NY Times Profiles One Of The World's Worst Patent Trolls

from the probably-a-good-time-to-downsize dept

We've covered patent troll Erich Spangenberg a few times over the years, starting with the time a court told him he needed to pay $3.8 million to DaimlerChrysler after he had signed a patent licensing agreement over some patents in one of his shell companies, transferred those patents to another shell company... and sued DaimlerChrysler once again. The NY Times now has a big profile on Spangenberg, in which he claims to be making $25 million per year, and he claims that the "mauling" that the judge gave him in that particular case (which he's still appealing) was actually good for business:

“It was a mauling,” Mr. Spangenberg said of Judge Crabb’s takedown, now under appeal. But weirdly enough, the ruling turned out to be terrific public relations.

Soon after Judge Crabb’s decision, IPNav’s phone was ringing with new business. RadioShack, Bridgestone and other companies wanted to strike a variety of deals to monetize their patents. The mauling had laid bare Mr. Spangenberg’s aggressive business techniques. IPNav soon grew from five employees to 80, most of whom are patent specialists; it currently manages about 10,000 patents

Okay, time to add RadioShack and Bridgestone to the list of companies never to do business with again. The article, by the way, approvingly mentions the "many unprintable names" that commenters right here at Techdirt have called Spangenberg.

Spangenberg tries to play the same card that all the big patent trolls now claim: that they're helping poor independent inventors get their due. The article highlights Steve Dodd from Parallel Iron, whose highly questionable patents and lawsuits we've covered a few times as well. Hearing Spangenberg and Dodd tell the story, they're just helping the little guy build a business:

“Erich saved our bacon,” said Steve Dodd, a patent holder with a client company called Parallel Iron. “We were more than $1 million in debt and I was getting ready to file for bankruptcy.”

Right. The reason he was $1 million in debt was because his business failed. Under a capitalist system, when that happens, you go out of business. You don't use highly questionable, almost certainly bogus, patents to shake down everyone for using a basic file system that they came up with entirely independently. But that's what Spangenberg and Dodd have done.

And this is the key point that is woefully lacking in so many stories about patents and patent trolls -- including in this particular profile: the fact that these cases almost never include stories of anyone actually copying someone else. Perhaps, in those rare instances, you can make an argument that a patent prevents flat-out copying that may feel unfair (whether or not it actually is is a whole different story). But, here, we're talking about Parallel Iron claiming that anyone who uses Hadoop infringes on the patent, despite the fact that Hadoop was created independently, and that when Parallel Iron tried to build an actual business, it failed. That's because what matters in business is rarely the idea, but almost always the execution. Parallel Iron couldn't execute. The idea that it gets to sue those who do is really quite ridiculous.

The rest of the profile of Spangenberg is interesting too, though I find it interesting that Spangenberg is apparently downsizing. He's apparently selling his 14,000 square foot home in Dallas (it could be yours for merely $19.5 million) and has moved into a 2,000 square foot apartment. He's also sold off all but one of the 16 cars he recently owned (including six Lamborghinis). He kept a Ferrari, however. He claims that the home and all the cars were "a combination of 'nouveau riche on steroids' and midlife crisis" that he's since decided he's outgrown. Of course, there's another possibility. With the White House coming out strongly against patent trolls, and the FTC and DOJ beginning to investigate the businesses of patent trolls, one wonders if he doesn't see the writing on the wall... Of course, perhaps he and his wife can focus on her side business of trademark trolling.

Filed Under: erich spangenberg, patent trolls, patents, steve dodd
Companies: ip nav, parallel iron