EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS


Regulators Target Patent Trolls But Lose Sight of Patent Cartels

Posted in Law, Patents at 3:30 pm by Dr. Roy Schestowitz


Summary: Action is finally being taken against patent abuse, even though it does not go far enough

TECHRIGHTS has gathered a lot of information on Intellectual Ventures and so did a paper from early in the year, which states accurately: [via Stefano Zacchiroli, the Debian Project Leader]

The new mass aggregator, however, is an entirely different beast. To begin with, funding sources for mass aggregators include some very successful and respectable organizations, including manufacturing companies such as Apple, eBay, Google, Intel, Microsoft, Nokia, and Sony, as well as academic institutions such as the University of Pennsylvania and Notre Dame, and other entities such as the World Bank and the William and Flora Hewlett Foundation. Nations such as China, France, South Korea, and Taiwan even have their own mass aggregators to varying degrees.

Moreover, the acquisition appetites and patent supply sources are quite interesting. Mass aggregators may have portfolios that range across vastly different areas of innovation from computers to telecommunications to biomedicine to nanotechnology. In some of the acquisition activity, mass aggregators purchase large chunks, and even the majority, of an operating company’s patents and patent applications. They typically pay cash up front, as well as a share of any future profits generated from asserting the patents against anyone other than the selling manufacturer. Mass aggregators have engaged in other unusual acquisition approaches as well, including purportedly purchasing the rights to all future inventions by researchers at universities in developing countries. Other acquisition approaches purportedly include targeted purchases of patents that are of particular interest to the mass aggregators’ investors.

The types of returns promised to investors and the types of benefits offered to participants are also quite different from garden-variety non-practicing entities, as are some of the tactics used in organizing the entities and in asserting the patents. Finally, the scale itself is simply mind-boggling. Mass aggregators operate on a scale and at a level of sophistication and complexity that would have been unimaginable a decade ago. They have taken the prototype strategies pioneered by a prior generation of non-practicing entities and changed them into some of the cleverest strategies yet seen in the intellectual property rights field.

The goal of this article is to shed some light on mass aggregators. We hope to provide some understanding of the nature of the change, to analyze its economics and implications, and to offer some normative considerations. In the descriptive section, we focus on the oldest and largest of the mass aggregators, Intellectual Ventures, which has gone to great lengths to maintain secrecy. Working from public sources and investing thousands of hours of research, we offer a detailed picture of the entity, tracing through approximately 1300 shell companies and thousands of patents. The section also describes in brief form several other mass aggregators, including ones that are public companies.

These are cartels and they should be made illegal. They inflate prices and deflate innovation. We dealt with the subject before.

There is an article in the BBC titled “Phone patents: An absurd battle“. iophk says it proposes patent trolls as a solution and adds: “I am surprised that Intellectual Ventures was not promoted. That’s one of the biggest if not the biggest” (it is).

I cannot read this article in the UK. Neither can Glyn Moody, who wrote: “wow, this is fun: the #BBC won’t let me access the bbc.com site ‘cos I’m in UK – http://bit.ly/Q5SK2Q ironic much?”

Good ol’ BBC is still serving plutocrats, not taxpayers who fund it obligatorily.

Here is what Groklaw quotes from this article: “One reason boils down to the nature of mobile devices like smartphones and tablets, according to Daniel O’Connor, a self-styled anti-trust and internet policy wonk as well as senior director of public policy at the Computer and Communications Industry Association. He says that software is a particularly active area for patents, especially anything to do with telecommunications, semiconductors and 4G data networks. Software patents are also particularly broad and vague, and that makes infringement difficult to avoid. “That creates the conditions for a kind of patent perfect storm,” O’Connor says….

“[M]ost of these patents don’t just make a single claim to a particular intellectual property right – on average each patent makes more like 20 such claims. That means that this collection of 250,000 patents actually describes about five million restrictions on what mobile device makers can do while they design a new model. Realistically an individual may be able to keep five, 10 or maybe 20 restrictions in mind when designing a new feature for a mobile device, but probably not 50 or 500. And five million? Not a chance.”

The solution should be to rethink patents, not create cartels with them. Innovative Automation (IA), a company named in a comical way like IV, shows that even cartel members are not safe. Apple got sued while still assembling a new part of the patent cartel:

Back on September tenth we posted a report revealing the fact that Apple had acquired 434 LTE centric patents. One of the original sources of our report stated that Rockstar Bidco, a company that Apple holds the majority stake in, acquired 116 LTE patents from Nortel, giving them a total of 434 LTE patents. It’s now been revealed that Apple had been acquiring even more patents over the summer and the list is extensive.

In a report filed yesterday, Business Insider listed a link to the US Patent Office which linked to a series of patent assignments between Nortel, Rockstar Bidco and Apple. The list totaled up to 1375 patents originating from Nortel, with the vast majority of them being assigned to Apple. Some of the listed patents have yet to be assigned to Apple as shown here and here.

Google’s talking points from the patents team focus on trolls rather than the cartel as their problem. They are focusing on trolls instead of the system as a whole because the want Google to become part of the cartel, hence part of the problem. That’s how patent lawyers think. Regulators are said to be taking a look at this problem:

U.S. antitrust authorities are examining whether specialized patent-holding firms—or “trolls” to their detractors—are disrupting competition in high-tech markets, opening a new front in a long-standing Silicon Valley battle.

“There’s a possibility of competitive harm here,” said Joseph Wayland, who served as the Justice Department’s acting antitrust chief until last week, when he stepped down to return to private practice. Mr. Wayland said officials are devoting “huge energy, particularly at a senior level” to this and other antitrust issues surrounding patents.

Other reports like this one from Reuters say that the US-leaning ITC is also taking a look:

The US International Trade Commission will review a judge’s decision which found that Apple did not violate patents owned by Samsung in making the iPod touch, iPhone and iPad.

An administrative law judge at the ITC had said in a preliminary ruling in September that Apple was innocent of violating the patents. The ITC, which could have opted to simply uphold the judge’s decision, said that it would take up the matter. A final decision is expected in January.

The FTC focuses on patent trolls and not cartels:

US antitrust enforcers are getting mighty interested in patent trolls. The Federal Trade Commission has even taken to calling these lawsuit-happy companies “patent assertion entities,” or PAEs.

“There’s a possibility of competitive harm here,” said Joseph Wayland, who was the head of antitrust enforcement at the Justice Department until last week. Wayland just left the government for private practice, and he told the Wall Street Journal there is “huge energy, particularly at a senior level” being spent on scrutinizing the intersection of patents and antitrust.

The FTC and the Department of Justice announced today they will host a public forum on December 10 to study the issue more closely. The speakers include IP lawyers, law professors specializing in these so-called PAEs, and even officers of high-profile patent trolls like Intellectual Ventures and Round Rock Research LLC. Executives from companies that have been critical of patent-holding companies, such as Cisco and Rackspace, will also be featured.

Here is more:

The US Department of Justice (DoJ) and US Federal Trade Commission (FTC) are opening informal hearings next month which will look into the question of whether specialised patent-holding firms, also known as “patent trolls” to many, are disrupting competition in technology markets. Concerns that non-practising entities (NPEs) – companies that hold patents but do not make use of them – cause problems in the market have existed for some time. The traditional “troll”, a small company holding a handful of patents, has in recent years been joined by the huge patent-holding corporations who buy up hundreds of patents. The aim of the NPEs is to get licence revenue from companies who they claim are infringing the patents they hold.

They ought to look at the cartels, not just trolls. We’ll make this point again at the end of the night (addressing the USPTO as a whole, not just the ITC). The patent system is as inherently corrupt as the political system, which corporations control at people’s expense and to people’s detriment.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New

  1. The Spanish EPO Scandal - Part I

    How García-Escudero Marquez, the sister of a Spanish Senate speaker, got controversially appointed to succeed the (now) EPO's Vice-President Alberto Casado Cerviño

  2. Media Alert: IAM 'Magazine' Does Not Protect Sources

    An important discussion regarding the role of IAM (Intellectual Asset Management) in the debate about EPO abuses

  3. Richard Stallman and Eben Moglen on the Microsoft-Red Hat Deal

    Founder of Free software and author of the GPL (respectively) comment on what Microsoft and Red Hat have done regarding patents

  4. Links 30/11/2015: Linux 4.4 RC3, Zaragoza Moving to FOSS

    Links for the day

  5. Public Protests by European Patent Office (EPO) Staff Weaken the EPO's Attacks on the Media

    Where things stand when it comes to the EPO's standoff against publications and why it's advisable for EPO staff to stage standoffs against their high-level management, which is behind a covert crackdown on independent media (while greasing up corporate media)

  6. Why the European Patent Office Cannot Really Sue and Why It's All -- More Likely Than Not -- Just SLAPP

    Legal analysis by various people explains why the EPO's attack dogs are all bark but no bite when it comes to threats against publishers

  7. How the EPO Twisted Defamation Law in a Failed Bid to Silence Techrights

    Using external legal firms (not the EPO's own lawyers), the EPO has been trying -- and failing -- to silence prominent critics

  8. East Texas and Its Cautionary Tale: Software Patents Lead to Patent Trolls

    Lessons from US media, which focuses on the dire situation in Texas courts, and how these relate to the practice of granting patents on software (the patent trolls' favourite weapon)

  9. The Latest EPO Spin: Staff Protesters Compared to 'Anti-Patent Campaigners' or 'Against UPC'

    Attempts to characterise legitimate complaints about the EPO's management as just an effort to derail the patent office itself, or even the patent system (spin courtesy of EPO and its media friends at IAM)

  10. The Serious Implication of Controversial FTI Consulting Contract: Every Press Article About EPO Could Have Been Paid for by EPO

    With nearly one million dollars dedicated in just one single year to reputation laundering, one can imagine that a lot of media coverage won't be objective, or just be synthetic EPO promotion, seeded by the EPO or its peripheral PR agents

  11. EPO: We Have Always Been at War With Europe (or Europeans)

    The European Patent Office (EPO) with its dubious attacks on free speech inside Europe further unveiled for the European public to see (as well as the international community, which oughtn't show any respect to the EPO, a de facto tyranny at the heart of Europe)

  12. What Everyone Needs to Know About the EPO's New War on Journalism

    A detailed list of facts or observations regarding the EPO's newfound love for censorship, even imposed on outside entities, including bloggers (part one of several to come)

  13. EPO Did Not Want to Take Down One Techrights Article, It Wanted to Take Down Many Articles Using Intimidation, SLAPPing, and Psychological Manipulation Late on a Friday Night

    Recalling the dirty tactics by which the European Patent Office sought to remove criticism of its dirty secret deals with large corporations, for whom it made available and was increasingly offering preferential treatment

  14. The European Private Office: What Was Once a Public Service is Now Crony Capitalism With Private Contractors

    The increasing privatisation of the European Patent Office (EPO), resembling what happens in the UK to the NHS, shows that the real goal is to crush the quality of the service and instead serve a bunch of rich and powerful interests, in defiance of the original goals of this well-funded (by taxpayers) organisation

  15. Microsoft Once Again Disregards People's Settings and Abuses Them, Again Pretends It's Just an Accident

    A conceited corporation, Microsoft, shows not only that it exploits its botnet to forcibly download massive binaries without consent but also that it vainly overrides people's privacy settings to spy on these people, sometimes with help from malicious hardware vendors such as Dell or Lenovo

  16. When the EPO Liaised With Capone (Literally) to Silence Bloggers, Delete Articles

    A dissection of the EPO's current media strategy, which involves not only funneling money into the media but also actively silencing opposing views

  17. Blogger Who Wrote About the EPO's Abuses Retires

    Bloggers' independent rebuttal capability against a media apparatus that is deep in the EPO's pocket is greatly diminished as Jeremy Phillips suddenly retires

  18. Leaked: EPO Award of €880,000 “in Order to Address the Media Presence of the EPO” (Reputation Laundering)

    The European Patent Office, a public body, wastes extravagant amounts of money on public relations (for 'damage control', like FIFA's) in an effort to undermine critics, not only among staff (internally) but also among the media (externally)

  19. Links 27/11/2015: KDE Plasma 5.5 Plans, Oracle Linux 7.2

    Links for the day

  20. Documents Needed: Contract or Information About EPO PR/Media Campaign to Mislead the World

    Rumour that the EPO spends almost as much as a million US dollars “with some selected press agencies to refurbish the image of the EPO”

  21. Guest Post: The EPO, EPC, Unitary Patent and the Money Issue

    Remarks on the Unitary Patent (UP) and the lesser-known aspects of the EPO and EPC, where the “real issue is money, about which very little is discussed in public...”

  22. Saving the Integrity of the European Patent Office (EPO)

    Some timely perspective on what's needed at the European Patent Office, which was detabilised by 'virtue' of making tyrants its official figureheads

  23. A Call for Bloggers and Journalists: Did EPO Intimidate and Threaten You Too? Please Speak Out.

    An effort to discover just how many people out there have been subjected to censorship and/or self-censorship by EPO aggression against the media

  24. European Patent Office (EPO) a “Kingdom Above the EU Countries, a Tyranny With ZERO Accountability”

    Criticism of the EPO's thuggish behaviour and endless efforts to crush dissenting voices by all means available, even when these means are in clear violation of international or European laws

  25. Links 26/11/2015: The $5 Raspberry Pi Zero, Running Sans Systemd Gets Hard

    Links for the day

  26. EPO Management Needs to Finally Recognise That It Itself is the Issue, Not the Staff or the Unions

    A showing of dissent even from the representatives whom the EPO tightly controls and why the latest union-busting goes a lot further than most people realise

  27. Even the EPO Central Staff Committee is Unhappy With EPO Management

    The questions asked by the Central Staff Committee shared for the public to see that not only a single union is concerned about the management's behaviour

  28. The Broken Window Economics of Patent Trolls Are Already Coming to Europe

    The plague which is widely known as patent trolls (non-practicing entities that prey on practicing companies) is being spread to Europe, owing in part to misguided policies and patent maximalists

  29. Debunking the EPO's Latest Marketing Nonsense From Les Échos and More on Benoît Battistelli's Nastygram to French Politician

    Our detailed remarks about French brainwash from the EPO's media partner (with Benoît Battistelli extensively quoted) and the concerns increasingly raised by French politicians, who urge for national or even continental intervention

  30. The Sun King Delusion: The Views of Techrights Are Just a Mirror of EPO Staff Unions

    Tackling some emerging spin we have seen coming from Battistelli's private letters -- spin which strives to project the views of Techrights onto staff unions and why it's very hypocritical a form of spin


RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time


Recent Posts