When Patent Litigation Isn’t About A Quick Settlement
- United States
- 10/19/2016
A patent troll can refer to any company that buys a patent in order to sue companies and collect quick, cheap settlements.
So what do you call a plaintiff that buys a patent and wants to litigate right up until the bitter end?
That’s a question Trend Micro’s general counsel Felix Sterling has been contemplating. Since 2010, his company has been locked in a court battle with Intellectual Ventures, one of the largest patent holding companies in the U.S.
“IV is in its own category…” said Sterling. “When IV approaches you, really they’re looking for you to take a license [to use their patents] … and litigation is more of a tool to encourage people to take a license.”
He said the cost of licensing a patent portfolio from IV is not “trivial” and can cost more than the estimated cost of losing at trial. That’s partially why Trend Micro decided it had to fight IV, according to Sterling.
Last month, that decision paid off when the U.S. Court of Appeals for the Federal Circuit invalidated the two patents that IV has been asserting against Trend Micro.
Intellectual Ventures declined to comment for this article, including on the decision that came down last month.
In the 39-page opinion, a Federal Circuit Court panel ruled 3-0 to invalidate two patents related to email software security features, that IV had asserted against Trend Micro, for which it had sought $150 million in damages on patent infringement claims.
IV could petition for an en banc hearing from the Federal Circuit Court, or petition the U.S. Supreme Court to hear the case. Either way, it will be well-lawyered for an appellate work: although it had used lawyers from Susman Godfrey in the trial court, it used the boutique Goldstein & Russell for its most recent appeal.
The case could have wider implications for what kind of “abstract ideas” are patentable, lawyers said. Also, cybersecurity patents have been highly litigated, and as Bloomberg BNA reported last month another cybersecurity company, Finjan Holdings, filed more patent infringement suits than nearly any other plaintiff.
Intellectual Ventures is also a big enough company that its move will be closely watched: Founded in 2000 by Microsoft’s former chief technology officer Nathan Myrhvold, the company has raised billions of dollars to purchase patents and owns around 40,000 intellectual property assets, according to its website.
After buying the patents, its business model has been to make returns on those investments by licensing its patent portfolios to large companies. And it has attracted buy-in from large corporations, recently announcing deals to license its patents to Ford Motor Company, Shazam and other companies.
In recent years, it has also launched patent infringement lawsuits against J. Crew, J.C. Penny, NetApp, and other companies such as Trend Micro.
Still, some lawyers believe IV’s loss at the appellate level will encourage more companies to reject IV’s licensing deals and fight the company in court.
“Every time [Intellectual Ventures] loses a case, it encourages everyone else in the ecosystem to keep fighting them,” said Clem Roberts, a partner at Durie Tangrie, who has represented clients adverse to the company. “And so because IV’s whole strategy is to scare everyone into taking licenses, it undercuts their whole business model.”
Roberts added, “When you see somebody stand up to the bully, you’re more likely to stand up to the bully.”
