Intellectual Ventures Ramping Up Lawsuits

from the a-troll's-gotta-troll dept

For many years, even as people correctly noted that Intellectual Ventures was perhaps the world's biggest patent trolling operation, the company insisted that it shouldn't be called a troll, in part because it hadn't actually sued anyone. That was misleading for a variety of reasons, with the biggest one being the war chest behind IV and the implicit threat of lawsuits certainly got plenty of companies to cough up huge sums to avoid them. While IV has ridiculously strict nondisclosure agreements, various leaks have suggested companies often pay hundreds of millions of dollars to Intellectual Ventures... for nothing. All they really get is a promise not to be sued and the potential to dip into IV's big database of mostly useless patents, which the paying companies can then use to sue others. Overall, Intellectual Ventures admits that it has brought in over $2 billion dollars directly from licensing and another $5 billion in "investments" -- some of which came from companies "buying in." What a racket, huh?

Back in 2010, the company finally filed its first lawsuits. Since then it's continued filing lawsuits on an irregular basis. 2011 was a big year, with sudden bursts of lawsuits in July, September and October. 2012 had fewer lawsuits, and just small blasts in February and May. However, it looks like IV may be ramping up with the lawsuits again. IV filed three in February (one against Windstream and a few small telcos, one against CenturyLink, Qwest, Embarq, Savvis & CenturyTel, and one against AT&T and various subsidiaries). However, in the last week or so, it's filed three more lawsuits. First against Symantec, then against Toshiba, and the latest against Canon and Ricoh.

The latest one claims that Canon and Ricoh -- two companies, I should remind you, who actually produce printers and actually add value to the world by making products -- are apparently violating some IV patents which have to do with printing. They claim that Canon (whom they've sued before) infringes on nine patents and Ricoh infringes on seven.

So, let's ask a simple question: what has Intellectual Ventures contributed to the world of printing?

We'll wait.

Okay, it was a trick question: the answer is absolutely nothing. No printer company in the world has relied on some great breakthrough from Intellectual Ventures, nor have they relied on the insight gleaned from a crappy patent that IV bought at some point. No, printer companies have built and innovated based on their experience in the marketplace selling printers. Intellectual Ventures is simply trolling and taking away from actual innovators.

In a truly sickening blog post, Intellectual Ventures' "Chief Litigation Counsel" Melissa Finnocchio tosses out IV's standard "defense" of its indefensible activities:
Since our founding, IV has efficiently and effectively identified strong patents covering significant and relevant inventions, purchased those patents, and marketed and licensed them to companies who need them. A properly functioning patent system is the foundation of IV's business model, along with the sensible notion that a fair price must be paid for use of a patented invention.
Almost nothing in that paragraph is accurate. IV started out by buying up patents, en masse, from various universities' "tech transfer offices" after those universities spent big time setting up those offices, thinking it would bring in lots of cash. Then no one wanted those patents (at least not at the ridiculous prices offered) and for nearly every single university tech transfer office they suddenly became seen as a cost center, rather than a profit center as planned. Enter IV with a giant war chest, agreeing to buy up tons of crappy patents that no one else valued or wanted, on the cheap, and suddenly tech transfer offices can aggregate a bunch of patents and show some money coming in. IV has never, ever been about "identifying strong patents." It has always been about finding enough patents they can use to pressure companies into giving them money. IV's entire business model, from the beginning was built on exploiting a clearly broken patent system by a group of folks who had a history with the system.

As for a "fair price," a fair price is what someone in the market is willing to pay for a product. Not what IV gets by bullying companies. IV has tens of thousands of patents. We've yet to find a single one that was a key breakthrough which companies relied on to move innovation forward. Because they don't have any such patents.
Patent infringement, however, continues to be a problem and the patent system cannot work as intended if infringement goes unchecked. When sophisticated companies turn a blind eye to infringement, we are forced to take action to safeguard the value of our patents and to protect the interests of our investors and customers. Infringers need to pay for the inventions they are using. An issued patent provides rights to the patent owner and when these rights are ignored, it impairs the incentives that spur invention and poses a real threat to innovation
That entire paragraph might make sense if the patents in question were (a) unique, clearly defined and definitive breakthroughs and (b) were the main reason why other companies produced the products they did. However, since (as far as we can tell) every single situation in which IV has sued a company has been because of independent invention by actual practitioners in the field doing what the market asks for, and the patent in question has nothing to do with the actual innovation, it's not just wrong to suggest that "infringers need to pay," it's a gleeful cheering on of a shakedown.

Finally, the idea that when patent owners don't sue it somehow "impairs the incentives that spur invention and pose a real threat to innovation" has simply no basis in any reality-based discussion. The problem with the patent system today is the fact that broad and vague patents are being asserted against obvious innovations in the market place. That is putting a massive tollbooth on innovation.
We enter into litigation after careful deliberation and a thorough analysis of the patents we own and the products we believe to be infringing. The actions we take to protect our rights are with established, patent savvy technology companies – not start-ups – and we have reached settlements for significant amounts. In other words, our patent portfolios are being recognized for their validity and relevance to current industries and key technologies.

IV does not enter litigation lightly, and our actions are not frivolous. Asserting our rights is something IV, and any patent owner must do, when their patents are being used without license.
Shorter version of this paragraph: look we only shakedown big companies with big bank accounts. The fact that some of them are willing to pay does not mean the patents are recognized for their "validity." It means that big companies can do the math on the cost of fighting IV in court, and recognize it's cheaper to pay up than deal with the mess. IV may not enter into litigation lightly, but it's abusing the system, taking billions of dollars out of actual innovation and is the perfect example of everything that's wrong with the patent system.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Mar 27th, 2013 @ 3:56pm

    So basically they turned a junkyard into a pay us because you use garbage system.

    Which pos thought that up?

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Mar 27th, 2013 @ 3:56pm

    I wonder if IV will end up facing the same as Prenda Law.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Mar 28th, 2013 @ 6:09am

      Re:

      IV is the definition of "market correction" for the patent system.
      Too many patents are filed every day for every inventor to see all relevant pieces. That is a problem in itself for the system so the trope patents=innovation was born to signify that the value lost for the inventors wasn't a lose to the government!
      Now a company has made a business on buying patents, marketing (by suing) and enforcing them. If the US politicians see this, it should be clear that IV is a model company for how to effectivise the system and "incentivise" the use of modern patents. This is the future of the system unless we see sensible reforms.

      Either you embrace IV or you embrace changes to the system!

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    Nigel (profile), Mar 27th, 2013 @ 3:59pm

    I don't get how these folks and the requisite lawyers can actually reside in their own skin.

    Isn't there a fairly new site floating around to help crowd source some research into prior use etc.?

    The only way to fix this mess is to move to invalidate useless patents and tie them up in court with crowd funded defenses. We are many, they can be beat at their own game here.

    Nigel

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Robert Doyle (profile), Mar 28th, 2013 @ 8:25am

      Re:

      "The only way to fix this mess is to move to invalidate useless patents and tie them up in court with crowd funded defenses. We are many, they can be beat at their own game here."

      You realize that they still win with that approach right? Lawyers get paid for being in court...

      A better use of those funds would be to crowd-source information gathering on all of the people they employ - make their life an open book and advertise, advertise, advertise.

      The public needs information, and explanation of what the information means. Crowd-source investigative journalism and hit them in the media. Expose their connections to politicians - get people to actually talk about the negative impact of what they are doing. They add nothing to GDP - but they are closing down companies that do.

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    teka (profile), Mar 27th, 2013 @ 4:01pm

    so that is products and services that ended up costing an extra 7 billion dollars (in aggregate) That is money shifted away from tech labs and funneled into lawyers in excess of that amount (the costs to companies outside the mob payoffs, I mean, settlements & investments in IV)

    They are the shining-turd example of a system that robs the world to fill their own coffers using the law.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Alien Rebel (profile), Mar 27th, 2013 @ 4:04pm

    Small world

    I started wondering about Intellectual Ventures when I was digging into the Copyright Alliance; front group run by the lobbying firm, Nickles Group, LLC. Turns out IV is Nickle's #1 client 5 years running. And Nickles is IV's #1 lobbying firm. The primary lobbyist for IV is same person who lobbies for the Alliance, Cindi Tripodi. (Listed as Alliance staff until recently) Not a day goes by where some tentacle of Nickles doesn't show up in the news. And oh yeah, Sen. Don Nickles was the guy who introduced DOMA in the Senate. Like I said, . .

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Nigel (profile), Mar 27th, 2013 @ 4:19pm

      Re: Small world

      Interesting... nicely fleshed out sir!

      N.

       

      reply to this | link to this | view in chronology ]

      •  
        icon
        Alien Rebel (profile), Mar 27th, 2013 @ 4:30pm

        Re: Re: Small world

        For additional entertainment, "This American Life" did a piece on patent trolls (with honorable mention of IV) in 2011; might be a link around here someplace; but if not, surf their site for "Show 441: When Patents Attack!"

         

        reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Mar 27th, 2013 @ 6:53pm

      Re: Small world

      This is a big drain on a strained economy. Dirtbags from government seeing an opening like this and jumping in with both feet to, not only stomp on the citizenry's rights, but to also suck money out of anything that moves for things that serve no purpose whatsoever in either, making the world a better place, or keeping everyone just a little bit safer. Using fear mongering to enrich themselves and erode our rights; that's all that's going on here.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    out_of_the_blue, Mar 27th, 2013 @ 4:31pm

    Let's simplify law suits, instead of patents.

    I suggest giving each side three hours total to present their view of the case, then goes to the jury, with instruction that if they can't decide it definitely beyond reasonable doubt (not the 50.01% of usual civil trial) from just that, then out it goes, never to be raised again. Also, heard and decided no more than 90 days from filing, none of this fooling around that ONLY lawyers want.

    I recognize that lawyers will faint at this proposal, and I sincerely hope that in falling they hit their head. They're the biggest plaque since the Black Death.

    I also recognize that this proposal could be gamed too, but it's better than status quo forever.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      out_of_the_blue, Mar 27th, 2013 @ 4:33pm

      Re: Let's simplify law suits, instead of patents.

      ^^^ "PlaGue", not "plaQue".

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Mar 27th, 2013 @ 7:07pm

        Re: Re: Let's simplify law suits, instead of patents.

        No, plaque, it's a build up in the arteries that will eventually lead to a massive coronary for western culture.

         

        reply to this | link to this | view in chronology ]

    •  
      icon
      Alien Rebel (profile), Mar 27th, 2013 @ 4:46pm

      Re: Let's simplify law suits, instead of patents.

      I think civility has been in decline for 10,000 years. Once, you and all the people that agree with you would face off with clubs and spears against the people who're being jerks. Then money came into the picture, and you could buy an army of friends. Then came lawyers. Now we have paid armies of lawyers. I'm beginning to think clubs were the highest, most civilized form of dispute resolution; after all, where'd the patent trolls be if it was just them vs. all the people there f'ng with?

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    The Old Man in The Sea, Mar 27th, 2013 @ 4:53pm

    The humour of Intellectual Ventures' "Chief Litigation Counsel"

    Does what happened to Pinocchio when he lied happen to Melissa Finnocchio?

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Mar 27th, 2013 @ 7:24pm

      Re: The humour of Intellectual Ventures' "Chief Litigation Counsel"

      her clit grows

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      MrWilson, Mar 27th, 2013 @ 7:37pm

      Re: The humour of Intellectual Ventures' "Chief Litigation Counsel"

      Yes...except her bank account, instead of her nose, grows when she tells lies.

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    Ninja (profile), Mar 27th, 2013 @ 7:32pm

    Holy crap, $2 billion doing nothing. Madoff would be proud!

    I say keep suing. Sue like there is no tomorrow, siphon shitloads of money out of the economy and make things break. Maybe then some enlightened mind in the US Govt will scratch their heads and think: "Something is wrong..."

    Not that I want American people to suffer but it seems there won't be any workable way other than that.

    On a side note, if I had deep pockets I'd have an yearly budget set aside just to invalidate IV patents and help smaller players fight them.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Mr. Applegate, Mar 27th, 2013 @ 7:59pm

      Re:

      "I say keep suing. Sue like there is no tomorrow, siphon shitloads of money out of the economy and make things break. Maybe then some enlightened mind in the US Govt will scratch their heads and think: "Something is wrong..."
      "
      The problem with your plan is companies like IV payoff the politicians to turn a blind eye to the problems. Sometimes they even pay the politicians to empower them further.

      Things are already very obviously broken to anyone who cares to take an honest look at the problems. The systems are abused and the only losers are the ones that can't afford to play the game (consumers).

      This ends one of two ways:

      1. Massive worldwide economic collapse
      2. People revolt against their governments and corporations.

      Right now option 1 seems much more likely to me. Both will probably also result in a huge decline in world population due to food shortages, disease...

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Mar 28th, 2013 @ 5:57am

        Re: Re:

        Economic collapse is a likely trigger for revolt, especially if governments try to use tax payer money to bail out big corporations.

         

        reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Mar 27th, 2013 @ 9:44pm

      Re:

      Funnel money from innovation into campaign contributions.
      Politicians "The economy is working!"

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    Spaceman Spiff (profile), Mar 27th, 2013 @ 9:55pm

    Is it any wonder?

    Is it any wonder that Nathan Myhrvold, the principal of IV, came out of Microsoft? Sometimes, I have to think that he is still their proxy...

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Steph Kennedy, IPTT (profile), Mar 28th, 2013 @ 11:13am

      Re: Is it any wonder?

      Ding ding ding! We have a winner, folks.

      Now, if only someone could get the proof of this. There's already been a crowdfunded effort to expose their shell companies. That's where the skeletons are hiding...

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Mar 28th, 2013 @ 4:46am

    so, the main thing to now find is which Senators are involved with IV. there has to be some, surely because otherwise the company would have been shut down. as it is still going, someone in (a)position of power must be protecting it from political pressure and a new law

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Dinglebit the Aromatic, Mar 28th, 2013 @ 10:12am

    Patents vs Inventions

    It's time any supposed link between patents and inventions was abandoned. There's no need for it.

    The quote from Melissa Finnocchio says it all.

    IV has efficiently and effectively identified strong patents covering significant and relevant inventions, purchased those patents, and marketed and licensed them to companies who need them.


    In other words,
    - IV identifies a need.
    - IV patents that need.
    - IV charges the people who actually invent the solution.

    F##king ridiculous.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Steph Kennedy, IPTT (profile), Mar 28th, 2013 @ 11:11am

    I see Paris, I see France, I see IV's Underpants

    ...to quote myself:

    http://iptrolltracker2.wordpress.com/2013/03/14/psssst-intellectual-ventures-your-shell-c ompanies-are-showing/

    These guys are a nightmare. Allow me to translate:

    "IV has efficiently and effectively identified strong patents covering significant and relevant inventions, purchased those patents, and marketed and licensed them to companies who need them."

    Becomes:

    "IV has efficiently and effectively taken worthless patents covering completely nebulous ideas, full of sound and fury, signifying nothing, and used them to shake down people who are actually making products."

    Just sayin',

    IPTT

     

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This