Much of Dynamic Advances’ complaint is devoted to explaining the coverage and importance of the ’798 Patent.  Independent Claim 9, also quoted in the complaint, provides:

A computer-implemented method for processing a natural language input comprising:

• receiving a natural language input;
• providing from said natural language input a plurality of language-based database objects;
• identifying a finite number of permutations of the plurality of database objects, the database objects being stored in a metadata database comprising at least one of a group of information comprising case information, keywords, information models, and database values; and
• interpreting at least one of the permutations to provide determination of a result of the natural language input.

Dynamic Advances compares this description to one of Apple’s own patent applications for an “Intelligent Automated Assistant” (presumably Siri):

The Assistant receives the input, provides a plurality of words/phrases based on that input, identifies a finite number of combinations of the words or phrases as candidate syntactic parses, and interprets at least one of the candidates as the representation of user intent. In processing the input, the Assistant refers to and uses database objects such as keywords in its vocabulary database, objects in its personal memory databases, or information in its domain or task databases.

The complaint also quotes an un-named “patent analytics service” claiming that the patent “has been cited more than 93.5% of issued United States patents.”  The service is most-likely Patent Buddy, as the analytics on the’ 798 liked above, from Patent Buddy, provide the identical claim of 93.5%.  The patent also boasts two highly qualified professors:

At the time they invented the claimed technology, Dr. Hsu was a Professor of Decision Sciences and Engineering Systems at Rensselaer and Dr. Boonjing was a doctoral candidate at Rensselaer. Dr. Hsu currently is a professor of Industrial and Systems Engineering at Rensselaer. Dr. Boonjing is currently a professor of Mathematics and Computer Science at King Mongkut’s Institute of Technology Ladkrabang in Thailand. In addition to being awarded the ’798 Patent for their joint invention, Dr. Hsu and Dr. Boonjing have co-authored a number of articles on natural language processing technology.

Dynamic Advances ownership records suggest a possible link with patent monetization firm IPNav.  According to Texas state records, one of Dynamic Advances’ owners is an entity called Spangenberg Family Foundation To Benefit Children’s Education and Healthcare.  The Foundation recently contributed to the Baylor Health Care System Foundation to fund a Neonatal Intensive Care Unit (NICU).  IPNav Chairman Erich Spangenberg is mentioned in this article referencing the donation.  In addition, IPNav’s website claims that the company “has already helped a number of major educational institutions.”  About a year ago, IPNav and Rutgers announced the creation of a Disruptive Innovation Fund to provide $1M to support commercialization of technology developed at the university, so a Rensselaer partnership would not necessarily be IPNav’s first deal with a university.

Rensselaer’s decision to generate revenue from the investments made in securing IP rights reflects an increasingly realistic view of IP rights generally.  That is, if a university decides to invest money to obtain patents, then those patents should be deployed when it makes financial sense to do so, and should be deployed in the most efficient manner under the circumstances.  Of course, litigation may, or may not, be the most efficient use of the ’798 Patent, but Rensselaer and Dynamic Advances’ actions demonstrate that they are willing to consider litigation as an option.

Meanwhile, another upstate New York professor shared a slightly different perspective.  Aija Leiponen from Cornell claims that there is a “consensus among analysts that an agreed level of maximum royalties would be beneficial for consumers and the industry as a whole.”  Doing so, says Leiponen, “would shift incentives away from intellectual property creation and royalty extortion and toward product innovation and commercialization.”  Leaving aside Leiponen’s characterization of royalty compensation as “extortion,” the professor is correct in his statement that an arbitrary cap on royalties would shift incentives away from intellectual property creation.  The problem, however, is Leiponen’s failure to acknowledge that “product innovation and commercialization” necessarily follows intellectual property creation.  That is, before a person develops and delivers a new or improved product to market, someone necessarily first conceived of it, and such conception leads to the instigation of intellectual property rights.

Dynamic Advances represents a key example, where the conception of the specific natural language processing techniques occurred at some point prior to May of 2001 (when Rensselaer applied for the ’798 Patent), but (allegedly) wasn’t introduced by Apple until 2011.  What’s more, the technology licensed by Dynamic Advances has been public knowledge since 2002.  Leiponen’s view would stunt the already slow progression of converting intellectual capital into useful products by removing a key incentive to publish such knowledge in the first place.  While eliminating compensation (through colorful allegories like “extortion”) might produce short-term gains for product developers, it threatens the long-term benefits provided by patents for centuries by incentivizing an ever-increasing crop of intellectual capital upon which new or improved products can be built.

Becton Dickinson made a surprising announcement today.  From the press release:

David V. Elkins, 44, Executive Vice President and Chief Financial Officer, has informed the Company of his plans to pursue an entrepreneurial opportunity at Round Rock Research, LLC, a technology licensing company, serving as its CFO.

Yes, that Round Rock Research.  The one formed by John Desmarais, with patents that Micron still holds an interest in.  On his reasons for the move, Elkins is quoted in the press release as saying:

While my decision to leave was difficult, this new entrepreneurial opportunity is something that makes sense for me and my family.  This will give me an opportunity to work with a long-time friend at Round Rock as its CFO and help the company execute its growth strategy. 

Elkins received approximately $1.5 – $3 M per year in total compensation between 2009-2011 while at BD, including over half a million each year in salary and bonuses.  Thus, getting Elkins interested enough to leave that security behind, in pursuit of an “entrepreneurial opportunity”, speaks highly of his interest in the Round Rock business model and the asset class generally.  As the son of a former CFO, I remember first-hand how deliberate, conservative and calculating the bean-counter types tend to be, so bagging one from a Fortune 500 company sends a clear message about the financial future of IP-based business models.

According to a press release issued yesterday, the German patent fund Patentportfolio 2 S.a.r.l. acquired 400 patent assets from publicly held BT Group PLC. The group is funded by the German investment fund Alpha Patentfronds 2, and strategic IP advisory services will be provided by IP Navigation Group (Europe).

See German Patent Fund Acquires Substantial Portfolio From British Telecom.

Patentportfolio 2′s first strategy was to auction covenants not to sue through ICAP Patent Brokerage.  This week, however, several of Patentportfolio 2′s patents turned up in patent litigation  filed in a Delaware District Court by a company called GlobeTecTrust, LLC, formed in September of this year.  As a Delaware limited liability company, information about GlobeTecTrust will essentially remain a mystery unless it’s owners want to talk.  Sixteen separate lawsuits accuse companies like AT&T, Cablevision, Charter, Cox, Level 3, Time Warner, and Verizon of infringing a variety of optical networking patents.

According to USPTO records, the lawsuits involve a portfolio of six patents assigned from British Telecommunications to Patentportfolio 2, signed on July 19, 2011 and recorded in late September of 2012.

In court documents, GlobeTecTrust claims to be the “exclusive licensee” with the “legal right to enforce rights under the [patents], sue for infringement, and seek all available relief and damages.”  Given that no other assignments were recorded for the asserted GlobeTec patents, it is reasonable to assume, for the moment, that Patentportfolio 2 granted the exclusive license to GlobeTec to maintain ownership of the patent assets, receive a share of any licensing and enforcement revenue, and remain an outsider to the litigation.  After all, Patentportfolio 2 is not your typical patent owner.

Rather, Patentportfolio 2 is part of a complicated investment structure involving a trust funded by German investors which serves as a limited partner in a patent monetization fund (Alpha Patentfronds).  Alpha, in turn, owns patent portfolio companies, such as Patentportfolio 2.  Joff Wild, who studied similar German patent investment vehicles, noted that much of the difficulty such investments have encountered is not in acquiring patent rights, but rather in securing licensing deals.   This likely provides motivation for Patentporftolio 2′s exclusive licensing arrangement with GlobeTecTrust.

But what does all this have to do with Charles River?  Researching a newly formed Delaware LLC sharing an address (1105 North Market Street, Suite 1300, Wilmington,DE 19801) with literally hundreds of other shell companies is no easy trick.  However, a friend tipped me off that someone at GlobeTecTrust had the good sense to secure domain names like GlobeTecTrust.com and GlobeTecTrust.us, both on July 16, 2012.  Alas, GlobeTecTrust.com is registered to “Domains by Proxy,” a privacy service offered by GoDaddy.com.  Another bust.

However, GlobeTechTrust.us is actually registered to David Yurkerwich using a Post Office box in Fairfield, Connecticut (and a New York cell phone number) as his contact information.  Coincidentally, Charles River also lists Yurkerwich as a Vice President in its Intellectual Property consulting business.  Yurkerwich is a fellow member of the IAM 300, and according to his profile “assists clients throughout the world with the valuation, licensing and sale of technology and intellectual property.”

Of course, all this proves is that some person, who happens to be a Vice President at Charles River Associates as an IP licensing advisor just happened to have registered a domain name identical to the name of a Delaware LLC that filed sixteen separate lawsuits against major telecom and cable providers.  Less certain is whether GlobeTec is an officially sanctioned CRAI operation, or whether Yurkerwich might be running this one “off the books.”  Also uncertain is, assuming CRAI is officially involved, when they came into the picture, and whether they are working with or displacing IP Nav.

Continuing, Ryan provides a timely example: “We did, in the last quarter, to certain companies, four or five licenses, and we got that all in one quarter as opposed to having it come in four different quarters.” Acacia issued a press release summarizing it’s earnings, and revealing that Cisco (CSCO) entered agreements with Acacia and some of its subsidiaries “to resolve pending patent matters,” including a list of four specific subsidiaries: Lambda Optical Solutions LLC, Teleconference Systems LLC, Video Streaming Solutions LLC, and Unified Messaging Solutions LLC. The revelation led to much speculation identifying Cisco as the likely company responsible for the $36 M revenue concentration. JPMorgan research analysts reportedly reached a similar conclusion.

(See Acacia CEO Paul Ryan Clarifies Second Quarter Results And ‘Key Performance Metrics’)

A look at the four portfolios licensed to Cisco reveals that each came from a very different source.  First, Cisco tangled with Teleconference Systems, LLC in a 2009 Declaratory Judgment suit filed in California over Patent no. 6,980,526.  The ’526 patent is assigned to Margalla Communications, and co-invented by Margalla founder Saqib Jang.  According to Margalla’s website, Jang is “personally involved in all Margalla Ventures activities” which include “raising capital, due diligence, mergers & acquisitions, and venture capital advising.”  Curiously, those activities at one point led to Jang’s invention of a videoconferencing method:

1. A method for videoconferencing using Internet Protocol (IP), the method comprising the steps of:

installing a videoconferencing services switch at an access point to a service provider IP network;at the switch, registering a plurality of subscribers for videoconferencing services, each subscriber including a plurality of endpoints;

receiving subscriber-specific settings to be applied to multiple videoconferencing calls from the plurality of endpoints associated with each subscriber;storing the subscriber-specific settings at a location accessible to the switch; and

configuring the switch to connect calls from the plurality of endpoints at each subscriber based on the corresponding subscriber-specific settings.

Lambda Optical Solutions, LLC filed a Delaware lawsuit against Cisco and several other companies back in 2010 over Patent No. 6,973,229.  The patent was originally owned by First Wave Intelligent Optical Networks, Inc., and was reformed as Lambda Optical Systems following an acquisition by VC firm Sevin Rosen in 2003.  The first independent claim of the ’229 Patent, which was confirmed during reexam, describes an optical switch:

1. An optical transport switching system for use in an optical network, comprising:

an optical access ingress subsystem which is adapted to receive an optical signal associated with an access network;an optical access egress subsystem;a transport ingress subsystem;

a transport egress subsystem; and

an optical switch subsystem which is adapted to ingress the optical signal into the optical network by optically coupling the optical access ingress subsystem to the transport egress subsystem and which is adapted to selectively provide optical coupling between the transport ingress subsystem and at least one of (1) the optical access egress subsystem, and (2) the transport egress subsystem.

Video Streaming Solutions LLC, filed suit in March of this year over 8 different patents originally owned by Philips, and sold to Acacia via one of Coller Capital‘s IP acquisition funds.  Included in the suit is Patent no. 6,157,673, which describes the de-multiplexing of data, and accused of being used in Cisco’s IP TV headend solutions.  Claim 17 from the ’673 patent illustrates the application of a de-multiplexing for television programming data.

17. A method of decoding a plurality of transport streams comprising:

de-multiplexing data for at least one elementary stream corresponding to a program from a currently accessed first transport stream of said plurality of transport streams and decoding the de-multiplexed data;

during said de-multiplexing, accessing and extracting program specific information from a second transport stream of said plurality of transport streams, indicating a correspondence between packet ID numbers and data for programs in said second transport stream; and

using the extracted program specific information in an event of a channel change necessitating that data for at least one elementary data stream corresponding to a program in said second transport stream be de-multiplexed.

Finally, Unified Messaging Solutions, LLC, which acquired exclusive licensing rights to patents from J2 Global, was mentioned in Acacia’s press release despite no record of the company actively litigating against Cisco.  Unified Messaging has, however, actively litigated a number of patents originally acquired by J2 through an acquisition of Netoffice.  Included in the portfolio is Patent no. 6,857,074, describing a messaging platform accessed through a browser interface that notifies users of available messages.

1. A communications messaging platform, comprising:

at least one computerized server system programmed to implement:

a messaging function configured to receive messages and configured to place the messages in storage areas associated with respective mailboxes associated with respective intended recipients of the messages, the messages being of any one or media types selected from the group consisting of an audio media type, an image media type, and a data media type; and

a notification function configured to send notification messages to respective ones of the intended recipients after receipt of the messages, the notification messages alerting the respective ones of the intended recipients of the receipt and availability of the messages at their respective mailboxes,

wherein:

the messaging function is configured to interface with the intended recipients through a browser interface;

the intended recipients are capable of accessing their respective mailboxes and the messages associated therewith through the browser interface; and

the messaging function couples information associated with the messages to the respective intended recipients via the Internet.

To use the new Infringement Finder feature, simply navigate Google Patents and type in any patent number you might be investigating.  For example, suppose you want help identifying infringers of US Patent 6,091,319, a patent on RFID technology now owned by patent licensing firm Round Rock Research, LLC.  Once the patent record is received, select the new “Find prior art” link near the top of the screen.

This link brings you to a new page of search results based on keywords extracted from the patent.  By default, Google sets the “end date” of the search results as the priority date of the subject patent.

To access the Infringement Finder feature, you only need to remember one of the simplest truisms of patent law: That which infringes if later anticipates if earlier.  Thus, by changing the “earlier” (End date) to become “later” (Start date), you can sift through a variety of sources that might indicate infringement.

Google’s motivation to create this new feature are not entirely clear, but they have provided what should be a useful advancement in patent analysis.  By speeding up access to information that may lead to evidence of infringement, Google puts more power back into the hands of inventors and patent owners.  Perhaps they hope to gain a little positive patent karma after taking ownership of a large patent portfolio from the former Motorola.

Acacia reports a concentration of 72% of Q2 revenue attributable to a single licensee, leaving only $14 M distributed among a remaining 37 agreements. In other words, outside of this one agreement, Acacia generated an average of less than $380,000 per license. Even worse, a full 85% of the Q1 and Q2 combined revenue is attributed to just four licensees. Thus, of the $149 MM earned by Acacia in 2012, only 15% (or $22 M) worth of revenue can be attributed to 95% (or 74) of its license agreements. Therefore, outside of four major deals (representing 5% of its business in the first half of the year), Acacia generated an average of less than $300,000 per agreement.

This is obviously a serious problem for Acacia, since the overwhelming majority of their time is spent earning a very small proportion of their revenue. There are several ways Acacia could reverse this trend, which I’ll explore in some future posts.

However, Acacia’s concentration figures are interesting for another reason.  Back in February, with very little information to go on, GametimeIP reported that Microsoft and Samsung combined for about $40-$65 M in licensing revenue for the ADAPTIX portfolio.  From Acacia’s most recent 10-Q (with dollar amounts in brackets for convenience):

One licensee individually accounted for 72% of revenues [$36 M] recognized during the three months ended June 30, 2012, and four licensees individually accounted for 36% [$53 M], 24% [$36 M], 13% [$19 M], and 12% [$18 M] of revenues recognized during the six months ended June 30, 2012.

The 24% ($36 M) agreement came in the second quarter, which means Acacia did individual deals in Q1 of $53 M, $19 M and $18M. Of those, two of them should be the Microsoft and Samsung licensing deals, which implies a combined deal range of $37-$72 M. Of course, remaining unanswered are questions about which company paid more, and about the identity of the third large deal in the first quarter.  For sure, an agreement of this size would merit an announcement by Acacia.  Besides Microsoft and Samsung, first quarter deals announced by Acacia included:

• magicJack
• Tealeaf Technology
• Compuware
• CA
• Abbott Labs
• Origin Healthcare
• Comerica Bank
• Tellabs
• Amazon.com

Most of the companies on the above list would have had enough cash on their books at end of 2011 to be able to afford an 8-figure settlement, but it would take more investigation to figure out which one had the proper motivation to enter into such a large deal.  The other remaining mystery is the identity of the $36 M licensing deal Acacia struck during the second quarter.  Based on Acacia’s 8-K filings, the candidates are:

• CDW
• Cisco
• Thomson Reuters
• HP
• Fujitsu
• CMC Magnetics
• Verizon
• Regions Bank

Once again, several large companies appear on the list, so many are likely candidates.  Verizon seems to be an unlikely candidate, since patent litigation between Adaptix and the mostly Verizon-owned Cellco Partnership remains pending.  During the earnings call Q&A period, a lot of questions centered around Cisco and the possibility of broad, term license agreements. Of course, Acacia refused to reveal specifics, so the mystery remains.

Schwartz and Kesan–whose paper is the product solely of academic research, not corporate funding like Bessen & Meuerer–focus their critique on problems in Bessen & Meurer’s data gathering techniques.  Essentially, the Chicago pair argues that the $29 B NPE “direct cost” figure is based on data gathered from a biased data set, while the benefits of NPEs are poorly accounted for.  From the study, Analyzing the Role of Non-Practicing Entities in the Patent System:

(1) Figures Based on Biased Sample. Bessen & Meurer’s $29 billion calculation of the direct cost of NPE patent assertions should be viewed as the highest possible limit. The true number is very likely to be substantially lower. It is the outer bound because the survey is not a random sample; instead it likely is a biased sample, which renders Bessen & Meurer’s extrapolation of the total costs similarly biased too high.
(2) Lack of Basis for Comparison of Figures. The vast majority of the $29 billion figure consists of settlement, licensing, and judgment amounts. For economists, these are not “costs,” as they are classified in the Bessen & Meurer study, but rather “transfers.” Such transfers to patent holders are the contemplated rewards of the patent system. Furthermore, before declaring litigation costs (i.e., lawyers’ fees) too high, there must be some basis for comparison. Bessen & Meurer provide no such comparison. For further academic studies, we propose comparing them to either the ratio of lawyers’ fees to settlements in practicing entity patent litigation or complex commercial litigation more broadly.
(3) Questionable Definition of NPE. Bessen & Meurer’s calculations rest upon a questionable and very broad definition of NPE. We suggest that they disaggregate among different categories of NPE, which should be possible with RPX’s database.
(4) Lack of Credible Information on Benefits of NPEs. Bessen & Meurer’s estimate of the benefits of the benefits of NPE litigation is based upon an analysis of very limited information, namely SEC filings from 12 publicly traded NPEs. We recommend a survey of NPE plaintiffs analogous to the survey of NPE defendants to provide more complete information on this issue.

Schwartz and Kesan present a compelling critique that soundly calls into question the reliability of Bessen & Meurer’s conclusion.  Further, the amount of important data excluded from Bessen & Meurer’s paper, combined with financial support from the Coalition’s broad array of corporate members, raises suspicion about the Boston University authors’ motives.  The sum total of affairs leads many familiar with IP monetization to believe that Bessen & Meurer paint a completely backward view of the benefits of IP as a whole.

IAM Magazine’s Joff Wild came to a similar conclusion, writing that “In fact, as things stand the likelihood is that they [Bessen & Meurer] are wrong, perhaps spectacularly so. The onus now is surely on the Boston University pair to respond to the points Schwartz and Kesan have made. Let us hope they do so sooner rather than later.”  Of course, a question still remains about how widely distributed the Schwartz & Kesan study will become.  Hopefully, every journalist who covered Bessen & Meurer’s paper has already received a copy, but it remains to be seen whether Schwartz & Kesan’s work garners the attention it so clearly merits.

The BBC ran another article in a tired meme about evil patent owners supposedly “costing” billions per year.  Of course, the article doesn’t specify who supposedly bore this $29 B “cost” or how it was calculated, but instead cites a Boston University paper by Professors James Bessen and Michael Meurer.   According to the BBC article, “Intellectual Ventures, one of the highest-profile NPEs, was not available for comment.”  However, an IV spokeswoman told Gametime IP that she was surprised by the article and that the BBC had not, in fact, reached out to them for comment.  Fortunately, I did speak with IV co-founder Peter Detkin, to get his take on Bessen and Meurer’s latest research, and the role of NPEs in general.

Previous work by Bessen and Meurer has already been debunked by Gametime IP not once, but twice.  While the previous research included substantial flaws in assuming a direct correlation between stock price and patent owner activity, the new paper rests mainly on survey data collected through the Coalition for Patent Fairness and RPX, focusing on the amount of money spent by companies to defend and resolve patent claims against NPEs while inferring effects of NPEs generally based on only a subset of NPE behavior.

“They are taking a small piece of the puzzle and extrapolating out to the entire puzzle,” explains Detkin.  He believes that the basic premise behind the research is a real phenomenon–that there are bad actors who impose costs onto everyone because of the improper way in which they use the legal system.  “When I coined the term ‘troll’ more than 10 years ago, I was talking about people who take specious patents that were likely invalid and asserted them broadly across an industry to extract nuisance value settlements.”  Ten years later, Detkin thinks some of the research validates his suspicions that a lot of people are “gaming the system and that there is a consummate cost to society.”

What’s improper, Detkin warns, is inferring based on this subset of patent activity onto NPEs as a whole. “They take that point and then say ‘therefore, all patent assertion by non-practicing entities is bad.’  And that’s like saying all personal injury litigation is bad.”  Are there people who game the personal injury system? Sure, says Detkin. “But that doesn’t mean we should eliminate the entire personal injury system because, on balance, we think it serves a purpose.”

As evidence that Bessen and Meurer cast too wide a net over their supposed ‘bad actors’ is the rather cursory treatment of NTP, Inc.  The Boston paper calls the company’s lawsuit against Research in Motion “a good example,” adding that “NTP asserted patents of doubtful validity but managed to win at trial and obtain a settlement of $612.5 million from RIM.”  The paper refers to NTP as an example of a “big game hunter,” lumping their activities in with other NPEs.  Detkin takes issue with the rather cursory manner in which the ‘big game’ activities are treated by the paper, adding “To me, when you win at trial and on appeal, that means that your patents are not of ‘doubtful validity’ anymore.”  In fact, the amount of the settlement alone speaks volumes about the strength of NTP’s claims.  As former head of IP litigation for Intel, Detkin agreed, saying “I would have to be hard pressed to go to my management and say ‘You should pay more than half a billion dollars for patents we don’t think we infringe.’”

Another aspect of the Bessen/Meurer paper is the assumption that money flowing to NPEs, as opposed to flowing directly to inventors, is supposedly “lost.”  The BBC notes the paper’s $29 B “estimate” against total R&D spending for 2009 of $247 B.  In other words, the estimated “losses” accounted for 11.5% of R&D spending.  In light of that figure, the article goes on to mention an other inane statement mentioned from the paper:

The authors added that about one quarter of the cost of NPE litigation consisted of legal fees – money, they said, that could otherwise be used to fund innovation.

First of all, companies pay fees for things other than NPE litigation, including paying legal fees for other administrative functions, taxes, accountants to figure out how much to pay in taxes, auditors to make sure the numbers accountants work with are correct, and salaries for sometimes ineffective managers.  All of this money could be spent on innovation, but it’s all necessary as part of running a successful business.  Sophisticated companies should think of legal fees, even fees spent defending NPE litigation, in the same way. “Just like keeping your aisle-way clean is a cost of doing business for a grocery store–as is paying for injuries caused when your workers are negligent–when you come up with a new product and you want to build on the inventions of those who came before, you have to pay to use those inventions.”

Lost in this conversation, however, are costs incurred by patent owners who find they are unable to obtain fair value for use of their patents without resorting to lawsuits.  Behind every NPE is an inventor or someone who invested (directly or indirectly) in an inventor.  The same is true whether it’s a company using employee-technology to create and sell products, or whether an NPE buys a patent portfolio Detkin mentioned an example the world took notice of last year: “Nortel is the extreme. People invested in Nortel; the bondholders got their money back, and they can go on to invest in the next great thing.”

Delays and expenses associated with collecting a return on that investment limit the amount that could otherwise be re-invested in future inventions.  Inventors are faced with a Hobson’s choice between giving up a large share of future wealth produced from an invention or possibly getting nothing at all in return for their work.  Either way, inventors sacrifice resources that could be re-invested to create new technologies that benefit future generations.  Detkin’s company invested billions into acquiring invention rights, including more than $400 M paid to individual inventors according to an IV spokesperson.  “Perhaps [Bessen & Meurer] are faulting us for not paying inventors enough, and we can argue about what is a fair deal. But I haven’t heard any inventors coming back and saying we short-changed them and, more importantly, it’s a lot more than they would have gottenbefore we came long because this market did not exist.”

In reality, both inventors and implementers have a role to play in creating and incorporating new technologies.  However, its long past time to worry about wasteful legal expenses for only one half of the innovation cycle.  Instead, patent owners and operating companies should work together to eliminate unnecessary transactional costs associated with licensing. Doing so benefits inventors and innovators alike, which ultimately benefits us all.

These so-called “patent plays” form an increasingly larger sector of the market and, in some cases, present a viable way for people to invest in valuable intellectual property.  Gametime IP will continue to report on significant events in the patent monetization, licensing and general IP transactional space, but the Seeking Alpha series of articles will focus specifically on IP issues relevant to patent play stakeholders and investors in general.  Generally, these articles will also be summarized on Gametime IP.

Judge Posner spectacularly destroyed the Apple v Motorola patent claims, leading pundits around the world to pontificate over how His Honor’s treatment of patent litigants influences future behavior and results.  The next natural evolution will be the forthcoming major patent plays, of which Nokia may be the most valuable.  In the article, I explain why Nokia’s strategy is largely unaffected and remains one of the more interesting patent monetization efforts to monitor:

NOK remains open to arrangements similar to the one reached with Microsoft and Mosaid, in which NOK receives a significant share of the purchaser’s licensing revenue. While technically patent sales, these types of deals should be thought of as more of a licensing play, with their potential to bring in more substantial revenue, albeit over a longer time period.

Thus, while Posner’s ruling may temporarily chill the market for all-cash patent sales, NOK’s strategy should remain unaffected as it has already demonstrated an ability to license patents directly, as well as by identifying partners like Mosaid to do the licensing work and share the revenue.

Since 2008, LMLP licensed 21 different companies, reporting a total of $46 M in “non-recurring” licensing revenue. Some of the companies larger revenue generating settlement agreements included $7.5 M each from PayPal and Citigroup, $5 M from Wells Fargo, and $4.5 M from JP Morgan.

On average, LMLP earned $11.5 M annually during its four year IP monetization campaign

See the article LML Payment Patent Monetization Proves IP Is More Than An Exit Strategy for more detail on what this means for LMLP.  Below is a complete list of settlements reported by company press releases.  LMLP is an important case study to refute the notion that IP is merely an exit strategy (ala Nortel).  In this case, LMLP used patent monetization to maintain a high cash balance while it’s transaction processing business ramps up.  Details on LMLP’s financials are in the article linked above.

In more or less reverse chronological order, starting with the most recent, LMLP’s reported settlements are:

• JP Morgan: $4,500,000
• Deutsche Bank: $450,000
• Capital One: $2,900,000
• Wells Fargo: $5,000,000
• Northern Trust: $1,250,000
• PayPal: $7,500,000
• Citigroup: $7,500,000
• HSBC: $5,500,000
• Regions Bank, Fifth Third and Marshall & Ilsley Bank combined for $1,315,000
• BNY Mellon, First National of Omaha and First National Merchant Solutions combined for $5,150,000
• M&T Bank: $695,000
• Union Bank: $1,200,000
• RBS: $1,150,000