Investment Companies Backing Patent Trolls

greenbird sends us to Forbes for an account of billions in investments flowing to US patent troll companies. One example is DeepNines, who is suing McAfee over a patent that covers combining an IDS and firewall in a single device. The patent was filed on May 17, 2000 and issued on June 6, 2006. No prior art for that, no siree. DeepNines is funded by "an $8 million zero-coupon note to Altitude Capital Partners, a New York City private equity firm, promising in return a cut of any winnings stemming from the lawsuit. The payout is based on a formula that grants Altitude a percentage that decreases with a bigger award."

Comments

Prior Art

[qdygwakf]

Is there a clearing house for patent threats and corresponding prior art? A GROKLAW equivalent for prior art is clearly needed.

Re:Prior Art

[Timesprout]

Prior art is irrelevant to these people. In the Alcatel Lucent case MS believed they had legitimately licensed the patents they were later sued over and having acted in good faith could end up paying twice for the same thing. The whole decision, the amount awarded and the fact that it was also against sales in areas outside of US patent jurisdiction was seriously dodgy.

You can't build a solid economy on IP.

[Anonymous Coward]

In a decade or two we'll likely see that it's impossible to build a solid economy upon intellectual "property". Unlike manufactured goods, IP has no inherent value. At least the material used to make a tangible product is often of some worth, even as scrap. The same can't be said for a patent, or a trademark, or an industrial design. The only way value can be derived from such things is through the use of artificial monopolies and the threat of civil lawsuits and/or other punishment.

A drive through Detroit, Buffalo, or most of the US midwest clearly shows how the manufacturing capacity of the United States is essentially gone. In such areas you'll see abandoned factory after abandoned factory. What's left is minimal, and even those firms are being squeezed out by foreign manufacturers. On one hand, these investment companies can only really put their money in IP. America has very little left in the way of actual manufacturing. Investing in businesses that no longer exist isn't really useful.

But eventually America will have to face the fact that it produces nothing with intrinsic value. All it takes are countries like India and China deciding to ignore American and international IP law, and the main item of production (ie. IP) of the US drops to a value of nil. China and India will exhibit strong economies, due to their actual production of goods with intrinsic value. The economy of the US, built around goods without any intrinsic value, cannot remain strong.

Re:You can't build a solid economy on IP.

[iminplaya]

Dead in ten years?

Listen, this is nothing new here. It's been going on for hundreds of years, ne, thousands. Unless there's an epiphany, or you get nuked, nothing is going to change. You will trudge on as dutiful as the Chinese do, and you will like it. That's the world being left to you. And chances are you will leave the same thing to your kids... and so on. This is the nature of nature. So, unless you are against nature, you will settle down, have a bunch of kids so there will be somebody to take care of you when you get old, and pay off your debts. And save the morality for when you catch your kid stealing a candy bar. And please do try to understand the true nature of this reply.

So i guess I am in violation

[EmagGeek]

Since I have a single device, a linux box, running tripwire and iptables...

Re:Sounds like good business

[FiniteElementalist]

This doesn't suprise me in the least that there is investment in these sorts of companies. Speculators will take bets on all sorts of different aspects of the economy. This could just be a don't pass bet on patent reform, since the trolls stand to make money or be bought out if their patent portfolios aren't overturned. Having a buyout target is good because a buyout will inflate the value of the stock.

Or, there is a possibility that this is just hedging against the effects of patent trolls. With hedging the investors could being trying to remove some of the risk of the targets of patent trolls by putting some money on the troll's position. This will dampen the effect on the portfolio as a whole either if trolls get their way or if not, as it is likely the stocks of the trolls and their targets will be negatively correlated.

If it is actually billions being funneled into trolls I doubt it is all hedging though.

Wouldn't it be funny

[grasshoppa]

Wouldn't it be funny if it turned out that China & Co were actually waging economic terrorism on the states via these investment firm's taste for litigation?

The irony would be delectable.

Re:There's never enough room for all the pigs.

[The Bungi]

M$ and other US companies would like to shut down or tax every other software company on Earth.

I hate to break it to you, troll, but "M$" is getting nailed by the very system you claim they enjoy. Ever heard of Eolas? I'd really appreciate it if you showed us a single instance of Microsoft (oh, "M$") using a patent offensively. That does not include FAT32, which is about as common a licensing scheme as it comes in the hardware world.

Microsoft plays the game the same way IBM and everyone else does to protect themselves from the patent trolls. The system is broken. Constantly harping on why "M$ is teh bad" like Stallman is not going to help much.