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01.08.17

Update on Patent Trolls and Their Enablers: IAM, Fortress, Inventergy, Nokia, MOSAID/Conversant, Microsoft, Intellectual Ventures, Faraday Future, A*STAR, GPNE, AlphaCap Ventures, and TC Heartland

Posted in America, Asia, Microsoft, Patents at 3:53 pm by Dr. Roy Schestowitz

Hiding behind fronts, attack dogs, and interest groups

Cat hide and seek

Summary: A potpourri of reports about some of the world’s worst patent trolls and their highly damaging enablers/facilitators, including Microsoft which claims that it “loves Linux” whilst attacking it with patents by proxy

THE ISSUE associated with patents as a ‘pure’ business model, or patent trolling, is widely understood. Imagine a world where people profit from making nothing at all, just demanding money from (if not blackmailing) companies that make actual sales and have a source of income/revenue, namely customers that buy products.

More patent trolls news came from the trolls-funded IAM the other day. “According to a December 29th release,” it quoted, ““Fortress will have the sole discretion to make any and all decisions relating to the company’s patents and patent monetisation activities.” Inventergy has around 740 patent assets acquired from Nokia, Huawei and Panasonic in a series of three separate deals in the first half of 2014.”

Here again we see Nokia as trolls’ ammunition, just like at MOSAID (now known as Conversant, which pays IAM’s publisher). Speaking of MOSAID, which Boris Teksler is involved in (hopping between Microsoft-connected trolls), see this new list from IAM. The Editor in Chief of IAM gives him (yet again!) some special honour, without noting that his employer paid IAM (under the new name, Conversant). So much publicity for an aggressive firm (actually a patent troll) from IAM… one might begin to think that it’s coverage that money simply buys. Conversant is such an evil patent troll (working for Microsoft’s interests now) that it had to change its name and now it’s trying to improve its reputation with some puff pieces? And from who, from IAM? Watch this latest IAM revisionism about Xiaomi (yet again!), maybe for the third time in the past month alone. We already explained that Microsoft was extorting Xiaomi with patents, but IAM tells a sanitised, face-saving PR story for Microsoft:

Xiaomi – Who says the IP deals market is flat? During 2016, Chinese mobile manufacturer Xiaomi – not yet 10 years old – seemed to be on a one company mission to prove that this is far from the case. In January it emerged that it had got its hands on a suite of Broadcom patents while a month later came the news that it had acquired a significant portfolio of US assets from Intel. Both deals, though, were eclipsed by the ground-breaking transaction with Microsoft announced at the end of May – a win-win for both that exemplified the way that IP is now forming the bedrock of much wider co-operative agreements between operating companies. While all this was happening. Xiaomi was also incorporating Zhigu Holdings into its internal operation – a move that saw the aggregator’s president and chief operating officer Paul Lin become Xiaomi’s VP of IP strategy. That could well prove to be a masterstroke, with Lin having gained a great deal of deal-making experience at both Intellectual Ventures and Microsoft while based in the US. Like many young Chinese technology businesses, Xiaomi is running a significant patent deficit; but unlike many of them it has recognised it needs to be aggressive in doing something about this. To expand, it will not only have to develop its own IP, but must continue to be active and creative in bringing it in form third parties. With Lin enjoying enlightened support from the very top of the company, Xiaomi is set to become an even bigger patent player in 2017.

Notice the connection between “Intellectual Ventures and Microsoft” (in the above text). It’s a strong and well established connection, which we have been covering for nearly a decade now. Microsoft uses the world’s largest patent troll, which it itself created/funded, to attack Linux. It’s a common tactic where the troll is mostly/only a proxy.

Similarly, as mentioned here the other day, Faraday Future throws its patents at some shell company and this new article from TechDirt looks deeper at the anatomy of it:

That’s all interesting… but what’s amazing is that in all of these discussions about how Faraday Future “doesn’t own its intellectual property” absolutely no one seems to point out the fact that the company that everyone compares it to, Tesla, famously dumped all its patents into the public domain and told anyone to go ahead and use them. That seems like a relevant point to make in articles about this upstart competitor and its “intellectual property.” Of course, it’s possible that the articles could mean something else when it says “intellectual property” — such as trademarks — but it seems unlikely that the trademarks for a flailing company that is unlikely to ever get anything on the market are that valuable.

The whole story, and the ignoring of Tesla’s stance on patents… is just strange. It is true that sometimes failing companies hang onto their patents as a sort of last ditch effort to extract some return for their investors in a patent fire sale. But if you’ve reached that point, things have already gone way too far south to really matter. Tesla has shown that it can build a pretty damn successful company without relying on “intellectual property.” It seems that people should stop freaking out that Faraday Future may have dumped its patents into some offshore company, and focus on the company’s real problems — like the fact that its execs are racing out the door as fast as possible.

Remember that Microsoft has its own patent “assertion” (trolling) department/entity (they call it “Licensing”) and several more large companies now do something similar. Sites like IAM just call that NPEs.

“For NPEs,” (i.e. trolls) Florian Müller explained the other day, “it’s often actually desirable to make litigation more, not less, expensive. Speed and injunctive relief attract them.”

Yes, this is a truthful statement and it helps demonstrate how to mitigate/tackle the trolling epidemic if there was sufficient desire, just like limiting trolls’ movement/travel. Currently, in the Eastern District of Texas, where defendants haven’t much confidence in winning (not cheaply anyway), trolls are making a killing.

East Asia is rapidly becoming the breeding ground for the trolling epidemic, as we noted here before. The above from IAM is just one example of it, as is the IAM article titled “The signs suggest that IP monetisation activity is on the rise in Southeast Asia, says A*STAR tech transfer chief” (“IP monetisation” is a euphemism for trolling). Another new article is titled “$130 million patent claim against Apple in Shenzhen shows NPEs in China increasingly strident”. It sure looks as if SIPO has turned China into a cesspool of patent trolls. Who benefits from this? A few parasites, not ordinary Chinese people. To quote IAM, “GPNE’s Chinese assertion appears to have begun back in 2013 in the Shenzhen Intermediate People’s Court. The court’s database shows four lawsuits against Apple and associated companies at the trial stage. According to a report in China’s National Business Daily, the most recent hearing was in late November 2016; the same article also states that Apple has made three separate attempts to invalidate the asserted patent at SIPO’s Patent Reexamination Board, with all of these complaints being dismissed on appeal.”

Poor patent quality at SIPO, just like at USPTO before it, emboldens patent trolls. IAM is siding with the trolls, as usual, also in the case of Nokia against Apple — a case which it belatedly covers (Nokia has become like a patent troll which merely licenses the brand).

Writing about patent trolls in general, Wolf Greenfield & Sacks PC bemoans what happens in the US. “Over the course of the last decade,” it says, “the U.S. Supreme Court has issued a series of decisions making it more difficult for so-called non-practicing entities (NPEs)—companies that own and enforce patents but do not offer products or services covered by them—to extract value from their patents. The Court may now be ready to take a step in the other direction by removing the equitable defense of laches against patentees’ past damages claims—up to six years of damages in many cases. Oral arguments were heard in the landmark case of SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC on November 1, 2016, and a decision is expected later this term.”

“Patent Value” for patent trolls (ignore euphemisms like “NPEs”) is also mentioned in this article. We can’t help but feel like patent law firms — not just sites like IAM (which trolls are paying) — take the side of trolls. They don’t care about innovation, just litigation. They profit from that.

United for Patent Reform, a group that battles against patent trolls, wrote the other day that “Crowdfunding company @gustly won its case over a #PatentTroll after 2 years in court.” Here is part of the statement:

The patent lawsuit filed by AlphaCap claimed ownership over “online equity financing”. As with most other patent lawsuits, the case was brought in the Eastern District of Texas. This court is known as a patent troll haven and has benefitted economically from an assumed bias in favor of trolls.

So here again we have an example where legitimate companies are hit hard by trolls that make nothing at all, just lawsuits. “Wearable device company Fitbit has moved for termination of its ITC patent complaint against Jawbone, which is unhappy at suggestions about its financial stability,” MIP wrote the other day (a move which we covered in this older post of ours). As before, Fitbit makes shameless excuses, trying to portray itself as merciful after it attacked a rival, only to realise that its case is going nowhere fast and is only wasting its own (Fitbit’s) financial resources.

Fitbit, like many other companies, must have realised that certainty of winning patent cases has gone down. Moreover, Jawbone sued Fitbit in retaliation, causing quite a big (and expensive) headache to Fitbit. As Fitbit is not a patent troll (it has actual products that it sells) it’s not hard to sue it as well, thereby compelling it to reach a ‘ceasefire’.

Meanwhile, as even IAM cares to admit, litigation numbers are down sharply and patent trolls suffer a lot:

Unified Patents and RPX have both released their early numbers on new US patent litigation cases in 2016, confirming what we have known for some time: district court cases fell dramatically, with Unified putting the total number of filings at 4,382 – a drop of 24.8% year-on-year. That is the lowest volume of new cases since 2011 when the America Invents Act (AIA) came into effect and a change in joinder rules led to an immediate increase in the number of suits. According to Unified, disputes at the Patent Trial and Appeal Board (PTAB) saw a slight drop down to 1,723 from 1,793, although last year was still the second busiest on record.

The question now is whether the 2016 litigation drop was a blip or part of a longer-term trend. The last few years have seen sharp fluctuations in the number of cases with 2013, the busiest year on record, leading into a marked fall in 2014 as plaintiffs were seemingly turned off by the Supreme Court’s Alice decision and by the prospect of patent reform. So if that is repeated, we might expect to see the number of new cases rise again this year.

MIP takes into consideration an upcoming SCOTUS case (alluded to above), but it barely bothers to mention that this case would affect trolls the most. To quote what is not behind a paywall:

Natalie Rahhal speaks to former Federal Circuit Chief Judge Paul Michel and others to assess the potential impact of In re TC Heartland at the US Supreme Court. One outcome could be a sharp fall in filing in the Eastern District of Texas and an increase in a potentially under-resourced District of Delaware

In re TC Heartland is already shaping up to be one of the most important patent cases in the US this year. The Supreme Court on December 14 granted cert in the case, which will give the court an opportunity to revisit the case law and statute governing forum selection in patent infringement suits.

We look forward to the outcome of this case because the Justices, probably well before Trump introduces new ones, are expected to serve a blow to patent trolls. Today’s Justices tend to be sceptical on issues pertaining to patents maximalism.

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