Guy Who Was Buying & Selling Foreclosed Homes In Florida Wins $124 Million Patent Lawsuit

from the yeah,-that-seems-reasonable dept

Joe Mullin points us to a story of yet another ridiculous patent trolling lawsuit win. This involves a small company called Grail Semiconductor, who appears to have done nothing of note in the market... but did secure a patent (6,642,552 on "inductive storage capacitor") which it used to sue Mitsubishi Electric... leading to a jury awarding Grail an astounding $124 million. Update: As pointed out in the comments, and discussed below, the issue here came about more as a breach of contract issue, rather than a straight up patent lawsuit...

However, what's interesting is that the "Naples News" from Naples, Florida has posted a somewhat revealing profile of Grail's "CEO" who doesn't seem to have any actual experience in the field, but somehow was hired to run the company through the lawsuit process (even though he lives in Florida, and the company is in California -- I guess it doesn't matter where you live if you're just suing over patent infringement):

A University of Wyoming graduate, [Ronald] Hofer spent about three decades compiling an eclectic résumé of business interests — insurance in London, tourism in Algeria, fusion technology in the U.S., drilling in Nigeria. Four years ago, Hofer settled in North Naples, buying foreclosed homes as investment properties.

From there, the story says that he met the inventor who held the patent "through mutual business acquaintances overseas," and somehow was made CEO of Grail despite no actual experience or relevant connection to the company.

Of course, the real big break for the company was hiring Ray Niro to run their patent fight. Niro is the guy who inspired the term "patent troll" years back, and has a long history with these kinds of cases. Grail had tried with other law firms in the past -- and apparently had trouble paying its bills. As the article notes, "One firm is suing for about $2 million in unpaid fees. Another is seeking more than $2.3 million." But, still, Niro took the case, and likely stands to earn himself a nice commission if Grail can hold on through the appeals process.

Also, the article celebrating Hofer claims that Mitsubishi "stole semiconductor designs" from Grail back in 2001, though I'm curious if that's actually true, or if this is just another case of independent invention of an obvious progression in the art. Lots of reporters claim that anyone found guilty of patent infringement "stole" from the patent holder, when it's very rarely the case. Update: Aha, some more details on the case suggest that, indeed, Mitsubishi did establish a deal with the engineer, and then appears to have shared the information with subsidiaries -- so this isn't a garden variety independent invention situation.

Either way, what does seem clear is that Grail tried to do something in the market and was a complete flop. If we were in a real free market, it would go out of business and move out of the way while others innovated. Instead, it gets to hang on, and we have a system in which we reward the failures, and punish the successful companies who innovate. That is not a recipe for economic growth by any stretch of the imagination.

Filed Under: florida, foreclosed homes, naples, patent troll, ronald hofer
Companies: grail semiconductor, mitsubishi electric