Defensive patent aggregation

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Defensive patent aggregation (DPA) is the practice of purchasing patents or patent rights to keep such patents out of the hands of entities that would assert them against operating companies. The opposite is offensive patent aggregation (OPA) which is the purchasing of patents in order to assert them against companies that would use the inventions protected by such patents (operating companies) and to grant licenses to these operating companies in return for licensing fees or royalties. OPA can be practiced by operating companies or Non-Practicing Entities (NPEs) [1]

Contents

Operating companies must often defend themselves against claims of patent infringement. To prevent such litigations, operating companies sometimes purchase patents in technologies which they use or develop. Another motivation for operating companies to acquire patents is the ability to counter-assert such patents in case another operating company files a patent litigation. Operating companies have also pooled their efforts and financial resources to purchase patents. An example of such defensive patent aggregation is Allied Security Trust (AST).

In 2008, a new business model emerged with third-party financing doing defensive patent aggregation whereby a third-party – the aggregator – purchases the patents or patent rights strictly to mitigate the risk and cost of litigation associated with non-practising entities (NPEs) and provides licenses to members against a fixed annual membership fee. This model was introduced by RPX Corporation, a start-up based in San Francisco. RPX received venture funding from Kleiner Perkins Caufield & Byers (KPCB) and Charles River Ventures (CRV).

Defensive patent aggregation has evolved to be more accurately described as the aggregation of defensive strategies from patent assertion. [2] Current strategies include:

Rationale

In the United States, the cost of defending against a patent infringement suit, as of 2004, is typically $1 million or more before trial, and $4 million or more for a complete defense, even if successful. And, when non-litigation licensing and settlements are factored in, the actual costs of fighting patent lawsuits is much higher. Because the costs and risks are high, defendants may settle even non-meritorious suits they consider frivolous for several hundred thousand dollars. [3] The uncertainty and unpredictability of the outcome of jury trials also encourages settlement. [4]

In the first 10 months of 2008, more than 2,300 patent lawsuits were filed the United States. [5] The majority of these cases are filed by the companies that created the patented invention. But a growing share of the lawsuits [6] is coming from non-practicing entities (NPEs) – also called patent trolls – which acquire patents for the sole purpose of licensing and asserting their patent rights. In fact, NPE litigation grew from 2.6 percent of filed cases in 2000 to 16.6 percent of filed cases in 2007. And unlike product companies, known as operating companies in the IP commerce world, NPEs are not susceptible to counter-assertion by their licensing targets because they do not make or sell any products or services. [7]

The NPE offense includes single inventor assertion firms, patent licensing and enforcement companies, litigation financiers and investors, and patent aggregators, both institutional and strategic. However, NPE offense is ultimately concentrated on asserting patents to the detriment of operating companies. NPE defense methods include defensive patent aggregation from companies including RPX Corporation, cooperative purchasing efforts, such as defensive patent pools and buying consortia, from companies including Allied Security Trust, outright purchasing of patents, settlement and litigation.

See also

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NTP, Inc. is a Virginia-based patent holding company founded in 1992 by the late inventor Thomas J. Campana Jr. and Donald E. Stout. The company's primary asset is a portfolio of 50 US patents and additional pending US and international patent applications. These patents and patent applications disclose inventions in the fields of wireless email and RF Antenna design. The named inventors include Andrew Andros and Thomas Campana. About half of the US patents were originally assigned to Telefind Corporation, a Florida-based company partly owned by Campana.

Walker Digital is a privately held American research and development lab based in Stamford, Connecticut. It was founded in 1994 by Jay S. Walker, who also holds the position of chairman as of 2011. The company specializes in creating applications and business solutions that work with large-scale networks such as cell phones and the Internet. Walker Digital and its principals partner with Fortune 500 firms such as Time Warner and International Game Technology to bring its inventions to market. It also licenses other companies to do so. Walker Digital is considered a "non-practicing entity" or patent troll because it does not create products itself, instead of relying on lawsuits to generate revenue.

PatentFreedom is an on-line community of companies that access and share information about non-practicing entities that own and enforce patents primarily to collect license fees. The company offers membership to operating companies as well as law firms representing them. The company was founded in May 2008.

Allied Security Trust (AST) is an independent, not-for-profit cooperative that provides its Members with a highly efficient, cost-effective method of mitigating the risk of patent assertions and litigation by enabling Members to secure patent rights by collectively purchasing assets available on the open market.

RPX Corporation American worldwide provider of patent risk management services

RPX Corporation is an American worldwide provider of patent risk management services, offering defensive buying, acquisition syndication, patent intelligence and advisory services. Since the company was founded in March, 2008, RPX claims to have introduced efficiency to the patent market by providing a rational alternative to litigation. RPX is based in San Francisco. It was incorporated on July 15, 2008. By acquiring patents that pose potential problems and providing information on litigation, RPX seeks to reduce patent assertions directed at its clients.

Vringo

Vringo was a technology company that became involved in the worldwide patent wars. The company won a 2012 intellectual property lawsuit against Google, in which a U.S. District Court ordered Google to pay 1.36 percent of U.S. AdWords sales. Analysts estimated Vringo's judgment against Google to be worth over $1 billion. The Court of Appeals for the Federal Circuit overturned the District Court's ruling on appeal in August 2014 in a split 2-1 decision, which Intellectual Asset Magazine called "the most troubling case of 2014." Vringo appealed to the United States Supreme Court. Vringo also pursued worldwide litigation against ZTE Corporation in twelve countries, including the United Kingdom, Germany, Australia, Malaysia, India, Spain, Netherlands, Romania, China, Malaysia, Brazil and the United States. The high profile nature of the intellectual property suits filed by the firm against large corporations known for anti-patent tendencies has led some commentators to refer to the firm as a patent vulture or patent troll.

Copyright troll Party that enforces copyrights for purposes of making money through litigation

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Article One Partners (AOP) is an online prior art search and intellectual property research crowdsourcing community. AOP was acquired by RWS Group in October 2017 and the AOP Connect crowdsourcing platform is now part of the IP Research group within RWS. RWS IP Research provides crowdsourced prior-art-search services by utilizing an online research community. The company's President stated that, as of June 30, 2018, AOP comprises "more than 40,000 in over 170 countries."

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Rockstar Consortium Inc., originally named Rockstar Bidco, is a consortium formed to negotiate licensing for patents acquired from the bankrupt multinational telecommunications and data networking equipment manufacturer Nortel. Members of the consortium are Apple Inc., BlackBerry, Ericsson, Microsoft, and Sony. Rockstar is a patent holding non-practicing entity (NPE) and submitted the winning US$4.5 billion bid for the Nortel patents at a week-long auction held in New York in June 2011.

Innovation Act

The Innovation Act of the 113th Congress is a bill that would change the rules and regulations surrounding patent infringement lawsuits in an attempt to reduce patent lawsuits.

A patent privateer or intellectual property privateer is a party, typically a patent assertion entity, authorized by another party, often a technology corporation, to use intellectual property to attack other operating companies. Privateering provides a way for companies to assert intellectual property against their competitors with a significantly reduced risk of retaliation and as a means for altering their competitive landscape. The strategy began with a handful of large operating companies. In April 2013, a group of technology companies asked the U.S. Department of Justice and the Federal Trade Commission to investigate the privateering strategy as an impediment to competition.

Unified Patents is a member-based organization whose goal is reducing the number of non-practicing entity (NPE) assertions in specific technology areas.

The following outline is provided as an overview of and topical guide to patents:

The LOTNetwork is a nonprofit organization that was formed to combat patent assertion entities (PAEs), also known as patent trolls, by cross-licensing patents that fall into the hands of PAEs.

TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ___ (2017), was a United States Supreme Court case concerning the venue in patent infringement lawsuits.

References

  1. ↑ "MoreRFID, "RPX Introduces First Patent Aggregation Service", November 26, 2008". Archived from the original on March 15, 2011. Retrieved October 11, 2011.
  2. ↑ Oliver (1), Richardson (2) (2017-03-01). "Stop Patent Troll Armageddon: Use Defensive Aggregators". www.americanbar.org. Archived from the original on 2020-10-30. Retrieved 2021-03-30.
  3. ↑ Tyler, Craig (2004-09-24). "Patent Pirates Search for Texas Treasure" (PDF). Archived from the original (pdf) on 2007-10-15. Retrieved 2007-07-27.
  4. ↑ Watts, Justin (June 2007). "Waiting for Godot". Patent World.
  5. ↑ Prof. Paul Janicke, University of Houston Law Center.
  6. ↑ McCurdy, Daniel P.; Chris Reohr (October–November 2008). "A New Tool for a New Kind of Patent Adversary". Intellectual Asset Magazine.
  7. ↑ "To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy" (PDF). Federal Trade Commission. October 2003.
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