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Tom Ewing is a regular contributor to IAM magazine and this blog. His areas of speciality are NPEs, Intellectual Ventures in particular, and the privateer model of assertion, through which IP owners (both NPEs and operating companies) use third parties to manage/enforce patents on their behalf. Ewing has got together with Robin Feldman, Professor of Law & Director of LAB Project, UC Hastings Law, to pen a paper for the Stanford Technology Law Review. And The Giants Among Us is one of the most important contributions to the debate about NPEs, patent aggregators and the state of the US patent marketplace that I have read in a long time.
Put simply, the case made by Ewing and Feldman is that over recent years we have seen the rise of large patent aggregators which differ from traditional NPEs/trolls in a number of important ways, for example: the nature of their patent portfolios, who funds them and why, how they are organised, and the scale on which they operate. While there are potential benefits in the mass aggregation model, the authors say, there are also some significant problems. They conclude that overall the downsides outweigh the upsides, and for that reason they believe there needs to be greater regulation of the patent marketplace as well as a much higher degree of transparency.
On top of this discussion, there is a lot of interesting background stuff – especially on IV – as well as some speculation on the relationships IV has with the likes of RPX and Round Rock:
It is possible that some of Intellectual Ventures’ investors wanted to participate in an aggregator that overtly operated as a patent defense fund, and a fund limited more to areas directly related to its investors’ businesses and interests, and that RPX was formed to fill this market need. The patents that RPX acquires tend to be somewhat more along the lines of nuisance value patent than the patents that Intellectual Ventures acquires, and it is possible that the two companies may not often find themselves competing for the purchase of a given patent.
Suggesting a connection between Round Rock and Intellectual Ventures would be speculation, but we do note an interesting number of intersections between the people involved in each entity. For example, [Round Rock founder John] Desmarais is the litigator for the patent infringement lawsuit that Intellectual Ventures has filed against the field programmable gate array manufacturers. He is also the litigator for one of the Pragmatus cases filed using patents formerly owned by Intellectual Ventures, as well as the litigator for Oasis Research, a possible Intellectual Ventures privateering operation. Melissa Finocchio, Intellectual Ventures’ chief litigation counsel, was formerly the head of the litigation department at Micron [the company who previously owned the patents Round Rock now manages]. In addition, Samsung has reportedly signed separate licensing agreements in 2010 with Round Rock, Micron Technology, and Intellectual Ventures.
Such a debate may lead to changes at some time in the future, but in the meantime the market is unregulated and pretty opaque. So another big takeaway from The Giants Among Us is a point that the authors do not actually make – and that is that these days no business operating in the US can afford to be a passive observer when it comes to patents. Unless you take an active interest in and make positive decisions about them then you run a greater risk of being caught up in events that you are going to find it hard to control, with all the potential damage that can do (just ask Google, if you don’t believe me). Of course, you can complain about the state of things and demand changes, but we are where we are. As this paper clearly shows, ignoring patents or just hoping they will go away is not a sustainable strategy; it is a negligent one.
Licensing, IP politics, IP litigation, Patents, IP business