Print 20 comment(s) - last by 1078feba.. on Jul 2 at 8:59 AM

Aim to buy up IP, protect smaller companies

Just like a the greatest comic book superhero teams -- the X-Men, the Avengers, and the Justice League -- a real world league of mighty powers is forming to fight a formidable adversary.  Plagued by the persistent sinister designs of patent trolls, the nation's largest tech companies have decided to form a coalition to fight back.

Patent law is a very controversial topic in today's legal community.  There are those that say the system works and only need minor revisions.  Then there are those who point the increasing number of broad and vague patents and the rise of patent trolls. 

A "patent troll" is a term for a company which makes a living off amassing massive amounts of IP and then suing companies who have products that might be covered under the patents.  Much of their IP is bought from failing companies, universities, or other bargain sources.

Much criticism has been leveled against these organizations, such as NTP Inc., as they generally do not try to market or produce any useful product and only show a perfunctory interest in courting corporate partnerships.  Their goal is merely to develop large vague patents and then reap the rewards from lucrative lawsuits.  Some argue that this is a brilliantly clever capitalistic scheme, while others less favorably view the companies as the business world equivalent of a leech.

In some cases, the settlements can nearly put legitimate companies with viable products out of business.  NTP Inc., a small Virginia firm labeled as a "patent-monger", attacked the wildly successful Blackberry after it successfully contended that they violated a series of vague wireless email delivery patents, which it held.  Though NTP had never produced a single piece of hardware, it ended up settling for $612.5M USD, leaving Research In Motion Ltd., makers of the Blackberry, to limp away and lick its wounds.

Now a coalition of the tech industry's largest players, tired of expensive litigation and settlements has assembled to fight the so-called trolls.  Leading the way are Verizon Communications Inc., Google Inc., Cisco Systems Inc., Telefon AB L.M. Ericsson and Hewlett-Packard Co.  Together with many other companies, they form the Allied Security Trust (AST).

The AST team aims to buy patents that would be used against its members.  In essence, it aims to out-troll the patent trolls.  Each company joining it will contribute $250,000 and will put $5M USD in escrow to aid in future purchases.

The group is not the only super-powered group looking to take down the patent mongers.  Also operating is the Coalition for Patent Fairness, which is hard at work lobbying for patent reform legislation in Washington D.C.  According to the group, the number of patent lawsuits increased from 921 in 1990 to 2,500 last year.  It points to NTP, and also blames companies like Qualcomm Inc. and Rambus Inc., who produce legitimate products, but use patents as a means of beating down would-be competitors.

Currently much of the reform legislation is on ice.

The AST is not an entirely new idea.  It is somewhat similar to Intellectual Ventures LLC, a patent holder run by former Microsoft Corp. executive Nathan Myhrvold.  Various companies give Mr. Myhrvold money to buy patents, and he in turn provides them with licenses to his portfolio.  Some, however, are growing fearful that IV will at some point turn on companies and use its massive patent library to litigate against the major tech players.  Mr. Myhrvold has said that he currently has no plans to pursue such an option, but, he darkly adds, he has not ruled it out for the future.

To prevent such developments in the new group, companies will sell patents they acquire after being granted a nonexclusive license to the patent's underlying technology.  Brian Hinman, a former vice president of intellectual property and licensing at IBM explains how AST is different stating, "It will never be an enforcement vehicle.  It isn't the intent of the companies to make money on the transactions."

Currently, the identities of the team, aside from the major players are secret, and Mr. Hinman's lips are sealed on the topic.  Mr. Hinman says there should be no antitrust problems for the group as it’s nonprofit and its members don't own patents, merely grant themselves licenses.

Ron Epstein, CEO of patent brokerage IPotential LLC labeled by many as a patent troll, offers perspective from the other side of the table.  He states patent hoarding companies are beneficial to small inventors, who might otherwise be exploited.  Mr. Epstein, who formerly worked as director of licensing at Intel Corp., says that any company should be free to aggressively litigate regardless if it produces or intends to produce the patent item.

Mr. Epstein sees attempts like the AST as an unfortunate effort to foil what he sees as a useful business vehicle.  He hopes that patent laws in Washington continue to allow generously for litigation and patent collection.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: A better use of their resources
By Parhel on 7/1/2008 2:05:47 PM , Rating: 5
Agreed. If the patent system needs fixing, then the government should fix it. If the government is dragging their collective feet, elect people who will take patent issues seriously. We don't need more RIAA-like corporate law enforcers.

RE: A better use of their resources
By Sulphademus on 7/1/2008 2:15:25 PM , Rating: 3
But will they use their powers for good ? or evil?

We don't need more RIAA-like corporate law enforcers.

We already know where the RIAA stands. Could the AST be the hero we need?!

By Parhel on 7/1/2008 2:24:04 PM , Rating: 5
But will they use their powers for good ? or evil?

I'm guessing they will use their powers for profit.

By Yawgm0th on 7/1/2008 5:47:44 PM , Rating: 3
Unfortunately too few Americans are fully aware of the many faults of the patent system and IP law in general in America. Too few politicians consider it an issue, and that is our fault, not the government's. The one positive thing to come out of some of the ridiculous patent suits of late as well as the RIAA/MPAA assault on piracy is the maybe this topic will become more apparent and more important to the people. Only then can major change occur.

In the meantime, I'm just happy to see someone is doing something about it.

"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il

Most Popular Articles5 Cases for iPhone 7 and 7 iPhone Plus
September 18, 2016, 10:08 AM
Laptop or Tablet - Which Do You Prefer?
September 20, 2016, 6:32 AM
Update: Samsung Exchange Program Now in Progress
September 20, 2016, 5:30 AM
Smartphone Screen Protectors – What To Look For
September 21, 2016, 9:33 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki