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?
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.