Or, better yet, listen to this podcast from ‘Planet Money’ and ‘This American Life’.
Technology companies pay Intellectual Ventures fees ranging “from tens of thousands to the millions and millions of dollars … to buy themselves insurance that protects them from being sued by any harmful, malevolent outsiders,” [Chris] Sacca says.
There’s an implication in IV’s pitch, Sacca says: If you don’t join us, who knows what’ll happen?
He says it reminds him of “a mafia-style shakedown, where someone comes in the front door of your building and says, ‘It would be a shame if this place burnt down. I know the neighborhood really well and I can make sure that doesn’t happen.’ “
Here’s what’s funny: When I’ve seen Nathan [Myhrvold, founder of the patent trolling company, Intellectual (sic) Ventures, and former famous person when he worked at Microsoft, that well-known originator of brilliant new ideas that weren’t stolen from anybody else, ever] speak publicly about this and when I’ve seen spokespeople from IV they constantly remind us that they themselves don’t bring lawsuits, that they themselves aren’t litigators, that they are a defensive player. But the truth is the threat of their patent arsenal can’t actually be realized, it can’t be taken seriously, unless they have that offensive posture, unless they’re willing to assert those patents. And so it’s this very delicate balancing act that is quite reminiscent of scenes you see in movies when the mafia comes and visits your butcher shop and they say, “Hey, It would be a real shame if they came and sued you. Tell you what: pay us an exorbitant membership fee into our collective and we’ll keep you protected that way.” A protection scheme isn’t credible if some butcher shops don’t burn down now and then.
In an email to us, Peter Detkin [someone who actually chose to be a lawyer for Intellectual (sic) Ventures, after he actually coined the term ‘patent troll’ while working at Intel] called the comparison to the mafia “ridiculous and offensive.” Detkin wrote:
We’re a disruptive company that’s providing a way for patent-holders to recognize value that wasn’t available before we came on the scene, and we are making a big impact on the market. That obviously makes people uncomfortable. But no amount of name-calling changes the fact that ideas have value. (See Detkin’s full response here.)
True enough. But you can see why many people feel like lots of butcher shops have been burning. As we were reporting this story, more and more Intellectual Ventures patents started showing up in the hands of companies like Oasis, companies without employees or operations, that were formed for the purpose of filing lawsuits. They’re known as non-practicing entities, or NPEs.
One former IV patent was used by an NPE to sue 19 different companies, a broad assortment that included Dell, Abercrombie & Fitch, Visa, and UPS.
These companies all have websites where, when you scroll your mouse over certain sections, pop-up boxes appear. The NPE said, “We have the patent on that.” Which would make pretty much the entire Internet guilty of infringing the patent.
Another group of former IV patents is being used in one of the most controversial and talked about cases in Silicon Valley right now. An NPE called Lodsys is suing roughly three dozen companies developing apps for the iPhone and for Android phones. Lodsys says it owns the patent on buying things from within a smartphone app.