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The Patent-Troll King Just Lost a Powerful Ally: Apple The Patent-Troll King Just Lost a Powerful Ally: Apple

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The Patent-Troll King Just Lost a Powerful Ally: Apple

But Microsoft and Sony are still giving cash to Intellectual Ventures.

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(Justin Sullivan/Getty Images)

All's fair in love and patent wars.

That's the lesson Intellectual Ventures—a company often accused of being one of the biggest and most egregious patent trolls in the country—is learning after it lost its cash backing from both Apple and Intel.

 

The move marks a departure from previous financial support the technology titans have given the Bellevue, Wash.-based company, and coincides with an ongoing push in Congress to reform the nation's patent laws.

But Ventures is still reaping a cash infusion from Microsoft and Sony, according to a Reuters report Friday, which cited people briefed on the fundraising. Their investments give Ventures "a fresh war chest to buy new patents," a patent expert told the wire service.

Apple, which is mired in another round of "smartphone wars" over its patents with rival Samsung, recently wrote in public comments that "no firm has been targeted by (patent trolls) more than Apple."

 

But Apple and a half-dozen other major corporations—including IBM and Microsoft—formed a group last week that warned Congress against passing a patent bill that would overcorrect a system that has helped propel American innovation forward for centuries. Google, which once invested in Ventures but has said it stopped doing so in 2003, has been generally more supportive of reform efforts.

"It's still unclear why Apple and Intel made this decision, but we hope it's for the right reasons," said Adi Kamdar, an activist for the Electronic Frontier Foundation, a group strongly pushing patent reform. "Companies are realizing that investing in patent trolls is a toxic business and PR decision."

Intellectual Ventures is frequently villainized as one of the worst abusers of the patent system by those working to reform it. It is often cited as a textbook example of a patent troll—a company that buys up tons of cheap patents and profits from them by threatening infringement suits against others, in the hope of settling.

The company possesses one of the largest patent portfolios in the country—some 70,000—but rarely creates its own products. It also has equipped thousands of shell companies with patents in recent years in an attempt to more easily hit others with infringement claims with little to no risk, according to a 2012 Stanford study. Ventures admits it purchases companies anonymously but disputes that it isn't transparent in its lawsuits.

 

In February, Ventures filed with the Federal Election Commission to form its own political action committee. The move was seen as an attempt to ratchet up influence in a growing debate on Capitol Hill over how to reform patent litigation to guard against abusive practices.

"This is their last chance to gum up the works and preserve their so-called business model," Michael Petricone, senior vice president of the Consumer Electronics Association, said at the time of the filing. "This is the last stand of the patent trolls."

Late last year, House Judiciary Committee Chairman Bob Goodlatte quickly muscled a bill through the lower chamber that would usher in several popular patent reforms. The Innovation Act passed the House with a wide bipartisan majority in December.

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Similar legislation has stalled somewhat in the Senate Judiciary Committee, which announced earlier this week it would postpone consideration of a reform package until after the two-week April recess beginning Friday, the latest in a string of delays by the panel.

A spokesman for Intellectual Ventures declined to comment on its fundraising activities. Formed in 2000, the billion-dollar company spent more than $1 million on lobbying in 2013, according to the Center for Responsive Politics.

How Patent Trolls Are Costing the Economy Billions Each Year

This article appears in the April 14, 2014 edition of NJ Daily.

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I read the Tech Edge every morning."

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