Cracking the Whip: Intellectual Property Analysis of Intellectual Ventures v AT&T et al.

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Fri, 02/24/2012

On February 16, 2012, Intellectual Ventures (“IV”) launched its seventh patent infringement suit, this time against AT&T, Sprint Nextel, and T-Mobile . In a familiar pattern, all but one of the patents in the suit were assigned to what appear to be IV “shell” companies before their most recent assignment to Intellectual Ventures by name. To IV’s chagrin, all three defendants control significant intellectual property estates in the technology space of the asserted patents; AT&T alone owns almost 500 properties that predate the patents being asserted against them.

In a July of 2011 This American Life show on National Public Radio, titled “When Patents Attack”, Peter Detkin, a co-founder and Vice Chairman of IV, was referenced as being the first to coin the phrase “patent troll”. Ironically, in this same show, Intellectual Ventures co-founder Nathan Myhrvold was asked if he was a patent troll. Later in the show, in response to a question about IV’s litigation behavior, Mr. Detkin is quoted as saying, “… we believe in our heart, that litigation is a highly inefficient way to do licensing. But let's not lose sight that litigation is just licensing by other means.”

Perhaps we should say IV’s latest patent infringement suit is just the latest crack of their licensing whip.

In the months following the NPR show, Intellectual Ventures has been seeking to recast its public image as a friend of inventors and governments. Perhaps in an effort to soften the reaction to their planned lawsuit against telecom firms, IV’s vice president and head of strategic acquisitions, Kenneth Lustig, penned an article titled “No, the patent system is not broken” in the February 9, 2012 edition of Forbes. In the article, Mr. Lustig draws comparisons between today’s smartphone patent litigation and what he characterized as the “Telephone Wars” of the mid 1800s, at one point even comparing Thomas Edison to a modern-day NPE (non-practicing entity). Mr. Lustig eventually states that “the buying, selling, and litigating of patents has always been essential to U.S. economic success.” If you are as disturbed by this characterization as we are, welcome to the club.

Using our proprietary M•CAM DOORS™ linguistic genomic analytic platform, we looked at the fifteen (15) Intellectual Ventures asserted patents. Our systems found nearly 500 AT&T patents, with similar claims, that predate the fifteen asserted patents. Sprint Nextel also owns 12 patents that predate the asserted portfolio. Additionally, Verizon once owned one of the patents in suit. Speaking of which, why isn’t Verizon a defendant? Oh yeah, they’re already an IV victim, ahem, we mean investor.

Is IV’s patent litigation helping inventors or investors? Considering that the bulk of the patents in suit were each “acquired” from what the USPTO characterizes as a “merger” with a different relatively unknown LLC, we’ll let you decide. Seems to us that it simply represents an attempt to use opacity and “hidden weapons” for a tactical assault having ABSOLUTELY NOTHING to do with innovation. In fact, these kinds of structures are also typically employed for tax “optimization” which is to say, to avoid paying taxes for any economic gains resulting from a successful assault, ahem sorry again, we mean “settlement”. We’ll have more about the identities of those “merger” partners later.

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