PatentFreedom To Offer Subscription-Based Reexam Service to Attack NPE Patents
Joff Wild from IAM Magazine attended the CIP Forum 2009 in Göteborg Sweden and provided an interesting report on a presentation given by Dan McCurdy, who is the chairman of PatentFreedom and CEO of Allied Security Trust. In his presentation, McCurdy announced the launch of a new initiative called "Integrity" which will essentially serve as an inter-partes reexam gadfly service against problematic patents owned by NPE's (aka "trolls").
PatentFreedom offers subscription-based services, priced between $15- $25K, "designed to help operating companies and their advisors more effectively assess, respond to, and ultimately reduce the specific threats posed by NPEs." Membership is open "to any operating company, law firm , or other entity that derives the majority of its revenues from the sale of products or services other than services involving the sale, enforcement, or licensing of intellectual property" (for a list of service offerings, click here).
The new "Integrity" service will be available to PatentFreedom subscribers, where each subscriber chooses which sectors they would like PatentFreedom to focus on when seeking to identify patents to challenge. Importantly (and perhaps oddly), subscribers cannot single out specific patents on their own - the PatentFreedom team will ultimately make this decision, based on subscriber portfolio assessments identifying particularly threatening and potetially vulnerable patents.
Wild provides further details:
Companies can identify as many sectors as they wish, but will have to pay a minimum of $100,000 for each one they do select. McCurdy estimates that the cost of an inter partes re-examination is between $100,000 and $200,000. He told me that the idea was not only to deprive NPEs/trolls of the weapons they use to challenge operating companies, but also to sow uncertainty in the minds of their financial backers. Will investors be so willing to fund an NPE/troll if there is a chance that the patent(s) it seeks to use to generate an income will be held invalid in a USPTO process that costs a fraction of the amount needed to fight a full-scale litigation?
According to McCurdy, PatentFreedom data shows that close to 4,000 operating companies doing business in the US have now been sued by an NPE/troll. The cost of NPEs/trolls to those who they targeted in 2008 was betwen $7 billion and $10 billion. Overall, they now account for 17% of all American patent litigation, although in the technology industries that figure climbs to more than 50%, with some individual companies experiencing a hit rate of 90%. It is time, McCurdy says, to be much more aggressive in fighting the threat that NPEs/trolls pose. For example, he wondered, whether operating companies should give work with law firms that routinely represent NPEs/trolls (he showed a slide of those which do so and some big names were on the list) or employ funds that back NPEs/trolls to run things such as pension and healthcare plans. When fighting a war, he stated, you go after the fight chain. And, he said, operating companies are engaged in a war with NPEs/trolls.
Read Wild's full post here (link)
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Likely, the reason they won't allow subscribers to pick patents targeted for reexamination is to avoid estoppel issues for subscribers in the event that the patent is upheld. I wonder how long it's going to be before an NPE that has been targeted sues McCurdy/PatentFreedom for tortious interference with contract?
Perhaps McCurdy/Patent Freedom is just looking to make money.
Sounds like they are beating the drums a little too hard.
How is McCurdy licensed to practice law or before the PTO???
I for one am excited about this market solution to the problem.
Sounds like this is set up to insulate their clieints from teh estoppel provisions of inter partes re exam. Although given the pathetically slow rate at which reexams are disposed of (so much for "special dispatch"), I'm not sure that really matters - the NPEs will have them in court long before the reexam is decided.
Call it what you will...patent hoarder, patent troll, non-practicing entity (NPE), etc. It all means one thing: “we’re using your invention and we’re not going to pay”.
Joff’s article is interesting and thought provoking. It’s war is it? Mr McCurdy and PatentFreedom’s initiatives should be resisted strongly as they are trying to stifle true competition in the IP market. Why? Because they only serve the needs of the anonymous Patent Dragons whom they serve. Patent Dragons are like the mythical creatures of old that hoarded gold (patents) for their own use and would not share it. They believe that as practicing entities they have the only legitimate right to patents and associated exploitation rights ....hogwash! Most of these Dragons have split personalities and are full of troll like practices.
The cost to the Patent Dragons in the US, at between $7-$10 billion, is a measure of how much the NPE’s of old have been ripped off by these Dragons. In the past they could simply ignore small NPE’s and steal their innovation because of the financial imbalance between the parties. All they can do now is whine that their MAD approach to IP (a peculiarly US Practice) is ineffective as they have a large number of bombs but no target to bomb!
How is PatentFreedom able to pull together a secret cartel of major US patent holders and to use their collective financial weight to a) undermine the legitimate patent rights of NPE’s and b) to attack the legitimate service provision of large numbers of US attorneys? Is this not anti-competitive behaviour?
Oh and Mr McCurdy...publish a list of your subscribers please!
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