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!

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

  1. Pingback: Idaho Comes Out Of Left Field, Takes Its Turn At Bat Against Trolls | IP Troll Tracker

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s