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  (Source: AP)
Dean Kamen blasts FTC probe, says he's a proud "troll"

They may be "trolls" according to some, but they're not stupid.  While scrutiny by politicians of so-called "patent trolls" -- companies that buy up hordes of patents, while not producing actual products -- is mounting in part due to arguably valid concerns, it's also being pushed by the invisible hand of large companies that have suffered at the hands of the "trolls" and are now pushing the politicians they paid off to fight back.  But the trolls are wising up to this bias and are looking to step up their own lobbying efforts, challenging tech firms to an effective bidding war to see who can pay off the most U.S. federal politicians.

I. Intellectual Ventures Argues Patent Trolling is a "Myth"

Intellectual Ventures -- oft pilloried by critics as a "troll" -- is leading these efforts.  

IV was founded by Microsoft Corp.'s (MSFT) former chief technical officer (CTO) Nathan Myrhvold, but has come under fire for "trolling" Apple, Inc. (AAPL), Google Inc. (GOOG), and Intel Corp. (INTC) with its portfolio of 40,000 patents.  IV denies these claims and what it calls "the myth of patent troll litigation" arguing that its helped startups like Nest Labs Inc. (the maker of smart thermostats) protect themselves against large rivals. Nest was sued by defense contractor Honeywell Int'l Inc. (HON) last year, however, it has thus far escaped a product ban.

Nathan Myrhvold
Ex-Microsoft CTO Nathan Myrvhold insists that "patent trolling" is a myth propogated by anti-intellectual property activists. [Image Source: ZUMA Press]

IV does not produce any significant consumer product, but rather subsists off of forcing licensing settlements for its large portfolio of patents.  It is believed to be one of the key firms targeted by President Barack Obama in a recent release in which he accused "trolls" of "hijacking" American technological progress, issuing five executive orders targeting the practice.

The situation is growing tense for the "trolls" -- also known as patent assertion entities (PAE) or non-practicing entities (NPE).  Last week the U.S. Federal Trade Commission announced that it would look to subpoena "trolls" under the Congressional authority granted to it by the FTC Act (specifically, 15 USC § 45), the law that created the Commission back in 1914.  This investigation in turn could lead to actions by the agency, other agencies, or even new laws.

In an effort to beat back that investigation Mr. Myrhvold -- and his pocketbook -- have headed to Washington, D.C., looking to "convince" federal politicians that the idea of patent trolling is a myth, which he says is invented by big corporations to disenfranchise small patent owners.

II. "Trolls" Look to Fight Payola, With Payola

The Coalition for Patent Fairness -- whose members include Google, Dell, Oracle Corp. (ORCL), and Cisco Systems Inc. (CSCO) -- has been leading the efforts to encourage the FTC and Congress to combat litigation from NPEs.  It has donated $110,000 in funds.  And the members of the Coalition have donated millions more to the Congress and the President.

Adam Mossoff, a law professor at George Mason University School of Law, told Politico in a recent interview that these contributions are starting to have an impact.  He remarks, "[The anti-trolling rhetoric is in part because] patent companies weren’t active in lobbying or PR.  They let patent skeptics in the academy and in think tanks and firms that oppose them set the terms of the patent policy debate."

Congress bribes
The anti-trolling crowd has made Congress listen with donations. 
[Image Source: Wikimedia Commons]

IV's chief counsel Russ Merbeth attacks this lobbying effort, which he says may weaken intellectual property rights.  He remarks, "[Investigations] seem to create uncertainty around patents generally.  From our perspective, that’s going to have a long-term negative impact on American competitiveness."

But his company is learning from its rivals and is now aiming to master the payola game.  IV is reportedly working to put together a new lobby, which would donate to members of Congress and encourage them to push back against patent reform.  Some lobbyists are skeptical of the effort.  Comments one lobbyist reportedly familiar with it, "For such an entity to be effective, it needs to secure members from all corners of the industry, and I think the companies that need to be involved realize that."

While they work on crafting a new lobby, they're getting assistance from The Innovation Alliance -- a veteran lobby that isn't fully supportive of the so-called trolls, but also is concerned that hasty reform may hand power over to large serial litigators that do produce like Apple and Microsoft.  The IA's largest member is Qualcomm, Inc. (QCOM), a top use maker of smartphone chips.

Dean Kamen
Dean Kamen says he's a proud troll. [Image Source: The Colbert Report]

At an IA event last week, Segway inventor Dean Kamen mocked the "troll" allegations, commenting, "It took me years to become a troll.  If you undermine the value of patents, you make it hard for innovation to be funded."

Source: Politico





“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls



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