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.

Filed Under: , , ,
Companies: canon, intellectual ventures, ricoh

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Comments on “Intellectual Ventures Ramping Up Lawsuits”

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Anonymous Coward says:

Re: 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!

Nigel (profile) says:

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.


Robert Doyle (profile) says:

Re: 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.

teka (profile) says:

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.

Alien Rebel (profile) says:

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, . .

Anonymous Coward says:

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.

out_of_the_blue says:

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.

Alien Rebel (profile) says:

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?

Ninja (profile) says:

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.

Mr. Applegate says:

Re: 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…

Dinglebit the Aromatic says:

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.

Steph Kennedy, IPTT (user link) says:

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

…to quote myself:

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.”


“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’,


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