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PatentFreedom To Offer Subscription-Based Reexam Service to Attack NPE Patents

By Peter Zura

Joff Wild from IAM Magazine attended the CIP Forum 2009 in Göteborg Sweden and provided an interesting report on a presentation given by Dan McCurdy, who is the chairman of PatentFreedom and CEO of Allied Security Trust. In his presentation, McCurdy announced the launch of a new initiative called "Integrity" which will essentially serve as an inter-partes reexam gadfly service against problematic patents owned by NPE's (aka "trolls").

PatentFreedom offers subscription-based services, priced between $15- $25K, "designed to help operating companies and their advisors more effectively assess, respond to, and ultimately reduce the specific threats posed by NPEs." Membership is open "to any operating company, law firm , or other entity that derives the majority of its revenues from the sale of products or services other than services involving the sale, enforcement, or licensing of intellectual property" (for a list of service offerings, click here).

The new "Integrity" service will be available to PatentFreedom subscribers, where each subscriber chooses which sectors they would like PatentFreedom to focus on when seeking to identify patents to challenge. Importantly (and perhaps oddly), subscribers cannot single out specific patents on their own - the PatentFreedom team will ultimately make this decision, based on subscriber portfolio assessments identifying particularly threatening and potetially vulnerable patents.

Wild provides further details:

Companies can identify as many sectors as they wish, but will have to pay a minimum of $100,000 for each one they do select. McCurdy estimates that the cost of an inter partes re-examination is between $100,000 and $200,000. He told me that the idea was not only to deprive NPEs/trolls of the weapons they use to challenge operating companies, but also to sow uncertainty in the minds of their financial backers. Will investors be so willing to fund an NPE/troll if there is a chance that the patent(s) it seeks to use to generate an income will be held invalid in a USPTO process that costs a fraction of the amount needed to fight a full-scale litigation?

According to McCurdy, PatentFreedom data shows that close to 4,000 operating companies doing business in the US have now been sued by an NPE/troll. The cost of NPEs/trolls to those who they targeted in 2008 was betwen $7 billion and $10 billion. Overall, they now account for 17% of all American patent litigation, although in the technology industries that figure climbs to more than 50%, with some individual companies experiencing a hit rate of 90%. It is time, McCurdy says, to be much more aggressive in fighting the threat that NPEs/trolls pose. For example, he wondered, whether operating companies should give work with law firms that routinely represent NPEs/trolls (he showed a slide of those which do so and some big names were on the list) or employ funds that back NPEs/trolls to run things such as pension and healthcare plans. When fighting a war, he stated, you go after the fight chain. And, he said, operating companies are engaged in a war with NPEs/trolls.

Read Wild's full post here (link)

Full post as published by Two-Seventy-One Patent Blog on September 08, 2009 (boomark / email).