Showing posts with label patent troll. Show all posts
Showing posts with label patent troll. Show all posts

Wednesday, September 10, 2008

Beating NPE Patent Holders At Their Own Game

Electronics Design, Strategy, News (EDN) magazine published an article yesterday, titled "If You Can't Beat Patent Trolls, Join Them," which covers the latest in the manufacturers-vs.-NPE's battles:

Stuck in apparent stalemate on the legislative side, large companies have formed two new organizations—Allied Security Trust (AST) and PatentFreedom LLC—that use market forces rather than laws to ward off trolls. Both entities emerged from discussions among large companies and IP experts, particularly at ThinkFire, an intellectual property advisory firm that counts Hewlett-Packard and Cisco Systems among its clients. Those two companies as well as others formed AST last year.

* * *

AST, a Delaware statutory trust, was launched in March 2007, but just came out of stealth mode in July . . . The trust buys patents on the open market, grants licenses to its members, and then sells the patents—with those licenses attached—back into the market.

* * *

PatentFreedom, a limited liability company, is a subscription service that provides detailed information on NPEs. As McCurdy sees it, operating companies are at a disadvantage because of the secretive nature of trolls. While NPEs can gather all sorts of information about the large well-known public companies that are their targets, the targets often have very little information on the NPEs

PatentFreedom’s goal is to correct this “asymmetry of information,” said McCurdy. The company had a dozen subscribers as of August and McCurdy expects that number to triple by the end of the year. Annual subscriptions range from $50,000 to $75,000 a year, a drop in the bucket for operating companies. The company also has a lower cost “pay-as-you-go” model for those companies that aren’t frequently targeted by NPEs.

PatentFreedom has identified more than 125 entities with some 800 subsidiaries holding more than 9,000 patents. “And we are confident that there are more than 20,000 US patent families now owned by trolls,” said McCurdy. “We just haven’t found them all yet.”

The article also included this little tidbit:
[N]ot all large companies think patent trolls are threats . . . It simply depends on a given company’s business strategy . . . In fact, some large operating companies even finance trolls and/or use trolls to their own advantage, according to Steve Hoffman, CEO of ThinkFire. Although he won’t name any names, he said he knows of some operating companies that sell their patents to trolls so the trolls can do the dirty work—asserting the patents against competitors without the operating company being involved.
Read the article here (link).

Monday, June 23, 2008

Company Files Defamation Action Against Patent Holding Company

Cognex Corporation v. VCode Holdings, Inc. (a.k.a. Acacia), No. 06-cv-01040, (D. Minn.)


Cognex has established a reputation for aggressively defending itself against patent infringement from holding companies. Back in 2005, the company successfully defended itself against Lemelson and invalidated 14 patents asserted in the action.

Recently, Cognex has been involved in a battle-royale with Acacia subsidiaries VCode Holdings and VData LLC in the district of Minnesota. In May, Judge Joan N. Ericksen held on Summary Judgment that one of the patents-in-suit ("the '524 patent"), claiming a system for capturing and reading 2D symbology codes, was both invalid and unenforceable due to inequitable conduct by the defendants during the procurement of the patent (read the order here).

Interestingly, Cognex asserted that Acacia's actions in the case were a violation of the Minnesota Uniform Deceptive Trade Practices Act, and that certain Acacia statements made to Cognex's customers were defamatory. While the district court dismissed the deceptive trade practices claim, the court denied Acacia's motion for summary judgment on the issue of defamation.

Recently Cognex filed a second amended complaint and a motion for summary judgment, claiming that Acacia published false and defamatory statements:


24. Upon information and belief, since the filing of Cognex’s original Complaint in this action, an authorized representative of Acacia has informed at least two alleged infringers of the ‘524 patent, who have raised this action as a reason to decline or defer taking a license under the ‘524 patent, that Cognex, as recently as last summer, offered to buy the ‘524 patent (along with a related patent, U.S. Patent No. 4,924,078 (the "’078 patent")) for an eight figure sum.

25. Specifically, in an e-mail dated April 27, 2006 to a Proctor and Gamble representative, the Acacia representative, Tisha DeRiamo, stated:

Your information regarding Cognex is very interesting. I hope their attorney told you that as recently as last summer, Cognex attempted to buy the ’078 and ’524 patents from Veritec for an eight-figure purchase price. In other words, they saw value in having the patents back then. But now, as Veritec has emerged out of bankruptcy and is able to enforce its rights regarding the patents, Cognex alleges that the patents are invalid. It’s incongruous. (emphasis in original).
26. Upon information and belief, Ms. DeRiamo also stated to at least one of these alleged infringers, Allison Payment Systems, a customer of Cognex for its data matrix symbol reader products, that Veritec was in possession of a letter of intent evidencing Cognex’s alleged offer to purchase the ‘524 and ‘078 patents for an eight figure sum.

27. These statements made by Ms. DeRiamo are false. Cognex never offered to buy the ‘524 and ‘078 patents for any sum, let alone one with eight figures.
The move by Cognex is also noteworthy in light of the SCOTUS decision in Quanta v. LG Electronics - since licenses "purchased" from patentees extinguish certain rights, patent holders will be restricted in selling a company a license, and suing the company's customers (see Law.com article here).

Hat tip: Groklaw (read more details here)

Read Cognex's 2nd Amended Complaint here

Motion for Summary Judgment (link)

Acacia's Memorandum in Opposition (link)

Wednesday, June 11, 2008

Wednesday Shorts: Patent Tools, Enforcement Company Updates, and More

More Patent Tools (Part 1): Rolf Claessen, who is a partner at the German firm von Kreisler Selting Werner, and proprietor of the wonderful IPNewsflash website, has added a patent PDF download tool covering numerous countries. To try it out, click here.

More Patent Tools (Part 2): A new website called PatentRetriever has also issued a PDF download tool that allows "download of US, European and PCT patent applications as PDF fileswithout annoying user registration or logos inserted on pages." To try it out, click here.

Patent Enforcement Company Update #1: from the Politico.com news site:

Last week, Rep. Pete Sessions (R-Texas) and two other Texans on the House Financial Services Committee asked the Government Accountability Office to investigate the company “and the potential impact of DataTreasury Corp.’s litigation” against nearly 60 U.S. banks.

The three members requested that the agency check into the backgrounds of DataTreasury’s founders, investors, lawyers and patents. In the past, financial services lobbyists have raised questions about the company executives backgrounds and the fees paid to the company’s two law firms: Nix, Patterson and Roach and Provost and Umphrey.

Patent Enforcement Company Update #2: Plutus IP is a notorious patent holding company that allegedly has a multitude of affiliate companies formed under its umbrella (e.g., Taurus IP, Gemini IP, Caelum IP, Phoenix IP, Orion IP, Constellation IP). Currently, DaimlerChrysler is seeking up to $4 million in legal fees against Plutus IP in the Western District of Wisconsin after prevailing on a jury verdict for breach of contract. Apparently, Daimler previously paid a $2.3 million dollar settlement on a portfolio of patents in a broadly construed "no-more-lawsuits" arrangement with Plutus. After patents were shuffled among the affiliates, Daimler was sued not once, but three more times by affiliates. The Wisconsin jury ruled that this was a no-no. Read the complete story at The Prior Art.

Patent Troll Tracker Litigation: Joe Mullin has the latest - click here.

Monday, April 16, 2007

Is it Time to Stop Using the Term "Patent Troll"?

Two articles were recently published in the John Marshall Review of Intellectual Property Law, in which the articles derided use of the term "patent troll." It's derogatory, inaccurate and it sends the wrong message to lesser-funded innovators; say what you will about the patent system, but stop with the name-calling, argue the authors.

The first article, written by Ray Niro, expounds on the Patent Troll Myth article, and argues that use of the word "patent troll" is a veiled attempt by large companies to besmirch independent inventors and their contributions to various technologies. By coining a snappy, but pejorative, term on litigious inventors ("troll"), Niro argues that this tactic has helped large companies to walk over smaller entities:


Famous criminal defense lawyer, Percy Foreman, once claimed that he focused his trials on the bad acts of the victims of heinous crimes to divert the juries’ attention from his clients’ own bad acts. This tactic begot the name “victimology” and maybe, at some point, the juries in Forman’s cases actually thought the victims deserved to die—victimology at its extreme. Examples of victimology abound, including the Menendez brothers’ defense: “We had to kill our parents when we became adults because, as children, they abused us,” and, as O.J. claimed, “The system is out to get me: I was rushed to judgment.” Like O.J. and the Menendez brothers, [a large company has] to make itself appear the victim to divert attention from what [is] really happening.
Niro further adds:


Are “patent trolls” really so dangerous that legislation is needed to reform the patent system? Or, is the now over-used term “patent troll” just a way to disparage individual inventors and the attorneys who take their cases? Worse, is it even possible that the phrase “patent troll” embodies subtle public relations, in which perpetrators of infringement collectively claim to be the victims?
Oddly enough, while the article pleads for less name-calling, a few choice terms are proposed to describe attorneys that defend large corporations against claims of infringement from independent inventors:


[S]uppose someone wanted to bash big-time lawyers whose clients hired them to defend patent infringement lawsuits, claiming an inventor’s patent is invalid, not infringed and procured through inequitable conduct. Let us create a disparaging name for them. How about “Patent Bloodsuckers,” e.g., an animal, such as a leech, that sucks blood? Seem too harsh? . . . Then what about “parasite”? “Parasite” is defined as: An organism that grows, feeds, and is sheltered on or in a different organism while contributing nothing to the survival of its host.

Okay: Let us call them “patent parasites.” They feed on inventors, contribute nothing to innovation, and depend for their survival on the millions of dollars in fees they extract from their clients. So maybe “patent parasite” fits. And maybe we can even create a cartoon of the “patent parasite”— a Dracula-looking character, consumed by a bare desire to attack helpless inventors, he will destroy patents and the innovation they protect all while we, as a Nation, slide gradually toward technical mediocrity. Bad image, yes? If enough people start saying it, some people may start believing it - essentially following the circuitous route that led to the derogatory term “patent troll.”

------------------------------

In a more measured approach, the second article was written by student Jennifer Kahaulelio Gregory, who argues that the term "patent troll" is meaningless, since no one can accurately define who is a "troll" and who is merely a "non-practicing entity" (NPE). The article points to examples like Eastman Kodak, who successfully sued Sun Microsystems for $92 mil. on a patent it inherited, and did not practice:

No one has ever called Kodak a Patent Troll, even though it was not “practicing” that particular patent. Many large manufacturers create a strategic advantage by holding unused patents in their patent portfolio, and forcing competitors to come to them for licenses in order to use the patented technology. Also, many individual inventors hold patents on their inventions, but they have neither the expertise, nor the money to manufacture them.
In other words, most patent holders, small or large, are essentially doing the same thing as everyone else when it comes to patent enforcement. Regarding the "waves" of litigation caused by patent holders (NPEs), the article points out that a recent study by the Antitrust Modernization Commission indicates that of patent infringement lawsuits filed in thelast five years, NPEs filed about two percent.

With all the bad press patent holding companies have received over the last 2-3 years, it was only a matter of time before defenders of patent holding companies started to publish articles that responded to criticisms of the enforcement/licensing process. We can anticipate more of these articles to publish in the coming months as congress continues the attempt reform patent law in the U.S.

Download Articles

Raymond P. Niro, Who is Really Undermining the Patent System – “Patent Trolls” or Congress?

Jennifer Kahaulelio Gregory, The Troll Next Door


See also,

James F. McDonough III, The Myth of the Patent Troll: An Alternative View of the Function of Patent Dealers in an Idea Economy.

Article from Robins Kaplan, ""Patent Troll:" A Self-Serving Label that Should be Abandoned"

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