06 September 2011

When patent trolls raid each other

Not only has the world become more litigious, it also seems to place more value on past innovations – and the patents derived from them – than new ones.
With the current frenzy in patent acquisition from companies that no longer exist (like Nortel) and from companies that have a trove from past development (like Motorola), one wonders where it will all end. My contacts tell me that InterDigital Communications and its wireless patent trove will be the next company to be acquired.

When some companies that began life as innovators and providers of real know how and products fell upon hard times, they found their way forward was to simply license their IP. In some cases, the companies found that licensing their patents and suing those who infringed them to be even more profitable than continuing as developers. And, by acquiring patents from failed companies (a practice called patent trolling) they beefed up their portfolio and were able to demand licensing fees from even more (infringing) companies.
Mosaid Technologies and WiLAN are two such companies. Mosaid started life as a developer of specialised semiconductor memory technology, while WiLAN was a pioneer in early wireless LAN (now Wi-Fi) systems. Now, WiLAN is trying to buy Mosaid. But Mosaid is not a willing party and is buying 2000 Nokia wireless patents from a Luxembourg company called Core Wireless as a defensive move.
About 1200 of the Nokia patents have been declared 'essential' to GSM/UMTS/CDMA and LTE. According to Mosaid, the acquired patents are generally not transferrable by Core Wireless (which will operate as a Mosaid subsidiary) and if Mosaid were to be taken over by WiLAN, the contract parties have the right to require Mosaid to transfer the patents to a third party for certain consideration (for this, read lots of money).
Meanwhile, WiLAN is suing Apple, Alcatel-Lucent, Dell, HP, HTC, Kyocera, Novatel Wireless and Sierra Wireless for violating its patents related to CDMA, HSPA, Wi-Fi and LTE. WiLAN says more than 250 companies have negotiated licenses to its patent portfolio.
My oh my, how the money rolls in.

Will Strauss is president and principal analyst with Forward Concepts.

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Will Strauss

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