The Prior Art

Patent enforcement companies speak at SF conference

Earlier this month, MDB Capital Group--an IP-focused investment bank that promises to help investors understand "the hidden value of intellectual property assets and future technological leadership"--held what it billed as its first annual "Bright Lights" intellectual property conference, bringing together IP-centric speakers from a variety of small and medium-size companies.

The Prior Art attended the opening panel, which included the heads of two of the largest, and most litigious, patent-holding companies—Erich Spangenberg and Paul Ryan, the CEO of Acacia Research Corp., the largest publicly traded patent-licensing company.

The panel also included representatives from consultancy ipCapital Group and RPX Corp., which buys litigated patents in order to strike deals between NPEs and operating companies, as well as IP guru Marshall Phelps. (Phelps is something of a legend for building IBM's legendary $2 billion patent-licensing operation; most recently, he helped Microsoft build up a patent-licensing operation before leaving the company last year.)

The most interesting part of the opening session came when Spangenberg and Ryan explained how their businesses work and and how they are changing.

Patent Litigation Weekly: International Trade Commission rebuffs Big Tech, keeps doors open to NPEs

The International Trade Commission is in charge of enforcing the Tariff Act of 1930, a law passed during the Depression to protect U.S.-based companies from unfair trade practices, including the sale of goods that infringe valid U.S. patents. In recent years, however, the agency's definition of what qualifies as "domestic industry" has expanded to the point that small patent-holding companies with just a handful of employees (Saxon Innovations, St. Clair Intellectual Property Consultants) and even individual inventors have been allowed to proceed with ITC litigation.

Congress helped expand the ranks of who could seek remedies at the ITC in 1988 when it amended the "domestic industry" requirement to include "licensing" as qualification. Patent-holding companies have relied on that change ever since to justify their arguments that the taxpayer-funded ITC should ban imports of certain products on their behalf. Of course, in 1988, the patent litigation landscape was very different, and patent-holding companies—aka "non-practicing entities," or "patent trolls"—in the modern sense simply didn't exist.