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Startup Seeks To Preempt Patent Trolls 117

Posted by CmdrTaco
from the wonder-how-long-that'll-last dept.
anaesthetica writes "The WSJ reports that a San Francisco startup is buying up patents with the promise never to assert them in order to help large corporations hedge against patent trolling firms. The company, RPX Corp, receives an annual fee in exchange for licensing the patents it has purchased. Cisco and IBM have already signed up for this service of 'defense patent aggregation.'"
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Startup Seeks To Preempt Patent Trolls

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  • Preempt them (Score:5, Insightful)

    by nurb432 (527695) on Monday November 24, 2008 @05:47PM (#25877887) Homepage Journal

    By being one..

    • As I see it, patent pools like this turn patent law against the patent trolls in much the same way that the GNU General Public License and other copyleft licenses turn copyright law against some publishers of proprietary software.
      • by TubeSteak (669689) on Monday November 24, 2008 @10:13PM (#25880529) Journal

        As I see it, patent pools like this turn patent law against the patent trolls in much the same way that the GNU General Public License and other copyleft licenses turn copyright law against some publishers of proprietary software.

        A patent cartel ("defensive pooling" my ass) only protects members of the cartel.
        It doesn't 'free' patents like the GPL 'frees' software.

        • by RichiH (749257)

          So what? If they do a legally binding "we will not attack anyone unless you attack a subscriber" stunt, you can simply ignore those patents. Of course, a large corp might not want to use a particular piece of software as they are battling someone else, but I don't care about that. And yes, abolishing the stupid (not all!) patents would be better. But in the current system, it means that pressure is taken off the community.

          • Re: (Score:3, Insightful)

            by HungryHobo (1314109)

            Lets try a situation:
            So I own a real, useful, solid, patent on something novel. A posterboy patent of when it's a useful system.

            They do the "we will not attack anyone unless you attack a subscriber" stunt.
            The next day one of their subscribers blatantly steals my work, starts producing my product in their fabs and bankrupting me.
            I try to apply my patent and get raped by their pool of patent troll patents when they use them to fight back.

            It's still patent trolling.

            • by RichiH (749257)

              Agreed. It is a lot better than being bashed on the head from the start, though.

      • by arth1 (260657)

        As far as I can tell, you're wrong in comparing the two.

        If this company goes tits up, the patent portfolio can be bought by patent sharks and used for exactly what it was intended to prevent. Similar if they get a CEO like McBride, or if their current leaders suddenly turn evil. Promises aren't worth the paper they never were written on.

        GNU copyleft, on the other hand, doesn't rely on the copyright holder retaining the rights or holding true to his promises, because the rights are already assigned.

        I think

        • by SL Baur (19540)

          If this company goes tits up, the patent portfolio can be bought by patent sharks and used for exactly what it was intended to prevent.

          Something very much like that happened with the Chaum digital money patents. Digicash was on the verge of some remarkable things before they went tits up and NOBODY was allowed to use the technology.

        • I think this is a very bad idea, and that the company sets itself up for being bought by someone with less scruples.

          Assuming that is not their real plan...

    • Re:Preempt them (Score:5, Interesting)

      by rudeboy1 (516023) on Monday November 24, 2008 @06:28PM (#25878393)

      I see where this is going...
        Company buys up billions of dollars worth of IP (cheaply, due to the business concept), promising never to use it.
        Company gets bought out, at a reasonable price considering all they own, since they're "not really the IP owners".
        New company decides it's not bound by previous company's ethics, decides to call in the lawyers for the billions of dollars worth of IP.
        New company litigates the living shit out of everyone.
        New company buys out other companies using the money won from being sued for using their own IP.
        New company now owns 50.1% of the world.

      Can someone verify the whereabouts of Pinky and The Brain please? I'm getting a little nervous.

      • Re: (Score:1, Funny)

        by Anonymous Coward

        Can someone verify the whereabouts of Pinky and The Brain please? I'm getting a little nervous.

        They haven't been seen since last Friday night, when CmdrTaco did his Richard Gere impersonation

      • What you do is you have them sign a contract. The contract says thing like "You can never sue us." When you buy a company, you buy their obligations too. You don't get to say "Oh look, we are a new company so we can just ignore the contracts." Nope, you bought all that as well.

        Remember: If you could get out of a contract with a sale, people could do this with houses. For example I buy a house, I sell it to you for a dollar. I then don't pay the mortgage. The bank comes to repossess the house and you say "It

        • Re: (Score:3, Insightful)

          by TheRaven64 (641858)

          You don't get to say "Oh look, we are a new company so we can just ignore the contracts." Nope, you bought all that as well.

          Nope, you liquidate the first company, sell its assets (the patents) to a third party, and then let the company fold complete with all of its contracts. Someone else buys it for a dollar and gets all of the remaining assets.

          • by jlarocco (851450)

            A properly written contract would prevent that from happening. A clause saying "This agreement is no longer valid if either company goes into bankruptcy or is liquidated" or something like that.

            That seems like a fairly obvious clause to add, and I only thought about it for 30 seconds. I'm sure IBM and Cisco's army of lawyers thought it over a bit more carefully. And if not, who gives a shit? It's not my problem, and it's probably not your's either. It's their IP, let them do what they want with it.

            • by Nicolay77 (258497)

              I think it is backwards in this case.

              What we want is that the agreement remains valid even in the company goes into bankruptcy or liquidation. Very unlikely to happen.

              If the contract is no longer valid, THEN the sharky lawyers will sue everybody and be very patent-trollish.

              • by jlarocco (851450)

                I'm not sure that's true.

                If the agreement lets everybody use everybody else's IP, you'd eventually end up in a situation where even if the IP reverted back to its original owners, you'd end up in a situation where nobody can really sue anybody without opening themselves up to several countersuits. Almost a "mutually assured destruction" kind of scenario.

                Technically companies with more patents would have a bit of an advantage, but I think it'd still be cheaper to form a new patent shelter company than

            • It'd have to be more like "all intellectual holdings of the holding company become public domain if the company is liquidated".

              It's pretty unlikely that they'd include this in their own contracts, and i'm not sure how it could actually be enforced.
        • by Godji (957148)

          The contract says thing like "You can never sue us."

          Sure, but what's to stop them from suing everyone except "us"? They'll sue "us" for something else that someone else gave them.

      • by canajin56 (660655)
        Two things. One, you can't just void all the contracts that a company you bought out signed. Two, even the companies why didn't license would be protected by promissory estoppel. They can't say "We will not sue over these patents" and then do so later. If not for promissory estoppel, there would be so many awesome money making schemes. Take a song and say "Feel free to share this on P2P" and then track down people who share it and sue their asses of! Put up signs that say "free parking" on your privat
        • Re: (Score:3, Interesting)

          by ScrewMaster (602015) *
          True, and then there's also the Nazgul. No patent troll in his right mind would take them on. Not if he knows what's good for him.
      • by ScrewMaster (602015) * on Monday November 24, 2008 @08:53PM (#25879821)

        Can someone verify the whereabouts of Pinky and The Brain please? I'm getting a little nervous.

        "What are we going to do today, Brin?"

        "Same thing we do every day, Sergey ... try and take over the world!"

        • "What are we going to do today, Brin?"

          "Same thing we do every day, Larry... try and take over the world!"

          There, fixed that for ya. Hold on, I actually did fix that for ya! Weird.

          • "What are we going to do today, Brin?"

            "Same thing we do every day, Larry... try and take over the world!"

            There, fixed that for ya. Hold on, I actually did fix that for ya! Weird.

            Yeah, yeah. I hit SUBMIT and then said a bad word.

      • by shentino (1139071)

        In the case of a buyout, the new company would almost certainly be bound by the contractual obligations of the old one.

        If old company signed a "will not sue" agreement, the new company cannot go litigation happy without breaching said contract.

    • so it's either fight fire with fire or (more likely) be the bad guys in disguise

    • by ponraul (1233704)

      YCTAT [encycloped...matica.com].

  • This just in (Score:4, Insightful)

    by TheSpoom (715771) * <slashdot&uberm00,net> on Monday November 24, 2008 @05:51PM (#25877915) Homepage Journal

    Company buys up all other patent trolls, seeks funds from major companies while saying "we don't use them against you (if you pay us), honest!"

    News at 11.

    • Re:This just in (Score:5, Insightful)

      by virtualXTC (609488) on Monday November 24, 2008 @06:00PM (#25878023) Homepage
      That's what I didn't get.
      If they "won't assert their claims" then why do you need to buy a license from them?
      If you do need to buy a license from them, how are they not trolls?
      • Consideration (Score:4, Interesting)

        by tepples (727027) <{tepples} {at} {gmail.com}> on Monday November 24, 2008 @06:10PM (#25878159) Homepage Journal

        If they "won't assert their claims" then why do you need to buy a license from them?

        A contract, such as the purchase of a patent, requires some sort of consideration [wikipedia.org] in order to be binding. This consideration could be a token amount such as one dollar, or (more likely in this case) it could be only as much money as is needed to maintain the patent pool.

        • by tehcyder (746570)

          A contract, such as the purchase of a patent, requires some sort of consideration [wikipedia.org] in order to be binding. This consideration could be a token amount such as one dollar, or (more likely in this case) it could be only as much money as is needed to maintain the patent pool.

          You have a touching face in humanity, and presumably have never worked in business.

      • Re:This just in (Score:5, Insightful)

        by SydShamino (547793) on Monday November 24, 2008 @06:21PM (#25878297)

        I believe their claim is that they won't assert these patents against anyone. IBM isn't willing to buy out these patents to prevent their exploitation, but IBM is willing to donate a smaller amount of money to achieve the same thing. Cisco believes the same thing.

        I see this as companies doing something that is beyond themselves. It's in their own interest, yes - the have neutralized a series a patents at less than it would cost to buy them or fight off a lawsuit - but in the process they have protected other companies that didn't help fund the operation.

        • Good citizenship aside, if this were a non-profit entity, these donations would also be tax-deductible.
      • Re:This just in (Score:4, Insightful)

        by Piranhaa (672441) on Monday November 24, 2008 @06:30PM (#25878421)

        I can see it from both sides and I'm not entirely sure where I stand.

        Take these into consideration however:
        1) They need money in order to buy patents out. This isn't an ad driven service...
        2) They do have to buy out a LOT of patents (only if the squatter is in fact willing to give it up) to make this worthwhile.
        3) The patents were already held in hand, so it could have ended up in a multimillion dollar lawsuit OR the companies wanting to use them would not have been able to make a product with that particular patent, resulting in unattainable revenue.
        4) If the price is reasonable, it's basically a (cheap?) insurance policy. It's practically a guaranteed way to use any patent this company has.
        5) Companies don't need to request, or pay large amounts per patent, but rather pay into the pool and can use them ALL.

        These are just some of the facts that came to my head. What I want to know is what happens if a company decides not to buy in, or doesn't realize they are violating a patent, if they'll get slammed hard.

        Also, if these guys are just squatting on these patents and not producing ANYTHING with them, how will they hold up in court? IANAL, but I thought a company needs to show some effort in actually USING the technology for it to be considered VALID.

        • by akozakie (633875)

          I have no idea whether there is an obligation to use the patent (I don't think so), but even if there is - so what? The whole business model of this company is to get paid for eliminating patents. If they become invalid - great, goal achieved. Of course, without RTFA i can't tell if they are just planning a pool of free-to-use patents or some sort of patent NATO, where if a contributing partner is attacked by a patent troll, they join the war by suing the troll using their patent pool. Invalid patents would

      • Well, they claim that they're never going to use the patents, so no one is required to pay them. If IBM or Cisco decides not to join, they still won't use the patents. That makes them very different from patent trolls.

        Obviously the question is, why would anyone pay a company to do what it intends to do anyway? The answer is, most companies wouldn't, but the very largest companies with the most to lose from patent lawsuits are willing to pay because they like being safe from those lawsuits. They know tha

      • I assume they'll start patenting in areas relevant to your company.

        Lots of places apply for defensive patents for their technologies. This is simply a company you can hire to do that for you.

      • by PMuse (320639)

        . . . how are they not trolls?

        I believe the theory is that buying up all the abandoned / firesale patents on the market is cheaper than getting hit up by 1-2 trolls who want real money. The phrase "cheap at twice the price" comes to mind.

        Yes, they do ask their "licensees" to contribute money, but this troll-suppression scheme can't work without funding from somewhere. We'll see if it can work at all.

    • by qw0ntum (831414)
      Yeah... I don't see how this is any different from regular old patent trolls. They are still owning patents with no intention of marketing the products they cover. Why is it worthwhile to give a patent to this company and then license it back from them?
  • by CopaceticOpus (965603) on Monday November 24, 2008 @05:53PM (#25877937)

    Interesting business plan, I wonder if they patented it.

    • by geekmux (1040042)

      Interesting business plan, I wonder if they patented it.

      Too late, I just did.

      (strokes bald cat and adjusts monacle)

    • Re: (Score:2, Informative)

      by DogDude (805747)
      No, at the very least, Sourceforge, Inc (the owner of Slashdot), is doing it as well.

      (From their latest 10-K filing):
      We protect our intellectual property through a combination of copyright, trademark, patent and trade secret laws, employee and third-party nondisclosure agreements, and other methods of protection.
      • Re: (Score:3, Funny)

        by Mister Whirly (964219)
        SourceForge has the advantage of not only enforcing patents, but they can Slashdot effect companies as well...
  • by Anonymous Coward

    So they buy up patents that are most likely to cover the technologies already employed by firms, and then offer to the firms to pay a license fee for which in exchange they receive a guarantee that they will not be sued for infringement? That's a novel idea.

    While the patent trolls state "I'm going to burn your store down!", these guys clearly say "It's a mighty fine store you have there, I can protect it from being burnt down for only a small fee".

  • Legalized "patent-squatting"? Are we serious?

    And IBM signing up? Didn't the rest of us concede they won the race for most patents about 74,273 applications ago?

  • What? (Score:2, Insightful)

    by Anonymous Coward

    Won't this just encourage patent trolls?

  • I better go RTFA, coz from the intro it sure sounds like a patent troll itself.

  • What's to stop them from turning around and blackmailing these huge companies once they've amassed all these patents?

    They must be getting a really nice chunk of change.

    • Contracts?
      • by Dripdry (1062282)

        Oh, sure. But I've known enough lawyers who scoff at all sorts of contracts. Like rules, they seem made to be broken.

        You're probably right, though. Perhaps my overzealousness to get an early post and mod points blinded me to the apparent simplicity of my contribution.

      • Silly person! Haven't you learned anything from Darl McBride?

        Contracts are what you use against parties you have relationships with.

  • Does anyone else see this as a harbinger for another legal quagmire in the future, or am I just trying to get karma by using big words?

    • Depends on which quagmire you're referring too... Giggety, giggety.

      [Yes, I know you were talking about "harbinger" as your big word.]

  • "New startup makes it easier and standard practice to legitimize the practice of patent trolling."

    Just fix the damn system already!
  • If you've read Accelerando by Charles Stross the occupation of Manfred Macx the novel's protagonist does exactly what this company does. Stross terms this a Venture Alturist. He goes a step further with his character, whom not only sits on patents so the trolls can't get at 'em, but spends time alot of time furiously dreaming ideas and patenting them.

    But really this is a bit "Honestly officer, I picked it up before someone stole it."
  • Days of Our Patents (Score:4, Interesting)

    by earlymon (1116185) on Monday November 24, 2008 @06:20PM (#25878287) Homepage Journal

    Plot^H^H^H^H History:

    1. Government develops the concept of patents to protect the little, lone creator from amoral, robber industries - because even in groups, the creators have no defense against amoral industries. Government protection against business.

    2. Developments soar - we're beyond the end-of-day-almost-off-air programming of the 60s that warned one day technology would double every year - technology doubles faster than we can measure.

    3. Characters arise to be lionized and demonized in the tech age. They are given primary credit - in the mass mind (including on /.) - for their companies' successes and failures. Creation still in the hands of individuals, despite mass mindset.

    4. Charlatans seize upon the opportunity, start trolling patents like crazy. It gets out of hand.

    5. A business develops the patent-license-protection-clearinghouse to protect the large, rich businesses from the amoral, robber trolls' abuse of the law - because even in groups, corporations have no protection against the amoral trolls. Business protection against government.

    If I invoke the name of Calculon does it help illustrate the point? It's a multi-year-long plot, very boring, very circular, and I'm calling it: Days of Our Patents.

    I don't know about you guys, but I signed up decades ago to be a part of this thing called tech - not to become a forced extra in some asinine soap opera - which I fear we are all going to become part of, like it or not, know it or not.

    • > If I invoke the name of Calculon does it help illustrate the point?

      The gold robot on Futurama? Who is a famous soap star, and falls in love with Bender? Who is temporary female, so he could compete in the Olypics?

      What's he got to do with this?

      • The next sentance answered your question: It's a multi-year-long plot, very boring, very circular, and I'm calling it: Days of Our Patents.

        because, as you know: Who is a famous soap star
      • by earlymon (1116185)

        The gold robot on Futurama? Who is a famous soap star...

        Exactly. Only a star of Calculon's range could possibly hope to act this all out.

  • The best and cheapest defense against patent trolls is defensive publication [wikipedia.org].
  • The irony here is laughable.
  • Intellectual Ventures started this way and now are supertrolls, RPX is refugees from there and *must* inevitably go the same way. A license to patent A is not a license to patent B, so this concept just plain won't work and RPX knows it. It's just plain deception - it's like paying off the mafia when everyone knows the tongs and yakuza are waiting on the step for their cut.
  • *Any* business based solely on patents is pure overhead for the rest of us. Overhead of the patent system, I mean. The fact that you can have a growth business of just dealing with patents and nothing else means that the overhead of the patent system itself grows over time. At some point the overhead costs more than the benefit that we get from the system! Don't get me started on insurance companies, lawyers, bankers and brokers either. Each system has players that are pure overhead, and increasingly s
  • I think our patent system has truly gotten out of control when companies start doing stuff like this.
  • Assuming this company is on the hook for all legal costs/suites regarding said patents. It sounds a bit like outsourcing patent and associated legal costs, without all of the bad connotations that go with the word 'consulting' anyway ;)
  • This is not being done for free. Someone is making money off of it. It takes cash to buy patents. Ergo someone is also paying money for this. Anyone care to guess who?
  • Wait a minute... (Score:3, Insightful)

    by roc97007 (608802) on Monday November 24, 2008 @06:49PM (#25878681) Journal

    Isn't this, like, the same thing... only cheaper?

    • Re: (Score:1, Interesting)

      by Anonymous Coward

      Yeah, competition is tough in the patent troll sector.

      But you should come to me, you get a free iPod with every patent I successfully sue you for!

  • We're sorry to interrupt your usage of this fine product, but we really really need to reach our goal of $1,000,000 in revenue this quarter. You know you use the product, so why not give? And if you contribute now, we'll send you a nice shiny mug!
  • Amazing (Score:5, Insightful)

    by stinerman (812158) <nathan,stine&gmail,com> on Monday November 24, 2008 @06:56PM (#25878759) Homepage

    If this isn't a wakeup call to Congress that our patent system is entirely and completely broken, I don't know what is.

  • by Alain Williams (2972) <addw@phcomp.co.uk> on Monday November 24, 2008 @07:00PM (#25878795) Homepage
    Probably the only voices left saying that patents are OK belong to certain ''well funded'' politicians.
  • ...and how long will it last? Now and again even a troll can strike patent gold.
  • by EEBaum (520514) on Monday November 24, 2008 @09:08PM (#25879963) Homepage
    From TFA:

    The company, called RPX Corp., buys up patents to keep them from firms that might use them as the basis of lawsuits or to press for licensing payments. Companies that pay a fixed annual fee receive licenses to the patents purchased by RPX...
    (emphasis mine)

    So they'll buy patents and try to sell you licenses to them, in order to prevent other firms from buying patents to try to sell you licenses to them?

    Sounds to me like the only difference between this company and the nasty patent trolls is that they've embraced the One-Bill business model, a la Verizon. I wonder if that's patented...
  • The essence of a defensive patent pool is explained by this statement from the RPX website [rpxcorp.com]:

    Members in RPX pay an annual fee to have a license to all patents and associated rights in the aggregation. Over time, companies receive perpetual licenses to all patents purchased in the aggregation and any patents that are sold during their tenure as members. Patents in the aggregation are also available to use in a counter-suit against any non-member who initiates litigation against a member. [my emphasis]

    In othe

  • To defend against a patent being used to interfere with invention, you have to release the patent into the public domain. Doing that eliminates the artificial government monopoly, forever, for everyone.

    If you don't do that, if you keep the patent, and license it to select licensees, you are using your patent to interfere with everyone else.

    Therefore, there is absolutely no difference between these new patent holders and "patent trolls". Including big IT corps paying their extortion.

    • by AdamWill (604569)

      Exactly. To me, telling people they should pay you not to assert your patents sounds exactly like...well...asserting your patents.

  • But at least it's an answer.

    It's the wrong answer because even though on one end it relieves the pressure from bullshit patents, on the other end it encourages bullshit patents by buying them up.

    We are better off letting legislation and court judgments takes their courses. Recently, a judge made a decision that effectively invalidates most "process" patents of recent years, and would make it much more difficult to get them in the future.
  • See Subject.

    • Re: (Score:3, Funny)

      OK, I wasn't convinced at first, but you won me over with your well-reasoned arguments.

    • by shentino (1139071)

      I would think that a modest fee would be loads cheaper than the standard settlement.

      They have to get revenue SOMEWHERE to both feed the payroll and get the patents.

      I see nothing wrong with this.

  • Intellectual ventures(http://en.wikipedia.org/wiki/Intellectual_Ventures) does the same thing? I am sure they would have patented (or at least applied for one) the business model!!
  • This is creepily similar to defense against the dark arts? Snape, are you there?

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