We've never been a fan of Ocean Tomo, the "patent auction" shop that was seen as something of a clearing house for lawyers and patent hoarders looking to buy up patents to squeeze money out of other companies. However, in February, we wrote about an article in the Chicago Tribune insisting that the tough economy was increasing patent sales as companies looked to squeeze more value out of their patent portfolios. We questioned the article, noting that it showed absolutely no proof whatsoever that sales were up -- other than a claim (with no data) from an Ocean Tomo exec, who had every incentive to make people believe that sales were up.

But, in reality, it turns out sales aren't up. They're way, way, way down.

Joe Mullin writes about the latest Ocean Tomo auction that can reasonably be termed a total disaster after sales didn't just fall, but fell off a cliff:

While some folks I spoke to before the auction said they expected sales this year to be down by as much as 50 percent from last year, the final results were much worse. Friday's auction took in just under $2.9 million--more than 80 percent less than the roughly $17 million in patent sales generated by the company's San Francisco auction last year.

Out of more than 80 lots of patents on the block, only six sold. (An Ocean Tomo auction "lot" can include a single patent, several patents, or a portfolio of patents in related technology.) Ocean Tomo tacks on a 10 percent fee paid by buyers, and also charges fees to sellers, meaning the company probably took in less than $1 million for itself....

Ocean Tomo CEO James Malackowski looked a bit shaken by the end of the day.

"Obviously the market has become more selective," he said in brief concluding remarks.

That, of course, is exactly the opposite of what Ocean Tomo was telling reporters just a few weeks ago (and those reporters repeated it without question).

In the meantime, Saul Hansell of the NY Times, notes that one of the very few buyers was RPX, a company we covered last year, which is still insisting that its business model is never to sue for infringement but to simply let tech companies "license" its portfolio as a way of having ammo against other patent infringement lawsuits. It's sort of "Intellectual Ventures-lite." This was the original business plan of IV, but no one really believes that IV won't eventually sue -- and I'd imagine the same is true of RPX. At some point, its A-list investors will demand a bigger return, and using the portfolio to sue will just be too tempting.

When Intellectual Ventures first came about, Nathan Myhrvold convinced tech companies to back him, with a business plan that was all about pooling resources to buy patents for defensive purposes. The original pitch was that by joining with IV, you could make use of the patent portfolio to protect yourself against potential patent lawsuits. Except that once things got going, Myhrvold admitted that to make this work, the threat of also suing people for patent infringement had to be on the table (though, it hasn't reached that point yet). So, consider me quite skeptical of some former IV execs who have gone off to start a new firm that sounds suspiciously like IV's original plan.

It involves getting a bunch of tech companies to pay up, so that this new company, RPX Corp., can buy up a bunch of patents "for defensive purposes only." The company insists it won't sue anyone with these patents. But, of course, the whole thing makes you wonder. For the companies that buy into RPX's deal (or IV's for that matter), they end up spending a bunch of money for a rather weak form of insurance that protects them in the very rare case where they might be able to use a patent in either firm's portfolio to maybe, possibly protect itself against an infringement lawsuit. It won't stop others from suing, of course. And, if RPX is serious about not suing for infringement, then why won't other firms just free ride? They get the benefit of those patents not being in litigious hands, but without having to pay. The whole situation just shows how ridiculous the patent litigation world is these days, that a bunch of companies feel the need to fund other companies to buy up patents just so they're not sued. That's not quite "promoting the progress."