Is The Economy Taking A Bite Out Of Abusive Patent Lawsuits?
from the one-can-hope... dept
We've never been a fan of Ocean Tomo, the "patent auction" shop that was seen as something of a clearing house for lawyers and patent hoarders looking to buy up patents to squeeze money out of other companies. However, in February, we wrote about an article in the Chicago Tribune insisting that the tough economy was increasing patent sales as companies looked to squeeze more value out of their patent portfolios. We questioned the article, noting that it showed absolutely no proof whatsoever that sales were up -- other than a claim (with no data) from an Ocean Tomo exec, who had every incentive to make people believe that sales were up.But, in reality, it turns out sales aren't up. They're way, way, way down.
Joe Mullin writes about the latest Ocean Tomo auction that can reasonably be termed a total disaster after sales didn't just fall, but fell off a cliff:
While some folks I spoke to before the auction said they expected sales this year to be down by as much as 50 percent from last year, the final results were much worse. Friday's auction took in just under $2.9 million--more than 80 percent less than the roughly $17 million in patent sales generated by the company's San Francisco auction last year.That, of course, is exactly the opposite of what Ocean Tomo was telling reporters just a few weeks ago (and those reporters repeated it without question).
Out of more than 80 lots of patents on the block, only six sold. (An Ocean Tomo auction "lot" can include a single patent, several patents, or a portfolio of patents in related technology.) Ocean Tomo tacks on a 10 percent fee paid by buyers, and also charges fees to sellers, meaning the company probably took in less than $1 million for itself....
Ocean Tomo CEO James Malackowski looked a bit shaken by the end of the day.
"Obviously the market has become more selective," he said in brief concluding remarks.
In the meantime, Saul Hansell of the NY Times, notes that one of the very few buyers was RPX, a company we covered last year, which is still insisting that its business model is never to sue for infringement but to simply let tech companies "license" its portfolio as a way of having ammo against other patent infringement lawsuits. It's sort of "Intellectual Ventures-lite." This was the original business plan of IV, but no one really believes that IV won't eventually sue -- and I'd imagine the same is true of RPX. At some point, its A-list investors will demand a bigger return, and using the portfolio to sue will just be too tempting.
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Filed Under: economy, patent auction, patents
Companies: ocean tomo, rpx
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Maybe it's not just the economy
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Ocean Tomo was a source used to purchase patents for abusive patent lawsuits. The fact that sales are down suggests that those lawsuits may be less economically feasible these days.
I would have thought that was clear from the context.
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I think the only two things seen here is a lack of available funds from investors to take the risk on patents, and an somewhat naive business owner that thought his product(s) were recession proof.
When credit gets easier and the economy is rolling again, let's check back and see how their business is.
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No, it suggests that few want what Ocean Tomo is selling. It says nothing regarding how entities are exerting patent properties that were not acquired from Ocean Tomo.
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Heh. Nice try. Last month, Ocean Tomo was claiming more people would be making use of these patents to get extra money, a statement many people agreed with.
The fact that the sales dropped off by a HUGE margin, certainly suggests Ocean Tomo is wrong, and thus it's hard not to believe that it's a lot less feasible to go down this road.
Or do you think that Ocean Tomo was lying last month?
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I think that Ocean Tomo's claims were overdone, but they look worse because of how truly crappy the economy is today.
Again, do you see a decrease in lawsuits?
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Also at patstats.org, the total number of filings in 2007 was 2,903 and the total number of filings in 2008 was 2,749, or a drop of 154.
Now, if you take away the Central District of California, patent lawsuits WENT UP slightly everywhere else.
While I wish to avoid getting into the difference between causation and correlation, sprinkling in speculation, I would suggest the following possibilities for the down turn in Ocean Tomo sales:
(1) The patents Ocean Tomo had to offer were in industries that had little cash to purchase (Mike's economy theory).
(2) The patents Ocean Tomo had to offer were of the types that were most affected by recent litigation, such as Bilski (a non-economy affected cause).
(3) The patents Ocean Tomo had to offer were perceived as having less quality than Ocean Tomo seemed to believe (a non-economy affected cause).
(4) The patents Ocean Tomo had to offer were in industries where litigations favored the plaintiff even less than other industries (according to the AIPLA, only about 20% of all lawsuits initiated end up favoring the plaintiff; you can see that it would take very little to convince people that unless your complaint is really solid that the odds are not in your favor)(a non-economy affected cause).
Statistically speaking, there are perhaps more possibilities that are not economy based for the poor Ocean Tomo sales than those that are based on the economy - though ultimately all such decisions have economics behind them.
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The fact that the sales dropped off by a HUGE margin, certainly suggests Ocean Tomo is wrong, and thus it's hard not to believe that it's a lot less feasible to go down this road.
Or do you think that Ocean Tomo was lying last month?
No, I think Ocean Tomo was dead wrong, but not because of the economy. I think it has much more to do with the change in the law on patentable subject matter. Apparently Ocean Tomo's executives never read In re Bilski. Otherwise they would have realized that potential buyers probably don't want to be buying patents that are ripe for quick invalidation.
However, patentees whose patents pass muster under Bilski are still engaging in just as much litigation, "abusive" or otherwise. Had Ocean Tomo had more patents that met the "machine-or-transformation" test in their inventory, perhaps they would have had a better turn out. Using Ocean Tomo's lack-luster auction as evidence that the economy is diminishing "abusive" (whatever that means) patent lawsuits is taking one data point and extrapolating it to the world.
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patent hoarders
Call it what you will...patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: “we’re using your invention and we’re not going to pay”.
for the truth about trolls please see http://truereform.piausa.org
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Re: patent hoarders
Heh. Anyone pointing to an RJR site loses credibility immediately.
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