For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

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Wednesday, 9 November 2011

Trolls and tribulations -- or Lovers and Licences? IV, LG tie the knot

"LG signs deal with patent giant Intellectual Ventures" is the title of a news item on the BBC this morning. It's not often that patent licences occupy the Beeb's attention, so the IPKat thought he'd take a look.  According to this feature:
"LG Electronics has become the latest smartphone maker to sign a deal with the patent house Intellectual Ventures. IV licenses out its huge library of innovation rights rather than using them to build products of its own. LG will be able to access IV's patents to threaten counter-attacks against any firm planning an intellectual property lawsuit [Aha, says  Merpel: now I understand.  If A buys a licence from B so that B won't sue A, B is a troll -- but if A buys a licence from B so that he won't be sued by C, D or E, that's a policy of prudent defence]. Industry watchers say other businesses are likely to strike similar deals over the coming years [presumably, the closer IV's portfolio resembles necessary patents for achieving technical standards, the more licences will be struck -- but the more FRAND-ly the negotiations will have to be].

"With companies claiming breach of patent across the board, firms can either defend every case that comes in or try to limit their exposure," said Chris Green, technology analyst at Davies Murphy Group Europe. "Doing deals with big patent houses allows them to do the latter [-- but only up to a point. They will still need to defend or pay off patents owned by parties outside the large patent house(s) from whom they take their licences]. [IV] ... acquires patents and does some R&D of its own. But the vast majority of its patents are bought on the secondary market” [Does any reader know how much IV's R&D spend is? Presumably, since it takes time to develop and patent innovations, much of its own R&D and that which it has funded for third parties won't yet have reached the stage of being licensable technology] ...

Patent experts say the deal may allow the firm to become more adventurous.

"LG now has the opportunity to leverage IV's large patent portfolio and more aggressively expand product offerings in novel directions," said Andrea Matwyshyn from the University of Pennsylvania's Wharton School. ...

Over the past 11 years [IV]has built up a portfolio of more than 35,000 patents covering areas such as text messaging and internet security. The firm has signed licensing deals with HTC, RIM and Samsung among others. However, it has also filed lawsuits against Motorola, HP, Dell and Hynix Semiconductor alleging they have infringed its rights [at least it's picking on some big players to sue, who are quite able to look after themselves].

"Its business model is that of an aggregator," said Florian Mueller, a patent consultant whose clients include Microsoft. "It acquires patents and does some R&D of its own. But the vast majority of its patents are bought on the secondary market, and its business model is to license them. "But that's not necessarily a bad thing if the technology involved is a legitimate innovation deserving patent protection."

However, others are more critical of patent owners who sue others but do not produce their own goods, describing them as "patent trolls". A Boston University study recently claimed such organisations add over $30bn in costs to industry each year and contribute little in return [on which see IP Finance blogpost here and some very interesting comments from readers].

However IV defends its business model. "Our goal is to reach productive licence agreements that give our customers access to the patents that will help them minimise risk and stay competitive," said Andy Elder, the firm's executive vice president of global licensing. "That's especially important in crowded markets like the mobile industry. Litigation is an option we have, but we prefer to negotiate a licence that's beneficial for both companies"".
The IPKat has never been enthusiastic about the term "troll", which is used as a disparaging defining term that is in danger of covering perfectly innocent folk like university research institutions which lack the funds, the motivation and the know-how to manufacture their own inventions. It's also an awkward term to use within the context of complex industries such as mobile telecommunications, where a large number of patents exist which don't actually relate to a specific product that someone can make and sell.  He prefers to judge patent owners, like their competitors, on the basis of their actual behaviour.  What do readers think?

Some favourite Intellectual Ventures here and here

11 comments:

Anonymous said...

Relying on one's own portfolio to defend against a competitor's patents may have been sufficient in the past but that is not the primary purpose of a patent and manufacturers have no right to grumble when a non-practising entity acts properly within the patent system to spoil their game.

I would rather focus on clamping down on abuse of the patent system, e.g. mass mailing infringement threats with cheap settlement offers, and reducing costs so that defending against a dubious quality patent is an affordable matter for SMEs.

Gentoo said...

I'm with anonymous 11.52 on this one but would go further

LV is a variation on the Open Innovation Network (OIN) both organisations exist becasue of the seemingly potty behaviour of the USPTO.

I'm not sure if Merple needs to use the HTML 6.0 tag but perhaps Merpel might rather contemplate the deadweight costs introduced by a system that allows a patent on a metaphor for a toilet lock door, starting with the latter protecting third parties from what it is guarding and the former promoting it.

Anonymous said...

I'm surprised Jeremy missed newsnight last night. The way Jermey Paxman uses the word 'troll' it wouldn't suprise me if the UN security council didn't feel the need to investigate.

An overblown piece about a poor London app developer who has been sent some US patents by their owner with accusations of infringement. The poor business man (with a ferrari in his own parking spot no doubt) couldn't understand a word of the patent claim, and neither could the hapless BBC reporter who also had a go. Clearly then, these things are bad, the patentees are bad, and everything to do with IP is bad.

BBC probably stands for Bad Bad ip Chaps.

Apparently, the hard-pressed businessman is consulting a lawyer (or probably his mate the solicitor who does very nicely out of conveyancing thank you very much). The BBC on the other hand, could afford to interview a top barrister, rather than go down the road for a bettter-value patent attorney to chat to. They took those nasty US patents along too - probably hoping he'd give some free advice that the BBC reporter could pass on to his mate, the hard-pressed businessman.

As for software patents, if only someone could examine them properly they would be ok, but clearly, anyone examiner who knows about software has a memory scan of 15 seconds and thinks everything they read is novel and the best thing since sliced bread.

Anyway, I have recently submitted my patent application for sliced bread cunningly disguised as a software patent (goes in the toaster as software, but comes out as hardware).

Jeremy said...

@Anonymous 3.43pm

I wish I'd watched Newsnight -- but don't be surprised that I've missed it. I don't have a TV because, if I did, I'd spend all my time watching it instead of blogging!

Anonymous said...

You're in luck Jeremy - it is on the BBC iPlayer (http://www.bbc.co.uk/iplayer/episode/b0176k93/Newsnight_08_11_2011/)

The piece starts about 38-39 mins in.

Andy J said...

Jeremy, You can watch it on the iPlayer (legally) here: iPlayer. The piece on patents starts at 38.30 mins

Anonymous said...

I just watched the report on iPlayer. Paxman sets the tone by starting with this gem:

"Fancy a slice of toast? Be careful! If you heat your bread to a certain temperature for between 3 and 90 seconds you may be impinging on US patent 6080436."

He forgets to mention to his UK audience that (a) you would have to be in America, and (b) the 'certain temperature' is a very non-domestic temperature range of 1300-2500°C.

Yes! This patent is stopping everyone from making toast!!! Burn* the patent system!


*Preferably at a temperature of between 1300 and 2500°C, and more preferably at a temperature of 1900°C.

Anonymous said...

Is it just my imagination, or is Paxman currently losing it? After the infamous "idiot from Brussels" incident and the fawning interview to Boris Johnson, this marks a new low in his career...

Anonymous said...

To add to anonymous at 7:32, Paxman might also have mentioned that the patent expired through non-payment of renewal fees in 2008.

Of course the first thing any good journalist would do would be to check that the patent was in force...

Anonymous said...

So to summarise, when Paxman said his viewers could infringe the patent by making toast he was right, except that his viewers couldn't infringe (because they're not in the US), making toast doesn't infringe (because the patent only covers temperatures far exceeding the domestic toaster) and the patent can't be infringed anyway (because it has expired). Oops!

Anonymous said...

Anon at 2pm: You are forgetting the recent results from CERN proving we could go back in time to turn on our toaster and travelling so quickly would surely raise our temperature to such high levels.

Is Anon at 12:56 responible for defamation by accusing JP of being a lousy journalist or is it the blog author Jeremy?

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