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Archive for the ‘Patent Trolls’ Category

I was just reading the New York Times article by Steve Lohr about how exciting it is that Zoltar Satellite Alarm Systems will be placing their patents up for auction as if a patent auction were some new and exciting forum where valuable patents can be made available for the public to benefit from them. The funny thing is that in my opinion, patent auctions are where patents go to die.

The article continues to boast Zoltar’s patents stating that they have been litigated many times as if that boosts their value. I chuckled when I read this because the fact that the patents have been litigated only indicates that the value of the patents have deflated (like air escaping from a ruptured balloon) because there are no longer valuable prospects to sue. On top of that, I was surprised to see that the article mentioned that even in the lawsuits they initiated, the patents were found NOT to infringe which suggests to me that the value of the patents are even less that I thought they were by the impressive subject matter description of being a personal alarm device that transmitted a person’s location. In other words, it suggested to me that the patent claims were too narrowly drawn or were vague and unenforceable. Otherwise, unless the settlement offer was substantial (and a few million dollars is substantial, but the article suggests that they also spent a few million dollars which means they are only breaking even if they are lucky), there is no reason to settle unless Zoltar just wanted to get out of the lawsuit with the shirts on their backs because they learned at the Markman hearing that their patents had serious flaws and that it was not clear that they would have succeeded at trial.

I also found it interesting (and even funny) that the author gave a plug to venture capital companies like Intellectual Ventures, Acacia Technologies, Altitude Capital Partners, Intertrust, IPotential, Ocean Tomo, Rembrandt IP Management and Thinkfire. The reason I found it funny is that some of these companies (e.g. Acacia) are well known as being patent trolls who purchase patents for the purpose of licensing them to others under threat of suit.

Some of the other names on this list, such as IPotential, are not patent trolls, but are actual patent service companies who take a patent portfolio, wrap it up in a nice package where the value of the patents are clearly visible to buyers, and then find buyers who pay top dollar for the valuable patents they sell (quick plug and regards to Ron Epstein, the founder and CEO of IPotential). I find this service to be valuable because Ron knows the patent market and is not about to broker the patents off to a venture capital company who wants to pay pennies on the dollar for the patents. If I had some good patents to sell, I’d seek out Ron and convince him to take me on as a client before looking to any of these others on the list.

Another name on this list is Ocean Tomo, a patent auction house which holds fancy auctions in foreign countries making the whole process seem beyond five-star; I have written about them in the past. I like the concept of Ocean Tomo — they’ll package your patents in their high quality catalog with glossy pictures and fancy photos (I wouldn’t be surprised if each catalog cost them upwards of $15-20 each based on the high quality). However, the chuckle here is that just because their catalog is beautiful doesn’t mean the patents have any value. A prospective buyer will need to analyze the patents in depth as they would for any other patent purchase because listing it on Ocean Tomo’s auction does not mean that there is any value to the patents. On another note, sadly, I hear that attendance to Ocean Tomo’s auctions have been dying down and that only a fraction of patents listed recently have been sold which means that the auction house patent sale model might be losing momentum. That being said, I still like their idea of trading stocks on some kind of stock market forum. I’d succeed there because as a patent attorney and a patent litigation attorney, I’d see the valuable stocks and buy shares in them in an instant and watch the value grow in my patent stock portfolio.

All this being said, it’s sad that the NY Times article is describing old players and making them seem new. Intellectual Ventures has been buying up patents forever. Acacia has been a patent troll forever. Ocean Tomo has been around forever. Some of the newer names such as Rational Patent Exchange in my understanding are offshoots of Intellectual Ventures (the same guys are running each patent chop shop), except they run the business like the mafia, stating, “buy into my elite club and you we’ll protect you against patent trolls. Decide not to buy into our club, and we’ll sue you ourselves with our army of patent litigation attorneys.”

I could go on, but in sum, there doesn’t seem to be anything new or exciting presented by this article. Just old sheep in new clothing, however the cliche goes.


Robert Z. Cashman, owner of Patent Prophet, is a contingency fee patent litigation attorney in Houston, TX. He works for a law firm that specializes in contingency fee patent litigation, and in the past, he worked in house for a patent company as both a patent attorney and a patent acquisition specialist, where he interacted daily with inventors looking to sell their patents.

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Pasted below is a summary version of the article posted on JD Supra on “Black hats and white hats in the patent law system” that I wrote on 8/16/09.

Within patent law and the patent litigation system, there are good ways and bad ways to make use of the rules and laws that have been set forth for us to follow. Many patent practitioners and patent litigation attorneys follow these rules to further technology and to protect the rights of inventors via their patented inventions. In the analogy of white hats and black hats (terms used in the information security / hacker communities), people who do good by the law would be considered white hats.

However, within the patent litigation system, there are also black hats, namely venture capital companies, inventors, and attorneys who seek to harm others by writing, enforcing, and suing on patents where the protection does not cover the technologies these often non-practicing entities (NPE’s) hope to target through the patents they assert. This causes havoc by overburdening the court systems with frivolous lawsuits, by devaluing patents already in existence, and by causing inventors to sell their patents to those who wish to profit and do harm with them. Often this results in the inventor making only a fraction of what she is entitled to, and the NPE’s taking the majority of profits by suing or licensing on a technology they did not invent.


Robert Z. Cashman is a patent litigation attorney / patent attorney in Houston, TX.  He has started an informative website using the name Cashman IP which will be a resource for those who wish to obtain a patent or for those who would like to find out how to prevent companies from stealing their inventions. Services include help with entering into IP Agreements & Licensing options, IP Enforcement and Litigation, Strategic Counseling, and much more.

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It took a few seconds to come up with this analogy, but after reading the “Wear a White Hat” article by Scott Gibson, I couldn’t stop thinking about how relevant the concept of black hat, white hat was not only to archetypes, hackers, and network security professionals, but also to patent practice professionals.

In the hacker / network security / cybercrime world, a black hat is a hacker who, among other things, penetrates networks and security systems and often wreaks havoc on the systems he has gained access to. Viruses can be installed, information can be exploited and/or manipulated, and general bad things can happen when a hacker penetrates your system.

On the other hand, there is also something called a white hat, which generally refers to an “ethical” hacker. Frequently, this is a programmer or a team of network security professionals who are hired by a company for the purpose of testing the company’s network for security holes, vulnerable entryways, and for weaknesses in the company’s network security system. While they may work with grey hats (best described as those who walk the fine line between violating laws and ethical hacking), these white hats help companies combat black hats who are intent in finding a security hole, penetrating a network, and exploiting the vulnerabilities inherent in that vulnerable network.

I see patents the same way. There are white hats who practice traditional patent practice whether on the side of patent prosecution, patent licensing, or patent litigation. These are the practitioners who write the patents and advance technology by sharing inventions with the public in return for a multi -year monopoly so that the inventor can benefit from their invention. The goal with white hat patent practitioners is that they are looking to help their inventors to find where the inventor’s understanding of the invention is lacking, and to help their inventors secure protection of their inventions by covering as many embodiments of the invention as possible to most completely and to most broadly describe the invention. This is similar to the white hat ethical hacker who finds security holes with the intent of writing a patch to fill those holes and to keep the network secure.

In licensing and in litigation, there are also white hat patent practitioners. These are the attorneys who help the inventor protect their inventions against companies who have knowingly or unknowingly taken the protected invention and have used the invention to make a product or a service which incorporates the protected subject matter of the patent. This white hat patent practitioner will often approach the company or individual using the protected invention of the inventor and will ask the company to properly compensate the inventor for the value of his/her contribution. If and when the company decides not to pay the inventor for the invention that is protected by law as belonging to him through his patent (whether their decision is in bad faith, e.g. denying the inventor compensation based on the company’s greed or whether their decision is based on a good-faith belief that the patent is invalid), the white hat patent practitioner (here a patent litigation attorney) will file suit to enforce the inventor’s patent rights. Throughout the proceedings, the white hat patent litigation attorney will develop evidence and will ethically move through the lawsuit proceedings so that the judge or jury will find that their client was wronged by the company who refused to take a license and pay the inventor his/her fair share of the value their invention contributed to the company’s profits, and in the end, if the inventor is in the right, the court will find for the inventor and will order the company or infringer to pay the damages rightly owed to the inventor.

Interestingly enough, just as there are white hat inventors and patent attorneys, there are also grey hat and black hat inventors and practitioners. Often known as patent trolls, these individual or companies will patent or acquire patents to inventions with the sole purpose of using them as a weapon to harm another company, whether it be to block them from making a product, or more frequently, to carve out a profit for themselves by asserting the newly acquired patent against the company. The stated purpose of patents are to promote and to reward innovation and to further the growth of technology; forcing a company to “pay up or else,” or to stop producing a product under threat of lawsuit blocks and hinders technology.

Black hat patent practitioners and black hat inventors usually fall into the category on non-practicing entities (NPE’s). These individuals generally see a patent as a commodity to be mined and exploited rather than an invention to further technology. You’ll often find black hat practitioners trying to reverse engineer and to invent around existing inventions for the sole purpose of suppressing the next step in the furtherance of technology, or to try to induce the real inventors and companies to “trip” (so to speak) over the patent and infringe it and then WHAM! the lawsuit and threats start pouring out. You’ll also find many venture capital companies acting in a black hat capacity by aggregating patents for the sole purpose of making a pretty penny by enforcing one or more patents against a target company with deep pockets who stand to lose the most by being confronted with one or more patents which may or arguably may cover the technology they are practicing.

Lastly, the distinction between a black hat patent litigator versus a white hat or grey hat litigator is how they conduct themselves in the preparation for and during trial. Black hat litigators will threaten, scream, intimidate, and will use scare tactics and legal maneuvers to intimidate the other side into settling with them WHETHER OR NOT they really are infringing the patents being asserted against them. Sometimes a party facing a lawsuit will settle giving money to a black hat litigator who has no leg to stand on just to save money on the expensive costs that will be incurred if they decide to fight the black hat litigation attorneys.

In the network security world, the job of the good guy belongs to the white hats who write security updates and patches to prevent the hacker black hats from causing damage through their illegal and often immoral activities. However, in the patent world, a white hat is often at a disadvantage when facing a black hat, and their only remedy is to endure the high costs of litigation and attempting to file a declaratory judgment and or summary judgment motion, or defending their client all the way through trial until a judgment is granted in their favor.

However, the real white hats in the patent world belong not to the patent attorneys and the patent litigators who ethically run their practice, but to the congressmen, the senators, and the lawmakers who are able to explore how black hat patent practitioners exploit and abuse the system, and they can pass laws to patch up the vulnerabilities in the law which allow black hats to do their damage. This can only happen through advice and letters from ordinary people like you and me who write them and share their thoughts, their feelings, and their experiences to best empower the real white hats to propose legislation changes to remedy vulnerabilities in the patent system as it is today.

Robert Z. Cashman is a patent litigation attorney / patent attorney in Houston, TX.  He has started an informative website using the name Cashman IP which will be a resource for those who wish to obtain a patent or for those who would like to find out how to prevent companies from stealing their inventions. Services include help with entering into IP Agreements & Licensing options, IP Enforcement and Litigation, and Strategic Counseling.

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Today in Barron’s, there was an article “RIMM To Pay $267.5 Million To Settle Visto Patent Suit” by Eric Savitz.

I’m actually not that sad about this settlement. If Visto’s patents genuinely covered the technology used by RIM, then they had a duty to license their technology and not to steal it. Without delving deeper into the facts, I’d give RIM the benefit of the doubt that they just didn’t know about Visto’s patents when they went into that technology area. That happens quite often, and is the reason the patent system is in place. Here, Visto bought patents owned by Motorola and I would expect that RIM should have known about these patents and should have sought a license for the use of the subjects they cover, but I’m guessing that their GC thought, “hey, these patents were just bought by some venture capital (VC) company. What are the chances they’ll sue us?” Silly GC, VC’s are often trolls under a legitimate business structure.

Nevertheless, even if Visto was not some VC, it’s likely the same story — Big companies don’t take little companies / inventors holding patents seriously. They fail to realize that inventors pour out their life’s savings to develop a technology with the hopes of one day achieving some kind of financial remuneration for their inspiration and innovation. It is only fair that an inventor can hold a legal monopoly and can go to court to sue when their patent is infringe (noting that laches is always a good defense for the infringer as a side note because inventors often don’t act fast enough or they trip up while trying to send threat letters to the big companies letting them know of their infringement and then doing nothing when the big companies retort).

That being said, companies as big as RIM often take the little guy not seriously when they come with a valid patent in which they are practicing. They’ll stall, hee and haw, and will cost them thousands just to convince the huge companies to take a license from them.

Any inventor / small company that has to resort to going to court to resolve a patent disagreement deserves a good judgment because if it has come to a lawsuit, the licensing negotiation and stalling tactics by the big company has taken too long.

Obviously patent trolls are a different story. They didn’t invent the technology; they bought it at a fire sale and now they’re trying to assert it EVEN when they don’t have a strong case.


Robert Z. Cashman is a patent litigation attorney / patent attorney in Houston, TX.  He has started an informative website using the name Cashman IP which will be a resource for those who wish to obtain a patent or for those who would like to find out how to prevent companies from stealing their inventions. Services include help with entering into IP Agreements & Licensing options, IP Enforcement and Litigation, and Strategic Counseling.

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It just occurred to me that social networking sites are about to become fewer in the coming months. There is an article in the Jewelry BlogStore Blog, “Facebook Huddles with Patent Vampire” referring to talks between Nathan Myhrvold from Intellectual Ventures, and Mark Zuckerberg, the founder of facebook.com. In the article, it shows the two icons talking.

Here is how I would think the conversation likely went:

Zuckerberg: “What do you think you can do for me by me selling you my patents for millions of bucks?”

Myhrvold: “How would you like to be the only social networking site in existence?”

Zuckerberg: “You can do that? How?”

Myhrvold: “Well, you know all those me-too social networking sites? Do you have any idea how many of them are infringing patents?”

Zuckerberg: “My patents don’t cover their activities. I’m not so sure it will work.”

Myhrvold: “Think a bit bigger, my friend. We’ve been buying patents on social networking for years, so much so that we can even put you out of business with our patents. We obviously wouldn’t of course, and we’re friends, and I’d like it to stay that way.”

Zuckerberg: [a bit nervous] “Uh huh…” *frown*

Myhrvold: “If you sell us your patents, we will give you a license to keep practicing your patent forever. Think of it as a royalty-free lifetime license. We — together — will bring the other social networks down to their knees, and we’ll share the profit 60/40.”

Zuckerberg: “I’m not so sure about this.”

Myhrvold: “You can’t lose. The patents speak for themselves. Plus, imagine what you’ll be allowed to do on your own facebook.com site because we’ll license you these patents which will allow you to expand your capabilities. You’ll have the #1 social networking site in the world!”

Zuckerberg: “What about the Twitter problem?”

Myhrvold: “We’re working on it. ;)”


Robert Z. Cashman is a patent litigation attorney / patent attorney in Houston, TX.  He has started an informative website using the name Cashman IP which will be a resource for those who wish to obtain a patent or for those who would like to find out how to prevent companies from stealing their inventions. Services include help with entering into IP Agreements & Licensing options, IP Enforcement and Litigation, and Strategic Counseling.

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It’s assumed in the blog world that IV is evil and that Nathan M. is public troll #1. I keep wondering in the back of my mind, what if he is up to good rather than no good.

Everybody agrees that there are serious kinks in the patent laws and that the USPTO is backlogged until Moshiach comes. 😉 There IS a hole in the system regarding people being able to enforce patents they did not invent. This is one of the big holes IV is exploiting.

The thought is — what if they’re trying to gather enough political clout to force a change in the law? What if as the biggest potential troll in the world, they are able to eradicate all other trolls from the patent system? What if they are trying to bring justice to the system (in a socialistic kind of way which I don’t quite understand or support) by bringing huge companies down to their knees?

There is a lot of money behind those patent conglomerate companies, and they’re obviously doing what they do for some reason. G-d knows they own enough patents to cripple the patent litigation system forever with valid (not frivolous) lawsuits should they choose to. It would take a flick of a pen and we could say goodbye to the system as we know it.

How’s that for an apocalyptic view of the patent litigation system and those who hold the true power of it? 😉

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Recently when I’ve searched for “Intellectual Ventures” on the Twitter web site, all I’ve been seeing are comments about how they hit up a big company for a large sum of money over a license based on a number of patents they owned (a.k.a. purchased). The opinion, as described in the “Microsoft Wants to ‘Save’ the World, Using Restrictive Monopolies” article suggests that IV has gone bad.

It’s both surprising and not surprising to me that IV is said to have gone offensive, especially with the recent Intuit license that has everyone in a frenzy.

I thought the whole purpose of IV/RPX was to form a patent protection conglomerate to protect against frivolous lawsuits claiming patent infringement when there was none. The purchase of all those patents as far as I understood was for the use of member companies (those who paid to join in) to defeat those claims that ordinarily would cost companies millions.

I’m not so quick to start calling Intellectual Ventures a super-troll. There is probably a lot going on there behind closed doors. Some good may come of it.

On the point of the article regarding Microsoft giving open source programmers a difficult time because of their patents, that somewhat hits a nerve between the programmer in me who believes in open source and the attorney in me who believes in copyrights, patents, and protection of intellectual property. On the one hand, I suggest that Microsoft leave the open source community alone as there are bigger fish to fry, so to speak, as there are commercial applications infringing many of Microsoft’s longstanding patents. However, if their method of attack is to sue members of the open source community to go after lost profits based on what they claim they would have made had they sold the same program for which they own the patent, I understand that their damages would be greater, however their ability to collect would be nominal.

Maybe it’s more about acquiring a meaningful judgment to bolster the strength of their patents and in patents in general rather than a small-to-moderate judgment that will make their shareholders a few dollars (more likely a few pennies on their stock, if even that), as I’m sure they don’t need the latter or the aggravation of collecting a judgment against a small fish.


Robert Z. Cashman is a patent litigation attorney / patent attorney in Houston, TX.  He has started an informative website using the name Cashman IP which will be a resource for those who wish to obtain a patent or for those who would like to find out how to prevent companies from stealing their inventions. Services include help with entering into IP Agreements & Licensing options, IP Enforcement and Litigation, and Strategic Counseling.

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