Intellectual Ventures Lending Its Patents To Members To Sue Others

from the win-win? dept

We've certainly written plenty about Intellectual Ventures, the giant, incredibly secretive, patent hoarding operation that has convinced a bunch of companies to pay hundreds of millions of dollars in a sort of pyramid scheme protection racket, to avoid getting sued on any of the patents that it holds. But now it's taken things a step further. Last year, we saw how at least one IV patent had shown up in a patent lawsuit, and now Zusha Elinson is reporting that Intellectual Ventures has effectively loaned out one of its patents to member company Verizon, with which it can sue TiVo, in response to a lawsuit TiVo filed against it.

Yes, effectively, Intellectual Ventures is becoming an arms dealer in patent nuclear war.

Think about this for a second. TiVo sued Verizon over patents. Traditionally in patent lawsuits between two big tech companies, the sued party then finds some of its own patents that the other company is infringing on and then counter-sues. But, in this case, apparently Verizon couldn't find anything good, and IV dug through its own portfolio and transferred the rights over to Verizon so Verizon could pound back on TiVo. This must be what Verizon paid Intellectual Ventures $350 million for. The right to get handed patents that it has no intention of using or implementing, but over which it can sue others. I don't think this is what Thomas Jefferson envisioned when he set up the patent system.

Amusingly, Intellectual Ventures tries to position this all as a good thing:
Don Merino, vice president of licensing at IV, said it's an example of IV taking "a much more customer-centric approach."

"We want to figure out how to get out of the, 'I win, you lose' to a much more collaborative, 'We both win,'" said Merino.
Well, sure. Unless you're TiVo. Or the general public who would prefer that these hundreds of millions of dollars getting tossed around went towards actual innovation instead of lawsuits.


Reader Comments (rss)

(Flattened / Threaded)

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    Nina Paley (profile), Mar 3rd, 2010 @ 7:56am

    Jefferson

    I don't think this is what Thomas Jefferson envisioned when he set up the patent system.

    Actually he may have had that in mind, which is why he was dubious about such a system from the beginning.

     

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    Anonymous Coward, Mar 3rd, 2010 @ 7:59am

    “. Traditionally in patent lawsuits between two big tech companies, the sued party then finds some of its own patents that the other company is infringing on and then counter-sues. But, in this case, apparently Verizon couldn't find anything good, and IV dug through its own portfolio and transferred the rights over to Verizon so Verizon could pound back on TiVo. “

    GREAT NEWS!!! Lawyers are finding new and innovative ways to create litigation. See, patents do lead to innovation after all. This new innovation is a novel way of enriching the pockets of lawyers.

     

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      :Lobo Santo (profile), Mar 3rd, 2010 @ 8:04am

      Re:

      LOL. Thanx anon, very astute observation.

       

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        Someone, Oct 21st, 2011 @ 7:24pm

        Re: Re:

        Impossible.

        I think it should be clear by now that they want to create a cartel and then force competitors shut down their businesses, so that cartel partners can run by sharing monopolies.

        There must be some agreement between partners to settle internal disputes, and the intention is obviously not to make every company a partner of them.

         

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    Ima Fish (profile), Mar 3rd, 2010 @ 8:06am

    Wouldn't it be hilarious if both sides to a patent lawsuit obtained the patent rights from Intellectual Ventures? It'll happen someday.

     

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    JerryAtrick (profile), Mar 3rd, 2010 @ 8:16am

    Regarding the movie picture assoc.

    What are the legalities regarding the movie picture association trying to convince the FCC to allow them to release first run movies directly to the consumer instead of releasing the material to theaters? Is that even legal?

     

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    Anonymous Coward, Mar 3rd, 2010 @ 8:22am

    "Don Merino, vice president of licensing at IV"

    Is he anything like Don Corleone?

     

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    Anonymous Coward, Mar 3rd, 2010 @ 8:24am

    This doesnt make any sense at all. This implies Verizon never had the patent rights in the first place.

     

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      Derek Kerton (profile), Mar 3rd, 2010 @ 4:13pm

      Re:

      Patent Nuclear War doesn't work like that. It's not just about "the patent rights" around a single technology. The countersuit can be about anything.

      For example, Company A could sue Company B for infringing on PVR technology patents with a new whole-house PVR, server based solution. Company B is at risk of losing, so seeks something with which to sue back. Not finding anything in their patent portfolio, they search IV's patent portfolio and find a patent on, say, audio encoding in MPEG2 video (just making this up). They counter-sue on those patents.

      You see they are not countersuing saying "No we didn't infringe." They countersue saying "Oh, yeah? Well you infringe on our separate patent!"

      Then both settle to avoid wasting more time and money in court.

       

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    jakerome (profile), Mar 3rd, 2010 @ 8:30am

    It's all nuts

    I'd say this is exhibit A why serious IP reform is needed, especially patent law, but there have just been so many ridiculous examples.

    Whatever deal w/ the devil TiVo made to win their DISH lawsuit, at least they are making & selling an actual product that relies on their patents. The Verizon countersuit is pure inanity. Also, it's clearly not the case that the $350 million was invested just for these patents-- TiVo would have gladly settled for that amount with Verizon. More likely, Verizon bought themselves protection & gained rights to borrow patents as needed to sue.

    So fucked up.

     

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    Andrew (profile), Mar 3rd, 2010 @ 9:30am

    Actually the timing on this is pretty good. The US has already exported much of its manufacturing sector overseas. This is a great opportunity to get out of the service sector too, maximise profits by suing each other and leave all of that pesky innovation and value creation to the Chinese, Indians, et al.

     

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    BearGriz72 (profile), Mar 3rd, 2010 @ 9:33am

    Patent Nuclear War

    "Yes, effectively, Intellectual Ventures is becoming an arms dealer in patent nuclear war."

    Apple Responds with iNuke

     

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    Kirk (profile), Mar 3rd, 2010 @ 11:08am

    So Ridiculous, it just might work

    I say, bring on the ridiculosity! I hope this escalates into a global intellectual nuclear war. Only when the patent junkies hit bottom will they revolt against their dealers and get clean. IV is exactly what's needed to inspire a moment of clarity.

     

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    fogbugzd (profile), Mar 3rd, 2010 @ 11:26am

    Nice way to prevent competition

    Businesses are finding more and more ways to prevent competition. That seems to be the sole purpose of this loan.

     

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    Lachlan Hunt (profile), Mar 3rd, 2010 @ 1:53pm

    Mike, you seem to have largely ignored the fact that TiVo struck first and instead tried to place all the blame upon Verizon. Clearly, Verizon is doing this as a defensive measure. TiVo shouldn't have sued Verizon in the first place, and most of the blame should lie with them for being so aggressive. I would have much more concern about this if Verizon had taken an offensive position with this borrowed patent.

     

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      Mike Masnick (profile), Mar 3rd, 2010 @ 1:59pm

      Re:

      Mike, you seem to have largely ignored the fact that TiVo struck first and instead tried to place all the blame upon Verizon. Clearly, Verizon is doing this as a defensive measure. TiVo shouldn't have sued Verizon in the first place, and most of the blame should lie with them for being so aggressive. I would have much more concern about this if Verizon had taken an offensive position with this borrowed patent.

      I've been plenty harsh on TiVo for its patent lawsuits (see http://www.techdirt.com/articles/20090625/2343205367.shtml) for example, and I also wrote about TiVo's initial lawsuit against Verizon (http://www.techdirt.com/articles/20090826/1945196009.shtml). So I disagree with the claim that I've "largely ignored" it. I'm still troubled by the process of giving patents out for lawsuits like this.

       

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        Lachlan Hunt (profile), Mar 3rd, 2010 @ 11:30pm

        Re: Re:

        Mike, I meant that you largely ignored it within this particular article. The fact that you've covered it previously is irrelevant to my point.

        I agree with you that patents suck and we would be better off without the entire system. But the reality of the situation is that we're currently stuck with it and companies like Verizon are forced to take whatever defensive measures they can against aggressors. And as is so often the case with patents, the fight fire with fire approach is sadly the most effective defense, despite being a costly exercise.

        Why shouldn't Verizon and IV in this case do whatever they can to work together to defend against TiVo's attack? By saying that IV shouldn't have stepped in to help Verizon out with a patent to counter sue TiVo, then you're basically saying that Verizon should have been left suffer the consequenses while TiVo - the real evil party - gets a nice payout.

        At least this way, TiVo gets a taste of their own medicine, and I hope TiVo suffers big time for their initial aggression, and learns not to be so aggressive in the future.

         

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      Anonymous Coward, Mar 3rd, 2010 @ 2:00pm

      Re:

      I guess you missed the entire paragraph explaining TiVo's lawsuit against Verizon and that the post mostly "blamed" IV, not Veritzon.

       

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    Anonymous Coward, Mar 3rd, 2010 @ 2:30pm

    The general public could give a crap...

    "Or the general public who would prefer that these hundreds of millions of dollars getting tossed around went towards actual innovation instead of lawsuits."

    The "general public," whoever or whatever that may be, does not get a voice with respect to where privately owned companies spend their money. While the "general public" may prefer that the money went to "actual innovation," the company could just as well have decided to spend the money on a new executive bathroom, bonuses, or whatever. Not spending money on lawsuits does not automatically translate into spending money on innovation. Indeed, since in the vast majority of cases the actual dollars spent are relatively small, the money was likely shifted from some other optional category. Innovation tends to be a protected category and the budget for innovation is rarely affected in medium and larger companies by intellectual property lawsuits.

     

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      Derek Kerton (profile), Mar 3rd, 2010 @ 4:23pm

      Re: The general public could give a crap...

      "The "general public," whoever or whatever that may be, does not get a voice with respect to where privately owned companies spend their money"

      However, the "General Public" does get a say in who represents us in government, and, ostensibly, the laws of the land. In this case, we have laws that support Intellectual Property in ways that deliver the outcomes seen in this case. Maybe the "General Public" would prefer different laws that produce different outcomes.

      Outside of government, the "General Public" comprises many of the consumers which, in aggregate, make up the economic concept of "Demand". I have found that successful companies should and DO, in fact, pay attention to demand.

      Contrary to your assertion, the opinion of the "General Public" should and does matter. It does affect where privately owned companies spend their money.

      "Innovation tends to be a protected category" Please!! When budgets are tight, it's often the first to go.

       

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      Mike Masnick (profile), Mar 3rd, 2010 @ 4:58pm

      Re: The general public could give a crap...

      The "general public," whoever or whatever that may be, does not get a voice with respect to where privately owned companies spend their money

      No, but the patent system is designed to promote the progress -- and thus increase the overall welfare of "the general public."

      If that's not happening, then it's a pretty good demonstration that the patent system is broken.

      You would be absolutely right if you were talking about actual private property. But when you're talking about gov't granted monopolies, designed for the purpose of promoting the progress of society, the fact that it's a waste to the general public is very, very relevant.

       

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    Anonymous Coward, Mar 3rd, 2010 @ 3:14pm

    This seems like nothing more or less than Champerty. I'm not a lawyer, so I'm not sure how US courts treat the concept today, but I doubt they treat it favorably.

     

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      Anonymous Coward, Mar 3rd, 2010 @ 6:13pm

      Re: Champerty

      This seems like nothing more or less than Champerty. I'm not a lawyer, so I'm not sure how US courts treat the concept today, but I doubt they treat it favorably.

      On the contrary, it seems to be admired in the US, where it is seen as just another form of free market capitalism and the courts practically give those who practice it standing ovations. There are companies that support other companies financially in bringing lawsuits (even bogus ones) against their competitors (e.g. Microsoft supporting SCO) and some litigants are even beginning to openly sell shares in their cases wherein the profits from the litigation are to be "shared" with the case "investors".

       

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