Intellectual Ventures Files Its First Lawsuits; Giant Patent Troll Awakened

from the watch-out... dept

Wed, Dec 8th 2010 4:35pm — Mike Masnick

For years, Intellectual Ventures has avoided suing companies directly, while building up a portfolio of tens of thousands of patents (mostly bought -- though it likes to get PR from the wacky and usually useless patents it files directly). Its business model, to date, has been about shaking down giant tech companies for hundreds of millions of dollars in exchange for letting those companies use IV's patent portfolio either defensively or offensively against others. However, as part of an attempt to avoid the dreaded "troll" label, the company had avoided suing others directly for quite some time -- though, it's always hinted that it would eventually. About a year ago, we started to see IV patents showing up in lawsuits, but they had been licensed to other companies first. The notoriously secretive company would never comment on whether or not it had any stake in the results of such lawsuits.

However, Intellectual Ventures has finally stepped up and filed three separate patent infringement cases against nine companies, including Symantec, McAfee, Trend Micro and others. Of course, some of these companies have a history of questionable patent activity themselves... Still, this seems like IV and Nathan Myhrvold stepping things up a notch. Consider it a warning to other tech companies: if you don't agree to pay hundreds of millions of dollars to Intellectual Ventures, the company might sue you too.

That's not how innovation is supposed to work.

Still, perhaps this will convince more people just how problematic our current patent system is today and how we need to move towards fixing it.

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Filed Under: nathan myhrvold, patents
Companies: intellectual ventures, mcafee, symantec, trend micro

38 Comments

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Pierre Wolff (profile), 8 Dec 2010 @ 5:04pm

Really?
"Still, perhaps this will convince more people just how problematic our current patent system is today and how we need to move towards fixing it." Do you believe that? For big companies, paying up is easier and cheaper than fighting. Once they've paid, they're in on the scam. No politician, as we've seen, has the balls to take on a fight against large corporations (read "campaign donors") who'd have no interest in changing the status quo. So I guess the follow-up question would be, who do you think are the *people* who would be convinced of the need to fix things and could actually have an effect on doing so? ;)
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GeneralEmergency (profile), 8 Dec 2010 @ 5:30pm

Why fix it?
Just -END- patent altogether.

The real inventions these days are just noise buried by a cacophony of "Refrigerator-Clock" incrementalist dreck.

All of this nonsense is a DRAG on our economy and needs to be swept away.
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TtfnJohn (profile), 8 Dec 2010 @ 5:59pm

Re: Really?
At some point, if a system is broken, there comes a time when the break in the system causes a collapse.

Consider the number of times this site and others have pointed out that some patents never should have been awarded due to prior art and a number of other factors overlooked or ignored by the patent examiner.

None of this is fantasy but the way that patents can be overturned is time consuming, expensive, labour intensive and seems not to rest on any evidenciary rules at all.

What we are witnessing is a near explosion of software patents being granted for all kinds of thing including algorithms that have long existed and programs already in existence by a minor rephrasing of the purpose of the patent. Keep in mind that one is not supposed to be able to patent algorithms or other mathematical equations which pretty much sums up software any more that one is not supposed to be able to patent anything occurring in nature. None of these things seems to stop an examiner from saying no.

I'm calmly waiting for the day, which I suspect will be soon, when someone discovers that the same thing has been granted two or more patents under different names and for different "purposes". When the patent owners start to go after each other is the day the entire system starts to fall in on itself because it's been built on so much sand.

Allowing the system and the good it does, and there is some once you get by some of the more ridiculous things surrounding patent law in the USA which has affected patent law elsewhere. Even to the point of so called "examiners" stamping damn near every patent application that wanders by.

Now let's stop of a moment and consider that if the BASIC language had been patented that Microsoft would probably not exist. Remember, it's first product was BASIC for the Altair computer back in the mid 70s. Had patents existed that likely would have stopped MS from producing their BASIC Interpreter cassette.

I can think of a few situations where most computer languages existing today wouldn't exist if the current patent regime had existed other than, perhaps, COBOL. So we'd all be left hacking away at Assembler.

The microcomputer itself may not exist and certainly not on the scale and price it does now becaue I can see just about every peripheral and connector being patented and fiercly defended.

Admittedly it's worst case but think a moment and it's not hard to envision.

Just imagine! No Internet porn and still stuck with Playboy and Penthouse 1960s style complete with vaseline slathered all over the lens!!!!

The current patent system isn't just problematic its so badly flawed that unless it's changed I can see it collapsing on itself far sooner rather than later. And with it whatever good it was originally intended to bring.

Copyright is rapidly heading that way too, for different reasons that I'm not going to go into here because that's off topic (take note trolls!).
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NullOp, 8 Dec 2010 @ 7:14pm

Legal?
Harassment is illegal. Why isn't patent trolling? Sometimes the law is so obviously ineffective. Far as I'm concerned this company is operating in a loophole that needs to be closed.
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abc gum, 8 Dec 2010 @ 7:27pm

Cool - the next bubble.

1) Patent trolls go public
2) securitized trolling sold
3) exagerate ratings
4) bubble bursts
6) too big to fail
7) taxpayer bailout
8) profit !!!!
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Anonymous Coward, 8 Dec 2010 @ 8:14pm

I don't get it
When I read this:
"That's not how innovation is supposed to work."

Why is innovation the ultimate goal? Innovation takes ideas and execution. IV specializes in ideas - they execute ideas. What is wrong with that?
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Anonymous Coward, 8 Dec 2010 @ 10:04pm

Re: I don't get it
What execution?
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Lawrence D'Oliveiro, 8 Dec 2010 @ 10:47pm

Re: Why is innovation the ultimate goal?
Because that�s supposed to be the point of Capitalism. If a company isn�t being paid for innovative products that customers want, what is it being paid for?
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Anonymous Coward, 9 Dec 2010 @ 12:58am

Re: Re: Why is innovation the ultimate goal?
"Because that�s supposed to be the point of Capitalism"

Thats a common mistake actually. The point of Capitalism is monopoly at all costs. Free markets, which require rules that are always enforced with democratic oversight and the utmost transparency, never laxes and maintains competitive safe harbor for startups is what you mean.. it's not as catchy though ;)
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Richard (profile), 9 Dec 2010 @ 5:55am

Re: I don't get it
Why is innovation the ultimate goal? Innovation takes ideas and execution. IV specializes in ideas - they execute ideas. What is wrong with that?
They don't execute the ideas they just sue the people who do.

The problem with unimplemented ideas is that they are often obvious to many people - but are held up by lack of materials or infrastructure. For this reason the patent system used to require a working prototype. Nowadays people talk about "speculative patents".

Da Vinci "invented" a lot of things - but most of them were impracticable due to lack of materials or manufacturing techniques.

If you have difficulty with this concept then ponder on the following two questions:

1) Why didn't the Romans have bicycles?

2) Why was Newcomen's "atmospheric" steam engine invented before the (seemingly much more obvious) standard type where the stem pushes the piston directly?
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Richard (profile), 9 Dec 2010 @ 6:42am

Re: Re: Re: Why is innovation the ultimate goal?
You need to distinguish capitalism from capitalists.

Capitalism is a system where capitalists compete with each other in attempting to overthrow capitalism.

What is good for an individual capitalist is bad for capitalism.

What we really need is a capitalist system operated exclusively by socialists.
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Anonymous Coward, 9 Dec 2010 @ 7:09am

Re: I don't get it
Perhaps I was not clear, IV executes ideas in that their product is ideas. The product of their work is ideas. When they execute, ideas are the output. There is nothing wrong with that. Mike talks about a lot of different things that *can* produce innovation, like ideas having sex and copying. Well, patents can and do produce innovation. There is nothing wrong with having a business around patents. There is nothing wrong with defending your business interests. IV did not create the environment that we live in and they are simply being good capitalists by taking advantage of it - yet you fault them for that. I think you are all confused.
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Pixelation, 9 Dec 2010 @ 7:24am

Re: Re: I don't get it
Their product is not ideas. Their product is a protection racket. Reminiscent of the Mafia. Pay us or we'll sue you. Nice product. Nice people. Very beneficial to society. I, for one, hope they go under.
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DH's Love Child (profile), 9 Dec 2010 @ 7:35am

Re: Re: Why is innovation the ultimate goal?
Because that�s supposed to be the point of Capitalism.

Actually that's supposed to be the point of Patents. To promote progress and all that jazz....
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Gabriel Tane (profile), 9 Dec 2010 @ 7:52am

Re: Re: I don't get it
~blink~ really?

"The product of their work is ideas. When they execute, ideas are the output. There is nothing wrong with that. Mike talks about a lot of different things that *can* produce innovation, like ideas having sex and copying. Well, patents can and do produce innovation."

How is their product 'ideas'? Especially when they didn't produce them... they just bought them up.

Let me boil their MO down for you...they buy a patent (idea), wait for someone else to have that same idea, then sue them for trying to move on that idea.

Nowhere in there did they actually do anything with that idea.

So, tell me... how is that good for innovation? Anyone actually doing the innovation is sued into oblivion and the idea stays the same.
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Anonymous Coward, 9 Dec 2010 @ 9:32am

Re: Re: Re: I don't get it
Its nice that you see it that way. Have you been to the IV home page? This is right on their home page:
"Intellectual Ventures is the global leader in the business of invention. We collaborate with leading inventors, partner with pioneering companies, and invest both expertise and capital in the development and monetization of inventions and patent portfolios. Our mission is to energize and streamline an invention economy that will drive innovation around the world."

IV has a real staff made of real people that do real work. Yes the bought some of what they have but not all of it. Their goal is to partner with people that wants to bring the ideas to market. You seem to be misinformed. Maybe you should try to get your information from more than one source. Try a source other than Mike's opinion - maybe you'll be able to form your own opinion rather than just repeating Mike's.
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staff, 9 Dec 2010 @ 9:33am

hypocrite
'shaking down'

Let's see, they own property they want others to stop using or pay for use of. What's wrong with that? If I reprinted your story without permission, wouldn't you want me to stop, or pay for the use of? Don't be a hypocrite.

Just because they call it patent �reform� doesn�t mean it is. Patent reform is a fraud on America.

Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.
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MrWilson, 9 Dec 2010 @ 10:00am

Re: Re: Re: Re: I don't get it
"Try a source other than Mike's opinion - maybe you'll be able to form your own opinion rather than just repeating Mike's."

Try a source other than IV's PR statement on their website - maybe you'll be able to form your own opinion rather than just repeating their PR statement.
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angry dude, 9 Dec 2010 @ 10:26am

Yeah, really broken
Ok, end patents and copyrights, hand everything over to China and elect mike masnik an emperor of the world

Stupid stupid punks
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angry dude, 9 Dec 2010 @ 10:31am

Re: hypocrite
wait a minute

Makey writes nothing but propaganda - a cheap one

He WANTS all punks here to promote and replicate his propaganda at no cost to him
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Mike Masnick (profile), 9 Dec 2010 @ 10:41am

Re: Re: Re: Re: I don't get it
IV has a real staff made of real people that do real work. Yes the bought some of what they have but not all of it. Their goal is to partner with people that wants to bring the ideas to market. You seem to be misinformed

What product has been brought to market so far?
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Gabriel Tane (profile), 9 Dec 2010 @ 11:18am

Re: Re: Re: Re: I don't get it
And when you go to Shell or Exxon or Nike or any of the companies known for exploitation, pollution, callous damage to the world (no, I'm not making an analogy of death to patent-hoarding), you'll see messages of "we care" and "we're fixing the world".

Do you believe those at face value too? When I see IV (or any other patent-hoarder) doing ANYTHING like what their website says, I'll start believing them. Is it unfortunate that heinous actions of other corporations have jaded us and made us so cynical that we won't take any corporation at face value with the benefit of the doubt? ~shrug~ Maybe. Is it going to change? Not until a vast majority of the corporations out there actually try honesty for once.
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Anonymous Coward, 9 Dec 2010 @ 1:02pm

Re: Re: Re: Re: Re: I don't get it
Companies like Samsung and HTC have license agreements with IV. Both Samsung and HTC have a history of producing products. When you mix IV's ideas with the execution of companies like Samsung and HTC then innovation can happen. These deals are recent, I suppose we need to wait and see what comes out. 'has been' and 'is coming', not the same thing.
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Anonymous Coward, 9 Dec 2010 @ 1:05pm

Re: Re: Re: Re: Re: I don't get it
No more than I believe techdirt at face value. Check wikipedia and other places. Form your own opinion.

Nothing illegal is going on here. You might not like it but this is how the system is setup and how the system works. Name calling won't change that.
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Anonymous Coward, 9 Dec 2010 @ 1:09pm

Re: Re: Re: I don't get it
They've hired and paid real scientists to do real science and produce good ideas. They then take those ideas and release them publicly as patents. They run the risk of never licensing those patent and never making a dime. After 20 years, their ideas are suddenly public domain. This is beneficial to society.
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Gabriel Tane (profile), 9 Dec 2010 @ 1:24pm

Re: Re: Re: Re: Re: Re: I don't get it
"No more than I believe techdirt at face value. Check wikipedia and other places. Form your own opinion."

But Techdirt isn't trying to sell people on the company... they are trying to point out the business practice that is questionable. And they usually do a good job of pointing to the sources for further investigation. I do form my own opinion... just because I start at Techdirt to find out about the stories doesn't mean that my opinion is somehow flawed.

"Nothing illegal is going on here. You might not like it but this is how the system is setup and how the system works. Name calling won't change that."

No, nothing illegal; just highly questionable on an ethical standpoint. And legal /= OK. Name-calling won't change it, you're right. But increasing awareness of the situation and urging for reform of the broken patent system will change it.

And besides, I don't believe I ever 'called them names'.
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Anonymous Coward, 9 Dec 2010 @ 1:29pm

Re: Re: Re: Re: Re: Re: Re: I don't get it
"But increasing awareness of the situation and urging for reform of the broken patent system will change it."

We'll see.

You are right, you did not name call. But the article you are supporting did. Think 'patent troll'.
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Mike Masnick (profile), 9 Dec 2010 @ 1:47pm

Re: Re: Re: Re: Re: Re: I don't get it
Companies like Samsung and HTC have license agreements with IV. Both Samsung and HTC have a history of producing products.

Um. Wow. In both cases, those companies did "license agreements" in order to respond to lawsuits from others. It had nothing to do with licensing IV's patents to learn how to produce something. HTC has specifically slammed the practice of using patents, saying it prefers innovation and competition to exclusion.
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Dade, 9 Dec 2010 @ 1:53pm

A troll is still a troll
Doesn't matter if they don't sue directly. If they're the ones benefiting from the lawsuit, then they are still a troll. Call them what they are - extortionists.
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Pete, 9 Dec 2010 @ 2:19pm

It is an utter shambles that Patent 6460050, utilized in the suits against Symantec, Microtrend, et al. was awarded in the first place. A cursory viewing of Google Scholar shows that the use of hashing based-identifiers/signatures to identify records, multimedia, and files in (network-based) databases was extensively described in the literature 19 years before the patent was submitted.

That was the only one of the patents I invested in any time into investigating, I'm sure others are similarly without merit. What a circus of clowns that IV are; they should be truly ashamed of themselves for extorting others based on the flimsiest repackaging of ~20 year old ideas.
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teka, 9 Dec 2010 @ 3:00pm

Re: hypocrite
really?

you are really going to trot out Both of those debunked ideas?

"They own property they want others to stop using"
No. They own or control government granted liscenes designed to promote/encourage innovation and invention. The fact that they do not actually make use of these "properties" is fairly damning, but the litigious actions are worse.

Let us consider a thought experiment. You are a scientist, working in your lab on a new development that you invented. You did not copy this invention from anyone. When you try to produce and sell your product, derived from your independent invention, Someone that you have never heard of makes a claim.

"I own the idea of toothbrushes that dispense their own paste!" they cry, and sue you for a billion dollars plus %75 of all your future income. Terrified by their hundreds-strong team of lawyers, you cop out and take a settlement deal, signing away a few million dollars, plus dollars per unit.

Your product now costs more, and this entity has more money to hire more lawyers (though they do not seem to produce anything). They now claim that they are "partners" with you whenever someone tries to complain that they do not produce anything at all. They claim that they are letting you use the idea, as if you would never have created a self-pasting toothbrush without their "r&d skills"

Your product costs more, or your profit is much less. Customers are left holding the bill, in higher prices or less innovation in the market.
The Entity that sued you saps away more money, to sue more people, increasing the cycle.

Everyone loses, except for IV, i mean, except for the mystery example company.

If I reprinted your story without permission, wouldn't you want me to stop, or pay for the use of? Don't be a hypocrite.

thanks for letting us know that you have not been paying attention in the dozens of hundred of other times someone asked Mike about that. Want to copy this content? go ahead and try.
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john, 9 Dec 2010 @ 3:01pm

Re: Re: Re: Why is innovation the ultimate goal?
Adam Smith : 'when ever business men get together the talk soon turns to talk of monopoly'

In capitalist systems If the business fails the capitalist Owner loses the business. The Modern System is : Managerialisum In this system when the manager stuffs up the manager gets a bonus and everybody else gets shafted.
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Anonymous Coward, 9 Dec 2010 @ 5:54pm

Tech companies never, ever copy and steal (err, "make good use of") other people's ideas for their own benefit? And as long as they produce products, that never does anyone any harm?

These same companies are not about to throw all their patents out in the open for the good of the market. They don't want patent law to cease to exist. They want it to...selectively exist.

This good guys vs. bad trolls rhetoric is interesting, though.
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Keong, 9 Dec 2010 @ 8:14pm

The outcomes of the lawsuit should be limited to the amount of your product sales (or something like that)...meaning that Non-Practicing Entities, i.e. companies owning the patents but not shipping any actual product, would effectively get nothing because don't have product sales. Then there wouldn't be any business case built purely on lawsuits.
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Anonymous Coward, 10 Dec 2010 @ 7:06am

Re: Re: hypocrite
"I own the idea of toothbrushes that dispense their own paste!"

You have obviously never been involved with patents directly. Its doesn't work like that, you don't patent ideas, you patent processes to make things. You would patent the process by which the brush does its dispensing - there is more than one way to cause a toothbrush to dispense paste.
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Anonymous Coward, 10 Dec 2010 @ 7:15am

Re: Re: Re: Re: Re: Re: Re: I don't get it
So in this those cases, IV is *helping* them by being willing to license their patents. These are amicable deals. No one can honestly say that something good will not come from this. The real story is that one patent does nto equal one product, it may be hard to tell exactly where and how the patents are used and Samsung and HTC certainly will not disclose that. They licensed more than what they needed to cover their asses. We'll just have to wait and see what happens. I can't predict the future any more than you can.
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Jay (profile), 11 Dec 2010 @ 10:23pm

Re: Re: Re: Re: Re: Re: Re: Re: I don't get it
You're missing the point. IV has the patents but has nothing on the market. They're basically "thugs for hire", licensing out their patents to the highest bidder. They're not doing it to "progress the arts or sciences", they're doing it because they have a huge portfolio. It's the same way Microsoft feels that they bring their patents to bear against newcomers in the field, bullying them for more money.
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Anonymous Coward, 14 Dec 2010 @ 11:25am

Re: Re: Re: Re: Re: Re: Re: Re: Re: I don't get it
Again, you seem to be misinformed. IV has real employees, real scientists and engineers that do real work. They come up with new ideas and they patent them. This real work is creating progress in science. The patents will be public domain at some point, like 20 years. Society benefits from their work and from their patents. You can hate them all you want but to deny that they create anything is dishonest. IV has patents on the market, their product is patents - they produce half of the equation idea+execution=innovation. You missed the point that IV came to the rescue of Samsung and HTC when those companies were under pressure from other 'thugs' as you call them.
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