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Owner of Nortel Patents Sues Cisco For 'Immense' Patent Infringement 83

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from the patent-troll-dreams-big dept.
jfruh (300774) writes "The venerable Nortel Networks may have vanished into bankruptcy five years ago, but thanks to U.S. patent law, it can strike back at its old rival Cisco from beyond the grave. Spherix, a Virginia-based 'research company' that bought Nortel's patents in 2009, has filed a federal lawsuit claiming that Cisco has been knowingly violating 11 Nortel patents. 'The vast majority of Cisco's switching and routing revenue from March 2008 until the present is and has been generated by products and services implementing technology that infringes the Asserted Patents,' the lawsuit claims."
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Owner of Nortel Patents Sues Cisco For 'Immense' Patent Infringement

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  • by maliqua (1316471) on Wednesday March 26, 2014 @04:03PM (#46587655)

    a Virginia-based 'research company'

    "ABOUT SPHERIX Spherix is committed to advancing innovation by active participation in all areas of the patent market" -http://spherix.com/

    That sure doesn't sound like they're even pretending to be a research company they're patent trolls plain as day says it right on the first page of the site

    • by bill_mcgonigle (4333) * on Wednesday March 26, 2014 @04:24PM (#46587889) Homepage Journal

      That sure doesn't sound like they're even pretending to be a research company they're patent trolls plain as day says it right on the first page of the site

      Don't be silly - the patent system only promotes the progress of science and the useful arts. It says so right in the Constitution. Government-granted monopolies are good for the economy.

    • by Charliemopps (1157495) on Wednesday March 26, 2014 @04:27PM (#46587923)

      Sure they are. They research who they can sue, then sue them.

    • Why are people allowed to buy and sell patents in the first place? And as far as a company goes, a patent is an agreement between the company and the government. If the company ceases to be, then the patents should be terminated and the inventions released into the public domain.
      • by Chirs (87576) on Wednesday March 26, 2014 @05:14PM (#46588333)

        Once you accept the notion of patents in the first place (as a temporary monopoly on something in return for disclosing it instead of keeping it secret), it's a very small jump to buying and selling them. If an independent inventor comes up with an idea but doesn't have the capital to bring it to market, they can sell the patent to a bigger company.

        This is fine in and of itself. Even patent trolls would be fine if the patents they were holding were actually valid and the companies they were suing had in fact copied the idea from the published patent.

        The problems are twofold:
        1) If someone else comes up with the same idea totally independently, it should invalidate the patent as too obvious.
        2) Patents have been granted for things that should never have received them. In particular people have been allowed to patent *concepts* rather than *specific ways to implement a concept*.

        • by geoskd (321194) on Wednesday March 26, 2014 @05:44PM (#46588549)

          Once you accept the notion of patents in the first place (as a temporary monopoly on something in return for disclosing it instead of keeping it secret), it's a very small jump to buying and selling them. If an independent inventor comes up with an idea but doesn't have the capital to bring it to market, they can sell the patent to a bigger company.

          That right there is the problem. Ideas themselves are essentially worthless without the many thousands of hours of work involved in taking an idea to market. The real work is done by the people who develop the product. the idea itself has always been considered pretty much worthless. That is why venture capitalists care far less about the idea than they do about the inventor(s). They want people who get things done. The idea itself is almost irrelevant.

          That is the real reason why so many people hate the patent system. It unjustly enriches the worthless turds who produce nothing of value, but insist on being paid for their "contribution".

          Along those lines, Patents (and copyright) should be irrevocably granted to individuals, and transfer should be forbidden. If an individual wishes to make money from a product, let them do the real work involved in bringing that product to society.

          • by wasteoid (1897370)
            for years i thought i had invented the blt sandwich. i even told women that. then i later found out the blt was invented in 1903.
        • by kqs (1038910)

          3). A patent should have a far shorter term. 6 year patents on technology would usually give the inventor a good chance to capitalize on his invention. We can quibble on the length but shorter terms would solve most of these issues.

      • Yes, it's time we stopped treating intellectual property like real estate. Instead, let's make IT an inalienable right, like free speech, of the actual creator of work. No more selling off IP to faceless "rights holders" - if you want to exploit a patent, you have to maintain a contractual relationship with the creator.

    • From the Article (Score:5, Informative)

      by Anonymous Coward on Wednesday March 26, 2014 @05:40PM (#46588525)

      It purchased the Nortel patents from the Rockstar Consortium, which had acquired a large collection of patents for US$4.5 billion after Nortel went bankrupt in 2009.

      Some questions:

      Q. How did SPHERIX afford to pay for the patents?

      A. Spherix Incorporated, a company originally founded by Gilbert Levin, has acquired four families of mobile communication patents from the Rockstar Consortium in exchange for initial consideration of up-front cash and Spherix common stock.[6] Rockstar will also receive a percentage of future profits from Spherix after recovery of patent monetization costs and an initial priority return on investment to Spherix.

      http://en.wikipedia.org/wiki/Rockstar_Consortium

      Q. Haven't I heard of Rockstar before?

      A. Members of the consortium are Apple, Inc., BlackBerry, Ericsson, Microsoft, and Sony.

      http://en.wikipedia.org/wiki/Rockstar_Consortium

      Q. So this is a shakedown?

      A. Youbetyourass!

  • Good (Score:5, Insightful)

    by AK Marc (707885) on Wednesday March 26, 2014 @04:05PM (#46587687)
    Proof that patent chests don't work. If some non-practicing entity acquires the patents, your war chest doesn't help. What is Cisco going to do, sue Nortel for infringement (since there is apparently no formal cross-licensing agreement), and try to get those debts applied to the current patent holders, to cancel out their suit?

    This is a good thing, as it will help prove the downfall of the current patent system. When you can get the big patent holders scared of other patent holders, we can get some progress in trimming the power of the vague and obvious patent.
    • This is a good thing, as it will help prove the downfall of the current patent system. When you can get the big patent holders scared of other patent holders, we can get some progress in trimming the power of the vague and obvious patent.

      Who says Cisco is scared? Also this same line has been trotted out for going on a decade every time a big company is sued over patents and yet it has lead to jack and shit.

      • by AK Marc (707885)
        That's because the big companies almost always win. When one of these gets to where the big company loses, and people start buying up failing little companies for the sole purpose of suing the big guys, it will cause a rapid and massive change.
      • Except for three lawyers. They all go home with big fat paychecks.
    • Having been in a somewhat similar boat in the past (I was in a contract with a company that went bankrupt) No... the company that purchased the assets of that company (i.e. people that owed it money etc...) does not purchase that same companies liabilities. In fact, due to the bankruptcy those liabilities basically vanish for all intents and purposes. So now you have a company you owe money to or are liable to and you have no recourse if the services or products provided were faulty or caused you damage.

      Luc

      • by AK Marc (707885)
        I've seen it happen where "someone" ended up with the "leftover" credits and liabilities. It doesn't always go one way or the other. But it's structured so that you can't restructure yourself out of past liabilities (a car company can't dodge an impending lawsuit by declaring bankruptcy), so sometimes the new owners do get unknown and undisclosed liabilities.

        And if you note my wording, I didn't indicate Cisco could get the liability assigned to the new company, but that they could try. How successful th
    • by NoKaOi (1415755)

      This is a good thing, as it will help prove the downfall of the current patent system. When you can get the big patent holders scared of other patent holders, we can get some progress in trimming the power of the vague and obvious patent.

      Except that's just not how large companies behave. Rather than having the mindset of, "we got hurt by game, the game sucks, let's get rid of the game or change it," it's more like, "we got hurt by the game, we need to play harder!" We it time and time again.

    • by drinkypoo (153816)

      Proof that patent chests don't work.

      No it isn't.

      What is Cisco going to do, sue Nortel for infringement (since there is apparently no formal cross-licensing agreement), and try to get those debts applied to the current patent holders, to cancel out their suit?

      Perhaps they will try to sue Nortel for infringement of their patents, and reduce them to a smoking hole in the ground before they can actually collect anything from Cisco. That sort of thing has happened before.

      • by AK Marc (707885)

        Perhaps they will try to sue Nortel for infringement of their patents, and reduce them to a smoking hole in the ground before they can actually collect anything from Cisco.

        Someone else already pointed out that the party after the bankruptcy that ended up buying the patents, is unlikely to have liability for the infringements, so that tactic probably won't work. And it's possible that the bankruptcy discharge will have eliminated all previous liability, and if Nortel was infringing Cisco, Cisco lost on the ability to sue when they didn't list as a creditor for the bankruptcy.

  • yet most of us would be hard pressed to remember a case in which it was successfully asserted. (http://en.wikipedia.org/wiki/Laches_%28equity%29) Are we to believe that it took Spherix five years to check whether the world's largest manufacturer of network products was violating their patents? Assuming that Cisco is in fact infringing those Nortel patents, justice in this case would be served if they got an award based no more than six months worth of Cisco's sales of the products cited by Spherix.
    • by swb (14022)

      It''s not like they're going to walk into a courtroom with a grey Meridian phone and say "we own this, now pay up". They have to prove it.

      Given the size of the patent portfolios of both companies, the breadth of products produced by Cisco and the complexity of the products in question, I can see how it could take quite a while to digest all that information as well as integrate existing patent law, case law and so on to figure out what was infringing, how much, and which would produce the most likely succe

    • by cusco (717999)

      This set of patent trolls just acquired the patents from another set of patent trolls last year. Probably the earlier trolls were frightened of Cisco's mountains of cash and herds of lawyers.

      I'm torn in this case. I dislike patent trolls and loathe their entire business model, but at the same time I view Cisco with the same disgust I normally reserve for bot fly larvae and candiru fish. Not sure who I want to win this one.

      • by NoKaOi (1415755)

        I'm torn in this case. I dislike patent trolls and loathe their entire business model, but at the same time I view Cisco with the same disgust I normally reserve for bot fly larvae and candiru fish. Not sure who I want to win this one.

        Right, because the winner of the case should have absolutely nothing to do with the merits of the case, and should be based solely on the names of the companies involved.

        • by cusco (717999)

          Don't know about you, but I am not competent to judge the "merits of the case" (and to be truthful, neither are most judges). I just know that both companies are loathsome pus-filled boils on the face of the IT industry.

        • by rk (6314)

          If he's the judge, this would be a problem. Since (making a fairly safe assumption) he's not, there's nothing wrong with rooting for/against someone in a case for extralegal reasons.

  • Patent sales like this one should be forbidden. Nortel was a practicing entity that used patents defensively as a Mutually Assured Destruction weapon. Selling this weapon to a non-practicing entity who is happy to use patents offensively with no fear of consequences would be akin to selling Ukrainian nuclear weapons to Al-Qaeda back in 1994.

  • by AaronW (33736) on Wednesday March 26, 2014 @05:39PM (#46588513) Homepage

    The big problem is that these patent trolls have nothing to lose. There's no way a company can reach a cross-licensing deal since the patent troll produces no products and is otherwise just a parasite with no redeeming qualities.

    I think that if a patent is traded or sold that the recipient of the patent must either produce similar products that either use the same or a related technology to what the patent covers or if they don't produce anything they have a limited time, say 3 years, in which to produce a product otherwise the patent goes to the public domain.

    Hey, I should patent this idea!

    • I should file a patent on patent reform

      Why? You'll never have an opportunity to sue for infringement!

      • by AaronW (33736)

        I think this should only apply when a patent is traded or sold. I think if someone goes and files a patent, even if they never implement it then it's reasonable to be able to collect royalties, assuming the patent isn't obvious and there's no prior art. It's a problem when the patent is no longer held by the original inventor or by somebody who can't make use of the patent that it's a problem. I think it's even reasonable for a company that uses one method to do something and buys a patent for another metho

        • Yes, but your post is (somewhat) contradictory with the title; I'm not saying I disagree with you in principle. I'm not saying the idea is contradictory, the endgame is. You propose patenting something for which there is plentiful prior art (patent reform). You're by far from the first to propose such reforms to patents (just search slashdot for "patent" - you're probably liable to timeout waiting for the results).

          My point is that if patent reform were passed as you propose, your patent itself would be inva

  • IMHO, this is what's so insidiously wrong about the patent system. Spherix didn't actually invent the stuff. They didn't do the work. The invention didn't come from the brains of the people who work there. IMHO, therefore, they should have no standing for a patent lawsuit.

  • Why are patents transferable in this fashion? If the owner goes bankrupt or dies, all that stuff should become public domain.

  • I'm curious about which patents are being asserted. The news items somehow never get around to listing the patent numbers or describing them.

    (I worked for a router company when Nortel was sinking and suing everybody who did anythig with SONET for infringement, in a desperate attempt to come up with enough money to avoid going under. Very much like a drowning person dragging others down. Some of my inventions (including patented ones) were in a chip that had something to do with SONET, so I (and other des

  • Avaya bought Nortel some years ago. (2009) But Nortel patents was bought by RockStar ( Apple, Microsoft, BlackBerry and Sony) which sold a portion of its patents to Spherix Inc (2013). Now Spherix sues Cisco. It is interesting to see how the patents business goes.

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