The Empire Strikes Back, Intellectual Ventures Style

Yesterday the 271 Patent Blog published an article titled Now it Begins? Litigation Rumors Surface Over Intellectual Ventures, which discusses how we may be starting to see the beginning of what might become an epic saga between good and evil.  It seems that Intellectual Ventures, the patent absorbing company founded by former Microsoft executive Nathan Myhrvold, is starting to head where we all knew they eventually would, which is in the direction of turning to patent litigation against those who are unwilling to cave into their licensing demands.  Peter Zura, the purveyor of the 271 Patent Blog details the rumors associated with how IV handles its patent licensing efforts.  It seems that Intellectual Ventures sets a deadline to have a negotiated resolution.  If the deadline passes then they sell the patent to the party who they feel can best monetize the patent, with a pay-back to IV in the end.  As Zura explains: “IV has allegedly started to ‘outsource’ their patent litigation.” And can you guess who is associated with a current patent litigation where the patent can be traced back to IV ownership? None other than notorious patent troll litigator Ray Niro. You can just hear the Darth Vader music playing in the background, can’t you?

Just over a year ago John White (of PLI Patent Bar Review fame) wrote an article published on Patentfools.com complaining about how no one seemed to really care about the massive build-up of patents by Intellectual Ventures.  There were some who were a bit concerned, but the comforting assurances of IV and Nathan Myhrvold were that a defensive only patent portfolio was being established.  Here is what John White had to say just over 50 weeks ago:

The below the fold article September 17 in the Wall Street Journal about Nathan Myhrvold, of Intellectual Ventures, should have displaced the above the fold headlines regarding the vague financial turmoil currently afflicting the U.S. and World Economy. Whereas one will pass, like kidney stones, with much watery eyed pain and gnashing of teeth, the other is far more insidious and potentially fatal to our collective future as a leading economy. Here’s why:

Just like in the story-line of Independence Day, where the alien death ships slowly but surely positioned themselves over each major city, with the eventual outcome well understood, so too is Intellectual Ventures (I.V.) slowly positioning itself as the patent overlord over many major industry segments. Just like in the movie, the eventual outcome is well understood. To wit: Complete usurpation of the U.S. Patent system. The outcome is a ,gigantic tax/toll collector controlling the pulse of innovation in the U.S. or, like the move, extermination of innovation.

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The 20,000 patents, and growing, in the I.V. portfolio have each withstood an average of but 14 hours of scrutiny by the U.S. Patent Office. That’s it; less than 2 business days of total review to issue a property right that, when amassed as I.V. has done, can inflict great pain ($ 1 Billion per) upon an entire industry. But here’s why the Emperor has no clothes: In any collection of patents, bar none, about 95% of the patents reflect the worth of their 14 hours of individual scrutiny. In addition, the Supreme Court, last year, re-wrote the standard of review (KSR v. Teleflex). In short, these patents are not worth the paper they are printed on. But, owing to the excessive cost and uncertainty to have a second look at these patents either during the course of litigation, or through the Patent Office Reexamination procedures, most victims of this licensing extortion racket meekly pay-up. What Myhrvold has wrought is an obscene abuse of the patent system. It should be stopped, either by industry groups banding together to file reexaminations, or by Congress, or both.

John’s likening of Intellectual Ventures to the aliens of the movie Independence Day is certainly starting to seem appropriate.  Myself, I would liken Intellectual Ventures to the Emperor in the Star Wars movies.  If you have seen all six of the Star Wars movies you know that in the most recent three films, which fill in the time before the original Star Wars movie, it turns out to be the Chancellor who is the Emperor, who has been plotting against the Federation all those years.  He was building an army right under the noses of the Jedi and right under the noses of the Senate.  Few really saw what was going on until it was too late.  I suppose that would make John like the Samuel L. Jackson character who finally figured out that the Chancellor was the Emperor.

In the end it didn’t work out so well for Sam’s character.  John is still doing well, at least as far as I know, but no one really seemed to listen to what he was saying then.  I also know that no one was listening to anything I was saying either as I have been writing that patent trolls obviously are not a real problem because if they were then Mega Companies would fight back in a coordinated effort using Reexamination as part of a tool to take the fight to the enemy rather than constantly being a target that reacts, complains and pays.   I just do not see the mileage in being a deer during hunting season.  The truth is that prey gets shot, and if you don’t want to get shot, and you are looked at as prey, you need to do something to fight back.  If you walk around with a bulls-eye on your chest then don’t be surprised when you do get shot, particularly if you are walking in the woods and wearing a deer costume with antlers and all, which is exactly what tech America has been doing.  Now it might be too late because if IV is in league with Niro everyone had better hope and pray for the modern day Darth Vader turned good who comes and saves the day, but the chances of that seem slim.

Who knows where this will lead, right?  I mean one would think that eventually Congress might actually get involved and rather than just talking about patent reform and then abandoning ship and walking away without anything to show for it.  But as I am typing that I am already chuckling.  Congress get involved and do something worthwhile?  That is a good one!  But something is going to have to get done at some point because given Congressional abdication of its responsibilities with respect to patent law and tech America’s abdication of common sense with respect to dealing with the patent troll problem we have one fine mess.  A lot of companies who need to be focusing on creating new technologies for the future, hiring workers and participating in whatever economic recovery we can muster will be tithing to Myhrvold and Intellectual Ventures.  That is not change you can believe in, but it is a believable and predictable change in course for IV.