The Prior Art

"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.)

Keker & Van Nest wants to get away from client with cybersex patent rights; won't say why

Keker & Van Nest has an inconvenient client.

After Immersion Corp. won an $82 million judgment against Sony Computer Entertainment America Inc. for infringement of its patent on "haptic" (vibrating) joystick technology, a mysteriously named company—Internet Services, LLC—sued Immersion, hiring Keker & Van Nest attorneys Mark Lemley and Daralyn Durie in an attempt to cut itself a piece of patent victory pie.

Internet Services, LLC (ISLLC) appears to be a lawyer-controlled patent holding company. (at least, I can't tell what they make.) Although they must do something, because they did pay $1.7 million to Immersion in royalties, according to a declaration filed last week by its president, Leslie Layne Britton. Britton is a Los Angeles lawyer who has a disconnected phone number and a resume that includes a stint as an executive at UPN.

Britton's company had an exclusive license with Immersion to market its vibrating technology for the adult gaming market. And Immersion wanted to outsource its patent lawsuits in the adult game market to ISLLC because "in some cases it might be bad publicity for Immersion to enforce its IP rights against some companies in ISLLC's exclusive field of use," according to Britton. That field of use had something to do with "teledildonics," a term I confess to being unfamiliar with until yesterday.

From Britton's declaration:

While negotiating ISLLC's license with Immersion, I met with Richard Abramson (then Immersion's head in-house lawyer) and Louis Rosenberg (Immersion's founder, Chairman and CEO and President) in Richard Ambramson's office at Immersion on multiple occasions. At one particular meeting, Messrs. Ambramson and Rosenberg discussed a concept called teledildonics. In explaining the concept of a teledildonic device, Mr. Abramson brought up the website www.teledildonics.com on his computer monitor and showed it to me and Mr. Rosenberg. Mr. Rosenberg then took apart a vibrating mouse that Immersion had developed for and sold in the retail market, pulled out its chip and motor, and explained to me that these two items cold (sic) be put into almost any form factor, including a teledildonic device. Messrs. Abramson and Rosenberg said that a teledildonic device would infringe Immersion's IP within ISLLC's exclusive field of use, and that ISLLC, not Immersion, could sue such infringing device makers. They further explained that because it might in some cases be bad publicity for Immersion to enforce its IP rights against some companies in ISLLC's exclusive field of use, Immersion wanted ISLLC to have enforcement rights within that field. And Messrs. Abramson and Rosenberg noted that it might only make sense for ISLLC to try to enforce its rights if the potential damages were high because ISLLC alone would have to bear the cost of such a suit.

Really, you can't make this stuff up. Now Lemley and company want off the case, but won't say why (who wouldn't want to enforce a patent on teledildonics? I don't get it.) But his client won't let him off the hook. In fact, ISLLC hired new attorneys just to argue against Lemley's motion to withdraw. Hey, when you've got the best, why settle for less, right? They're up against an Irell & Manella team led by Morgan Chu, after all.

(Interesting aside: Chu was assisted in the Immersion v. Sony lawsuit by Patent Troll Tracker blogger Rick Frenkel, who was then an associate at Irell & Manella.)

There is a suggestion in one brief that the reason for withdrawal may be related to a conflict with ISLLC "advisor" Greg Piccionelli, another Los Angeles lawyer. <Download PDF brief> Hard to know much more than that, since Judge Claudia Wilken has been all too obliging in allowing KVN lawyers to file all the documents relating to their withdrawal motion under seal. (Immersion successfully moved the case from state to federal court.)

Yesterday, Lemley was in Judge Wilken's courtroom in Oakland, making his case to withdraw. There have been three mediations, Lemley said; his client walked out on the last negotiation. Now KVN would even "be willing to waive our considerable fees until today to expedite the transfer."

Any takers?

Update: The patents are actually on "user interfaces," so they cover more than just joysticks. See U.S. Patent No. 5,889,672, entitled "Tactiley responsive user interface device and method therefor," and the even sexier U.S. Patent No. 6,275,213, "Tactile Feedback Man-Machine Interface Device."

Will the IP bar split over 'patent trolls?'

File under interesting timing: the lawsuit against Troll Tracker was reported the same day my colleague Zusha Elinson reports on Howrey's new advertisement urging clients not to support law firms that litigate for "patent trolls," which they call a "scourge on legitimate businesses everywhere." (article is here, free registration required)

I've had off-the-record conversations with folks at various firms about their opinions on taking work for patent-holding companies. Some say their high-tech clients are pushing them to not do such work; others have said there's no such pressure.

Definitely worth reading. I doubt IP will ever be like product liability or personal injury litigation, since (most) big companies that defend against lots of little-guy patent suits still think of themselves as potential plaintiffs. But the issue looms: will the big firms continue to be able to "work both sides of the street," as Henry Bunsow puts it? Or are we seeing the development of a new, more clearly  defined plaintiffs' and defense bar? There's certainly a fissure of tension, and Howrey's ad isn't shy about sticking itself in there.