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Tech Giants Pooling Cash To Buy Patents

Posted by timothy on from the oh-wsj-you-tease dept.

theodp writes with a link to a Reuters report, based on a WSJ story, that "Verizon, Google, Cisco, and HP are among the companies that have joined a secretive group called the Allied Security Trust. Each of the companies will reportedly put $5 million in escrow to allow AST to snap up intellectual property on their behalf before it falls into the hands of parties that could use it against them. Patents will be resold after AST member companies have granted themselves a nonexclusive license to the underlying technology. According to AST CEO Brian Hinman, a former VP of IP and Licensing at IBM, the arrangement will keep member companies out of antitrust trouble." (The WSJ's story itself is more detailed, but it's subscriber-only.)

35 of 109 comments (clear)

  1. Offensive or defensive? by adpsimpson · · Score: 5, Insightful

    If this is to be used for defensive measures, it's another sign of how badly broken the US patent system is - and how expensive that brokenness is to big businesses.

    If it's to be used for offensive measures, then it's another sign of how badly broken the US patent system is - and how expensive that brokenness is to small businesses.

    --
    Is crushing a suspect's child's testicles illegal?
    John Yoo: "No, [if] the President thinks he needs to do that."
    1. Re:Offensive or defensive? by Anonymous Coward · · Score: 2, Informative

      It looks pretty defensive. Since they are selling the patent after granting themselves a license, it looks like they are just trying to avoid patent lawsuits on the cheap.

    2. Re:Offensive or defensive? by dintech · · Score: 4, Interesting

      Offensiveness and defensiveness both fall in to the 'interests' catagory so expect it to be used for both of these as necessary.

      Where it gets interesting is what happens if two members are in despute about a single patent. Could this trust be used to arbitrate between them or come to some solution outside of the courtroom? Are the patents open to everybody with the organisation then?

      I think it could be a very interesting deal, for those on the inside that is.

    3. Re:Offensive or defensive? by Ngarrang · · Score: 5, Insightful

      The patents owners won't HAVE to sell, but if someone came to your door with a wheelbarrow full of money, you might be tempted to say "Sure, here it is." But, now that the 'secretive' group has been exposed, they are no longer, um, a secret. Yes? No?

      --
      Bearded Dragon
    4. Re:Offensive or defensive? by Devout_IPUite · · Score: 3, Informative

      Either way, there's a serious need for patent reform. Unfortunately, that's a standard democrat white bread (lawyers, yum) and the republicans veered off of of their small government market freedom in favor of big business pandering years ago... So I can't imagine either party trying to fix this right now.

    5. Re:Offensive or defensive? by BlackCobra43 · · Score: 2, Funny

      Does it even matter? I personnally wouldn't care if the dumptruck-full-of-cash has a logo on it or not.

      --
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    6. Re:Offensive or defensive? by stjobe · · Score: 3, Funny

      That's because you, like so many others today, have no principles.

      --
      "Total destruction the only solution" - Bob Marley
    7. Re:Offensive or defensive? by xigxag · · Score: 5, Insightful

      It may be meant as a defensive measure, but its result is offensive, and anticompetitive.

      The problem isn't that big businesses have to pay to keep themselves out of trouble. The problem is, what if this works as intended? Then ultimately, it will lower the relative risks of the member tech giants. So relatively speaking, every other small and medium business will have to pay a risk tax that does not exist for these large companies. Basically, AST will drive your mom & pop shop out of business, not through better products, but by unleveling the playing field, making it too risky for you to compete. Which will hobble the engine of American competitiveness, and in the long run, damage its place in the world economy. Not that Verizon et al. will care because they can always relocate to Europe or China if need be.

      --
      There are two kinds of people: 1) those who start arrays with one and 1) those who start them with zero.
    8. Re:Offensive or defensive? by fictionpuss · · Score: 2, Insightful

      Because if you file for a patent, the absolute last thing you care about is money?

    9. Re:Offensive or defensive? by stjobe · · Score: 2, Insightful

      No, of course not. But a principled person might take exception with where the money comes from ("has a logo on it or not") or what accepting the money might entail for the future development of both you, your company, your market, the economy and your society as a whole.

      --
      "Total destruction the only solution" - Bob Marley
    10. Re:Offensive or defensive? by JesseMcDonald · · Score: 3, Insightful

      On the surface, a free market doesn't preclude companies from holding patents or unlimited licenses.

      Sure it does. There are no patents -- or copyrights -- in a free market. In a free market anyone can do whatever they wish with their own property, insofar as such use is compatible with the same freedom for others. Patent and copyright infringement do not impact the ability of others to use their property as they wish, and as such are meaningless concepts in a free market.

      --
      "The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
    11. Re:Offensive or defensive? by Migraineman · · Score: 4, Insightful

      Unfortunately, the "principled man" often doesn't stay in business, because the "principled" decisions don't jive with First Sale Doctrine. You listening to me, Dad?

      Yes, The Dad went out of business because he refused to sell his products to people who might use them in ways he didn't like. There was always this uncomfortable pause between where he'd ask what the end use was and the customer declining to answer. That usually was immediately followed by the customer saying "no thanks" because they wouldn't enter into a sale contract that had strings attached. Funny, I wouldn't buy a car that could only be started if I justified the trip to someone else.

      You can stand on your political soapbox all you like. Expect your customers to find a way around the obstruction you present. You are motivating them to do so. At the end of the day, all you've done is devalue your patent to the point of worthlessness.

    12. Re:Offensive or defensive? by Miamicanes · · Score: 3, Insightful

      > The problem isn't that big businesses have to pay to keep themselves out of trouble.
      > The problem is, what if this works as intended? Then ultimately, it will lower the relative risks
      > of the member tech giants. So relatively speaking, every other small and medium business will have
      > to pay a risk tax that does not exist for these large companies.

      In other words, they're re-inventing ASCAP in a different industry. They'll offer to let those small companies join, for an extortionate annual fee, then eventually start suing everyone IT/Telcom-related who's not a member on the presumption that they couldn't possibly be doing business without infringing on SOMETHING the group owns. Then AT&T, Microsoft, Dell, and Sony will start another company with similar, but non-overlapping, patent portfolio, and metaphorically become BMG... and hit those same small companies up for a SECOND, equally-extortionate, annual fee.

    13. Re:Offensive or defensive? by stjobe · · Score: 2, Interesting

      I'm not talking about first-sale doctrine. I agree that when I've sold I've nothing to do with what happens with the product/patent/whatever.

      I'm talking about maybe not selling to whomever just because they have the money ("We reserve the right to refuse service") on account of that I believe selling to that person/company/entity would be detrimental to my best interests (and not only to my bottom-line).

      Now, the buyer might get the same thing ("find a way around the obstruction") somewhere else, but at least I've stuck to my principles and acted according to my beliefs.

      I guess it's hard to agree with this if you don't have any principles though. Or if they're worth less than a "dumptruck-full-of-cash".

      That is what worries me. That Dad was forced out of business by competitors with no principles, no scruples and a couldn't-care-less attitude about anything else than the bottom line. That is what's driving this country down the road of corporatism. That is why you get corporate-sponsored laws and politicians, and that is why the rights of the individual is eroding in favor of the right of the corporate owners to make a profit.

      Oh. Sorry for the rant. I'll step off the soapbox now.

      --
      "Total destruction the only solution" - Bob Marley
    14. Re:Offensive or defensive? by stjobe · · Score: 3, Interesting

      Yeah, I understand what you're saying. I just don't like it.

      Jokes aside, in my book Dad did the right thing. His actions were completely relevant in that he tried to do the right thing, not just simply the thing that made most financial sense. I applaud the Dad and wish more were like him.

      Anyway, I guess I'm objecting more on a philosophical and/or ethical level than on a practical level. I've owned a small company and been an officer of a couple of others, so I know the drill - and you're right of course in your description of how it works.

      I do think that if people stood up more for their principles (such as they might be) we'd have a healthier society as a whole, and perhaps even a healthier economy.

      But on the other hand that might require a revolution.

      --
      "Total destruction the only solution" - Bob Marley
    15. Re:Offensive or defensive? by sumdumass · · Score: 2, Informative

      On the surface, a free market doesn't preclude companies from dropping missiles on their competitors' buildings.

      Sure, you get sued. Sure, a bunch of your staff is going to rot in court for a few years, maybe even in jail, but HEY! you destroyed the competition, the spoils of war are yours!

      On the surface, a close or controlled market doesn't preclude that either. Nothing would be different without a free market. A free market doesn't preempt a company from obaying an existing law or even the concept of a law. And nothing change when going from no free market to a free market. I'm not really sure why you would have even brought that up.

      The misconcept of the free market is, quite possibly, the most damaging device to the U.S. economy - worse than the wars on drugs/terror, worse than pulling half of your leaders from the smallest gene pool in the northern hemisphere.

      There, I fixed that for you. There is nothing wrong with the free market. In fact, you can't claim it has done damage because for the most part, we have enjoyed a free market since the beginning of the country.

      The free market, in its purest, philosophical form, means money conquers all, and by extension, corporations conquer all, since they have way more money than all the people in your town put together.

      When has anything dreamed about on paper made it to reality in it's purest form on the real world? And to that note, I'm not entirely sure that you understand the concept of free markets. In a free market, you and I could go into business and compete with the evil corporation. All regulations do is raise the barrier to doing so because now you and I have to join together in order to get over the hurdles imposed by regulation. In fact, regulation prevents competition which is a key benefit to the people and in essence protects the corporations in that they no longer have to provide products at competitive prices.

      If nobody cares to fix that soon enough, there won't be any presidents or senators anymore, there will be CEOs and board members explicitly deciding your fate, based on profitability projections.

      There is nothing they can produce that will preclude your government. All you have to do is simply not purchase their products. When people have done that in mass, any power you think companies will have will simply vanish altogether. The problem for you is that more people have their head screwed on in different directions then you do and it isn't near as bad to them as you might think.

    16. Re:Offensive or defensive? by Migraineman · · Score: 2, Insightful

      Honestly, I don't like it either. The Dad is an upstanding guy, though his personal prejudices will occasionally color his decisions. I've watched him walk away from a number of questionable deals involving a briefcase full of cash. That takes guts. I respect him because he's earned my respect. And I agree that we'd have a better society if people would stand behind their principles and put ethical behavior before the fast cash-grab.

  2. Chief Executive Officer by MRe_nl · · Score: 5, Informative

    Brian Hinman is currently CEO of AST. Previously he was Vice President, Intellectual Property and Licensing for IBM Corporation. While at IBM, he held various positions including Business Development Executive for IBM Research at the Thomas J Watson Research Laboratory. Prior to IBM, he was Corporate Director of Business Development and Licensing at Westinghouse Corporation.

    --
    "Kill 'em all and let Root sort 'em out"
  3. 1, 2, 3, 4, Profit? by Frosty+Piss · · Score: 3, Insightful

    If ever this was a great boon to the IP Squatters! I see a bundle of the folks setting up "business models" based wholly on selling IP to this single group.

    --
    If you want news from today, you have to come back tomorrow.
    1. Re:1, 2, 3, 4, Profit? by apathy+maybe · · Score: 3, Insightful

      OK, so first you have to acquire a patent that would be relevant for them (either "invent" or buy or whatever). Then you have to attract the attention of this mob and persuade them that it would be cheaper to buy your patent, rather then just sue you for infringing one of their patents.

      Then you have to repeat.

      Good luck with that.

      Personally, I don't see what the problem with this group is, in the current system. (Of course, there are heaps of problems with the current system, but this isn't the place to go into them.)

      --
      I wank in the shower.
  4. Broken! by squoozer · · Score: 2, Insightful

    If this doesn't send a clear signal regarding how totally broken the current patent system is what will?

    I actually like the basic idea behind the patent system. I think it fosters innovation and provides reasonable reward but it's completely lost its way in the area of computing.

    Unlike some I don't actually think we need a complete re-think of the patent system. What we need to do is think long and hard about the hurdle a patent in computing needs to jump over to be accepted because it appears the current hurdle is too low.

    --
    I used to have a better sig but it broke.
  5. RICO? by dreamchaser · · Score: 3, Interesting

    Sounds like racketerring in a sense. IANAL, but I wonder if an ambitious prosecutor somewhere could use the RICO statues instead of anti-trust statutes.

    Any lawyers familiar with RICO want to chime in?

    1. Re:RICO? by sumdumass · · Score: 3, Insightful

      Spell this out to me. How does it sound like racketeering?

      From what I can see, some companies have banded together to purchase patents related to stuff they might want to do in oder to give themselves a perpetual license, and then resell the patent. Unless they are going to hide the license in order to claim the patent is more valuable, I'm not sure where the evil is. If the Telecoms are the only companies that the patents are useful too, then it is no different then joe small selling them a license anyways, Most of the value of the patent will be gone once the license to the people most likely to use it is done. It is no different then you leasing a car for your family (wife and two teen age drivers) to drive. You'll get killed on the miles and it is a stupid idea but that doesn't make it illegal.

  6. Queue Pat Benatar's "IP's a battlefield" by erroneus · · Score: 2, Funny

    To the tune of "Love is a Battlefield"

  7. So, any potential, new competitor... by Enleth · · Score: 2, Insightful

    ...is now shit out of luck, because there are 6+ companies that will smash them into the ground for trying to use every single practical approach to whatever they're trying to do, instead of a single one?

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  8. Patents==new oil/dotcom/housing bubble by greyhueofdoubt · · Score: 3, Insightful

    So here we are at the base camp to another bubble in speculation and hyperinflation, this time in the market of IDEAS.

    The way things used to work, advertisers tried to convince you of the utility and attractiveness of their products. Speculators predicted how much a product or resource would sell for. Now we will have ads and speculators working in the field of ideas, which are thoughts, which is a little disturbing to me.

    It will happen soon that ads will be for brand names (not products); campaigns will be waged with one trademark against another; mascots engaging in mudflinging; ads proclaiming that some product has the most patents...

    I see mutual-fund-like holding groups for IP that will begin paying big dividends. I see the market changing from product- and service-driven to trademark-driven.

    Dammit I told myself no more posting before coffee.

    The point I'm trying to make is that I foresee a huge bubble in patents and trademarks, and speculation thereof, and I'm worried that it could be the last straw for our poor economy. OK.

    -b

    --
    No offense, but I've stopped responding to AC's.
  9. the real problem...fix the USPO! by mwilliamson · · Score: 3, Insightful

    What we need is to fix the problem, which is a broken patent system and an unqualified oversight mechanism. Courts aren't much help to settle issues because an (un|de)qualified jury simply listening to testimony of experts just isn't effective or fair.

    What's going to end up happening with all these companies spending billions is that they will come to embrace the current screwed-up system and probably defend it because of their investment. They even may end up lobbying to maintain the status quo.

    The small developer is screwed in the butt as usual.

  10. Open Invention Network by hasbeard · · Score: 2, Interesting

    Well, if they do sell the patents, it would be nice if the Open Invention Network people were standing first in line to buy them. http://www.openinventionnetwork.com/index.php/

  11. Why not spend that money... by $1uck · · Score: 2, Insightful

    Lobbying congress to fix the patent system, instead of buying patents?

  12. Freedom For The Rich by Bob9113 · · Score: 4, Insightful

    Nice to see that we're developing another system whereby giant corporations are free to operate, and smaller enterprises are barred from entry. I'm sure that is exactly what Adam Smith had in mind for free market competition.

    --
    Stop-Prism.org: Opt Out of Surveillance
    1. Re:Freedom For The Rich by Duketape · · Score: 2, Informative

      In Europe we would send Neely Kroes to those companies. When she is finished with them, they have payed more than those small companies and everybody will know that it is forbidden.

  13. We have a word for this by IGnatius+T+Foobar · · Score: 2, Interesting

    It's called a "cartel."

    Ok, maybe not exactly, but it could certainly turn into one, especially if some of the more, shall we say, "evil" industry players begin to join.

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  14. Surpise! by Duncan3 · · Score: 2, Insightful

    These guys are going to be SOOOOOO pissed when they find out over 95% of the world isn't even under US IP laws, and those that are pay no attention ;)

    --
    - Adam L. Beberg - The Cosm Project - http://www.mithral.com/
  15. Re:BMG? by atraintocry · · Score: 2, Informative

    No, he meant BMI.

  16. Re:I have different principles than you by stjobe · · Score: 2, Insightful

    Well, turnabout's fair play, right? How would you feel as the vendor whose religion forbids you to sell clothes without hoods to women, and still this foreign woman insists on buying a shirt without a hood? Would you throw your (religous) principles out the door to make that sale or would you refuse the sale?

    If your answer is that you'd sell the shirt, I was right in my first comment; the problem with you is that you have no principles.

    Now, I think that I and Migraineman above agreed that the rules of the free market most of the time requires one to let ones principles take the backseat to capitalistic concerns, but that does not mean that we cannot see that it is not always the most humane or even the right thing to do.

    I stand by my point that society as a whole probably would benefit from people standing up more for their principles.

    --
    "Total destruction the only solution" - Bob Marley