Intellectual Ventures Flexes Some Patent Muscle

The following is a guest post by Patrick Anderson of Patent Calls. Patrick originally published this on his own blog, GametimeIP.

Intellectual Ventures made a name for itself by (originally) negotiating patent licenses outside of litigation.  However, when those prospects started to run dry, IV launched a warning shot–which later appeared a bit underwhelming for a mass aggregator holding tens of thousands of patents.  This opening blow was followed by a series of targeted rifle shots, like their ITC enforcement action against Hynix and Elpida.  What these lawsuits collectively lacked was shock-and-awe, like Jay Walker's bold protestation against widespread, uncompensated use of his company's IP.  Until now, that is.

Intellectual Ventures has now sued AT&T, T-Mobile, and Sprint Nextel in a single lawsuit over fifteen different patents.  Breaking the news on its IV Insights Blog, the patent owner provided a copy of a complaint and a relatively simple statement noting that the aggregator "previously attempted to discuss licensing options with each of these companies, but none were responsive." The technology appears to mainly deal with techniques for managing cross-carrier text and multi-media messages, hence the combination of carriers in a single suit despite patent reform's partial ban on the practice.  Perhaps even more interesting are the various original sources of patents used in IV's most recent attack.

This week's lawsuit, more than the others IV previously waged, demonstrates the obvious power of massive patent aggregation.  The fifteen patents identified in the suit come from at least 10 different sources, including major companies, research institutions, one university and some individual inventors.  Separately, any given patent could be vulnerable to non-infringement arguments, or susceptible to a momentum-killing reexamination.  Combined, however, the patents are inherently much stronger.  Assume, for example, that for each patent asserted, the wireless carriers believed they had a 90% chance of invalidating all relevant claims at trial.  To prevail, the carriers must prevail in fifteen independent events, which carries only about a 20% likelihood of success.  And there is good reason to treat invalidation and infringement of each patent as an independent event because, although the patents are all related in general subject matter, most come from different sources and thus describe distinct inventions.

In fact, only three patents come from the same original owner–Conexant–who provided 6,977,944, 7,343,011 and 7,136,392.  Remaining contributors to IV's pool of asserted patents are responsible for only one patent each, and include Verizon (the only major wireless carrier absent from the suit), Motorola, Nokia, Telecordia Technologies (formerly BellCore, the Baby Bell's version of Bell Labs), and Hong Kong University of Science and Technology.

Interestingly, while Verizon contributed patents to IV's collection, and managed to avoid this latest lawsuit, Motorola's deal with IV apparently did not come with rights, at least to some portfolios.  Motorola's contribution was part of a 344-asset sale to Torsal Technology Group back in 2008.  Torsal subsequently transferred the Motorola patent to Antozskij Research LLC, which merged with Intellectual Ventures I LLC earlier this month.  All three transactions used the same law firm to record the deal: Schwabe, Williamson & Wyatt in Portland.  Telecordia's contribution is part of a transaction involving 45 assets sold to TTI Inventions B LLC in 2010.  TTI Inventions merged with Intellectual Ventures II, LLC earlier this month as well.  Telecordia is currently owned by Ericsson, but the sale to IV's holding company occurred during the ownership tenure of two notable private equity firms: Providence Equity Partners and Warburg Pincus.

Listed as lead counsel for IV is Martin Black of Dechert LLP, marking the sixth different law firm used as lead counsel for the aggregator.  Several are large, well-known law firms (including Susman Godfrey Weil Gothshall, and Irell & Manella).  This is the first lawsuit filed in 2012 for IV, and the first in nearly four months (John Desmarais' firm sued Nikon over five different patents in late October).  While IV's next move remains to be seen, it's safe to say things just got a lot more interesting.

38 thoughts on “Intellectual Ventures Flexes Some Patent Muscle

  1. It strikes me as highly problematic to bind a later purchaser to statements by party Y in prosecuting patent Y about patent X to party X, either by estoppel or inequitable conduct, unless the purchaser had some involvement or interest in the prosecution at the time the statement was made.

    It would be reasonable, I think, to make the acquirer choose between the two patents when a shortcoming of one is the basis for allowing the other

    Close – but not as interesting as might happen with a true aggregator who does not process any patents. What if there are no links between the two (or more) patents (and the attainment [as in granting] of the second (or more) linked to the first (or any)).

    Or to rephrase the post:

    It strikes me as highly problematic to bind a later purchaser Z to EITHER statements by party Y in prosecuting patent Y about patent X to party X, either by estoppel or inequitable conduct, OR statements by party A in prosecuting patent A about patent B to party B, either by estoppel or inequitable conduct unless the purchaser Z had some involvement or interest in the prosecution of patent Y or patent A at the time the statements (by party Y or party A) were made. In essence, without such involvement or interest, the estoppel becomes in rem.

    It would be reasonable, I think, to let the acquirer not be punished at all if there was no basis of one to allowing the other(s).

  2. “There is no” is pretty good Enlgish, last I checked.

    Much better than the typical ad hominem from MM.

    Wait, you think it perfectly fine for ad hominem.

    Carry on.

  3. He is a genuinely good fellow and quite bright.

    Hilarious – the jokes write themselves!

    I would ask you politely, looking glass

    I would ask you politely not to assume that I am looking glass.

  4. "Those that make typos should not be slamming others about their English – when they are making typos."

    But Malcolm was not complaining about typos, was he?  He was complaining that the response was inapposite the question.  This relates not to grammer or the ability to type, but the ability to understand.

    Your post in reply was a classic strawman, was it not?, confusing typing ability with reading comprehension as if they were the same thing.

    Malcolm as a whole is a competent, thoughtful and persuasive patent attorney.  I have no idea why you try to flame his posts with troll-like responses unless it is because you have no genuine interest in pursuing substantive conversations.

    I would ask you politely, looking glass, to get off Malcolm's case.  He is a genuinely good fellow and quite bright.

     
     

  5. looking glass, we all make typos, do we not?

    Those that make typos should not be slamming others about their English – when they are making typos.

    Ned, defending MM on this, is quite humorous.

  6. looking glass, we all make typos, do we not? Malcolm usually does not, but you have pointed out that even he is vulnerable to the malady.

    It appears that Strawman did answer Malcolm’s two questions by a simple statement that he thought applied to both. I don’t think he explained himself too well, which prompted Malcolm to ask again because he did not think the answer pertained to either of the questions he asked. But where is the fault here, Strawman or Malcolm?

    I think Strawman could have been a little clearer in his response.

  7. Closeminded, but you seem to ignore the fact that these defendants were approached about a license. I wonder just how many companies accused of infringement of valid have not been forced to take some action at some time: either they take a license, they sue in court or file for a reexamination, or they are sued for infringement, or the patent declared invalid in some fashion during litigation or reexamination by others.

    In this universe, I warrant, I would suggest that most patents are litigated or licensed. Companies cannot expect to simply ignore the patent holder with impunity, or can they?

    Given this, the posture of the defendants to not negotiate at all is remarkable. It doesn’t make much sense except if the law has so corrupted the patent system that it makes sense to keep quite and force the patent owner to sue.

  8. Malcolm, in most cases the PO will not sue on both. He will choose the best patent. If that one goes down, he has the other.

    I don’t think the courts would require a disclaimer of the other patent as condition of filing suit. If, however he choose to file on both, once the double-patenting situation is revealed, I think that at a minimum the PO will be forced to withdraw one of them based on binding covenant not to sue. That still would not foreclose the defendant from asserting that the patent remaining in the case was invalid.

  9. IANAE The issue of the validity of the disclaimed patent is moot, but surely the validity of the other patent is still both relevant and objectively ascertainable.

    Absolutely. I didn’t mean to suggest otherwise.

    All I’m driving at is that it seems eminently reasonable and fair to require at a minimum that a patent owner in possession of two patents, both of which cannot be valid based on statements made during their prosecution, disclaim one before proceeding with the other. I can’t think of any policy reason against such a requirement.

    Ned: if I were a judge, I would order the matter litigated so that the right answer be obtained rather than simply rely on estoppels.

    But the right answer is that one of the patents is surely invalid. It seems reasonable for the court to assume that, between the two commonly owned patents, the invalid patent is the patent that is not being asserted.

  10. if the Aggregator disclaims one of the patents, then the issue of “which is one is valid” becomes moot.

    The issue of the validity of the disclaimed patent is moot, but surely the validity of the other patent is still both relevant and objectively ascertainable.

    You’re the last person I’d expect to be cavalier about having invalid patents floating around, particularly patents currently being asserted by litigious aggregators.

  11. Malcolm, but the unilaterl disclaimer not effective to foreclose the validity inquiry. Lilly tried this one time to eliminate a double patenting issue.  The courts did not buy it and still held the second patent invalid.

    The disclaimer of a patent does not forclose the defendants from still making the inquiry as to truth and validity.  If the patent owner chose wrong about X or Y, they lose both patents, as in Lilly.

  12. Is English your native language? I asked some specific questions.

    cf

    Does prosecution estoppel to an owner of two patents even where the patents were prosecuted by two different parties prior to being purchased by the Aggregator?

    W

    T

    F

    MM, you ask some specific non-grammatically correct question and have the nerve to make fun of someone else’s English skills?

    Does prosecution estoppel

    to an owner of two patents

    even where the patents were prosecuted by two different parties

    prior to being purchased by the Aggregator?

    Really?

    What exactly is the skill level that you are “writing” in?

  13. Ned: Malcolm, you have two opposed representations of fact. Both cannot be true. One of the two patents is invalid. Which one, is the real question.

    Sure, but if the Aggregator disclaims one of the patents, then the issue of “which is one is valid” becomes moot. If the Aggregator is interested in continuing the litigation, obviously the Aggregator won’t disclaim the patent it’s asserting.

  14. Malcolm, you have two opposed representations of fact. Both cannot be true. One of the two patents is invalid. Which one, is the real question.

    I think this or something like this happens all the time in interferences when there is a settlement. In the end, the PTO demands that the true inventor be indentified after a fairly neutral inquiry.

    Based on this as an example, if I were a judge, I would order the matter litigated so that the right answer be obtained rather than simply rely on estoppels.

  15. I guess the question for you (and others) is: does this matter? Does prosecution estoppel to an owner of two patents even where the patents were prosecuted by two different parties prior to being purchased by the Aggregator?

    It strikes me as highly problematic to bind a later purchaser to statements by party Y in prosecuting patent Y about patent X to party X, either by estoppel or inequitable conduct, unless the purchaser had some involvement or interest in the prosecution at the time the statement was made.

    It would be reasonable, I think, to make the acquirer choose between the two patents when a shortcoming of one is the basis for allowing the other, in a sort of squeeze argument. But that’s probably the extent of it. After all, party Y was giving up nothing when it made its original statement about patent X, and party Y certainly didn’t encumber patent X at the time.

    Very interesting and topical hypothetical.

  16. sockie, your obsession with “strawman questions”, whatever you think they are, is noted.

    there is no cross-contamination estoppel effect that you are infusing into the situation

    Is English your native language? I asked some specific questions. Try answering them “yes” or “no” instead of trying to write prose beyond your skill level. Thanks.

  17. It still is a strawman question.

    The effects of obtaining the property innure to the property. There is nothing and no reason to distinguish this from any later owner of the property. The property itself is what is constrained, not the cumulative effects – there is no cross-contamination estoppel effect that you are infusing into the situation.

  18. Maybe this is enough for you to understand. The numbers on the Document don’t match the Files I received.
    And I have so many references to me and others being told I don’t have any idea what you want, I have nothing of yours.
    And if my Document doesn’t work… Then that is the only explanation. But whether it does or not, expect me to go the distance!

  19. It’s not a “strawman question.” Let me clarify one assumption that isn’t clear from my hypothetical: Aggregator didn’t prosecute patent X or patent Y. It bought the patents after they issued from two distinct entities.

    I guess the question for you (and others) is: does this matter? Does prosecution estoppel to an owner of two patents even where the patents were prosecuted by two different parties prior to being purchased by the Aggregator?

    Similarly, what if Aggregator prosecutes a third application (application Z) after its acquisition of patents X and Y and, during the course of prosecution of application Z, files a declaration that flatly contradicts statements made during the prosecution of X and/or Y. Is there a potential inequitable conduct issue there?

  20. And when I tried to get into the Alabama State Bar site to see, an ERROR CAME UP stopping me from entering because it would send me further down the yellow brick road. ” JR. was the one that stopped my entry” so glad I copied it.

  21. But if the atty or law firm charged the Client for things they destroyed or knew weren’t theirs because of what was done to the Client, well then that is a whole different ball of wax. And I sure hope that firing him was not an exercise in stupidity… because that’s exactly what He did!

  22. jarhead, it looks as if we are seeing he combined effects of eBay and Seagate. It will actually force litigation, because attempts to negotiate can be rebuffed with impunity.

  23. Given the actual reality that less than 2% of patents are really litigated, “but none were responsive” can hardly be surprising, much less draw to the level of “This cannot be true

    The conclusion is not supported by reality.

  24. Does it make sense that when you become the owner of a patent that you also “own” all statements made under oath during prosecution of that patent?

    Is this a strawman question? Last I checked, prosecution estoppel was alive and well.

  25. Not being responsive isn’t necessarily the same as providing no response. They may have just declined offers to take a license.

  26. “this cannot be true”

    Huh? Ned, you’re smarter than that.

    Infringers don’t respond unless and until they’re sued.

    Why should they? There is little chance that “troll” can ever get an injunction. Eventually, the infringer may have to cough up a small percentage of whatever the invention is worth, but they would definitely have to today if they picked up the phone. The longer it takes, the better it is for the infringer.

    I know. You guys are going to tell me that willfulness can treble damages. Perhaps. But so few of these cases ever get that far and those that do are not often trebeled.

    No response buys time, reduces costs and good lawyers earn their fees.

  27. “But none were responsive.”

    There has to be more to this than that. Perhaps the approach of IV was of the nature that the companies had no idea whether they were actually being accused of infringement?

    Can anybody shed a light? On its face, the sentence makes no sense and would suggest that AT&T and the rest of these companies are completely irresponsible in the way they would deal with IV. This cannot be true.

  28. “What these lawsuits collectively lacked was shock-and-awe, like Jay Walker’s bold protestation against widespread, uncompensated use of his company’s IP”

    If that is what patent tards think is “shock and awe” I can see we have a long way to go until the tards in the patent system understand “shock and awe”. All that was is more like: they made a press release whine fest that nobody really gave a sht about.

    I can’t wait to see how priceline infringed

    link to dblaw.com

    From the looks of just that one patent no wonder nobody wanted to talk about a license. Under what theorylol is priceline infringing?

  29. Just a note, IV was co-founded by Marshall Phelps, then ex of IBM, and a first inductee into the IP Hall of Fame. link to ipcg.com

    Mr. Phelps, according to his bio in the link, has a “doctorate from Cornell Law School.” Consistent with his character, that.

    Well done there, Mr. Phelps.

  30. Question for the Peanutly-O Gallery:

    Does it make sense that when you become the owner of a patent that you also “own” all statements made under oath during prosecution of that patent?

    For example, let’s say Aggregator own patent X and patent Y, and during prosecution of patent Y a declaration is filed stating, e.g., “patent X is not enabled for embodiment W and therefore does not anticipate.” Examiner allows patent Y over patent X in light of the statement.

    Then Aggregator then asserts patent X in court against an infringer making embodiment W. It seems reasonable and just to me that in order to be successful with such a suit, at the very *least* the entirety of patent Y must be disclaimed by the Aggregator. Agree? Disagree? Any other solutions to this obvious problem?

  31. If you want a bit more detail and math on the above-noted great improvement in the odds for patent owners suing on multiple patents, see:
    “Probabilities of Losing As To At Least One Patent In Multi-Patent Litigation,” Journal of the Patent and Trademark Office Society (JPTOS), October 1986, Vol. 68, No. 10, pp. 498-502. [My co-author was a leading expert on probability theory, and my inspiration and example "A" was the Polaroid v. Kodak litigation on instant camera related patents.]

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