Tag Archives: Allied Security Trust

AST’s 2018 patent purchase program is open July 9 – July 20

Patent holders, this year’s version of Allied Security Trust’s Industry Patent Purchase Program, “IP3,” is a good indication of where the demand is highest.

The 2018 fixed price, time-limited program AST and its members are searching for patents primarily in the following categories:

  • Artificial Intelligence / Machine Learning
  • Augmented Reality / Virtual Reality
  • Automotive / Transportation Services
  • Blockchain
  • Internet of Things / Connected Devices
  • Smart Home
  • Software / Web Services

Most technologies are no surprise, but others, like Augmented Reality/ Virtual Reality, may encourage lawyers and their clients to revisit portfolios. It is also good to see interest in Software Patents, as well.

The window for submitting patents for sale will be open from July 9 through July 20.

For complete IP3 2018 program details and to submit your patents for sale, go here.

Image source: ast.com

Can a Publicly Held Patent Buying Service Solve the ‘Troll’ Problem?

An article in Fortune by a former litigator examines a possible market solution for what he calls “the nation’s most pressing legal challenge.”

Taking on the Trolls in the current Fortune is worth reading for what it hints at – a possible market based solution for a growing business problem, patent disputes – as well as what it leaves out, a balanced discussion of what has caused the increase in NPE suits.

The article is written by Roger Parloff, perhaps the best legal journalist in America. Parloff undercuts his profile of Rational Patent Exchange (NASAD: RPXC), a patent buying service which to date has acquired rights on behalf of its clients totaling more than $500m, as a possible NPE solution by drawing upon misleading data and making snide remarks about inventors.

Parloff should know better, and so should reporters at some other major media outlets. He dismisses the majority of patent enforcement as frivolous, and suggests the enforcement numbers are skyrocketing for some high-profile (Fortune 500) targets, like Apple, when in relative terms they may actually be down.

“NPEs have their defenders,” chides Parloff, “… the argument continues, but also society at large, by preserving the incentive systems that our Founding Fathers wrote into the Constitution to ensure that the Thomas Edisons of the world would be motivated to provide the rest of us with the maximum possible benefit from their genius.”

Top NPE Targets

According to statistics attributed to RPX in The Ten Biggest Troll Targets, an excerpt from the Fortune article, which “have been relied upon by academics and government agencies,” NPEs filed 3,608 new suits in 2013, up 19% from the 3,042 they filed in 2012. Their suits named 4,843 total defendants, up 13% from the 4,282 sued a year earlier. NPE suits accounted for 67% of all new patent cases filed last year, and 63% of all new patent defendants. 

“Still, the sheer numbers have made many people skeptical,” continues the award-winning reporter and former criminal litigator. “Is AT&T really stealing breakthrough ideas from various Edisons at a rate of more than once per week? Or might someone be gaming a flawed system, bringing dubious claim in favorable plaintiff’s venues and harvesting nuisance settlements?”

Words like “stealing” and “trolls” are inadequate when it comes to patents. They do not help to capture the complexity of the problem, nor do they serve to address the fundamental issue of disputed innovation. It’s difficult to accuse a party of stealing when patents are so unreliable and their coverage difficult to define. At the same time, those who have the capital and experience to monetize legitimate rights should be allowed to.

Bad Actors on Both Sides

Bad actors exist on both sides of patent disputes. There are 140226110436-rpk17-troll-illo-620xasome plaintiffs who rely on the high cost of litigation to settle quickly and there are tens of thousands of  businesses selling products that infringe others’ inventions. From the defendants that I talk off the record it seems most of the patents being enforced are legitimate. Demonizing all enforcers or all NPEs may  help some companies in the short run, but it is only a small part of the story that will have a negative impact on innovation and commerce.

In fairness, most companies want to do the right thing when they can, but the uncertainty implicit in patents (only a portion of those issued are eventually found valid put to the test) and the courts makes doing so difficult. Businesses are frequently blindsided by patents they never knew existed.

One question rarely asked aloud is how thoroughly have they searched for patents that might read on their products?

When these businesses are confronted with quality patents that the products they sell may be infringing, which they can not cross-license and must pay to practice, they are in state of pseudo-shock.  A leveler playing field for innovation rights is a geography that more innovative businesses are reluctantly becoming familiar with. This is a truth that the Fortune reveals. RPX, however, is only one answer. [Taking on the Trolls is available in its entirety in Fortune in print or to digital subscribers.]

More Inventions, More Disputes

There are more NPE suits for several reasons, including (1) there amount of innovation is much greater, (2) invention returns are higher than in the past, (3) more inventions can now be produced by an individual as opposed to big research lab, (4) NPEs are better at bringing suits than top-heavy, risk-adverse large public businesses or individual inventors, and (5) the America Invents Act (AIA) makes it necessary to separate what litigation-costs-prepared-by-rpx-for-pandodailywould have been several defendants in a single suit into separate suits.

How did patent litigation get so expensive? Don’t ask the law firms, ask the defendants. Time (and cash) is on their side.

When the market for trading potentially dangerous patents brings down the risk factors, you may see more companies proactively taking an early license or using buying groups, like RPX, AST or Unified Patents to acquire patents or bust them early, as opposed to rolling the dice and possibly getting embroiled in a suit or numerous suits.

Given the explosive pace of innovation — the USPTO granted 277,835 patents in 2013 alone —  it’s a wonder that invention disputes have led to only a few dozen suits and a handful of trials annually. It’s inevitable that the numbers rise, unless a system of adjudicating disputes can be improved. A single large tech business’ products can draw upon 20,000 or more inventions, some of them fundamental to a successful product. Techdirt reports that some 250,000 patents impact a smartphone.

RPX has a point in saying that law firms are benefiting the most for invention disputes. (The article cites some data to support that.) But despite their whining most large holders can afford to allow things to play out over time. The potential danger of weaker patents and more arduous and costly monetization options is that established businesses will be allowed to determine what innovation is and what is not. Highly disruptive inventions, those that can create new industries, will have a harder time getting through, especially if they are seen as potentially threatening.

Market Solution

Permitting successful technology companies set the patent agenda will inevitably tip the advantage in their favor. With foreign competition just beginning to heat up, it may not be the best time for this to happen. More competitive, market-based solutions for patent disputes, and fewer legal ones, are a natural evolution for a society built on providing more and better ideas, and a healthy way to maintain our inventive DNA. RPX is one among many who can help to provide a step in that direction.

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Image source: money.cnn.com; rpxcorp.com 

Battle Between Tessera and Activist IP Investor is Heating Up

Tessera says that Starboard Value wants to turn it from an R&D business into a patent “troll.”

The battle between activist investor Starboard Value and Tessera Technologies (NASDAQ: TSRA) took a nasty turn this week with Tessera publishing on May 6 a letter to shareholders explaining “the superiority of its IP business model” and how Starboard is determined to change it to a company that values lawyers over engineers.

Starboard, a 7.7% shareholder in TSRA countered on May 7 with its own letter to shareholders that “addresses some of the recent misleading statements, false allegations, and gross misrepresentations made by Tessera, and provides its views on the recent corporate governance manipulations carried out by the Company.”

Among the points Tessera raises in its letter is that Starboard would rather abandon the company’s $33 million R&D investment for more frequent and expensive litigation. tessera logo“Starboard’s strategy,” said Tessera, “can best be analogized as cutting down the apple tree to harvest the apples. In essence, Starboard wants to operate a business that seeks out defendants rather than customers.”

Tessera’s letter positively characterizes a list of Technology IP Licensing Companies with positive five-year operating margins, putting itself at the top, and names like Dolby, InterDigital, ARM Holdings and MIPS Technologies right behind. The letter calls RPX Corporation, Acacia Technologies and WiLAN “Patent Trolls,” and shows that they have weaker margins than the Licensing Companies, and no R&D to speak of.

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Tessera’s description of RPX, Acacia and WiLAN as poorly run predators is unfortunate and unlikely to improve its relations with shareholders.

So-called “black hat” NPEs who enforce dubious assets are fewer and further between than some would like to believe. It’s inaccurate to say that NPEs without R&D or product sales, who might settle quicker than others, are by nature equipped with lesser quality patents. It takes many different IP models to make an ecosystem, including those who may ask less for a license in court even though they may win more in a protracted litigation.

Tessera’s business model is a valid one. It draws upon R&D and operations, in the hope of establishing “carrot” licenses, when possible. It has delivered value, but Starboard starboard_logobelieves the ROI is insufficient, and the company would perform better with a more in-your-face, sue first and negotiate later approach.

Starboard is saying that it the company’s share price of about $20.64 and a current market value of just under $1.1 billion does not reflect the company’s true worth, and that its strategy is holding it back. (Starboard does not indicate what is a more accurate valuation.) It makes sense that Tessera’s management would to want to fight for what it believes is a superior approach, but it must be careful what it says and how it conveys it.

In patent licensing today, what may start out as a legal battle may wind up as a customer.

NPEs, with or without operating units, sniping at each other, and separating themselves by claiming to have a superior or more ethical business model play into the hands of IP naysayers, like Sen. Charles Schumer (D-NY).

Schumer recently said that “patent trolls are preying on New York’s technology industry with unwarranted lawsuits, costing legitimate [my italics] companies billions of dollars.” He announced last week that he had introduced new legislation designed to crackdown on a growing problem. (Schumer led the effort to prevent patents held by Data Treasury that read on financial institutions from being enforced.)

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Activist investors have been around for decades. Carl Icahn, among others, have made them famous (or is that infamous?), and many shareholders rich. Icahn, as you may recall, put pressure on Motorola to sell its patents, before the entire company was sold to Google for $12.5 billion. Starboard has brought the challenge of higher value to businesses with significant IP holdings. It played an important role in the AOL’s $1.05 billion portfolio sale to Microsoft, which was in turn partially sold to Facebook.

Named by IAM as one of its IP personalities of 2012, Starboard has history when it comes to shareholder activism and patents. In February 2012, the firm wrote to the board of its AOL investment, criticizing the company’s IP strategy and accusing it of failing to realize the monetization potential of its patent assets. Starboard stated that it would be putting up its own candidates for election to AOL’s board. Within two months, AOL had sold its patent portfolio to Microsoft.

I can understand Tessera’s frustration with having a professional investor looking over its shoulder telling it what strategy it should pursue. However, Starboard is looking for the best return on its investment.

Another Starboard investment is MIPS Technologies, which participated in a November 2012 sale of most of its patents for $350 million to a consortium organized by defensive patent aggregator Allied Security Trust and led by UK semiconductor IP company ARM Holdings.

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IP monetization is a rapidly changing business. When it comes to publicly held companies with significant IP assets its as easy to loose sight of patent quality as it is of market value.

Illustration source: tessera.com; starboardvalue.com

Patent “Plot” Thickens

EDN Takes a Fresh Look at NPEs

In the current Electronic Design, Strategy, News, contributing editor Tam Harbert cuts to the heart of the NPE matter with a timely article that focuses on the performance of patent aggregators.

The take away is that NPEs appear to be here to stay and with them defensive patent aggregators (DPAs), as well. NPEs are growing and increasingly serve to facilitate innovation, not just to impede it, as some would have us believe.

The two major patent aggregators, Allied Security Trust and RPX Corporation, differ structurally and functionally from Intellectual Ventures. All have succeeded in mitigating risk associated with NPEs. IV, arguably, a hybrid aggregator, part DPA and NPE, has accumulated some 30,000 patents. The others, only a few hundred.

Patent aggregators are evolving, and now possess a growing list of participants and patent acquisitions intended to defend members and reward investors.

Brody Berman Associates was a source for EDN article.

Illustration source: Newsletter Archive


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