VCs Invested $300 Million In Visto And All They Got Were… Some Patents To Sue With?

from the lovely dept

Visto is an interesting company. They’ve been around for quite some time and came out with a fairly mediocre email system for mobile phones that never really got very much traction — though, somehow, the company kept convincing venture capitalists to dump in more money (to the tune of somewhere around $300 million). However, more recently, the company has gotten very active on the patent lawsuit front. We noted back in December 2005 that, just as RIM and NTP were going back to court over NTP’s invalid patents, NTP “convinced” Visto to license its patents. Though, the details seemed pretty sketchy. NTP first invested in Visto — effectively NTP gave money to Visto, which Visto could then use to “license” the patents. This way, NTP could point to Visto as a licensee of the patents to put pressure on RIM to settle (which it eventually did). However, it became clear that Visto didn’t just take money from NTP, but the lessons of how to use patent lawsuits to its advantage — which it proceeded to by suing Microsoft for patent infringement.

Since then, it seems that Visto has continued to struggle — failing to go public as promised in 2006. So, instead, it seems to be falling on the all-too-popular tactic of falling back on patent infringement lawsuits when you’ve failed to make a real dent with your real business model. There was a bit of confusion last week as Visto had apparently kept quiet the fact that it had raised another $35 million. However, the folks over at Valleywag have come up with a pretty good explanation for why they might have wanted to keep it quiet. The firm that lead the latest round tends to invest in patent trolls. That is, they like to invest in patent litigation, rather than companies that actually have something to sell. The website for Altitude Capital Partners makes this pretty clear. They only care about the “intellectual property” a firm has, along with things like “Number and Quality of Potential Infringers” as well as how well the company has done in previous patent challenges. This seems like yet another example of a company that failed in the marketplace wanting to take money away from those who actually did deliver what customers wanted.


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Comments on “VCs Invested $300 Million In Visto And All They Got Were… Some Patents To Sue With?”

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11 Comments
Iron Chef says:

How successful attornies in IP law get started

Remember that kid everyone made fun of in elementary school?

The one that took the soccer ball away because it was his ball?

Kids, if your still growing up, and know someone like this, go and be his friend. If you don’t he’ll sue your children in 25 years.

(queue NBC “The More You Know” theme music)

zh says:

ok, just one second

You said :
“This seems like yet another example of a company that failed in the marketplace wanting to take money away from those who actually did deliver what customers wanted.”

this weakens your point a little – I hate patent trolls as much as the next guy, but there are certainly legitimate patent holder/innovators out there who have gotten their ideas ripped off and successfully taken to market, and this statement would seem to say they shouldn’t be able to sue either.

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