By Andrew Goldberg
Article One Partners, a New York-based startup that crowdsources the search for prior art by rewarding researchers who find evidence that can be used to invalidate questionable patents, announced last week that Microsoft Corporation has signed on to its latest initiative to thwart patent suits by non-practicing entities (NPEs).
The new service, called Litigation Avoidance, is designed to help companies target poor quality patents before find themselves contending with them in court as a result of litigation launched by NPEs, which are often perjoratively as patent trolls. Previously, Article One and its global network of scientists and technologists focused on assisting companies once they'd already been sued.
Microsoft, the first official member of the new preemptive patent protection program, will pay Article One an undisclosed fee to participate in Litigation Avoidance.
"NPEs continue to actively target large technology companies and often with portfolios of questionable quality,” said Bart Eppenauer, Chief Patent Counsel at Microsoft, in a statement. “Litigation Avoidance gives businesses another tool to address patent quality issues prior to litigation to reduce risk and potential litigation cost.”
The software giant is a frequent target of trolls. For instance, Eolas, a patent-holding company, won a $521 million jury verdict against Microsoft in a 2003 patent suit over Internet Explorer plug-ins, before the case was remanded and the parties reached an out-of-court settlement. Last year, NTP, which extracted a $612 million settlement from Research in Motion, targeted Microsoft in another patent infringement suit. That suit has been stayed until the Patent and Trademark Office resolves the validity of the smartphone patents at issue.
According to reporting by Reuters’ Alison Frankel, Article One will select the patents that it chooses to study in one of two ways: In one scenario, member companies can request ten specific studies of patents. In the other, Article One--based on its own analysis of when the certain patents were acquired, which NPEs purchased them, and how likely they are to be asserted--will decide which patents to ask its network of purportedly more than 1 million researchers to investigate.
Article One’s crowdsourcing initiative is one of several new business models aimed at neutralizing NPEs at a time when companies are exploring various ways to shore up their patent defense capabilities. RPX Corporation-- a self-styled defensive patent aggregator that caters to companies concerned about becoming troll targets--went public last month. RPX buys up patents to keep them away from NPEs, then licenses them to clients for an annual subscription fee. Microsoft is also an RPX customer.
Article One, a privately held company which won the Silicon Alley Insider 2009 Best Startup contest, has raised more than $8 million in venture funding. So far, it has paid out more than $1.3 million to members of its patent research community in individual awards of $5,000 to $50,000.
The company's crowdsourcing initiative isn't the first of its kind in the patent realm. For instance, the PTO, in cooperation with New York Law School’s Peer to Patent project, has even launched its own modest, one-year pilot initiative to crowdsource the search for prior art that might not otherwise be found during the patent examination process.
Whatever the cost to Microsoft for availing itself of this service, it was probably worth whatever price the company had to pay in order to deter the ever-growing scourge of patent trolls. In all fairness, though, when trolls regularly collect triple the amount of damages awarded to practicing entities in patent litigation, it is certainly no surprise that more trolls are springing up and becoming ever more aggressive. They have everything to gain and relatively little to lose. I fear that the only way to minimize the threat that PAEs pose to small businesses is by eliminating their incentives to assert patents -- i.e., by limiting the damages that they can collect.
http://www.youtube.com/watch?v=LkQELhZeDYQ
Posted by: patent litigation | June 13, 2011 at 02:46 PM