9 ms·

Startups can now buy insurance against threat of patent trolls

103 points by pjl 12y ago

teachingaway 12y ago
Patent trolls have been getting trounced in court for the last few months, especially in NY and CA. I suspect RPX is offering patent troll insurance now because their payout risk (exposure?) is now much lower. The RPX insurance might still be a good idea. Just be sure to re-evaluate the current state of patent troll risk before you buy a $10,000 policy.
PythonicAlpha 12y ago
An other example, how software (and other low invention height-) patents are just existing to get money from small companies and startups (and thus being a new toll for innovation laid unto the later customers). An insurance might be a good thing for some startups to reduce the risks, but it is only a second- (or third-) best solution for the main problem. The main problem is, that what once should help innovative people, today does the opposite -- it hampers innovation and is a shield against creative companies for dinosaur corporations and a living for so called "patent trolls". And it is -- in any case -- a streaming money-fountain for lawyers.
mikeryan 12y ago
How is this different than standard Patent Infringement Insurance that already exists?
SomeCallMeTim 12y ago
I'd be much more happy to pay into an "insurance" system that did promise to "fight to the death" over invalid/inappropriate patents. It sounds like buying this insurance might tie your hands and require you to buy out the troll, even if the troll's claims are completely bogus (or are based on extremely broad claims that never should have been granted).
- rosser 12y ago
  "Fighting to the death" runs directly counter to RPX's business model. If NPEs are discouraged from trolling by a streak of losses, no-one needs to pay RPX's premiums any more.
vikramjb 12y ago
This seems like I have to pay protection money to a company which supposedly protects me from other patent trolls.
- johnernaut 12y ago
  E-Mafia.
zyx321 12y ago
Smells like a press release to me. Wouldn't surprise me if 90% if that article were reprinted verbatim from a PR piece.
- tesq 12y ago
  Given the increasing amount of PR pieces and fluff pieces fellating multinationals (the Firestone ebola article, anyone?), I wouldn't be surprised.
renegaid 12y ago
IANAL/P, but why can't we just pass a law stating that "the patent is not being used for anything" is a valid patent suit defense? I imagine this would instantly defuse patent trolling while having no collateral damage to businesseses that actually use their patents to defend investments (which is supposed to be the whole point). Is the only reason we're not seeing such a law because trolling has a powerful lobby, or am I grossly oversimplifying?
- eurleif 12y ago
  Patent trolls could just put out sham products that are cheap to produce but use their patent. And there are also legitimate cases for inventing something and licensing the patent out without producing anything yourself.
  - chetanahuja 12y ago
    Of course in that case, the licensee is Either a) Using the patent to to produce and sell the invention, in which case it's not a paper patent. Or b) Using the patent purely to sue other people (which is what most of the big name patent trolls do) and therefore must be stopped.
    - eurleif 12y ago
      >Using the patent to to produce and sell the invention, in which case it's not a paper patent. If they're successful, patent trolls end up with licensees too. If you're not allowed to sue anyone until you already have licensees, then if you invent and patent something and pitch it to a company, you can't sue them if they rip off the idea.
- teachingaway 12y ago
  > can't we just pass a law stating that "the patent is not being used for anything" is a valid patent suit defense? That's how patent law worked until the 1940s. It was called the "paper patent doctrine." i.e., if you're patent was just on paper, and not used in industry, then the patent was dead. Prof. John Duffy wrote a great paper about it last year - http://cornelllawreview.org/files/2013/10/98CLR1359.pdf http://cornelllawreview.org/files/2013/10/98CLR1359.pdf
denimboy 12y ago
RPX IS a patent troll. RPX Corporation is a spin-off of Intellectual Ventures. John Amster and Geoffrey Barker, the CEO and COO of RPX, came from high level positions inside Intellectual Ventures. http://pando.com/2013/09/09/rpx-and-the-complicated-business-of-stockpiling-patents-for-good-not-evil/ RPX and Intellectual Ventures bought the Kodak patent portfolio together: http://www.iam-magazine.com/blog/detail.aspx?g=4d1024d9-1e6c-43fa-8f78-a123f22575da http://www.ipwatchdog.com/2012/12/19/kodak-sells-patents-to-intellectual-ventures-rpx-for-525-million/id=31737/ RPX and Intellectual Ventures own a common NPE holding company RPX-LV: http://www.plainsite.org/flashlight/rpxlv-acquisition-llc/ RPX was sued by Kaspersky Labs for extortion: http://www.scribd.com/doc/56754406/RPX-Criminal-Complaint RPX cannot be trusted anymore than Intellectual Ventures. RPX is playing the same game as Intellectual Ventures. There is a better than good chance that RPX and Intellectual Ventures are working together as evidenced by their co-ownership of patent property and shared personnel history. The Kaspersky complaint raises the specter of RPX (with or without Intellectual Ventures) playing a good cop, bad cop style extortion racquet. How does that insurance look now? Buyer beware!
- PythonicAlpha 12y ago
  Isn't that what "patent trolls" are doing all day: Sell "insurances" to other companies .... In the middle ages, some called such things "way toll" and those who asked for it where called "robber-knight".
  - cheepin 12y ago
    Nowadays we call them rent-seekers.
    - PythonicAlpha 12y ago
      As non-Nativespeaker, I did not know that word before ... Thanks!
- alexqgb 12y ago
  So just like the Mafia they're "offering" to sell you protection from...themselves.
tesq 12y ago
Phew, problem solved.
kirillzubovsky 12y ago
This is awful. Insurance companies are already printing money by "protecting" people from all sorts of things that don't require protection. As a business case though, this is brilliant. Buy up all the ammunition, then charge your customers for protection. How's this allowed again? :(
logicallee 12y ago
Wouldn't this create an adverse incentive (in insurance called a 'moral hazard') i.e. because you could access the most innovative and highest-value patented technology for the insurance cost alone? (For example, ARM does not have its own foundries.) i.e. you could simply build a startup around reading through patents for the most valuable ones, and then willfully infringing them. Whether it's some kind of breakthrough addition to a generator in a nuclear power plant, or a futuristic warp drive or what-have-you, or just ARM's technology, you could compete directly with the entity who developed the technology (or their licensees) without paying the high patent costs. How would this be dealt with? How can RPX keep from startups based on theft? Wouldn't this be like offering "copyright infringement insurance" - how would you keep people from using it while actually violating the most valuable copyrights? http://en.wikipedia.org/wiki/Perverse_incentive http://en.wikipedia.org/wiki/Perverse_incentive http://en.wikipedia.org/wiki/Moral_hazard http://en.wikipedia.org/wiki/Moral_hazard

103 points by pjl 12y ago

Patent trolls have been getting trounced in court for the last few months, especially in NY and CA. I suspect RPX is offering patent troll insurance now because their payout risk (exposure?) is now much lower. The RPX insurance might still be a good idea. Just be sure to re-evaluate the current state of patent troll risk before you buy a $10,000 policy.

PythonicAlpha 12y ago

An other example, how software (and other low invention height-) patents are just existing to get money from small companies and startups (and thus being a new toll for innovation laid unto the later customers). An insurance might be a good thing for some startups to reduce the risks, but it is only a second- (or third-) best solution for the main problem. The main problem is, that what once should help innovative people, today does the opposite -- it hampers innovation and is a shield against creative companies for dinosaur corporations and a living for so called "patent trolls". And it is -- in any case -- a streaming money-fountain for lawyers.

mikeryan 12y ago

How is this different than standard Patent Infringement Insurance that already exists?

SomeCallMeTim 12y ago

I'd be much more happy to pay into an "insurance" system that did promise to "fight to the death" over invalid/inappropriate patents. It sounds like buying this insurance might tie your hands and require you to buy out the troll, even if the troll's claims are completely bogus (or are based on extremely broad claims that never should have been granted).

rosser 12y ago
"Fighting to the death" runs directly counter to RPX's business model. If NPEs are discouraged from trolling by a streak of losses, no-one needs to pay RPX's premiums any more.

vikramjb 12y ago

This seems like I have to pay protection money to a company which supposedly protects me from other patent trolls.

johnernaut 12y ago
E-Mafia.

zyx321 12y ago

Smells like a press release to me. Wouldn't surprise me if 90% if that article were reprinted verbatim from a PR piece.

tesq 12y ago
Given the increasing amount of PR pieces and fluff pieces fellating multinationals (the Firestone ebola article, anyone?), I wouldn't be surprised.

renegaid 12y ago

IANAL/P, but why can't we just pass a law stating that "the patent is not being used for anything" is a valid patent suit defense? I imagine this would instantly defuse patent trolling while having no collateral damage to businesseses that actually use their patents to defend investments (which is supposed to be the whole point). Is the only reason we're not seeing such a law because trolling has a powerful lobby, or am I grossly oversimplifying?

eurleif 12y ago
Patent trolls could just put out sham products that are cheap to produce but use their patent. And there are also legitimate cases for inventing something and licensing the patent out without producing anything yourself.
- chetanahuja 12y ago
  Of course in that case, the licensee is Either a) Using the patent to to produce and sell the invention, in which case it's not a paper patent. Or b) Using the patent purely to sue other people (which is what most of the big name patent trolls do) and therefore must be stopped.
  - eurleif 12y ago
    >Using the patent to to produce and sell the invention, in which case it's not a paper patent. If they're successful, patent trolls end up with licensees too. If you're not allowed to sue anyone until you already have licensees, then if you invent and patent something and pitch it to a company, you can't sue them if they rip off the idea.
teachingaway 12y ago
> can't we just pass a law stating that "the patent is not being used for anything" is a valid patent suit defense? That's how patent law worked until the 1940s. It was called the "paper patent doctrine." i.e., if you're patent was just on paper, and not used in industry, then the patent was dead. Prof. John Duffy wrote a great paper about it last year - http://cornelllawreview.org/files/2013/10/98CLR1359.pdf http://cornelllawreview.org/files/2013/10/98CLR1359.pdf

denimboy 12y ago

RPX IS a patent troll. RPX Corporation is a spin-off of Intellectual Ventures. John Amster and Geoffrey Barker, the CEO and COO of RPX, came from high level positions inside Intellectual Ventures. http://pando.com/2013/09/09/rpx-and-the-complicated-business-of-stockpiling-patents-for-good-not-evil/ RPX and Intellectual Ventures bought the Kodak patent portfolio together: http://www.iam-magazine.com/blog/detail.aspx?g=4d1024d9-1e6c-43fa-8f78-a123f22575da http://www.ipwatchdog.com/2012/12/19/kodak-sells-patents-to-intellectual-ventures-rpx-for-525-million/id=31737/ RPX and Intellectual Ventures own a common NPE holding company RPX-LV: http://www.plainsite.org/flashlight/rpxlv-acquisition-llc/ RPX was sued by Kaspersky Labs for extortion: http://www.scribd.com/doc/56754406/RPX-Criminal-Complaint RPX cannot be trusted anymore than Intellectual Ventures. RPX is playing the same game as Intellectual Ventures. There is a better than good chance that RPX and Intellectual Ventures are working together as evidenced by their co-ownership of patent property and shared personnel history. The Kaspersky complaint raises the specter of RPX (with or without Intellectual Ventures) playing a good cop, bad cop style extortion racquet. How does that insurance look now? Buyer beware!

PythonicAlpha 12y ago
Isn't that what "patent trolls" are doing all day: Sell "insurances" to other companies .... In the middle ages, some called such things "way toll" and those who asked for it where called "robber-knight".
- cheepin 12y ago
  Nowadays we call them rent-seekers.
  - PythonicAlpha 12y ago
    As non-Nativespeaker, I did not know that word before ... Thanks!
alexqgb 12y ago
So just like the Mafia they're "offering" to sell you protection from...themselves.

tesq 12y ago

Phew, problem solved.

kirillzubovsky 12y ago

This is awful. Insurance companies are already printing money by "protecting" people from all sorts of things that don't require protection. As a business case though, this is brilliant. Buy up all the ammunition, then charge your customers for protection. How's this allowed again? :(

logicallee 12y ago

Wouldn't this create an adverse incentive (in insurance called a 'moral hazard') i.e. because you could access the most innovative and highest-value patented technology for the insurance cost alone? (For example, ARM does not have its own foundries.) i.e. you could simply build a startup around reading through patents for the most valuable ones, and then willfully infringing them. Whether it's some kind of breakthrough addition to a generator in a nuclear power plant, or a futuristic warp drive or what-have-you, or just ARM's technology, you could compete directly with the entity who developed the technology (or their licensees) without paying the high patent costs. How would this be dealt with? How can RPX keep from startups based on theft? Wouldn't this be like offering "copyright infringement insurance" - how would you keep people from using it while actually violating the most valuable copyrights? http://en.wikipedia.org/wiki/Perverse_incentive http://en.wikipedia.org/wiki/Perverse_incentive http://en.wikipedia.org/wiki/Moral_hazard http://en.wikipedia.org/wiki/Moral_hazard