Stupid Costly Patent Nuclear War By Microsoft & Apple Against Android Averted

from the stupid-this-had-to-happen-in-the-first-place dept

We've written a few times about Rockstar Consortium, a giant patent troll that was created when Microsoft and Apple (and a few others) teamed up to outbid Google, Intel (and a few others) in buying thousands of Nortel patents. Nortel admitted that it had bulked up on many of these patents for defensive measures, but once Nortel went bankrupt they went to the highest bidder (and the bidding went pretty damn high). The winners of the bidding kept a few of the patents for themselves, but then dumped them all into "Rockstar Consortium" which was a new giant patent troll and which, importantly, was not subject to promises that Apple and Microsoft initially made (to avoid antitrust problems) to license the patents under reasonable terms.

Last year, Rockstar launched its massive patent attack on Android, suing basically all the major Android phone makers and Google. While some have argued that big company v. big company patent attacks aren't a form of patent trolling, some of us disagree. This, like most patent trolling, is just trying to extract money from companies and has nothing to do with actual innovation. In the tech world, some have referred to this kind of thing as "privateering" in which a big company puts the patents into a shell company to hide their trolling activity.

Either way, it appears that a settlement of sorts has been reached, with Rockstar Consortium agreeing to sell its patents to RPX (with Google and Cisco picking up much of the bill). RPX is sort of the "good version of Intellectual Ventures." It's a company that collects a bunch of patents with the goal of using those patents for member companies for defensive purposes. Even though RPX has generally been "good," the business model basically lives because of patent trolling. Its very existence is because of all the patent trolling and abuse out there. In this case, though, it's making sure that basically anyone can license these patents under FRAND (fair and reasonable, non-discriminatory) rates. The price being paid is approximately $900 million. While that article points out that this is considerably less than the $4.5 billion Microsoft and Apple paid originally, again, this is only 4,000 of the 6,000 patents, and you have to assume the 2,000 the other companies kept were the really valuable patents.

In short, this is basically Google and Cisco (with some help from a few others) licensing these patents to stop the majority of the lawsuits -- while also making sure that others can pay in as well should they feel threatened. Of course, Microsoft, Apple and the others still have control over the really good patents they kept for themselves, rather than give to Rockstar. And the whole thing does nothing for innovation other than shift around some money.

Cisco's Mark Chandler celebrated the deal as a "common sense" solution. And, it certainly beats all out patent litigation war. But it's still just about moving money around, rather than encouraging innovation. He notes that in settling this as a group, it helps keep things from getting totally out of control:
While we have no quarrel with companies using their patents to stop the copying of differentiating features without permission... the driving up of patent valuations as each side in the war sought to bulk up for battle ended up serving no one other than lawyers and middlemen.
In the end, this is a better solution than years of legal battles. Making this offering open to others (at least for a limited time) is also a better result than might otherwise have been achieved. But it still shows how patents are abused and misused to shake down companies, rather than for any legitimate purpose. And, as Chandler also notes, the real issue still has to come down to fixing the broken patent system:
What is most critical, however, is changing the law to level the playing field and restore a patent system that rewards innovation, not litigation gamesmanship. The chance will come later this spring to enact meaningful patent reform. We will be there as advocates, and hope you will be too.

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  • icon
    cypherspace (profile), 23 Dec 2014 @ 2:32pm

    Patent nuclear warfare is such a strange game. The only winning move is not to play.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 23 Dec 2014 @ 2:42pm

      Re:

      The only winning move is not to play.

      Only true if you do not produce anything for sale, otherwise you can be attacked.

      reply to this | link to this | view in chronology ]

  • identicon
    ViewRoyal, 23 Dec 2014 @ 3:47pm

    Smart move by Rockstar

    Mike Masnick, there is nothing "stupid" or "costly" about Rockstar (Apple, BlackBerry, Ericsson, Microsoft and Sony) selling its patent portfolio to RPX.

    It was a very intelligent move.

    The Rockstar companies retain ALL rights to those patents, so in effect they have pre-paid the licensing fees for the future.

    At the same time, those patents are now being protected by another company (RPX) who will be responsible for selling licenses, collecting fees, and paying for huge legal costs in courts.

    RPX has deals in place to license those patents to Google, Cisco, and other companies, so there is no freebie give-away happening. But you can be sure that if there are any infringement cases that come up in the future, RPX will defend those.

    Rockstar gets the following out of its deal with RPX: 1) $900 million; 2) retaining the licensing rights to all of those patents; and 3) not having the worry or expense of having to license and legally defend those patents.

    That is a smart move!

    And by the way, you lose points for referring to the Rockstar companies as "patent trolls"!

    You are just displaying your own irrational bias.

    Remember that Google was bidding on the same Nortel patents. If Google had won the bidding, instead of Rockstar, I would bet that you would NOT be calling Google a "patent troll" due to your personal prejudices.

    (͡° ͜ʖ°)

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 23 Dec 2014 @ 5:31pm

      Re: Smart move by Rockstar

      You are just displaying your own irrational bias.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 23 Dec 2014 @ 11:29pm

      Re: Smart move by Rockstar

      Those patents are still subject to the Alice Rules, and might still get challenged if someone is given any incentive at all.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 24 Dec 2014 @ 2:41am

      Re: Smart move by Rockstar

      When MAD is in play, two parties simply not annihilating each other is not a sensible move, it is merely a lack of open escalation.
      The sensible move is mutual disarmament for general benefit.
      Arseface.

      reply to this | link to this | view in chronology ]

    • icon
      Mike Masnick (profile), 24 Dec 2014 @ 5:42am

      Re: Smart move by Rockstar

      Mike Masnick, there is nothing "stupid" or "costly" about Rockstar (Apple, BlackBerry, Ericsson, Microsoft and Sony) selling its patent portfolio to RPX.

      I didn't say it was stupid or costly to sell the portfolio to RPX. I said the stupid and costly bit was the litigation. Selling to RPX avoided that stupid and costly litigation.

      Feel free to criticize me, but at least be accurate.

      The Rockstar companies retain ALL rights to those patents, so in effect they have pre-paid the licensing fees for the future.

      Did I suggest otherwise?

      And by the way, you lose points for referring to the Rockstar companies as "patent trolls"!


      Why? They used those patents to shakedown others. That's patent trolling.

      Remember that Google was bidding on the same Nortel patents. If Google had won the bidding, instead of Rockstar, I would bet that you would NOT be calling Google a "patent troll" due to your personal prejudices.

      If Google had used them to sue others, then, yes, I absolutely would have called them a patent troll. There are no personal prejudices at work here.

      To date, however, Google has only initiated one patent suit that I'm aware of -- via Motorola, when it owned that company -- and I criticized the company for doing so. I know of no other effort by Google to shakedown companies or to set up a front company for privateering patents to shake down others. If it comes out that Google is actually doing that, you better believe I'd call the company out on that, because it's a bullshit practice.

      reply to this | link to this | view in chronology ]

  • icon
    Ed (profile), 24 Dec 2014 @ 6:31am

    If it walks, talks, and acts like a patent troll, then it is a patent troll. Rockstar is a patent troll, it was created to be a patent troll to keep the hands of Microsoft and Apple less dirty.

    reply to this | link to this | view in chronology ]

  • identicon
    staff, 25 Dec 2014 @ 9:49am

    more dissembling by thieves

    'While some have argued that big company v. big company patent attacks aren't a form of patent trolling'

    Right, it's only wrong when inventors and small entities enforce their property rights.

    So say large invention thieves and their paid puppets. The word on the street is Masnick and his monkeys are pr hacks for large invention thieves. All they know about patents is...they don't have any.

    Can you say ‘dissemble’? Just because they call it patent "reform" doesn't mean it is.

    It’s about property rights and jobs. When government fails to uniformly and justly enforce property rights they contribute to the wealth and power of the well placed few, suppress the ability and rights of the rest to make better lives for themselves and their families, support giant monopolies that enslave and impoverish the public, and commandeer the government.

    Property rights and jobs in America are now hanging from a frayed thread. These changes are killing our small and startup firms and the jobs they would have created. Some in Congress and the White House continue to follow the lead of their giant multinational campaign donors like lambs...pulling America along to the slaughter.

    http://townhall.com/columnists/eriktelford/2014/10/22/google-leverages-patent-reform-for-c rony-ends-n1908760
    http://www.npr.org/2013/11/06/243022966/secret-persuasion-how-big-campaign-donors- stay-anonymous

    All this patent troll and ‘reform’ talk is mere dissembling by China, huge multinational thieves and their paid puppets. If you tell a lie often enough and can dupe others to repeat that lie, eventually it is accepted as fact. As Mark Twain said, 'truth is not hard to kill, and (that) a lie well told is immortal'. Those who use the amorphous phrase 'patent troll' expose themselves as thieves, duped, or doped and perpetuate the lie. They have already damaged the American patent system so that property rights are teetering on lawlessness. Simply put, their intent is to legalize theft -to twist and weaken the patent system so it can only be used by them and no one else. Then they can steal at will and destroy their small competitors AND WITH THEM THE JOBS THEY WOULD HAVE CREATED. For the last several years now they have been ransacking and looting small entities taking everything they can carry. Meanwhile, the huge multinationals ship more and more American jobs to China and elsewhere overseas.

    Do you know how to make a Stradivarius violin? Neither does anyone else. Why? There was no protection for creations in his day so he like everyone else protected their creations by keeping them secret. Civilization has lost countless creations and discoveries over the ages for the same reason. Think we should get rid of or weaken patent rights? Think again.

    Most important for America is what the patent system does for America’s economy. Our founders: Jefferson, Franklin, Madison and others felt so strongly about the rights of inventors that they acknowledged 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 American economy, but the world’s. If we weaken the patent system, we force inventors underground like Stradivarius and in turn weaken our economy and job creation. For a robust and stable economy America depends on a strong patent system accessible to all -large and small, not the watered down weak system the large multinationals and China are foisting on America.

    For the truth, please see http://www.truereform.piausa.org/
    http://piausa.wordpress.com/
    http://dailycaller.com/2014/12/04/the-conservative-case-against-patent-reform/#disqus_thread
    http://w ww.law360.com/articles/561199/justices-should-back-off-patent-eligibility-michel-says

    reply to this | link to this | view in chronology ]

  • identicon
    vbkley, 26 Dec 2014 @ 10:35am

    Serving up Masnick's words

    A few large companies made nice around a few thousand patents formerly of Nortel. The actions and reasoning were not discussed or critiqued. Indeed the whole of Masnick's rant boils down to a statement and a vague promotion for the benefit of the one thing that has nothing to do with patents.

    The statement- "What is most critical, however, is changing the law to level the playing field and restore a patent system that rewards innovation, not litigation gamesmanship." leaves unanswered:

    What law Masnick?
    Assuming its patent law, which section of federal legal code would you change?
    All litigation is gamesmanship- no law (by being a law) can change that.

    The thing is innovation. Innovation is a successful product produced or promoted by marketers, and companies needing new sales to feed their greed. You want to reward innovation Masnick? An innovation is successful or its a failure not an innovation. You say "restore a patent system that rewards innovation" yet there has never been such a patent system in the US.
    Innovations (successful products like the iPhone without any core inventions that distinguish it from other smart phones) are their own reward and in fact require no patentable elements at all.

    Those who spout innovation are just apologists for companies like Google who pretend to be inventors and claim important core inventions like the self driving car. An invention made by a small group of Berkeley inventors.

    It is in fact inventors who are protected under the constitution not the puppet masters that pull your strings Masnick.

    reply to this | link to this | view in chronology ]

  • icon
    nasch (profile), 29 Dec 2014 @ 7:47am

    Common sense?

    You know the situation is bad when this solution is described as common sense.

    Also, the shills are strong with this story.

    reply to this | link to this | view in chronology ]


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