Rise of the Trolls: An Innovation Story


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Cloudigy Law's Founder and CEO, Antigone Peyton, discusses patent troll firms and how they operate.

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Rise of the Trolls: An Innovation Story

  1. Rise of the Trolls: An Innovation Story Antigone Peyton CEO & Founder Cloudigy Law An Intellectual Property & Technology Law Firm #DCTrolls #DCWeek
  2. Here’s How It Began . . . It’s an old story Figure out a system, then figure out how to game it
  3. • Patent rights are not contingent on using an invention You create something new You file with the USPTO You disclose your invention You get your patent
  4. Patent Rights• Right to exclude others• Violation=infringement • Using • Making • Selling • Offering to sell • Importing
  5. Now, the game It’s the 1990s . . .And the patent litigation business was born.
  6. Patent Litigation Model• Business=make more $$ off IP• Purchase patents for little $• Don’t make products or commercialize technology• Lack R&D function
  7. Patent Litigation Model• File lawsuits & send infringement letters• Sue many companies at once• Several firms make their reputation on these suits• Seek early settlements for $$$• Contingent fee or low effort before trial
  8. Sometimes it feels like . . .
  9. And the Moniker Was BornNon-Practicing Entities (NPEs)
  10. Non-Practicing Entities (NPEs)
  11. A Case Study
  12. In the Beginning . . .• Nathan Myrvold - • Investors included former Microsoft Microsoft, Apple, exec Nokia, eBay, Google• Approached Silicon Valley’s large tech companies• Buy patents and create a pool to keep them away from trolls
  13. The Metamorphosis• Intellectual Ventures • Other companies did not sue directly would sue or send licensing letters• Set up shell companies to place IP • Over 1,300 companies assets traced to IV• Sold patents to other companies
  14. The Metamorphosis• IV now suing directly • Sued Motorola Mobility for infringement of 6• Used more than $1.5B patents of $5B investor capital • Google acquiring• Over 35,000 IP assets company• Over $2B in licensing • Google also an early revenue investor in IV
  15. The NPE Game Plan• A small town in TX • Has over 2,000 pending (Eastern District of TX) patent cases• Known to be Plaintiff • No real TX business friendly activity required
  16. The NPE Game Plan• License or sue• Defense litigation costs approx. $2-5M• Get settlement• Give patent license
  17. The NPE Game Plan• Monetizing IP• More than a nuisance fee• Leverage risk of litigation loss• Gag on settlement term disclosure
  18. JPEG Patent Attacks• Forgent Networks & Global Patent Holdings patents• Forgent collected over $100 million in licensing fees before patent was invalidated• Licensed to 30 companies & sued 31 more
  19. High-Profile Win• Research in Motion gave over $612M to NTP (a patent holding company) to keep its Blackberries on
  20. What’s the Problem?• Fees extracted out of • Dragging down line w/perceived IP companies w/lawsuits value • Cost passed on to• Not making or selling consumers inventions• Not bringing products to market
  21. Protection Issues• Defensive patent suit involving company’s own patents ineffective• Not trackable like competitors• Antitrust & patent misuse charges don’t work • No market power • Suing isn’t patent misuse
  22. Minimizing Risk• Design around costs • Fight clumping of reduce value of parties with different potential license products• Patent watch and • New patent laws don’t clearances allow one suit against multiple parties that• Oppositions in Europe “infringe” a patent and other countries & reexaminations at USPTO• Centralizing invalidity research & analysis
  23. Minimizing Risk• Litigating for • Patent aggregation everyone behaviors and agreements• Collaboration among defendants• Early settlement• Patent infringement insurance
  24. Defensive Buying• Allied Security Trust • RPX Corporation • 11 high-tech • Defensive Patent companies that Aggregation identify & purchase program pulls key tech patents patents off the open market
  25. Defensive Buying?• Nortel Patent Auction-6K patents• $4.5B defense arsenal purchase• Nortel 6-Ericsson, EMC, Sony, RIM, Apple, Microsoft• $750,000/patent
  26. Closing Thoughts• IP monetization • Behaviors drive use business is here to of pejorative term stay “troll”• Innovative $$ strategy• Well-known “patent trolls” are similar to patent pools or consortiums
  27. Antigone Peyton CEO & Founder, Cloudigy Law (703) 436-2033 antigone.peyton@cloudigylaw.comTwitter: @antigonepeyton @cloudigylawFacebook: http://www.facebook.com/CloudigyLawLinkedIn: http://www.linkedin.com/in/antigonepeytonCloudigy Blog: http://cloudigylaw.com/news/