Daily Archives: July 27, 2011

An inside scoop on technology patents

This American Life is one of Public Radio International’s most iconic, unusual and stimulating programs, and producer Ira Glass has turned his eye on a hotly debated aspect of the patent system – the acquisition and management of IP by non-operating entities (NPEs), often referred to as “patent trolls”.  You can listen to this fascinating and informative one-hour program HERE.

The program explains the origin of the term “troll” (the toy of an Intel lawyer’s young daughter); follows the trials and tribulations of several individual inventors (including Jeff Kelling of internet company Fototime), and interviews Nathan Myhrvold, the founder of Intellectual Ventures (IV), described by one patent lawyer as “a troll on steroids”.

Patent reform activist David Martin, CEO of M•CAM weighs in and demonstrates his DOORS analytic software to show that 30% of patents are worthless, often because they are not “novel” (e.g., patent 6,080,436 was granted in 2000 for “bread refreshing method”; that turns out to be toast!).  And for insight into one of IV’s many lawsuits (IV v. Hynix Semiconductor et al) you can download an M•CAM analysis (one of the Patently Obvious® series) HERE.

The program explains why the buying and selling of patents is likely to continue as a profitable and controversial business that affects the entire tech industry.  The targets of NPEs like IV, along with many observers, believe that the practices investigated in the program discourage innovation and impose a huge burden (the time and cost of litigation) on innovators, and especially on vulnerable tech start-ups.

IV claims to help inventors move their innovations into the market place.  But IV is not buying inventions; they are, for the most part, buying patents, many of which may belong in Martin’s 30%.  And while IV’s stated intention is to license these patents, they often sue without any attempt to negotiate a license; the threat of litigation can cower start-ups into paying royalties even when the outcome of an IV claim is uncertain. IV owns 35,000 patents and informants describe how the company effectively licenses their portfolio to third parties for use in quashing competition or for defensive purposes.

Last but not least, the $4.5 billion sale of Nortel’s patent portfolio that was acquired recently by a consortium including Apple and Microsoft for defensive purposes is discussed.

Complex?  Yes, very.  But listening to the entrepreneurs, inventors and lawyers who are interviewed on This American Life brings the subject into perspective.

Post written by Peter Bloch