By Dennis Crouch
Intellectual Ventures has received billions of dollars in investment & revenue for its patent licensing program. Almost surprisingly, the company has rarely resorted to litigation in order to enforce its rights. Rather, it seems that most would-be defendants are willing to buy a license before litigation. However, Symantec won't roll over.
Intellectual Ventures I v. Symantec (D.Del. 2013)
In a new lawsuit, Intellectual Ventures (IV) has sued Symantec for infringing three separate patents: U.S. Patent Nos. 5,537,533; 6,598,131; and 6,732,359. In an ongoing lawsuit, IV is also alleging that Symantec infringes its U.S. Patent Nos. 5,987,610; 6,073,142; 6,460,050; and 7,506,155. IV is a master at bundling patents together to cover a particular market area. Here, I looked up the ownership history of all the patents being asserted and they turn out to be a diverse group:
- The '533 patent was originally assigned to the Portland-based company MiraLink. When that company went through bankruptcy (restructuring), a shell company known as "So. Pak Pte., LLC" purchased the patent and later transferred it to Intellectual Ventures. I presume that So.Pak was an intellectual ventures shell company.
- The '131 patent was originally owned by the now-defunct Ondotek company. When that company closed, intellectual ventures purchased the patent through a shell company known as Oxtapro Tre ME, LLC.
- The '359 patent was originally owned by BellSouth who then sold its rights to Dono Tech Services that appears to also be an ongoing intellectual ventures shell company.
- The '610 patent was originally owned by Ameritech who then transferred its interests to the University of Texas who then spun-out the IP enforcer "Verve LLC" who then transferred rights to AUCTNYC8 and then to IV. My suspicion is that IV controlled the game by the time that AUCTNYC8 purchased the rights.
- The '142 patent was originally owned by the Park City Group who sold the patent to sold the patent rights to the shell company known as Pait Capital Facility who then transferred rights to IV.
- The '050 patent was invented by two guys running their own company who then sold their rights to intellectual ventures.
- The '155 patent was originally owned by InfoBahn before being transferred to GateKeeper then GK Webb Services and finally to Intellectual Ventures.
One thing that is unclear at this point is the extent that the original sellers retain back-end compensation rights associated with these patents.
I’m an inventor.
Cool. Me too!
Interesting Ned; thanks for your thoughts.
Relatedly, I wonder if companies try to buy — or at least license — the prior-art patents they use in their 102/103 invalidity arguments … if/once they realize that they’re actually practicing such prior-art patent/s (invention/s).
… and/or whether NPE/PAEs involved in/following such cases try to buy them.
… and whether the use of prior-art patents by companies is at least an implicit admission that such patents are at least 101 and 112 valid.
Thanks Ned; appreciate the link.
Steve, I the patent had broad claims rejected over the reference, I think it might be safe to think that the reference might have dominating claims covering the products of the patent's owner. For example, the patent was claiming a car, but that claim was rejected over a reference disclosing and claiming a car.
It might be interesting then to see if the person or company who has the patent on the car my be willing to sell the patent for enforcement purposes. These purchase can be in the form of future royalties. The company selling keeps its hands clean while IV does all the heaving lifting.
Barns and Noble: link to ftc.gov
Ned — for at least a couple of reasons that quickly come to mind, I’m not seeing how such an approach would work:
1. Since the patent; being listed in the IDS of an issued patent; was already considered by the patent office, it’s much harder to use it against that patent.
2. This assumes that IV is able to acquire the patent at a price it’s willing to pay for it; further assuming that the owner is willing to sell it (or perhaps an exclusive license with sub-licensing rights) at any price.
Am I missing something?
Ned — do you have a no-subscription-required link to the Barnes & Noble complaint?
Thank you.
I didn’t say it was frivolous. But anything that will make trolls like IV reticent to file lawsuits is a step in the right direction. If their case is a slam dunk, then they wouldn’t lose their bond. Then again, if their case is a slam dunk, then Symantec would probably already have settled.
IV’s business model seems to identify patents cited by companies in IDSs, seeing if these patents might be available for sale, sending a request for an insurance fee to the patent owner who filed the IDS, and then if they do not pay, acquiring the patent and then suing.
Perhaps the sequence might be a little different, but not by much since IV sues without prior notice of infringement so the difference is immaterial.
Anon, if you look, they said the patent was cited in an IDS filed by Symantec. This is not "notice" of infringement.
“was sued without prior notice of even the patent”
does not match up with
“had knowledge of and notice of the ’533 patent”
Ned, stop. Take a deep breath.
As I said, IV seems to claim to own a technology and demands a fee. They do not assert infringement and then demand a reasonable royalty.
In support of this, I wish to bring to your attention this paragraph of the complaint:
“Symantec has had knowledge of and notice of the ’533 patent and its infringement since at least, and through, the filing and service of the Complaint and despite this knowledge continues to commit the aforementioned infringing acts….”
In other words, it is clear that Symantec balked at paying a fee and was sued without prior notice of even the patent that IV had might be asserted against it.
This is very much the practice, as I know it, of IBM, which demands a fee based on the assumption that you infringe without specifically pointing out which patents you infringe so that you can determine your actual need for a license, or whether you can easily avoid infringement.
And, according to Barnes and Noble, this is now Microsoft’s modus operandi.
I’m not sure what you mean by “the company has rarely resorted to litigation in order to enforce its rights.” IV doesn’t sue as ‘IV’ all the time. But there are plenty of “companies” “doing business” in East Texas that are nothing but IV-subsidiary patent holding companies that do nothing but sue.
I am not sure about MS, but that seems to be the IV model.
what if I demand a fee, and then use the fee to acquire the patents that cover the subject matter?
I don’t know what to say. Obviously you can’t go around demanding fees you’re not entitled to, and you’d expect people to tell you to go pound sand, but if you later own patents that people are infringing, what’s to stop you from suing them for infringement?
Sounds like a pretty bizarre business model, though. Is MSFT really telling people to pay up or they’ll go buy patents they infringe and then sue?
OK, but what if I demand a fee, and then use the fee to acquire the patents that cover the subject matter?
is there a problem with MS’s initial demand?
Assuming you’re not mischaracterizing it, it’s problematic in that it doesn’t adequately state a legal basis for MSFT’s entitlement to compensation. So, a tad vague.
But if you are in fact infringing their patents, whether they’re “easily avoided” is less relevant than whether they’ve actually been avoided. If you infringe, and the patents are valid, you owe them some money and they’re within their rights to sue.
Do you owe them 5%? I don’t know. But if we’re going to try to curb frivolous lawsuits, I’d assess costs based on whether a reasonable settlement offer was refused, rather than whether the plaintiff has its name on the front page of the patent. If you offer them more than they end up winning in court, they should pay your costs for wasting everybody’s time and money. That way, maybe both parties will be reasonable, and the “troll” plaintiffs can still be assessed for costs as long as you send them a letter saying “here’s a dollar, now go away”.
Just, I am assuming you haven’t read the Barnes and Noble complaint.
Now think. Imagine MS says that it pioneered smartphones and everyone must pay it a standard fee of 5%.
If you refuse to pay, and they sue you on patents on very minor features of smartphones that are easily avoided, is there a problem with MS’s initial demand?
Like I said elsewhere, Rambam, if I ask you to pay insurance and when you do not, I acquire a patent and sue you for infringement, I think saying patent infringement lawsuits are legal does not adequately cover the situation.
I see something far more ominious. When your dealing with the indegent inventor being unable to afford an attorney this bill stops the ability to partnership with other indegent prosee contingent legal representatives to prepare and prosecute and file suit where lisencing or patent purchase negoations are dismissed by infringing companies as impossible due to indegency of the patent conciever and the bond requirement. Shield act esentially impeeds or stops the brightest inventors from monitizing there patents shuttering the system of valuable marketable human advancing jobs creating patents eliminating that market segment from occuring permadently
Said a man about to get out-push-uped by an 80 year old.
Dear different anon,
All the time.
Thanks.
From my research, virtually every invention improves a prior invention. The vast majority of those are small improvements that often cannot stand alone. These inventions in aggregate fuel our economic growth. I think we can probably agree to that.
An invention that cannot stand alone is destined to be enforced. To be enforced, it needs to have a certain level of market value. If it doesn’t, then no firm will take it and it will generate no value to the inventor.
I posit that these small inventions still provide value to society in aggregate. IV aggregates these inventions and provides value to the inventor.
If there is no value to the inventor, who in their right mind would pay tens of thousands of dollars for nothing?
Aggregation drives innovation. IV rides a white horse.
Hopefully cases like this will convince Congress to pass the SHIELD Act.
Why? Just because the patents were acquired separately, that doesn’t make them any less valid or infringed. What have you seen that suggests this action is so frivolous that it warrants a bond for the defendant’s costs?
I can see it being the poster child for requiring the real party in interest to register its interest at the PTO, but that’s about all.
Hopefully cases like this will convince Congress to pass the SHIELD Act.
anon, do you ever say anything of substance?
Thats me I can likley show that the parent conceptions evolved from my contact with the actual places and times involved and they wont pay me in 10000+ instances thats a wide spread consperacy and fraud. There enforcing stolen patents I think? These ones are a technical nature so I never know when I might find one or more that are so disconected I cant make a conection at all. Especially in electronics where monir subinvention spins from my original conceptions.
MM — if you mean to say you believe I’m a PAE, that would be incorrect; as I’m an inventor.
I was with you until the final paragraph. True, IV’s tactics are not illegal. But to say they create value and drive innovation is as extreme on one hand as is likening them to mobsters on the other hand.
Close italics tag.
The series of articles, each (with one exception) having the presumption that aspects of private ownership must be “bad,” draw to mind the words: Bully Pulpit.
I hope the irony is not lost, given the obvious one-sidedness of the crusade.
I guess I don’t get this big thing about who owned the patent before. It seems pretty clear to me that the more salable a patent is the more valuable it is and the more power it has to promote innovation.
I think what corporations need to do is from super innovation centers that get ahead of these types of patents with public use disclosure, and patenting. My guess is that such super innovation centers are being built right now to create prior art to kill the NPEs attacking the next gen of products.
Another reaction that I think should take place that I have seen a bit of is companies forming teams to fight off NPEs. I worked briefly with a Wall Street firm that did this.
Essentially, an NPE came after them for something that was standardized in the industry and calls went out that the other corporations should join them to help fight off the NPE as they would surely be next in line. I was actually not selected to move forward with the forming of the group and didn’t follow whether or not they actually formed up or not.
But, this is another reaction to NPEs that might be interesting in studying.
I would still be very interested in articles that discuss how companies are adapting to these tactics. Greater spending on innovation and disclosure is what I am seeing.
Too bad she doesn’t spend more time figuring out patent law and other law rather than laying about. Her opinions might be worth something if she weren’t so arrogant to think that she knows everything.
I’ll be curious to see who IV’s lead counsel is. The lawyers who have appeared so far appear to be local counsel.
Ned, it is indeed a protection racket, but it is a protection racket that unfortunately is legal. In Anglo/American law that’s sufficient, unless you can get a jury to buy into a jury nullification argument. (FYI in Jewish law there’s a term for such a situation, “naval b’rshut haTorah”, that can roughly be translated as “legal but disgusting”, but that’s of no help here.)
Their fee is based, as I understand it, on your presence in a field.
Oh please. If that was the case, they would be able to claim non-infringement. Not that your logic is stellar at any point, but it really needs some help today.
The big boys who “own” the territory don’t own anything but intimidation.
If they purchased the block, they could get rent. IV isn’t out breaking kneecaps or intimidating anyone.
They are strategically buying property and putting them together into a stronger asset. It’s like Oracle buying up a bunch of software companies and putting them together into a better product. I’ve heard no complaints on how that kills small software companies.
The value IV creates is substantial, and it drives innovation. Small inventions can actually generate value to a consolidator, and that makes it worthwhile to share inventions with the world in exchange for the right to exclude others.
this is actually a more cost and resources effective way of settling the issues; as Symantec gets to deal with only one patent holder instead of seven separate ones; and will likely end up with one master (multi-patent) license to cover them all.
Mmmmm … crystal PAE. [coughs] Yeah, man. Righteous.
Ruth putting you guys to shame:
link to shine.yahoo.com
Steve, I know that buying patents and asserting patents is entirely legal. But they do not ask you to pay a fee based upon your use of the patents. Their fee is based, as I understand it, on your presence in a field. Whether this is legal or not is an interesting question.
Barnes and Nobel complains about Microsoft. The essence of their complaint is that Microsoft requires people to pay royalties if they are in certain markets, while the patents they have that cover market participants are minor and easily avoided. Microsoft does not assert infringement when it demands royalties. It simply acts like they own the field and are entitled to tax market participants.
Fish, I don't think it a stretch. That is why I was asking whether Symantec was raising an equitable defense.
Calistus, but what IV does is different. With a few patent in a field, they claim to own the field and demand membership fees of all players in the field. IV acts just like IBM.
Think Chicago. You open a bar, and the next thing you know you have to pay insurance. To whom? To the big boys who "own" the territory. You don't pay, they send in the muscle.
Is IV different?
Oopan Symantec style!
Respectfully Ned, what IV is doing is completely legal; and is in fact not a protection racket:
link to en.wikipedia.org
Some such as yourself don’t like how they operate (I’m not one of you); but they’re not breaking any laws.
Indeed, this is actually a more cost and resources effective way of settling the issues; as Symantec gets to deal with only one patent holder instead of seven separate ones; and will likely end up with one master (multi-patent) license to cover them all.
That is a stretch, Ned.
I buy a a series of farms and rent the land, am I involved in a “protection racket”?
Ned, you’re smarter than that.
HEEEEEEEEEEEEEEEEEY INTELLECTUAL VENTURES!
Bob, IV act like a protection racket in that it buys patents covering a technology and demands every participatent in that technology to pay a fee. I don't know whether this is illegal, but it certianly is a protection racket.
Ned, how would arguing a RICO-type defense work, unless you could show that the patents were fraudulently procured as part of a criminal conspiracy? Absent a showing of fraud, IV hasn’t done anything legally wrong – they’ve accumulated a set of patents that allow IV to be a pain to Symantec. Even if those patents turn out to be invalid, under the law in its current form that eventual finding of invalidity doesn’t per se preclude IV’s assertion of those patents in litigation that leads to the finding of invalidity. And even if you could show fraud in the procurement of the patents – a tall order – you’d have to connect the dots to show that IV orchestrated the fraudulent procurement in order to extort companies like Symantec. I don’t see your proposed defense leading anywhere.
Dennis, is the Symmantec defense based on anything but non infringement? Do they defend, for example, on some equitable basis such as that IV is a protection racket?
Comments are closed.