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Unintended Consequences Of Google's $900 Million Nortel Patent Bid: Creating New Patent Trolls

from the this-dept-is-patented dept

Thu, Apr 28th 2011 10:04pm — Mike Masnick

A few weeks back, Google got a ton of attention for offering a $900 million bid for a bunch of Nortel patents. Google made it pretty clear that it was seeking these patents largely to keep them out of the hands of someone else who might start suing everyone. However, there may be some unintended consequences. The publicity around Google's role and the size of the bid (which rumors say has already been surpassed by others) has drawn some renewed interest by some companies in "monetizing" their own patents. Greg Sandoval over at News.com has the story of a company called ReQuest, who claims to hold patents (7,577,757 and 7,136,934) on syncing -- and is now sending out letters to companies asking for licensing fees. The letters apparently make it clear that "patent lawyers" are interested in buying up the patents, which is a pretty transparent threat: license up or we'll sue.

But what struck me is how the company's CEO explained to Sandoval why he was suddenly resorting to patent shakedowns:

"We just wanted to open up the patents to the market, especially as the patent market has heated up," Cholnoky said in the phone interview. "Google just offered to pay $900 million for (6,000 patents belonging to Nortel, the bankrupt Canadian telecom-equipment company). Nortel is auctioning them off. So, companies like Google are interested in acquiring patents and I sent the letters to people who might have some interest...we've received lots of calls."

In other words, if Google thinks a bunch of patents are worth $900 million, it's signalling to the world that patents-as-weapons (rather than patents as innovation drivers) are something it will pay for, and that's making more people interested in exploiting (i.e., shaking down) others over a bunch of wasteful patents.

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Filed Under: patents, syncing
Companies: google, request

17 Comments

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Jay (profile), 28 Apr 2011 @ 10:06pm

Well crap...
I know the intention was good, but was there a better alternative than paying for the patents?
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LyleD, 28 Apr 2011 @ 10:26pm

Think outside the box...
The other way of looking at it is he's not actually shaking people down for cash.. Maybe.. It's actually an open invitation for someone *coughgooglecough* to spend some more money by buying the patents off him!

I'm sure he wouldn't turn down a reasonable offer ^^
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Anonymous Coward, 28 Apr 2011 @ 10:43pm

Because everyone knows that Google spent a ton of time looking through those patents for ideas to copy.
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Jeff, 28 Apr 2011 @ 11:04pm

Google wins
I believe if Google can obtain patents and make them open for people to use without licenses... just think of what people can do and create without worries...
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TechnoMage (profile), 28 Apr 2011 @ 11:17pm

So?
I Actually don't think this is entirely "Unintended". I believe they want to make it known to "All"(those with influence) to what level patents have become twisted and corrupted away from their intended purpose(if they were ever actually fulfilling that purpose).
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- Intellectual Puppetry (profile), 29 Apr 2011 @ 8:48pm
  
  Re: So?
  And what, pray tell, was the "intended purpose" of patents, IYHO?
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Anonymous Coward, 29 Apr 2011 @ 12:56am

Wherever there are riches, there are freeloaders. Unless you want to become a freeloader yourself, the best thing you can do is just face forward and keep working on productive means of enriching everyone. Leave these sharks and leeches their share--their existence is mandated by some cosmic law and you can no more do away with them than you can fly by pulling your hair.
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- Intellectual Puppetry (profile), 29 Apr 2011 @ 8:51pm
  
  Re:
  The existence is mandated by the establishment in law of patents as personal property. Like your house, your car, and your chattel, they can be freely alienated. This props up their value. If you can't capitalize on your hard-earned patents, perhaps someone else can.
  
  Can anyone tell me what is wrong with that?
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Narcissus (profile), 29 Apr 2011 @ 1:04am

Patent tax
I just wondered: Did anybody ever calculate how much more, for example, a copy of Windows costs just because Microsoft pays license fees to a ton of non-innovators? They must price it in as variable cost if they pay a license for every copy.

I'd think that if it turned out that out of every copy of Windows $30 goes to licensing fees, people might feel a bit different about it and even politicians might get a better picture.

If you also add the lawyer fees, which of course are fixed costs (no pun intended) it would give a clear indication how high the patent tax is.
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- abc gum, 29 Apr 2011 @ 5:54am
  
  Re: Patent tax
  "Did anybody ever calculate how much more, for example, a copy of Windows costs just because Microsoft pays license fees to a ton of non-innovators?"
  
  I believe a better example of taxation via patent would be the cell phone market.
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- Intellectual Puppetry (profile), 29 Apr 2011 @ 9:00pm
  
  Re: Patent tax
  More like $3-5. Much, much more is spent on marketing, and useless stuff like Bing, and Windows Mobile.
  
  Thank God for XBox, though!
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JEDIDIAH, 29 Apr 2011 @ 6:49am

Cry me a river. The poor robber barons.
> I believe a better example of taxation via patent would be the cell phone market.

Yes. We can start by the cost of dealing with bogus patents from Microsoft with stuff like VFAT.
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- Intellectual Puppetry (profile), 29 Apr 2011 @ 8:54pm
  
  Re: Cry me a river. The poor robber barons.
  What in the world does Microsoft have to do with the cell phone market? (Except perhaps for a feeble attempt to compete with Apple and Google's Android. Can't leave any market untouched, after all. Great commercials though! "Really?")
  
  By far the largest part of your cellular telephone bill is the huge capital cost of building and maintaining cell sites and networks in the face of tree-huggers who want five bars but don't want to see a new cell site built anywhere near them.
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staff, 29 Apr 2011 @ 7:39am

we�re not going to pay
"patent troll"

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�. This is just dissembling by large infringers to kill any inventor support system. It is purely about legalizing theft.

Prior to eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the Supreme Court decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now some of those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don�t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back in the patent system with injunctions fully enforceable on all infringers by all inventors, large and small.

For the truth about trolls, please see http://truereform.piausa.org.
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- Anonymous Coward, 29 Apr 2011 @ 12:28pm
  
  Re: we�re not going to pay
  The irony of a so-called "inventor" resorting to spamming his shill site everywhere is apparently lost on you.
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- Intellectual Puppetry (profile), 29 Apr 2011 @ 8:58pm
  
  Re: we�re not going to pay
  Dissembling? WTF?
  
  Who cares about an injunction when you can just get a reasonable royalty?!?
  
  And a patent NEVER provides "exclusive use of [an] invention." Rather, it allows one to exclude others from making, using or selling an invention. The distinction is subtle, but very important, as the invention may itself rely on one or more other patents.
  
  Really?
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Tom Foremski (profile), 29 Apr 2011 @ 4:26pm

Puzzling strategy...
I agree. I wrote about it at the time of the announcement, saying:

"Its strategy is puzzling. It's taking a big risk in publicizing its interest in the Nortel portfolio.

Google could have waited until the auction and then made its move. By advertising its interest in the patents it reveals areas in its IP where it is weak.

For example, hedge funds might get together to outbid Google because they could then sell licenses or pursue successful legal challenges and recoup more than their outlay."

http://www.siliconvalleywatcher.com/mt/archives/2011/04/googles_900m_pa.php
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