The Prior Art

TPA Reading for the Week

A TPA extra edition--our mix of IP-related notes from this week:

• PatentFreedom, the patent defense consultancy run by Dan McCurdy, first talked to us about its database of NPEs (patent trolls) when the firm launched almost a year ago. Now, PatentFreedom is offering some of the basics from its database to the public--interesting stuff. Take a look, via Against Monopoly.

• French reject "three-strikes" law that would ban copyright infringers from the Internet. Lots of artists and content-side lawyers thought this one was going to pass. Not this time. Via Wired.com.

• Big Verdict: Mintz Levin won a $388 million patent infringement verdict against Microsoft for a case brought on behalf of a small California outfit, Uniloc. But will it stick?

• Big Verdict II: W.L. Gore & Associates (of Gore-Tex fame) must pay out $410 million to medical device company C.L. Bard. Via The Am Law Litigation Daily. Gore will appeal.

• Big Verdict III: A U.S. Court of Federal Claims judge has ordered NASA to pay a 1.25 percent royalty to Boeing because an aluminum alloy it used to build the space shuttle infringes Boeing patents. Damages still being briefed but looks like 9 digits. Seattle Times via IPO News, and The Am Law Daily.
  

• EFF senior attorney Fred Von Lohmann asks if President Obama violated copyright law when he gave an iPod to Queen Elizabeth.

• U.K. newspaper The Guardian showcases 15 years of anti-piracy videos.

Photo: L. Hine / Wikimedia

 

The buzz begins at Ocean Tomo patent auction; will deals follow?

I wasn't able to spend too much time Thursday at the Ocean Tomo events taking place in San Francisco, but I did manage to sneak in a few interesting conversations with folks in town for the events. One person I sat down with was Steven Hoffman, the CEO of ThinkFire, an IP consultancy and patent brokerage firm. Hoffman and I talked for a while in the Ritz-Carlton's lobby as it slowly filled up with patent wheelers & dealers talking business (or at least talking about the business they wish they were doing.)

This is the second Ocean Tomo event I've attended. Last year, the whispers in the hallways of the Ritz-Carlton were that Intellectual Ventures, Nathan Myhrvold's giant patent-holding firm, would be buying, depending on who was doing the whispering, half or two-thirds or perhaps even more of the patents going on the auction block. (Patent sellers at Ocean Tomo are identified, but the anonymity of purchasers is rigorously protected.)

This year, the talk in the halls is about how much smaller that number will be. No real surprise there: patents aren't immune to the vagaries of the wider economy. And Hoffman says conversations that he has had recently leave him believing that Intellectual Ventures, Ocean Tomo's biggest patent buyer, may indeed be moving out of its "acquisition" phase.

"IV will buy less—they will be less aggressive," says Hoffman. "I just don't know how much they're going to re-trench."

Bitten by patent-fish? Try "Catch and Release."

Several large tech companies have teamed up to try to defend themselves against patent lawsuits in a venture called Allied Security Trust, first announced to the Wall Street Journal.

Seven of AST's 11 members have been publicly identified and were confirmed by CEO Brian Hinman (at right) when I spoke to him yesterday; they are Sun Microsystems, Hewlett-Packard, Cisco Systems, Google, Ericsson, Motorola, and Verizon.

The basics: membership costs a bit less than $500,000, and each member has to put up $5 million for patent purchases. The strategy is what Hinman calls a "catch-and-release" model: AST will buy the patents, give nonexclusive licenses to members that want one, and return it to the marketplace. That will recoup some of the members' costs; it will also, of course, keep the litigation environment a few degrees hotter for non-members.

Hinman is quick to point out that the fund is just one part of patent defense strategy, not a panacea. "We are not obtaining all the patents in the universe that are problematic," says Hinman. But AST will negotiate—quietly, through brokers—to buy some of the really problematic ones. "Litigation costs and settlements continue to be on an upward trend," he notes, and a little dent in costs could go a long way.

Are there enough fuzzy-boundary technology patents out there to keep defendants jumping regardless? We'll all find out in due time; meanwhile, a burgeoning class of IP middlemen has cropped up to help clients navigate the economy's ever-costlier patent landscape.

On its website, AST describes its mission as "freedom of operation and cost reduction." No profits for the trust, and no lawsuits against anyone—a promise that Nathan Myhrvold at Intellectual Ventures hasn't quite been willing to make, to the consternation of many.

AST goes public just a few months after PatentFreedom, another patent consultancy with a defense-side business plan, made its debut. Both companies rise against the backdrop of a stalled patent reform bill in Congress and an explosion in patent assertions.

Interestingly, both Hinman and PatentFreedom CEO Dan McCurdy have long work histories at IBM.  McCurdy spent about 12 years at Big Blue in various capacities, leaving in 1996; Hinman worked at the company for 15 years, and left his position as VP of Intellectual Property and Licensing just a few months ago to start up AST.

I'll have more on AST in the August issue of IPLB.

The spicy quote in AST coverage so far is from Acacia Research CEO Paul Ryan, who tells Bloomberg News that the formation of Allied Security Trust "is an acknowledgement" that its members are infringers. "Otherwise they wouldn't have any exposure," he says.

Just the sort of saber-rattling that can be good for the shield business, I imagine.

"Patent Trolls" — with them or against them?

Folks are choosing sides—first Howrey LLP (against), and now a veteran IP executive (against). Hat tip to Joff WIld's IAM blog for this one.

Dan McCurdy's new company, PatentFreedom, is an online community for companies to get and share intelligence about the non-practicing entities some critics call “patent trolls.” Membership is limited to “operating companies” with over $100 million of revenue that’s not from licensing, enforcing, or selling patents or other intellectual property. (Such revenue sometimes comes from the sale of “products,” which can be found on the shelves of most stores not located in North Korea.)

“Patent trolls know a lot about operating companies,” McCurdy told me today. Their targets, conversely, frequently know nothing at all. “Are they the only company being approached, or one of a thousand? Who funds them? How well funded they are?”

PatentFreedom will fill that void both with its own research and by creating a community where operating companies can exchange information, anonymously, if they desire.

But in order to found the new company, McCurdy will have to split from ThinkFire, the company he co-founded with Intellectual Ventures chieftain Nathan Myhrvold in 2001. The reason? Worries about conflicts of interest.  ThinkFire has an IP consulting and brokerage practice, as well as a group that provides licensing and litigation support to companies asserting patents, many on a contingency basis. It also helps companies defend against patent-infringement claims, billing hourly, like a law firm.

Also like most big law firms, ThinkFire plays both patent offense and patent defense. But PatentFreedom’s "fight-them-trolls" business model was too much; shortly before the April 14 launch, ThinkFire’s board decided it couldn’t play both sides on this one, and decided it will spin off  PatentFreedom as a separate company. McCurdy will officially move over to PatentFreedom in July.

Says McCurdy: “ThinkFire made the decision that it was not in its clients’ best interest to constrain the kind of advice that ThinkFire might be able to give to them, simply to meet the needs of PatentFreedom.”

Fear of conflicts, and perhaps hope for a competitive edge, already caused law firm Howrey LLP to actually agitate against so-called “patent trolls,” like the one pictured above, in its ads, as The Recorder reported in March. (free reg. required)

While we talked, McCurdy tapped into his database from his home office in Pennsylvania, browsing through electronic dossiers on—get ready—94 non-practicing entities, 249 affiliates, and more than 4,700 patents they’re known to hold. (Way more than the shuttered Patent Troll Tracker!) But McCurdy says he has no grudge against NPE’s; he’d just rather beat ‘em than join ‘em.

“When I walk into a cocktail party, I feel much better about myself saying that what I do is help companies defend themselves against NPE’s, or ‘patent trolls,’ than saying ‘I attack companies with patents I bought,’” he says. “I’m not saying that NPE’s are wrong… they have every right to pursue what they’re pursuing.” But targeted companies deserve tools that “at least somewhat equalize the playing field.”

So far close to 10 companies have joined, all “household names,” says McCurdy, and all confidential. He expects up to 20 by the time he officially leaves ThinkFire in July, and 50 members by year’s end.

Annual membership starts at $50,000. (Might make you feel like a subscription to IP Law & Business is a real bargain.)