: 6000 at December 14, 2010 10:31 PM

6000,

Your indiscriminate branding of everyone as a tard shows who the true tard is.

When you smell shit all around you, no matter where you go, you should check your own shoes.

As for Eugene over at IPWatchdog - that dog has rabies. Clearly, Gene is open ranting. His latest anti-troll post is a veritable kitchen sink list of everything he doesn't like at the moment plus an "oh-yeah" trolls are bad.

It's as if he has some personal IP in the offing that just may be a target of the big bad conglomerate patent-hoarding "monster", who has decided to up the game with those that don't want to pay a proper license fee.

Gene's biggest complaint is with the very nature of Civil Procedure - bare notice pleading. That is a structural issue - and one that is universal way past just patent litigation.

Of course, you would know that if you got into law school. So when can we expect that to happen? Another ten years perhaps?

Posted by: Pedantic Pete at December 15, 2010 6:31 AM

It's weird to read these attacks at this site. I would think people would be more civil and less childish.

Posted by: acai purchase at December 18, 2010 9:26 AM

"What legal effect/s, if any, is/are there on patents not asserted (though infringers were known or could have easily been identified) for many (3, 5, 7, more?) years; yet are then sold to others (i.e. as here; to IV), who then assert them?"

In the current legal environment in US where properly filing patent infringement lawsuit against major corporation takes at least 2 million upfront, and patent holder can't even show initiative in approachinbg infringers for license negotiations (for fear of being DJed in foreign jurisdiction thanks to SCOTUS MedImmune decision), this whole arguments looks ridiculous

Of course small patent holders can do nothing about corporate infringers, sometimes for decades, until patent holder comes across some luck...

Is "luck" a legal term ?

It'd better be in US

That's all we (individual patent holders) have at present... a big "MAYBE ONE DAY...."


BTW, hawkie, how's that pro se patent litigation going on ?

Posted by: angry dude at December 29, 2010 12:21 PM