Private Equity Drooling Over Huge Patent Rewards; Investing Millions In Patent Hoarding

from the welcome-to-innovation dept

It's no secret that getting a random broad patent and suing companies that actually innovated and succeeded in the market is a huge money maker these days -- even if it's exactly the opposite of the intention of the patent system. However, with so many headline-grabbing rewards for such patent lawsuits, it's really no surprise that the big money is rolling in. Last year, we mentioned that VCs were starting to get into the game, but these days it's the east coast hedge funds/private equity guys who are joining the party. Earlier this year, we wrote about one such fund, Altitude Capital Partners who had quietly invested in Visto, but made it clear that it really only cared about companies who had patents that could be used in lawsuits. John points us to a Forbes article that talks about Altitude and other private equity funds that have raised hundreds of millions of dollars solely to support patent lawsuits. In other words, if you thought things were bad in the past, they're about to get much, much worse. Once again, almost all of these lawsuits aren't about protecting the interests of an inventor at all. They're quite often cases of independent work on fairly obvious "next steps" in a market -- where the company who actually succeeds in bringing a desired product to market gets punished by someone who didn't successfully bring a product to market. Too often the patents are vague, exceptionally broad and have nothing to do with anything particularly new or innovative. That's not about promoting innovation -- it's about promoting patent attorneys.
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  1. identicon
    sam, 25 Apr 2007 @ 8:42am


    while i fully sympathize with your feelings regarding bogus patents. ie, patents that should have more extensive research conducted prior to being granted, and i also agree that the patent office is over burdened, and that there might be investigators who are involved in the patent process who might be a little over their heads in certain cases.

    i would also suggest that the vast majority of patents are valid, with no issues.

    as to the point about patent companies, ie companies who buy up patents.. what's wrong with that?

    fred, if you work hard, come up with something novel/new/etc... and you apply/get a patent, you own it. you can do what you choose. you can allow it to be used by anyone for free, you can try to make a business using that IP of the patent, you can try to sell that patent to someone else. you're even free to tell other companies that you own the patent, and the company is infringing on your IP.

    i fail to see where the real issue is with this (aside from what i mentioned previously)

    if i put time/effort into something, and i can get a patent, then i'm damn well going to try to generate revenues from/with it.. and if my recourse is to sell it to a "patent" company, then that's my choice as well.

    on the other hand, if you really are upset over all of this kind of activity where companies buy up patents, there's nothing to stop you from taking your pennies, and trying to get others to add their pennies to the mix, and if you have enough pennies, you can make it known that you are now in the game of buying patents for the sole purpose of releasing the patents to the public...

    now, i'd applaud you if you were to put your cash to this kind of effort!!!

    i strongly suspect that you won't do this!



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