Two Big Patent Trolling Cases End With Whimpers Instead Of Bangs

from the deflating-trolls dept

Here’s a follow up on two big patent trolling cases that we’ve covered a bit in the past. The first involves the world’s largest patent trolling operation, Intellectual Ventures in one of its very first patent lawsuits (for years it just threatened and got companies to settle) in which it sued Motorola Mobility, as the company was in the process of being acquired by Google (which recently announced it was selling off the company while keeping the patents). Google had been an early supporters of Intellectual Ventures back when it was being presented as a “defense fund” against trolls, before Nathan Myhrvold pulled a big bait and switch. Since then Google has been a clear target for Intellectual Ventures, since the company was supportive of patent reform that would neuter IV’s parasitic business model.

That big case has now ended in a mistrial after a jury couldn’t decide who should prevail. A mistrial is hardly the end, as IV is already talking about a retrial (and hyping up that it still has other patent cases against Motorola), but it certainly suggests that the case isn’t nearly as open and shut as IV had been suggesting in the past.

Moving on to another high profile patent troll case. For a few years now we’ve been covering a company called Innovatio which was threatening lots of companies, claiming that anyone who used WiFi infringed on its patents, but that (out of the kindness of its heart) it wasn’t targeting individual users “at this stage.” Instead, it went after a ton of small businesses, including coffee shops, grocery stores, restaurants and hotels — exactly the type of businesses which wouldn’t be interested in spending money on a costly legal battle.

A bunch of makers of WiFi access points, including Cisco, Netgear and Motorola actually teamed up in an attempt to smack Innovatio down to protect their own customers. They noted that they had all licensed the patent in question in the past, and that should cover the end users. Furthermore, the patent itself was subject to RAND (reasonable and non-discriminatory) terms which Innovatio never mentioned to people it was threatening and suing. In fact, they argued that Innovatio was actually engaged in a form of racketeering. While a judge in the case, unfortunately, didn’t allow the racketeering claims to move forward, he did determine that if Innovatio was due a license, the royalty rate was less than 10 cents per device, rather than the much, much, much higher numbers Innovatio had been pushing.

Recognizing its case was going nowhere, it appears that Innovatio has agreed to settle. Innovatio admitted that over 100 million of the devices they had sent threats over were already licensed, but has agreed to “license” the remaining 85 million devices for $2.7 million, or about 3.2 cents per device. This is how lots of patent trolling lawsuits end. Innovatio was looking for a much larger payout, but $2.7 million is still pretty significant money for very questionable activity. Cisco, in reporting this, notes that it spent $13 million on the litigation (not even counting the settlement) and highlights just how ridiculous the whole thing is, and how some basic changes to patent laws might stop trolls like Innovatio from targeting end users.

But that expenditure would not have been necessary if Innovatio had met its obligations to license on reasonable and non-discriminatory terms, and had come to Cisco seeking a reasonable license first rather than targeting our customers and those of other manufacturers. And, if our laws included provisions requiring those who target innocent third party users of products to register their claims at the FTC and make sure users know they can take their claims to manufacturers like Cisco, it seems unlikely Innovatio would have engaged in its letter-writing shakedown against end users. And if they thought they might be on the hook for the $13M we had to spend, they might have thought twice about the way they approached their licensing scheme. Provisions to deal with this problem, and with the problem of lawsuits that target users of products rather than those who develop and sell the products, were included in legislation that overwhelmingly passed the U.S. House of Representatives recently. We hope the Senate will act quickly as well.

In the meantime, we hope the “Innovatio” outcome will cause others who are undertaking similar efforts to step back and rethink their strategy.

Trolling behavior has become so pervasive in the patent arena that anyone denies that it’s a problem is either lying or in deep, deep denial. However, it’s good to see that a couple of big trolls aren’t having quite as easy a time of it as they likely expected.

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Companies: cisco, google, innovatio, intellectual ventures, motorola, netgear

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Comments on “Two Big Patent Trolling Cases End With Whimpers Instead Of Bangs”

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That One Guy (profile) says:

A broken system indeed

‘Innovatio admitted that over 100 million of the devices they had sent threats over were already licensed, but has agreed to “license” the remaining 85 million devices for $2.7 million, or about 3.2 cents per device.’

So they admit that they sent out letters trying to shake companies down over devices which had already been licensed, and they are awarded for it?

Absolutely zero punishment for extortion, as long as you dress it up by claiming it has something to do with copyright or patents… yeah, the system as it stands is completely and utterly broken in favor of parasites like that.

Ehud Gavron (profile) says:

Feeding the troll hurts us all

The troll just made $2.7M.

If Cisco et al had held out and beat the troll, perhaps they’d be out more than $15.7M ($13M legal + $2.7M settlement) but the troll would be dead.

Instead the troll has a victory, a precedent, and a fresh warchest of cash.

To me this seems like a loss all the way around. Yes, we need better laws and less imaginary property. No, feeding trolls will not help get either of those goals met.

Tucson AZ US SOL-3 MW-1

That One Guy (profile) says:

Re: Feeding the troll hurts us all

Very much so, though I’m not sure if Cisco quite realized it, or do realize it and are just trying to spin it as a win for them when it was anything but.

‘In the meantime, we hope the ?Innovatio? outcome will cause others who are undertaking similar efforts to step back and rethink their strategy.’

That ‘outcome’ they talk about, the one they seem to think will cause other parasites to ‘rethink their strategy’, was the troll getting $2.7 million, which is, if anything, an incentive for other parasites to continue on, extortion business as usual, as the case has shown that even when the targets fight back, drag things on long enough and eventually they’ll fold.

Really wish more companies took the Newegg route, that of ‘Never give in to the demands of the trolls, even when fighting will be more expensive’, and while I can understand smaller companies just paying up, as paying will hurt, but fighting will bankrupt them, a big company like Cisco has no such excuse except cowardice and stupidity, cowardice from being unwilling to fight, and stupidity from failing to realize paying out does nothing more than incentivize the parasites to continue shaking companies down.

Anonymous Coward says:

Re: Feeding the troll hurts us all

The problem with this logic, as has been covered here before, is that the risk of losing is equally high. Had Cisco lost, they would have givven Innovatio a much larger war-chest.

Therein lies the rub. If you defend yourself successfully, then you are an ‘idea thief’; if you lose, then you were ‘wilfully ingringing’.

staff (profile) says:

more dissembling by Masnick

The word on the street is Masnick is a paid puppet for some of the world’s biggest invention thieves.

?patent troll?

infringers and their paid puppets? definition of ?patent troll?:

anyone who sues us for stealing their invention

All this talk about trolls is just spin control by large infringers and their paid puppets to cover up their theft.

The patent system now teeters on the brink of lawlessness. Call it what you will…patent hoarder, patent troll, non-practicing entity, shell company, etc. It all means one thing: ?we?re using your invention and we?re not going to stop or pay?. It?s a pure red herring by large invention thieves and their paid puppets to kill any inventor support system. Their goal is to legalize theft. The fact is, many of the large multinationals and their puppets who defame inventors in this way themselves make no products in the US or create any American jobs and it is their continued blatant theft which makes it impossible for the true creators to do so. To infringers the only patents that are legitimate are their own -if they have any. Meanwhile, the huge multinationals ship more and more US jobs overseas.

It?s about property rights. They should not only be for the rich and powerful -campaign contributors. Our founders: Jefferson, Franklin, Madison and others felt so strongly about the rights of inventors that they included inventors rights to their creations and discoveries in the Constitution. They understood the trade off. Inventors are given a limited monopoly and in turn society gets the benefits of their inventions (telephone, computer, airplane, automobile, lighting, etc) into perpetuity and the jobs the commercialization of those inventions bring. For 200 years the patent system has not only fueled the US economy, but the world?s. If we weaken the patent system, we force inventors underground like Stradivarius (anyone know how to make a Stradivarius violin?) and in turn weaken our economy and job creation. Worse yet, we destroy the American dream -the ability to prosper from our ingenuity for the benefit of our families and communities. To kill or weaken the patent system is to kill all our futures. Show me a country with weak or ineffective property rights and I?ll show you a weak economy with high unemployment. If we cannot own the product of our minds or labors, what can we be said to truly own. Life and liberty are fundamentally tied to and in fact based on property rights. Our very lives are inseparably tied to our property.

Prior to the Supreme Court case eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the eBay decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Essentially, large infringers now have your gun and all the bullets. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don?t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back into the patent system with injunctions fully enforceable on all infringers by all patentees, large and small.

Those wishing to help fight big business giveaways should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

For the truth about trolls, please see

Just Sayin' says:

pervasive trolling

“Trolling” as you call it is so pervasive, that you can only point to a very small cases a year, based on hundreds of thousands (if not millions) of active patents.

The basis of your arguments would make anything seem unreasonable. Since once in a while some people drive while drunk, clearly we shouldn’t have cars or sell booze or both. Since some teachers have affairs with students, clearly we should not have anyone getting taught by anyone other that a computer or distant learning only. As some airplanes crash, we should stop flying.

All of those arguments involve higher “error” and abuse rates compares to patent “trolling”, and yet they are all acceptable in your world. Why?

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