You Can’t Charge More For A License Than You Paid For The Patent. Wait, what?

It literally pains me, pains me, to be on the side of Intellectual Ventures on anything.  IV?  If you were dying of thirst and I had a glass of water, I’d drink it.


But this?  Ohhh…I don’t know about this.

IV paid $750,000 for a patent to detect malicious software embedded in digital content.  Now, they want some alleged infringers to pay up.

Intellectual Ventures is arguing in a Delaware courtroom that Internet security firms Symantec and Trend Micro should pay roughly $310 million combined for a license to that patent through the end of last year.

That’s a lot of moola, even for a company like IV who routinely tosses around figures in the billions.  Is the license for that patent worth that much?  Symantec and Trend Micro don’t think so, and they have an interesting reason why they shouldn’t have to pay it (emphasis mine):

Symantec and Trend Micro are fighting back – and advancing a novel legal theory that could pose a significant threat to the business model of Intellectual Ventures (IV) and other patent acquisition firms.

The two companies are asking a federal judge to bar IV from seeking such large licensing fees on the grounds that a patent acquired for so little couldn’t possibly be worth so much. That’s on top of more traditional arguments that Symantec and Trend Micro do not violate IV’s patents in the first place.

That statement is just so over the top kooky crazy that I’m not even sure I really read it right.  But then I read it and read it again, and there it is.  The second argument that they don’t infringe is well and good.  That’s standard operating procedure in the “Yes you did!” “No I didn’t!” “Yes you did!” craziness that is the patent litigation world these days.

But how can you say that just because IV was able to negotiate a good deal on the patent up front that they can’t get their money’s worth later?  Isn’t this an argument not for caveat emptor, but caveat venditor?  Does the seller have a responsibility to understand what it is they’re selling, and how to value it?  Is that value even knowable, actually?  Particularly with the heavily litigated technology patents, how can you ever really know what the next big thing is going to be and how important any given individual patent will turn out to be in the future?  Patent valuation is extremely tricky, that’s not news.

Besides which, even if IV had paid a larger amount for the patent, that fact alone wouldn’t now benefit either Symantec or Trend Micro.  What am I missing here?

Look, I’m fully aware of the strong-arm tactics that IV and their ilk use to extract high licensing fees.  I beat that horse on a regular basis.  We all know by now that patent assertion entities strike a balance between what it costs their victims/targets to litigate vs. what it costs to just take a license and get the monkey off your back already.  But is that what’s happening here?  It seems to me, and again, it is with huge, tremendous, agonizing agony that I say this, but this may be right:

Intellectual Ventures attorney Richard Hess said his client had a lot more information about the patent’s value than the seller, because IV knew how much companies like Symantec and Trend Micro used the technology.

See?  Caveat venditor.

If Symantec and Trend Micro’s lawyers can argue that IV deliberately shafted the original patent owner on the price and perhaps convince that person/company to weight in on the case (can they do that?  I really should get that law degree…)  or say that they were devious in the negotiations, something sleazy like that, well, OK then.  I’m more on your side.  But buying low and selling high is pretty much what businesses do, or else I need to turn in my BBA.

The hope that the defendants have is the fact that patent trials are allowed, for some odd reason, to go to a jury where you’re likely as not to get some doofus member who has an ax to grind.

Even if the federal judge sides with IV and allows its damages theory at trial, Symantec and Trend Micro could still try to convince a jury that it is unfair.

It would be interesting to see how a group of 12 impartial people see this issue.  But honestly, I don’t get this approach.  Instead of arguing with the cop that the price of a speeding ticket is too high, why not argue that you weren’t speeding?  Isn’t that the more logical place to focus your time and lawyer’s fees?  You’re doing that, you’re paying them to argue non-infringement anyway, why muddy the waters with patent valuation arguments?

As much as I like to see Intellectual Ventures lose in any way they possible can, I just don’t think this dog will hunt.



{Dos Equis meme guy found here.}

Also?  Happy Halloween!

You Only Need A Defense If Someone’s After You

“Patent trolls” are feeling the heat in Washington — and they’re taking steps to defend themselves in D.C.

Long pilloried in Silicon Valley as a drain on innovation, such companies have seen their troubles mount with regulators and lawmakers.

First, “long pilloried”, as used in the quoted article, is one of my favorite phrases ever, right after “Behold, I have found the stash of chocolate!”

Second, Nathan Mhyrvold’s being sent to DC to “make the case that patents benefit inventors” isn’t being 100% truthful because Intellectual Venture’s isn’t known for it’s ability to tell the truth they’re a troll.  He’s being sent there because all of the bills before congress are about to put the hurt on his business model.   It looks like the Goodlatte bill is really stuck in his craw.  They’re not saying that, of course, they’re generalizing the problem in an effort to dilute their affect on it:

The current debate about patent trolls “seems to create uncertainty around patents generally,” said Russ Merbeth, chief policy counsel at Intellectual Ventures. “From our perspective, that’s going to have a long-term negative impact on American competitiveness.

What’s a “chief policy counsel”, anyway?  When I think of company policy, I think of things like deciding whether or not to put a note on the fridge that all leftovers will be tossed by Friday noon, or setting the precedent that, though it does frequently reach 500 degrees with 1000% humidity in the summer in the armpit of the US Houston, no, you cannot wear a tank top, capris, and flip flops to the office.  I suppose in this case, the chief policy officer’s job is to deflect the real issue and talk about how these bills will hurt American  competitiveness which IV is doing , what, exactly, to help?


Intellectual Ventures executives have taken to the company’s corporate blog to question the “myth of patent troll litigation” and have touted the company’s role in helping startups, including Nest, the “learning” thermostat maker that has access to nearly 40,000 IV patents.

Uh, guess not.  Nest came to you so they could fight off Honeywell in much the same way that Ditto went to IP Nav to fight off 1-800-Contacts.  Nice try.

Look, you don’t file paperwork and spend $165,000 to fight something you’re not worried about.  The fact that IV and others who are part of the Innovation Alliance are worried tells you you’re close to home.

As always, I’ll add my standard disclaimer that I think the market system can solve this problem quicker than the feds can (insert shameless plug for That Patent Tool here).  But I think there are some good things in the Goodlatte bill, and I know this because they’ve got IV on the run.



VirnetX In The Crosshairs: Troll Gets (Potentially) Trolled With New Tactic

Note:  Edits at the end, based on new info.

This article over at Seeking Alpha (which sometimes requires a log in and other times not, which tells me they need to make up their mind already) was sent to me by a hipster tipster.  It contains a whole lot of information about stocks and prices and the market and shorting stock and honestly?  I don’t comprehend a whole lot of it.  I was 10 when I read The Westing Game and, being the overachiever that I was, checked out a stack of books from the library (<— ha ha, remember those?) about the stock market but completely failed to finish any of them because math.  I can’t wrap my brain around it any more than I can wrap it around the fact that George Lucas sold out off to Disney.


Definitely hipster, not my tipster.

But thankfully you don’t have to understand the ins and outs of Wall Street to know that New Bay is using IPR and the USPTO to go after VirnetX.


Here’s how it’s working:

VirnetX sued Apple for infringement (that’s one of many links about the suit, Google is your friend for history on that).  New Bay Capital is a brand new baby company born of another brand new baby company named Eastern Shore Capital, neither of whom has an expressed interest in the patents in suit between Apple and VirnetX.  According to the rules of IPR, it would appear that they don’t have to have an interest (quote from the USPTO site):

A person who is not the patent owner and has not previously filed a civil action challenging the validity of a claim of the patent may petition for an inter partes review of the patent.

An inter partes review must raise a substantial new question regarding the patentability of the patents in questions relating to obviousness or prior art references.  In this case, there is no certainty that the review will be granted much less actually result in any real change to the scope of the patents.  But it doesn’t matter and here’s why:  from the chart in the Seeking Alpha article, just the filing of the IPR (both by Apple and by New Bay) have brought VirnetX’s stock price down by 20%.  I don’t even understand this stuff, and serious thanks to Tom Shaughnessy for doing the actual math, but that’s not an insignificant amount.

While New Bay filed the IPR, they also went and played golf with the head honchos at VirnetX because I have it on good authority that trolls like to play golf, and told them they’d drop the whole thing in exchange for 10% of winnings from the Apple suit.


Just to recap:

  • New Bay files IPR.
  • Runs VirnetX’s stock price down, and probably buys a lot of it knowing they’re going to hit it rich in the Apple suit and the stock will thereby rise again.  This would allow them to sell at a higher price than they bought which, if I’m given to understand anything at all about this world, that is the way you want things to go if you play the stock market.
  • Just to ensure that they get something if the IPR fails and/or the stock price doesn’t go up because evidently stock prices are super fickle, they agreed to back off altogether in exchange for 10% of the final judgment in the Apple case.

All we need now is someone to tie these New Bay cats with someone at Apple or Cisco or anyone else who’s been trolled by VirnetX.

If the black hats can play the shell  game, why can’t the white hats?

UPDATE:  From Tom at Seeking Alpha, we have this update which tells us that New Bay did indeed request to pull their IPR.  From his analysis, it sounds like they’re a smidge afraid of discovery in EDTX.  Such a pesky, troll-friendly venue after all these years.  I contend that the damage was done…again, I have not much clue or interest in the stock market but can we get a read on who bought VHC stock while it was down and what they’ve done with it since?  It feels like a loss in the troll-fighting scheme of things, but from a financial standpoint for New Bay folks, they might be in the market for a new car or two with their winnings, is what I’m saying.



{Kramer image found here.  Internet meme of cute little toddler at a screen door can be found virtually everywhere on the internet.}

Goodlatte Needs A Latte And A Talking-To Re: Patent Reform

Getting him a latte shouldn’t be hard, and he’s going to need one to stay awake for the discussion of how his proposed bill isn’t worth the disk drive space it takes up.   I don’t mean to say that patent law is boring but….zzzz….it’s lots of legal stuff and…*nod*..*snort*…then the sheep went over the fence….and…

Ho, hey, what just happened there?


Because no one’s ever made this joke about his name 1000 times.
Also? Not Senator Goodlatte’s arm. As far as you know.

If you can manage to stay awake to read the Goodlatte Bill Proposal (or isn’t that what a bill is?  a proposed law?  I really should have paid attention to Schoolhouse Rock) then you’ll find loopholes and balderdash designed once again to make people think that the government actually cares to solve this problem.  (Hint: they don’t.)

Let’s start off with page three, lines one and two, emphasis mine:

1 cross-claim for patent infringement, unless the informa-
2 tion is not reasonable accessible, the following:

First off, typo.  Reasonably accessible.  Don’t I pay you enough taxes to hire a proofreader?  Either way, since when has anyone known a patent troll to be reasonable?  This is not just a loophole, it’s a giant gaping chasm you’ve left open to interpretation by a group of people who think nothing’s wrong with extorting money from Grandma Mimma who bought a printer/fax/scanner machine to use to run her quilt-selling store on Etsy.  “Reasonable”?  Not bloody likely.

This bill, like a few others out there, bangs the “Loser Pays” drum:

(a) AWARD.—The court shall award, to a prevailing
25 party, reasonable fees and other expenses incurred by that

1 party in connection with a civil action in which any party
2 asserts a claim for relief arising under any Act of Con-
3 gress relating to patents, unless the court finds that the
4 position of the nonprevailing party or parties was substan-
5 tially justified or that special circumstances make an
6 award unjust.

Here again, there’s a way out for the trolls.  They’ll argue all day long that there are “substantially justified” or “special circumstances” that prevent them from paying.  Besides which, as I’ve argued before, they’ll hide their assets and claim you can’t get blood from a turnip.   I like the theory of loser pays as it applies to trolls, but the reality will not bear out the way you want.  What will actually happen is it will prevent small inventors who are really truly being infringed on from taking the risk of a lawsuit.  Strike 1 1/2, Bob.

Why 1 1/2?  Well, because this is a pretty decent addendum:

‘‘(b) RECOVERY.—If a nonprevailing party is unable
8 to pay reasonable costs and other expenses awarded by
9 the court pursuant to subsection (a), the court may make
10 the reasonable costs and other expenses recoverable
11 against any interested party joined pursuant to section
12 299(d).’’

What I read here is that, since all interested parties would be required to be named, when Lodsys claims it can’t pay the bills on account of the high rent it has to pay for those swanky offices in Marshall, TX, the prevailing party can go after Intellectual Ventures.  That’s got some teeth.


Swanky digs, Lodtellectual Venturesys!

Like so many of the other bills that’ve been proffered of late, it offers a lot of after-the-fact solutions.  I like what Jon Potter at the Application Developers Alliance says:

“Reform should include demand letter transparency …,”

Totally agree.  I realize the Goodlatte bill puts the hurt on long and drawn out discovery requirements, which is the stage that kills a lot of defendants.  But wouldn’t it be better to resolve some of this prior to the suit actually being filed?  If we can continue to gather information on the demands the trolls are making by tracking their threatening “pre-suit communications” at That Patent Tool, I maintain that we can rally the troops and shut these guys down.  All you need is a solid set of data and communication between recipients and you’ve got yourself a way to collaborate and refuse to let these trolls even get to the litigation stage.

It’s great (I think) that the government is all over the patent trolling problem because it’s real, and it’s costing people money and companies.  But what I remain unconvinced of is that these bills aren’t going to do more harm than good, and end up being repealed or modified in some way that’s going to cost us yet more money as taxpayers.

As always, I remain a fan of market-based solutions, though I commend Senator Goodlatte for a) trying and b) having a great name that I can poke fun at (even though it’s really pronounced “Goodlat“, and not “lottay” like the drink, which is a total bummer).



{Latte image found here , Lodsys office image via Online News Corporation Unlimited, here.}

What Kinds Of Patents Do Trolls Sue Over And Who Do They Sue?

I don’t know that either of those questions is answerable to a degree of 100% certainty, but a little light reading a few days ago got me to thinkin’.  Serendipity is one of those words that I love sneaking into conversations with people because I am under some grand delusion that it makes me sound smart to use big words.  Overcompensate much?  Why yes, yes I do., defines the word as follows:

an aptitude for making desirable discoveries by accident.

I’m not sure it’s an accident or even, in fact, a discovery, but I read  this blog post and then I noticed an interesting search term used to find my own blog:


So I thought “Trask –> Radio”

(If you don’t get the reference, please pretend for my sake?  The movie it’s from stars Harrison Ford and is therefore by definition on the list of Best Movies in the World.)


What Brian Wassom seems to think, and I wholeheartedly agree, is that increasingly patent trolls are going after companies who are not in the technology sector, such as retailers:

Patent trolls actually sue more non-tech companies over software patents nowadays than they do tech companies, with retail being among the hardest hit of all.

And what’s more, his reasoning is sound:

That’s because the companies behind the software have a vested interest in defending it, while retail clients–who likely just licensed the technology as a one-off experiment–are much more keen to simply pay a nuisance settlement to get rid of the litigation, which the troll then uses to fund the next round of litigation.

The troll in question in this case is Lennon Image Technologies, of “we sued Ditto and then IP Nav ruined it for us with all their thuggery” fame infamy.   They have a patent on an AR technology (AR = augmented reality, such as the ability to try on a pair of virtual glasses) which is currently under ex parte re-examination.  We don’t know by whom, as Mr. Wassom points out:

 It was submitted by an attorney, but the party for whom he did it is allowed to remain anonymous.

The fact that he used the terminology “…is allowed to remain…” makes me think he thinks it shouldn’t be allowed.  And frankly, transparency is something that is sorely lacking in the whole patent space anyway, so I’m inclined to agree.  I guess the feeling from the other side is “if we tell you who we’re asking for a re-exam on behalf of, you’ll know we’re scared of you coming after us, Mr. Troll.”  A valid angle.

Addressing the question of what patents the trolls go after, it’s an easy call:  crappy ones.   Ambiguous ones.  Patents that never should have been issued.

In terms of who they sue, I think this guy’s on to something.  As the true definition of a patent troll includes, but is not limited to, the phrase “does not manufacture anything” they by definition always go after people who can’t counter sue for infringement.  But what Mr. Wassom hits on is that in going after retailers, they’re going after people who have no reason to sue them back anyway.  They don’t own the technology (or manufacture the product) themselves, they just use it (or sell it).  Retailers are in the business of retailing and are therefore more likely to settle because they don’t care about the technology itself or being able to use it in other products.

I mentioned in my Quarterly Troll Review that at some point, the target of technology companies is going to be played out.  Retail is someplace I think the trolls will head, though I envisioned the focus being more towards RFID technology.

Mr. Wassom has schooled me, and I’ll gladly take the lesson.



{Awesome Harrison Ford image found here.}

Ditto/IP Nav Win A Round, IP Nav Gets Rebuffed When Trying To Send Flowers

I hate it when I’m right about something so wrong.  (If you’re not an Aggie, that sentence can totally make sense.)

When last we left our (potential) hero Ditto, they were being sued by 1-800-Contacts and a company called Lennon Image Technologies (I’d link to you their website but oopsies!  they’re a troll and don’t have one) for patent infringement.  Kate Endress and her co-founder started an Indiegogo campaign, to which I contributed and for which I received a raspberry (which is to say, “purple”) colored t-shirt and a very nice note on embossed stationary that looked not unlike those hard cardboard perfume samples you get bombarded with if you shop in person at Macy’s only the Ditto one didn’t, to my great disappointment, smell like  Drakkar.  I was so excited to see this young company come out against trolls and imagined their campaign not only reaching it’s goal of $30k, but exceeding it mightily.

Alas, that was not meant to be.  And I tried not to judge people for not helping her even though everyone, everywhere should want to beat these trolls into submission.

Out of what I can only assume was massive fear for her company’s life and panic at the thought of losing all she’d worked for, Kate chose to get in bed with Erich Spangenberg at IP Nav.


And now, in the worst of all scenarios for troll trackers and fighters, it appears that IP Nav was successful in fighting off Lennon.  Well well well, isn’t Mr. Go-Thug just so proud of himself?


“I don’t stand accused [of being a troll].
I stand guilty.”

I do get it, I do.  I understand why Ditto needed an ally and this article at IndyStar,com explains:

not only has partnering with Spangenberg given Ditto more resources for its legal fights, but it has also freed the Dittos team’s time to actually focus on building the business (a site where shoppers can virtually try on eyeglasses) again.

But is the state of affairs on the Patent War front so dire that companies have so few options at defense?  Would Ditto have been better off fighting to invalidate the patent?  They tried other options, it seems:

She sought out lawyers who might charge a discount rate in return for a stake in Ditto. She also pleaded for help from techies in Silicon Valley, where Ditto is headquartered. She had no luck on either end.

Her luck, as it were, changed when she was seated next to Mr. Go Thug on a panel.  They struck up a conversation and out of a deep-seeded need for legitimacy and because helping Ditto would give him something positive to promote about his ne’er-do-well company, IP Nav cut a deal for equity in exchange for funding the lawsuits (both 1-800-Contacts and Lennon Technologies).

So now although Ditto has ostensibly been saved (the 1-800-Contacts suit is still pending, despite the pot of flowers sent to their parent company’s CEO by our favorite Spangenberg, which were summarily ignored), the means to get there sends exactly the wrong message, which is that partnering with a troll can save you from a troll.  How is that even logical?  Why does that work?

I dunno.

The article at the Indianapolis Star by Alex Campbell really does explain a lot of the back story, and it makes it hard not to sympathize with Ms. Endress’s plight.

What it does not do is make it hard to sympathize with Erich Spangenberg and IP Nav.  Once you go thug, you can’t go back.



{Picard facepalm image found here.  Erich Spangenberg image courtesy of the Dallas Observer.}

Statistically Speaking, Here’s Where We Stand On Demand Letters

I should look up the last time I posted conclusions about the demand letters entered at That Patent Tool but I’m busy burning dinner working on a new release so you’ll just have to trust me that we’ve done this before.

(Kidding, here’s the prior post.)

Numbers aren’t normally my thing because math.  But I thought it might be fun to run some stats on what’s been entered so far.   What’s so interesting is that even with partial information, you can still see patterns emerging.  By partial, I mean that sometimes we get the full name of the company the letter was sent to, along with the demand amount and the names of counsel, what products are specifically accused of infringing and why, etc.   Other times (most, in fact) all we get is the name of the asserter and the potentially infringing product, which is to say not much information at all.  Nevertheless, when you aggregate, here’s what you get:

Percentage of times the demand amount was entered (v. redacted or not provided):  29%

Avg demand amount across all letters:  $8063.63

Avg demand amount by category:

Scanning:  $1120.00

In-app purchasing:  $5000.00

Transportation*:  $150,000.00

*This is the Arrival Star v. TARTA assertion, the only one in this category.

Percentage of times the recipient was not named/redacted: 71%

Percentage of times the asserter was a six-letter company name:  56%

That last one is in there just for fun, because of course all of the six-letter asserters are really the Scanner Dudes, represented by Farney Daniels, PC.  You want to know something strange?  Most of the six-letter companies start with the letter F or I.  “F” I can kinda get behind because Farney Daniels.  But I?  What’s up with that?

The more data that comes in the more we can wrap our mitts around what the trolls are doing and who they’re going after.   If you’ve been hit by a troll or know someone who has, encourage them enter as much information as they can into That Patent Tool!!

And on a personal note, if you have any idea how to disable the touchpad on a Dell laptop running Windows 8, I would gladly pay you Tuesday for a hamburger today.



When Patent Trolls React To Being Called A Troll, You Know You’ve Hit A Nerve

Can I just say that the people at must love me for my titles.  If brevity is the soul of wit, then I must be the un-funniest person around because in case you haven’t noticed?  I like to talk.  I’m constantly having to shrink down my own URLs for posting on Twitter, an app that by the way is sheer torture for someone afflicted with verbosity.  144 characters?  Oh, the humanity.

Anyhoot, you can tell a lot about a man by what makes him angry.  I’m not sure who said that but the older I get the more I see that truism played out.  Which is why it’s always so interesting to me when a company gets called out on their behavior and they immediately send their PR guys in to comment on your blog posts (Hi Barry!!) or follow you on Twitter (Hi Erich/IP Nav!).

Remember Treehouse Avatar Technologies who went after gamers?  A quick search on will get you up to speed.  The gist of it is, you know, patent trolling.  Treehouse sent out form letters to game app developers hoping to score big.  Bad Pug sent an epic response and I haven’t seen anything more on that story so if you have, let me in on it.  What a slam.  I mean, how embarrassed are you if you’re Treehouse’s attorneys?

Turns out?  Not very.  Here’s how they respond to accusations of patent trolling:

Thank you for contacting us. We represent Treehouse Avatar Technologies in its efforts to enforce its patents, including U.S. Patent No. 8,180,858. The letter we sent to Bad Pug Games is not a form letter. Our letter was directed to the particular game system of Bad Pug, and demonstrated the applicability of the technology in the ‘858 Patent.

As you know, developers of online games commonly seek to prevent the unauthorized use of their creations by registering copyrights and trademarks. In like manner, the developers of the subject game technology sought to protect their rights in their invention by securing a patent. We are now seeking, on behalf of our client, to enforce those patent rights and to thereby secure just compensation for the unauthorized use of this patented technology. We do not seek to prevent the use of this invention by those who wish to do so. Licenses are available on a fair and nondiscriminatory basis.

While your readers may have preconceived beliefs as to the enforcement of patent rights, it is important to remember that the entire video game industry is based on the technological revolution of the last few decades, which would have not occurred without the hard work and creativity of inventors like those we represent.

We are proud to represent Treehouse Avatar Technologies and hope this assists your readers in fully understanding the legal process.

Stephen Roth

Let’s have a little fun with this and fire up the Patent Troll Translater™:

Thank you for contacting us. We represent Treehouse Avatar Technologies in its efforts to extort money from game developers who can’t afford to hire a decent attorney.  The letter we sent to Bad Pug Games is totally a form letter. Our letter was directed to anyone who collects information on how someone plays a game to then upsell them on in-app purchases.  Which applies to every game on every platform.

As you know, developers of online games commonly seek to prevent the unauthorized use of their creations by registering copyrights and trademarks. In like manner, the developers of the subject game technology sought to protect their rights in their invention by securing a patent because we advised them on how the USPTO works, including the likelihood that such a stupid patent would get issued.  We are now demanding, on behalf of our client, to enforce those patent rights and to thereby secure completely outrageous licensing fees for the unauthorized use of this stupidly patented technology. W’re not trying to stop you from using our technology because if you did then you’d get off on non-infringement.  No, we would love for you to keep using it because then we can shake you down.

While your readers may be sharp enough to recognize a troll when they see one, it is important to remember that unless they can fight us off in court, we sort of have all these developers over a a barrel.

We are proud to represent Treehouse Avatar Technologies because we have no shame and hope this letter assists your readers in fully understanding the legal process.  And also, calling us a troll is just mean.  We respectfully request that you stop.  Waaaah.

Stephen Roth (paraphrased)

According to his law firm bio, Mr. Roth “conducted psychological research on human perception”.  That explains why he was bothered by the perception reality that his client is a patent troll.  He’s also “actively involved in the training of the firm’s litigation associates”, which totally makes him the Louis Litt of his firm.


I’ll always contend that if these trolls think what they’re doing is OK and there’s nothing wrong with sending out a bazillion letters (give or take) trying to sham money out of people then they shouldn’t feel the need to defend themselves.  Just own what you’re doing and call it day, because when you write letters like that it only goes to show people that deep down inside, maybe, just maybe, you think what you’re doing is wrong.



{Louis Litt image found here, Stephen Roth image found here.}

FTC Asks, Intellectual Ventures Answers (Hint: Probably A Satirical Post)

Just like a Wendy interview, the FTC is about to get all up in the patent trolls’ business.  The full list of questions can be found on the FTC site and boy do they get specific.   Like, seven appendices worth of specificity, which on the official Specificity Scale is pretty much an F5.  So, seriously specific.


Thankfully, they’ve posted a summary of the types of answers they’re after as well, and this is much easier to digest:

  • How do PAEs organize their corporate legal structure, including parent and subsidiary entities? (Request B)
  • What types of patents do PAEs hold, and how do they organize their holdings? (Request C & D)
  • How do PAEs acquire patents, and how do they compensate prior patent owners?  (Request E)
  • How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)? (Request F)
  • What does assertion activity cost PAEs? (Request G); and
  • What do PAEs earn through assertion activity? (Request H)

Intellectual Ventures has likely received their personalized FTC Troll Expose’ Kit and are busy cutting and pasting their standard PR rhetoric preparing their answers.  Don’t tell anyone, but what follows is an advanced copy of their reply.  Remember, shhhh.  You didn’t get this from me, OK?


1.  How do PAEs organize their corporate legal structure, including parent and subsidiary entities?

We’re a private company.  We take money from investors and on occasion, actually pay them back.  That’s not going so well for us right now, though.  What’s a subsidiary?  We don’t have any, and Lodsys certainly isn’t one of them, whatever they are.  From a legal structure perspective yes, we have lawyers.  Is that what you’re asking?

2.  What types of patents do PAEs hold, and how do they organize their holdings?

The kind that we can extort money for, of course.  My cooking lessons aren’t going to pay for themselves, you know!  We organize our holdings into file folders by patent number.  ??  Geez, what a stupid question.

3.  How do PAEs acquire patents, and how do they compensate prior patent owners?

Well, sometimes we go through brokers.  Other times, we send our henchmen to all those nifty little incubator meet ups and convince first-time inventors to let us help them file and obtain a patent for whatever they’re doing that could be even remotely similar to something that we can sue people for infringing on.   As far as compensation goes, we spring for dinner at the local taco wagon after we have their signatures.  Because seriously, nothing says “We value your contribution to our monolithic patent coffers” like some ground beef and beans wrapped in a week-old tortilla.  Yeah, baby!

4.  How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)?

“Yes” to the first two, “Aggressive” to the third.

5.  What does assertion activity cost PAEs?

Money.  Wampum went out of style when all the beaches on the Atlantic seaboard eroded.

6.  What do PAEs earn through assertion activity?

Money.  While I’d like to be paid in solid gold bars, it just never seems to work out that way, you know? Besides which, we also earn a reputation that we’re not to be messed with which is actually worth way more than money.  You pick on enough of the people enough of the time, and word gets around.  All of a sudden, it only takes one or two meetings to get the signature you need.  Holla!


Right now, this is all just a bad dream for the trolls, who have 60 days to send in comments about this proposal that questions their livelihood.  They’ll not go down quietly, so we should all be on the lookout for complaints from all the usual suspects.  From the FTC’s site:

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).6 Your comment will be kept confidential only if  the FTC General Counsel grants your request in accordance with the law and the public interest.

Considering how far under the hood they’re willing to dig, I’d be surprised if any of the responses were actually kept confidential.

In a way, I’m sad to see the gov’t having to get so involved in this problem because I remain of the opinion that if we let the market ferret these guys out by doing things like tracking the demand letters they send (at That Patent Tool, come on and join in the fight!!) we can solve this issue on our own.  It always worries me when law-makers set out to bring down one rogue section of an industry because the effects are almost always more far-reaching than initially thought.  The “Law of Unintended Consequences”, and all that.

That said, I get a fiendish delight thinking of how much these trolls are squirming right now, just reading the list of questions.



An Open Letter To Martha Stewart And Eugene Kaspersky Re: Lodsys

Dear Mr. Kaspersky and Ms. Stewart,

You almost want to feel sorry for them, don’t you?  I mean, how bloodied and beat up are these Lodsys cats these days anyway, am I right?  From Joe Mullin over at Ars, we have the tale of the chicken:

Lodsys decided over the weekend to dismiss its case against Kaspersky with prejudice. Instead of facing a jury, Lodsys will slink away instead. It was an unconditional surrender.


Even better, I woke up this morning to the whole story in your own words, Mr. Kaspersky, my favorites of which were:

The enemy is defeated, demoralized, and on the run! Churchill was right: “Never give up!” We’ve followed his advice in our fight against a particular troll. As a result the troll gave up and ran away with nothing and its tail between its legs.


Defeated.  Demoralized.  On the run.

Hello!  Again!  Although I must take issue with the second adjective because how can you be “de”moralized when you have no morals to begin with, eh trolls?  But hey, I’ll forgive you that because how awesome is that picture of your team and also?  I hope you saved at least one bottle of Chivas to send to Martha.

From the “what-I’ve-been-saying-all-along” department (with acknowledgement to Techdirt), we see that Kaspersky Lab, like Todd Moore at TMSoft before you, has simply refused to roll over for the likes of these “vermin”.  That’s the only way to send a message that the bullies can’t have your lunch money, folks!

What I’m hoping these recent victories against Lodtellectual Venturesys* don’t mean is that you’ll back down, Ms. Stewart.  I watched every episode of The Apprentice: Martha Stewart and if memory serves (and it does), you don’t seem the type.  Nevertheless, there’s always the danger that, when the bully backs off one or two victims, the posse that’s been assembled to meet him at the bike racks the next afternoon and give him what-for will decide he doesn’t need it.

Rest assured, Lodsys needs and deserves the ass-whoopin’.

You’ve gone for the jugular here by filing for Declaratory Judgement on non-infringement and invalidity.  As we say in Texas, put a bullet in it.  Knock out this meager family of four piddly patents and be the hero to all the companies still in Lodsys’ path!  Don’t settle out because they’re down, go right ahead and kick ’em, no?  Crack open the can, baby!!


I hate to say the troll tide is turning because there’s still a lot of bad going on out there.  But if we (and by “we” I mean “you”) see this one through, it’ll take a whole lotta steam out of the engine.

Just sayin’,


*Intellectual Ventures + Lodsys = Lodtellectual Venturesys.  Try and follow along, people.

{Happless coyote image found here. Can of whoop-ass image found here, along with some decent advice.}