Wednesday, April 25, 2007

Forbes: Blame Hedge Funds and Investors for Recent Patent Trolling

Forbes published an article yesterday that sheds more light on legal financing companies and their impact on patent litigation. The article highlights Robert Kramer, who founded Altitude Capital Partners in 2005, by raising $250 million from hedge funds and others to invest in intellectual property. Since that time, Kramer added an additional $100 million in 9 different "investments" (read: lawsuits).

Most notably, Altitude is backing MercExchange in their battle with eBay (Altitude was recently subpoenaed by eBay to find more information on the scope of their relationship). Other projects include DeepNines patent litigation against MacAfee, and Visto's patent litigation against Microsoft, RIM and Motorola. Visto recently received a $7.6 million verdict against Seven Networks on the same patents.

Another auspicious investor mentioned in the article is Paul Schneck, who runs Rembrandt IP Management, a Bala Cynwyd, Pa. firm. Unlike Altitude, Rembrandt buys up patents and launches lawsuits from scratch. So far, Rembrandt has raised $150 million and has a number of high-profile cases in the till. One of them is based on a patent directed to digital TV communication. The patent was purchased from Paradyne (formerly Lucent) for $1 million, and is now being asserted against Comcast, Time Warner, Walt Disney, ABC, and others. Another patent is based on the treatment of contact lens surfaces, and is being asserted against Bausch & Lomb and Novartis.

Other investment groups include:

Coller Capital, which is a London private equity firm with a $2.6 billion fund. Recently, the group quietly formed Coller IP Capital, which plans to invest $200 million a year in IP.

Northwater Capital, a $9 billion Toronto manager of hedge funds, put together NW Patent Funding last year.

While mindful of the recent anti-plaintiff changes in the courts and in Congress, IP investors are still hopeful that they will be on the winning side of a Microsoft/Alcatel or RIM/NTP verdict. Regardless of any upcoming changes, they have vowed to fight onward. As one patent consultant noted, "they are the arms merchants in the new patent wars."

See Forbes article "Patent Pirates"

See earlier 271 Blog post: "Are Legal Financing Companies Encouraging Trolling?"

5 Comentários:

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ilanit said...

All in all, the meat of the survey is pretty predictable, and for those who have been following Orange County equity investment environment - it should not be suprising. But more importantly, the survey does confirm that United States still needs to go a long way in developing its judicial system toward protection of rights as well as dealing with the tedious bureaucracy of doing business.

Anonymous said...

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Anonymous said...

please see for a different/opposing view on patent reform


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