A Look Behind The Curtain: How A Patent Hoarder Makes Money

from the revealed! dept

A few months back, someone sent over some details about a legal battle involving Peter Boesen, who is both a convicted felon in jail and a patent hoarder who licensed his patents to a "patent troll" firm to assert against tons of tech companies, and Niro Scavone, the law firm representing the patent company (and the law firm famous for, among other things, having been the inspiration for the term "patent troll"). There wasn't much to write about directly, but it looks like Joe Mullin has been keeping on top of things (as always) and has found that via this lawsuit Boesen has exposed some of the underlying details of how much money patent trolls get:

Most intriguing is the sum paid by Apple to settle an SPT suit brought over the iPhone in the Eastern District of Texas in 2008: $865,000. Without any motions being filed after the intial complaint or any substantive discovery, a bit more than 30 percent of that amount, $271,817, went to Niro Scavone, which also billed $46,568 in expenses. Nearly $40,000 went to someone identified as "Ward"--most likely Johnny Ward Jr., who served as local counsel to SPT in the case. Of what was left, almost $109,000 went to SP Technologies, then owned by investor Courtney Sherrer, and $311,400 went to Boesen.

Also noteworthy: a full 10 percent of Apple's payout, $86,500, is marked as going to "LG"--an apparent reference to LG Electronics, which, according to the Boesen receipt, paid $834,964.01 to settle a separate SPT suit in 2006. Why would LG be getting a cut of the settlement in a suit to which it was not a party? And was Apple aware that a piece of that settlement might wind up with one of its competitors? Representatives from Apple and LG did not immediately respond to requests for comment.

There's a lot more in Mullin's post. Not sure how much is worth commenting on, but given that such patent holders and patent hoarding companies tend to be incredibly secretive about all of this stuff, it's still an interesting peek behind the curtain.

Oh yeah, as for Mullin's question about LG receiving 10% of the payout from Apple, that might not be all that surprising really. Last year, we covered how it was becoming increasingly common for patent hoarders to play this neat trick where they sue a bunch of companies and promise the ones who settle quickly a cut of what they can get from the others. This sets up a little an interesting game theory situation, whereby companies have extra incentive to settle quickly, which makes the patent holder very happy, and which they use to tout how "legitimate" their patents must be (yeah, right). It sounds like, perhaps, that's what happened here. Since LG settled earlier, perhaps part of the settlement was the right to 10% of a cut against others.

Filed Under: money, patents, peter boesen