Kodak Patent Auction - Low Bids and No Bidding War

Tonight, the Wall Street Journal article Kodak Patent Bidding Is Tame tells us Kodak's patent auction has not generated the bids Kodak expected. Instead, all initial bids are low, no apparent bidding war is ongoing like occurred over the Nortel patents, the bids are for a subset of the 1,100 Kodak patents and well below $500 million.

Note if you enter the article through Google news you get the full article, but the WSJ only gives you a snippet of the article apparently to encourage us to become paid subscribers.

Copyright © 2012 Robert Moll. All rights reserved.

Intel Buying InterDigital's Wireless Patents for $375 Million

Intel plans to spend $375 million to buy InterDigital's wireless patent portfolio of about 1700 wireless patents and applications. Professor Crouch notes below that InterDigital's stock price immediately jumped 28% on news of the purchase. The $260 million increase in InterDigital's valuation shows before the sale the patents were only valued at $115 million suggesting valuation of US patents in the mobile computing space can be an imprecise science. Here are several articles with details:

Selling Patents - Patently-O

Interdigital sells tech wireless-technology patents, applications to Intel - Philadelphia Inquirer

Intel to buy InterDigital patents for $375 million - Reuters

Intel Buys Wireless Patents From Interdigital for $375 Million - PC World

InterDigital sells wireless patents to Intel for $375 m- ZDNet (blog)

Intel spends $375 million on cache of InterDigital patents- San Mercury News

Copyright © 2012 Robert Moll. All rights reserved.

Kodak Seeks Confidential Auction for Over 1,100 Patents

On June 11, Kodak's attorneys filed a motion to authorize the sale of the patents in a confidential auction to ensure bidder confidentiality. The following articles have the details:

Kodak Concedes Difficulty in Drawing Lead Bidder for Patents - NY Times

Kodak Seeks Court Approval for Confidential Patent Auction Plan - PC World

Kodak Says 20 Patent Bidders Sign Non-Disclosure Agreements - Bloomberg

Kodak files motion to auction digital imaging patents - BBC

Copyright © 2012 Robert Moll. All rights reserved.

Leveling the Patent Playing Field, by Peter Detkin

I re-read Peter Detkin's article Leveling the Patent Playing Field tonight. It explains how the US patent system doesn't treat small entities fairly when it comes time to monetize patents and why patent aggregators have an important role in this regard.

Let me highlight some points made in Mr. Detkin's article:

1. Many important inventions have come from small companies, universities, and individual inventors rather than large companies. In fact, small entities such as individuals, business with less than 500 employees, and non-profits filed 43% of the US patent applications in the 1990s.

2.  Even worthy inventions by small entities may be difficult to monetize. Beside the expense of getting a US patent, small entities face difficulties in  finding a manufacturer and/or investors. Further, they face difficulties in licensing inventions even when they offer major advantages. For example, Dr. James Cunningham, a chemical engineer and an electrical engineer, had 46 patents as an employee of six semiconductor companies including Texas Instruments (TI). Some of Dr. Cunningham's inventions allowed microprocessor companies to switch from aluminum circuitry to copper which greatly improved performance of the microprocessors. He had fundamental inventions and decades in the fields yet he did not know who to approach about licensing the inventions.

3. Corporate licensing professionals are trained to avoid paying "crackpot" inventors or trolls. Their job is to limit payment to such "crackpots" not pay them! So they play interminable rounds of phone tag for months and reschedule the meeting at the last minute. Then after a few months pass they discuss and argue whether the invention has any merit for 6-18 months more even if they are currently infringing the patents!

4. Licensing negotiation rarely lead anywhere, leaving litigation as the only viable option. Large companies can out-resource even a veteran such as Dr. Cunningham at all stages so after a long dragged out process the big company ultimately says no we don't want to license your patent. And such was the case for five of the seven major companies Dr. Cunningham sought to license. With this result is it a wonder that some choose to sue for patent infringement? No, but little guys rarely win these cases.

5. Small entities cannot participate in the successful vast patent portfolio licensing of an IBM and the well capitalized patent licensing of Qualcomm, Rambus, or TI or the corporate patent pools in support of industry standard technology such as MPEG or DVDs. Unlike most small entities, major tech companies typically have huge numbers of patents, lots of money and lawyers to enforce them, as well thought out licensing programs.

Mr. Detkin notes models of patent monetization that will help the patent system regain balance. He suggests consultants, e.g., Thinkfire and ipValue will help large companies evaluate and exploit their patents. Ocean Tomo can run patent auctions, develop a stock index to track patent strength in companies, and create a centralized IP exchange. Companies like Acacia Research and Mosaid can purchase and assert the patents individually rather than as a broad portfolio. And his own firm Intellectual Ventures can purchase small entity patents such as those from Dr. Cunningham as well as seek patents on its own inventions resulting in portfolios that permit rational licensing for multiple technology products. Mr. Detkin notes Intellectual Ventures presents pre-screened patents and expertise in licensing and patent defense that allow it to reach an efficient agreement like that of a veteran real estate broker who negotiates with individual condo and apartment owners standing in the way of a skyscraper to be built.

Mr. Detkin states the above business models can match patent owners with patent users, ensure fair and efficient compensation for inventions, improve the public's access to new products and services, ensure bad patents do not receive unreasonable compensation, and restore balance to the patent playing field so more can play the patent game enriching our society.

In the end a great article, but Intellectual Ventures' daily actions will determine if they achieve these goals.

Copyright © 2012 Robert Moll. All rights reserved.

Zetta Research - Maximizing the Value of Patents from Failed Startups

Like a number of others, Zetta Research, LLC in San Mateo, CA buys patents from failed startups, but instead of just hoarding the patents, it works with the inventors of the startups to get the patent applications granted as patents and file any desired continuations that will maximize the overall value of patent portfolio to a big tech company.

For details see the Wall Street Journal article: Zetta Research Finds Friendlier Approach to Patent Business

Copyright © 2012 Robert Moll. All rights reserved.

AOL Giving Shareholders $1B Cash From Patent Sale

Last month AOL agreed to sell 925 patents to Microsoft for $1.1 billion and granted Microsoft a non-exclusive license to its remaining software patents relating to advertising, search, social networking, mapping, streaming and security. Next Facebook agreed to buy 625 patents from Microsoft for $550 million. This month AOL announced a plan to give shareholders 100% of the proceeds from its $1.1 billion patent sale, but the details are being worked out. AOL stated it could think of no better use for the money. AOL may have gained investor goodwill on this transaction, but now it has no extra cash on hand to address the major challenges ahead.

See details in CNNMoney's article: AOL to give shareholders all proceeds from patent bonanza

Copyright © 2012 Robert Moll. All rights reserved.

Nvidia and Intellectual Ventures' Joint Purchase of Nearly 500 Wireless Patents

As Nvidia shifts into mobile computing, it has purchased nearly 500 wireless patents presumably to help reduce exposure to patent infringement lawsuits. Privately held IPWireless initiated the deal when it offered the patents to Nvidia, which contacted Intellectual Ventures to evaluate the patents, resulting in Intellectual Ventures and Nvidia agreement to jointly purchase the patents from IPWireless. IPWireless will retain a license to the patents and Nvidia will license the patents it did not purchase. The financial terms were not released. Intellectual Asset Management stated senior IV executives told it why the market should expect more such deals.

Other details are given in the following articles:

Nvidia picks up wireless patents in mobile push - Baltimore Sun

Nvidia, Intellectual Ventures buy wireless patents - Marketwatch

Nvidia Grabs Wireless Patents - Forbes

Nvidia, Intellectual Ventures Jointly Purchase 500 Wireless Patent - PC Magazine

Nvidia, Intellectual Ventures partner to acquire 4G patents - Engadget

Nvidia teams with Intellectual Ventures to acquire patents - Venture Beat

NVIDIA buys 500 patents to take on Qualcomm - Intomobile.com

Copyright © 2012 Robert Moll. All rights reserved.

AOL's $1.1B Sale and License with Microsoft - What's Next?

The news coverage on AOL's $1.1B sale and licensing agreement with Microsoft continues. Most of that coverage attempts to place the agreement in context with a litany of patent transactions. However, what appears to be missing is a cohesive story on what to expect next. With that caveat, here are some links to that news coverage and my comment on what may be next for Microsoft:

Microsoft's AOL Deal Intensifies Patent Wars - New York Times

Microsoft fires latest salvo in patent war with $1 billion purchase from AOL - Washington Post

Microsoft deal with AOL part of patent scramble - BusinessWeek

Microsoft to snag over 800 patents from AOL - CBS News

Insight into AOL's Patent Portfolio - Envision IP

The last article published prior to the AOL sale gives the subject matter of the patents, but not the patent numbers. It would be nice to see how the purchased patents and licensed patents fall into the categories. This is not an academic exercise as purchased patents will translate into standing to sue for patent infringement, while non-exclusive licensed patents will not.

One may wonder why Microsoft, owning over 20,000 US patents, is willing to spend $1.1B to own 800 additional patents and obtain a non-exclusive license to 300 patent. Based on Microsoft's strategy to build a "bridge to collaborate" with other firms as described in Marshall Phelps and David Kline's Burning the Ships - Intellectual Property and the Transformation of Microsoft it appears Microsoft plans to (1) monetize the patents (e.g. sell or license), and/or (2) use the patents as leverage to get cross-licenses or non-assertion agreements from other software and Internet companies. For stronger firms such as Microsoft, this patent deal appears to be an exercise of option (2) to obtain freedom of operation. For weaker firms such as AOL, this patent deal appears to be an exercise of option (1) which is in essence giving up their patent portfolios to survive. The final outcome looks like a consolidation around the major IT companies.

Copyright © 2012 Robert Moll. All rights reserved.

AOL's Patent Sale and License: Microsoft to Pay $1.1 billion

Today, AOL signed an agreement with Microsoft to sell 800 patents and grant a non-exclusive license to 300 patents AOL retains for $1.1B. This works out to nearly $1 million per patent. And AOL's stock jumps 43%!

Here are a few links to news coverage on the AOL patent sale:

AOL surges 43% on $1 billion patent deal - CNN Money

AOL to make over $1 billion in patent sale to Microsoft - CNET

AOL Sells 800 Patents For $1.1 Billion To Microsoft [Memo to Staff] - Techcrunch

Copyright © 2012 Robert Moll. All rights reserved.

Predicting Patent Litigation - Top Ranked Patent Paper Today

Professor Chien's Predicting Patent Litigation 2011 is the top ranked academic paper focusing on patent law today. I will give some highlights, but recommend reading her paper, which helps one predict what patents are likely to be asserted in patent litigation.

Professor Chien initially points out that patent infringement lawsuits are disruptive, unpredictable, and expensive. Professor Chien also notes that patent litigation is practically uninsurable and companies are driven to rapidly purchase large patent portfolios to have a defense against other company's patents, which, of course, is no help to ward off patent assertion entities, which we affectionately refer to as patent trolls.

Information technology (IT) companies in Silicon Valley have a patent clearance problem. The large scale purchases of mobile phone patents has only exacerbated the problem. RPX asserts 250,000 US patents relate to smartphones today. Even if that estimate is off by a factor of ten, that is still 25,000 patents to review and assess whether they pose an obstacle. Who has the time and money for such a review?  Professor Lemley states people's response is to ignore patents (See Professor Lemley's Ignoring Patents) .... until the patent owner's letter arrives. Yet, since only 1% of issued patents are ever litigated awaiting that arrival doesn't appear irrational to all that many companies. 

Nonetheless, Professor Chien states uncertainty about what patent is likely to be asserted can be reduced by identifying the riskiest patents. And litigated patents have markedly different characteristics than non-litigated patents that can be readily observed before a lawsuit is filed.

Litigated patents have more:

• Claims
• Backward citations (applicants submit large IDSs to "bullet proof" the patent)
• Foreign counterpart (a signal of the owner's estimate of value of the invention)
• Patent family members (e.g., continuations, divisionals, and CIP)
• Forward citations (examiner cites the patent in subsequent filed applications with different inventorship)
• Maintenance fees (another signal of owner's estimate of value)

The litigated patent owners are more 

• A small entity
• Domestic based
• Owner by assignment of the patent
• The assignment involved a change in size (i.e., large entity to small entity)
• Patents were used as collateral
• Requested ex parte reexamination of the patent (If you are not getting the patent ready for litigation, why spend the money?)

I would emphasize the track record of the patent owner can trump many of these characteristics in predicting whether a given patent will be litigated.

Copyright © 2012 Robert Moll. All rights reserved.

AOL Looks to Sell or License More Than 800 Patents

AOL was my first ISP in the 1990s. It was a painful relationship that lasted 2-3 weeks. It might have been shorter, but I was working late in the office many nights so didn't feel the full frustration of working with the snail like dial-up speeds. As a web page slowly loaded one night, I wondered what to do then realized I have time to make a cup of espresso before this loads. But I returned to find not the page, but a lost connection and the need to dial-up again, but wait now the dial-up line is busy....

Not breaking this corporate mold AOL noticed although business is in decline it has over 800 patents. It floats the idea they will yield $1B in licensing income. Does this sound far-fetched? Not in this environment! I expect they will be quickly purchased and/or licensed and the only question is the value and the buyer.

Here are the details: AOL Said to Hire Evercore to Find Patent-Portfolio Buyer

Copyright © 2012 Robert Moll. All rights reserved.

Facebook Buys 750 IBM Patents - Call to Arms

Facebook is reported to have acquired 750 IBM patents, which may result in some counterclaims being filed in the Yahoo v. Facebook patent suit. Facebook also reported it owns 503 pending applications, which may result in additional counterclaims upon issuance.

Here are several related articles and blog posts:

Facebook Is Said To Buy 750 IBM Patents To Boost Defenses - Bloomberg

Facebook Said To Acquire 750 Patents From IBM Amid Lawsuits - SF Chronicle

Facebook Buys 750 IBM Patents To Defend Against Yahoo - TechCrunch

Facebook Buys 750 patents From IBM - Reuters

Facebook Gobbles Up Patents from IBM - New York Times

Copyright © 2012 Robert Moll. All rights reserved.

Intellectual Ventures and Patent Aggregators - Mr. Rosoff's Article

After I posted Intellectual Ventures and Patent Aggregators on February 29, I read Matt Rosoff's REVEALED: How Giant Patent Troll Intellectual Ventures Does Business. At first I thought nice summary of the Giants Among Us article, but now Mr. Rosoff's article seems too negative:

1. Read the title: ... Giant Patent Troll Intellectual Ventures .... The author doesn't waste any time before branding Intellectual Ventures a giant patent troll.  
2. The author states Intellectual Ventures "does very little inventing," but according to many articles IV is busy inventing in many technology areas.   
3. He states IV uses more than 1,200 shell companies. This makes IV sound sneaky but it's legal. So why can't IV use shell companies to reduce its purchase costs?   
4. He asserts about half its patents originated outside the U.S. and IV exploits the disparities in IP valuations between the US and the rest of the world. Don't inport/export businesses exploit disparities in valuations between the US and the rest of the world?
5. Mr. Rosoff states big companies invest in IV then use its patents for defense. Boo hoo some company pays for patent rights then has the audacity to file a counterclaim when it is sued. Sounds like self-defense to me.
6.  He notes IV's activities are compared to "privateering" in the Giant article, a now-abolished kind of warfare where countries would encourage private sailors to attack enemies ships and auction off the proceeds. This appears to refer to IV's willingness to license its patents to third parties who do the "dirty work of licensing and suing." But why is licensing and suing "dirty work?" This "dirty work" argument sounds truly lame.
7. Mr. Rosoff concludes IV's business is referred to as "an ugly business, but also perfectly legal." So there you have it: "Giant Patent Troll" labeling at the front end and "ugly business" at the rear end. 
8. It's this negative slant that makes the siren song for more government regulation such a clunker. 
9. After the REVEALED article was published, Intellectual Ventures pointed Mr. Rosoff to the Intellectual Ventures corporate blog for the other side and in my opinion some necessary balance.     

Copyright © 2012 Robert Moll. All rights reserved.

DOJ Closes Investigations of Google's Acquisition of Motorola Mobility and Apple, Microsoft and RIM's Acquisitions of the Nortel Patents

On February 13, 2012, the Department of Justice's Antitrust Division issued a statement that it is closing the investigations of Google's acquisition of Motorola Mobility, Apple's acquisition of patents held by CPTN (formerly owned by Novell), and Apple, Microsoft, RIM and other's acquisition of the Nortel patents. DOJ believes each acquisition is unlikely to substantially lessen competition given Apple and Microsoft's clear commitment to license its standard essential patents (SEP) on fair, reasonable, and non-discriminatory (FRAND) terms and not seek an injunction on the SEPs. In contrast, the DOJ appears to criticize Google's unwillingness to make a clear commitment on future use of its patents. The DOJ also stated a willingness to jump into the fray to stop any anticompetitive use of SEP rights. Hopefully, the DOJ's statement and analysis will bring some order in the mobile computing patent war. I think this is welcome news for consumers (Click here for the DOJ's statement)

Copyright © 2012 Robert Moll. All rights reserved.

Two Different Views - Why Investors Are Focused on Patents

Well here's two articles giving disparate views of patent deals today:

In Patent-Palooza: Why Investors Are Suddenly Focused on IP, Paul Ryan, President and CEO of Acacia Research, argues corporations need for profit is driving the recent patent deals. Patent rich companies are simply selling their under-leveraged patents to non-practicing entities such as Acacia Research that assert them against other companies.

In Crushed innovation: When patent lawyers switch to NPEs, Ruth Suehle, writer in Brand Communications + Design at Red Hat, decries patent litigators, John Desmarais and Matt Powers, switching from corporate patent defense to represent non-practicing entities against corporations. Ruth asks, "Could the sordidness of a business based on bringing patent lawsuits be outweighed by large amounts of cash?" It's not clear to me, why they are engaged in a sordid business. Is going to court to enforce patent rights and seek damages for infringement a sordid business per se or does it simply cross the open source "party line?" 

Thanks to Alan Cooper for Ruth's article. 


Copyright © 2012 Robert Moll. All rights reserved.

US Patent Spending Continues - Intel Adds RealNetwork Patents and Applications

Many are writing about the patent spending spree in Silicon Valley that continues unabated in recent months. On January 26, 2012, the BBC News reports Intel has agreed to pay $120M for about 190 patents and 170 patent applications from RealNetworks and commit to co-develop video encoding software in the future. 

Here's a link to the BBC article with details that my friend Alan Cooper sent earlier today:

Intel buys RealNetworks' patents and video coding tech

Thanks again Alan!


Copyright © 2012 Robert Moll. All rights reserved.