Defense In Lori Drew Case Rests, As Judge Considers Dismissing The Case

New Patent Buying Firm Swears It'll Never Litigate Over Its Patents

from the until-it-needs-money...? dept

Tue, Nov 25th 2008 3:11am — Mike Masnick

When Intellectual Ventures first came about, Nathan Myhrvold convinced tech companies to back him, with a business plan that was all about pooling resources to buy patents for defensive purposes. The original pitch was that by joining with IV, you could make use of the patent portfolio to protect yourself against potential patent lawsuits. Except that once things got going, Myhrvold admitted that to make this work, the threat of also suing people for patent infringement had to be on the table (though, it hasn't reached that point yet). So, consider me quite skeptical of some former IV execs who have gone off to start a new firm that sounds suspiciously like IV's original plan.

It involves getting a bunch of tech companies to pay up, so that this new company, RPX Corp., can buy up a bunch of patents "for defensive purposes only." The company insists it won't sue anyone with these patents. But, of course, the whole thing makes you wonder. For the companies that buy into RPX's deal (or IV's for that matter), they end up spending a bunch of money for a rather weak form of insurance that protects them in the very rare case where they might be able to use a patent in either firm's portfolio to maybe, possibly protect itself against an infringement lawsuit. It won't stop others from suing, of course. And, if RPX is serious about not suing for infringement, then why won't other firms just free ride? They get the benefit of those patents not being in litigious hands, but without having to pay. The whole situation just shows how ridiculous the patent litigation world is these days, that a bunch of companies feel the need to fund other companies to buy up patents just so they're not sued. That's not quite "promoting the progress."

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: litigation, patent defenders, patents, pools
Companies: intellectual ventures, rpx

15 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Douglas Gresham, 25 Nov 2008 @ 3:38am

So if I'm a US startup, I now not only have to pay for a patent lawyer to write up and apply for my application (with searches and whatnot), I have to pay $35k minimum to these guys, and I'm still not insulated against IV and the rest? Inventing something sure sounds like a way to lose a lot of money very quickly right now - but hey, protection rackets are the business of the future, right?
[ link to this | view in thread ]
Michial, 25 Nov 2008 @ 4:46am

something seems fishy
Who decides what patents are purchased and which ones aren't?

Seems that it would be a better idea to spend the "membership" fees on buying the patents that affect your own industry.
[ link to this | view in thread ]
angry dude, 25 Nov 2008 @ 6:42am

Mikey is a tool
Patents are property

All this Mikey's whining is a paid up anti-patent commercial
[ link to this | view in thread ]
Anonymous Coward, 25 Nov 2008 @ 7:08am

Intellectual PROPERTY
Instead of constantly critisizing the process why don't you come up with a solution to this mess. One that provides INCENTIVE to "innovate" rather than DUPLICATE. Today, there are legitimate businesses that have invested billions of dollars into R&D only to have others reverse engineer their product at considerably less cost. That allows the other party to sell the product at a much lower cost because they do not have to recoup the R&D costs. If you end IP litigation there is a lot more risk invovled with R&D because if your product is good people will duplicate it and undercut your prices.

Now, tell me how we can get companies to invest without Intellictual Property protections. It's not an easy task, you can't force other companies to be "good", without the threat of litigation. Maybe if consumers were smarter they would reward the innovator rather than the duplicator but in the end consumers make buying decisions with their wallets.
[ link to this | view in thread ]
angry dude, 25 Nov 2008 @ 7:42am

Re: Intellectual PROPERTY
T-Shirts !!!

Start selling t-shirts, LOOOOOOOOOOOOOOOOOOOOOOOOOTS of T-shitrs to make up for your losses

That's Mike Masnick's answer

Hillarious, isn't it ?
[ link to this | view in thread ]
Anonymous Coward, 25 Nov 2008 @ 8:04am

"they end up spending a bunch of money for a rather weak form of insurance that protects them" in the very rare case where they might be able to use a patent in either firm's portfolio to maybe,

what was the name of that group who came up with this idea? was it the MOB? you pay us so no one bothers you.
[ link to this | view in thread ]
DanC, 25 Nov 2008 @ 8:05am

Re: Re: Intellectual PROPERTY
Hillarious, isn't it ?

It's about as funny as your constant repetition of this lie.
[ link to this | view in thread ]
Hulser, 25 Nov 2008 @ 8:29am

Trust us
So, these companies are saying the patents they are buying are "for defensive purposes only." This reminds me of the politician who sponsors a bad law with loopholes in it that, if enforced as written, would criminalize normal behavior. The politician's response when the unintended consequences are pointed out? "Well, of course we'd never prosecute people in that scenario. Trust us!" Riiiiiiight.
[ link to this | view in thread ]
Hulser, 25 Nov 2008 @ 8:37am

Re: Intellectual PROPERTY
Instead of constantly critisizing the process why don't you come up with a solution to this mess.

I find this attitude incredibly narrow-minded. What you appear to be saying is that, unless you have a completely workable alternative solution figured out, you're not allowed to voice any critcism? Contrary to your comment, it is possible to see and understand the problems in a system without having the solution to fix them.
[ link to this | view in thread ]
Mike (profile), 25 Nov 2008 @ 8:38am

Re: Intellectual PROPERTY
Instead of constantly critisizing the process why don't you come up with a solution to this mess.

You say that as if we don't suggest solutions all the time.

One that provides INCENTIVE to "innovate" rather than DUPLICATE.

It's called the free market and competition. That provides tremendous incentive to innovate in order to differentiate and stay ahead of the competition. It's fantastic. You should look into it.

Now, tell me how we can get companies to invest without Intellictual Property protections. It's not an easy task, you can't force other companies to be "good", without the threat of litigation. Maybe if consumers were smarter they would reward the innovator rather than the duplicator but in the end consumers make buying decisions with their wallets.

All of this assumes, falsely, that innovation is a one-and-done process or that business models can't be constructed that rewards the innovators. This is simply untrue, and any look at historical evidence on innovation shows this is untrue.

If a company can reverse engineer a product, so be it, but the innovator should already be on to the next innovation, and can set up business models that encourage customers to sign on with them rather than the copier.
[ link to this | view in thread ]
Anonymous Coward, 25 Nov 2008 @ 8:58am

Re: Mikey is a tool
I thought you finally threw yourself under a bus. A shame. Today started out as such a good day.
[ link to this | view in thread ]
Robert Z. Cashman, 25 Nov 2008 @ 1:27pm

Maybe the issue is allowing patents to be TRANSFERRABLE PROPERTY.
I agree. The goal of the whole patent process is to INNOVATE and to protect the INVENTOR against others reverse engineering and copying his/her ideas. Perhaps the problem is allowing patents to be transferrable.

Obviously I don't have a solution, but the patent law system is obviously broken at the point where inventors no longer can enforce their patents and are forced to sell to larger companies (often called trolls) who have the muscle to enforce. Maybe in addition to giving inventors more protections to enforce their patents, preventing the purchase and sale of patents in itself is also a solution. I know a solution like that would upset a lot of people, but at least it would protect the integrity of the patent system.
[ link to this | view in thread ]
Robert Z. Cashman, 25 Nov 2008 @ 1:29pm

Re: Mafia
There is no reason that those looking for patent protection have to pay the equivalent of a mafia in order to have protection from would-be infringers. The laws themselves should provide enough patent protection to the inventors, but they don't in their current form.
[ link to this | view in thread ]
Snidely, 26 Nov 2008 @ 2:39am

Heard this before...
...and it's pretty much the textbook definition of racketeering. Pay us or we'll sue is more sophisticated than pay us or we'll burn down your store, but the intent is the same.
[ link to this | view in thread ]
Anonymous Coward, 27 Jan 2011 @ 4:02pm

And they bought it... for awhile.

http://www.techdirt.com/articles/20100906/08574010912.shtml

http://www.techdirt.com/ar ticles/20110125/01044012808/more-patents-that-have-touched-both-intellectual-ventures-ocean-tomo-sho wing-up-lawsuits.shtml
[ link to this | view in thread ]