Time to draw a line under trolls

by Andrew Watson on 21 October 2010


Back posting & time to draw a line under 3 months of troll posts

We’ve been out of blog action for two and a bit months, what with holidays and project commitments. It was busy pre-holiday but post-holiday has been a particularly hectic time for us. More below on new people to welcome to the team, but for now I wanted to draw a line under what has been a blog focus on trolls and NPEs pretty much since IPBC in June. I also wanted to thank Melissa Louckes, daughter-in-law of Ted Louckes, one of the Paice founders, for helping me with one  final bit of perspective on my  (its not the last one no doubt!) troll debate. I’m still a learner in blogging terms and I’ve realised in myself a tendency to be very opinionated and a capacity for shooting from the hip without checking the facts—opinionated is good, I think, that is after all what free blog speech is about, but if this site is to be taken seriously then the genuine merits of lone inventors need more research.

So where do we stand on trolls and NPEs:

  • At the heart of the debate, at least for me, is a terribly inefficient legal system that is used to arbitrate disputes. The plain truth is that reportedly 95% of troll litigations settle pre-court and the second plain fact is that outside the US, trolls are not able to be anywhere near so successful. Any system which “judges” the merits of a patent by reference to the cost of a license being less than the costs of litigating, has to be judged as terribly, almost embarrassingly, inefficient.
  • Sometimes the system works inefficiently both ways, both pro and against the troll. Paice (thanks again Melissa) seems to show the difficulty for the troll when a large corporate decides that it should and indeed has to fight. If, as now seems to be proven, the Paice invention history was some of the founding technology in the hybrid market, and the patents were validly granted and infringed, then any efficient system would have discovered and arbitrated (fairly) much earlier. But the absence of an efficient system leaves both the corporate and the lone inventor troll frustrated.
  • Whichever way the debate is argued, the inefficient system leaves the product company with a problem. Troll payments are like unwanted and unexpected taxes, imposed only or nearly only, in the US. So the successful product company is going to have to fight most of the troll claims it receives, or end up with a product that is heavily taxed (consultants call it royalty-stacking) and uncompetitive. Now Apple may have enough in their product margin to pay the tax, but Toyota and the other automotive manufacturers are on their financial knees. Paying whatever percentage of a very small margin is hard to commercially justify.
  • Trolls come in many shapes and sizes. One has to admire the brutal efficiency of Ronald Katz or Jerome Lemelson, or the ability of the Acacia management to create and list a troll model on NASDAQ, or IVs sheer audacity, to take the troll model and really scale it. But is there any social or technical worth in this? IV’s PR machine can paper over its core model with all of the other bits of its model, but at the heart of IV is (or at least was) a monster of a patent aggregation model that was Lemelson at scale. I just don’t see the merit in this—we have so many technical and social problems to solve in the human race, so for me, either add to the debate, take the technical story forward or at least don’t disrupt it. Making tons of money with patents alone is not helping anyone.
  • One shape and size that does deserve recognition, and a system that rewards them, are genuine lone inventors. I’ve not been able to verify Melissa’s timeline in detail but taking it at face value, we see a genuine lone inventor group which set out to solve a problem (merit 1) and could have been successful but for market-timing, then turning to the only thing left from a business venture, IP it filed and owned (merit 2). These people do deserve a system that rewards them. They probably also deserve a different name from one as disparaging as “troll” and don’t deserve to be labelled or viewed the same as those without these dual merits. They  deserve a system that efficiently rewards their genuine attempts to take science and society forward.
  • For the rest of the troll scale, they will remain an unwanted and unwarranted tax in the US until they get bored or the system starts to distinguish good from bad patents, and good from bad owners. They will also make life harder for the lone inventor groups who will get tarred with the same brush.
  • Will RPX and AST solve the problem? To be determined. I think the jury is out.
  • Will IV make money, and real returns for its investors? I think they might.

But for now that’s us and trolls over and out. They’ve taken up enough of Tangible IPs airtime in 2010 and we, and the great IP debate, need to move on. So expect a different constructive and expansive discussion from us with our next post, which is cooking now.

New talent at ipVA

Apparently it was Walt Disney who first coined the phrase “if you want to be successful, surround yourself with people more talented than you”. As with most things in my life, this has happened partly by chance than design, but the last 3 months has seen us adding people sizeably more talented than me, to an already very talented team.

We’ve added Richard Buttrick, ex of Philips. Another (our fifth) member of the IAM 250, Richard has already shown his IP talent. And we’ve added Tim Jackson, former head of IP at Renishaw. Tim’s focus on precision engineering and software control systems is a new technology specialisation for us and already we’re seeing a return on this investment. And we’ve added Kevin Nash, ex of McKool Smith and Timet, an experienced litigator and IP strategist who will help our European client base to manage the disruption of US IP litigation.

Thanks for all three for their faith in us. Adding to a team that has over 300 man years of business IP experience and expertise, I see us very well placed for the 9 months of work we have in our pipeline.

We did say goodbye to Jordan in September. Jordan’s gone to ARM as corporate counsel in their strategy team. I wanted to say a large and very public thanks to Jordan for his counsel and discipline in the two years we worked together. Take good care of him ARM, he is quite a talent.

Jordan’s replacement is Charlie Rothbart, our first trainee, and first girl. Welcome to Charlie who seems to be having a lot of fun and is learning fast.

We also brought in our new PR team, Gill and Gina from Gill Sainsbury PR. We have lots of good news coming out but we’re too modest to shout about it. Watch out for Gill’s impact, I don’t see us being accused of modesty too much going forward.

Another of my favourite expressions (I heard this first from Humphrey Nokes) is “you don’t know how far you’ve come til you look behind”. In any entrepreneurial venture, it’s worth always taking a breath and looking back. Even from September 1st I have to pinch myself with the progress we’re making.

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{ 4 comments… read them below or add one }

Samantha Funnell 10.21.10 at 3:48 pm

Dear Andrew,

Lemelson (note the spelling).

Jordan’s doing well and sorry about that.

Why do those of us who were successful have to reward those who weren’t? At the heart of all IP rights is the principle of compensation for damage suffered. If you couldn’t make it commercially successful and I didn’t steal or copy it from you, what damage have you suffered?

Sam

Andrew Watson 10.22.10 at 10:38 am

Thanks Sam. I wonder where you stand on the troll debate?

drllau 11.15.10 at 3:50 am

>we see a genuine lone inventor group which set out to solve a problem (merit 1) and could have been successful but for market-timing, then turning to the only thing left from a business venture, IP it filed and owned (merit 2). These people do deserve a system that rewards them. They probably also deserve a different name from one as disparaging as “troll” and don’t deserve to be labelled or viewed the same as those without these dual merits.

How about Banshee ? http://en.wikipedia.org/wiki/Banshee

I’m not being facetious but recognising that every domain group needs stories/analogies to help explain complex concepts (it not a coincidence that many computer programming languages/tools are puns in precious stones perl, ruby, etc). Let’s look at the merits

1) could have been successful but for market-timing
banshees are fairy woman keening at the death of important personages

2) only residual from a business venture, IP it filed and owned
banshees are only intangible ghosts … what else can you call a bundle of actionable rights?

3) deserve a system that rewards them.
well, if the strategy is wailing and gnashing of teeth then perhaps the only reason to lay them to rest is to get some peace and quiet from the rest of the industry. I’m not making any value judgements on the morality, but as noted above

we have so many technical and social problems to solve in the human race, so for me, either add to the debate, take the technical story forward or at least don’t disrupt it.

There’s also the joke going about in the VC world about walking zombies … funded companies with cash but no customers hanging on waiting for a cashed up IPO to acquire them.

patent litigation 02.07.11 at 11:55 pm

The recent Intellectual Ventures suits present just one example showing that the NPE (“patent troll”) business model is fast becoming dominant in the world of IP. Thomas Edison held over 1,000 patents, but practiced none of them. He invented, which is what he did best, and let others manufacture products from his inventions. If an inventor cannot sue for patent infringement and recover damages, they why should anyone invent anything? Only vigorous patent enforcement rewards inventors for their inventions and incentivizes others to invent.

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