IP Giant Intellectual Ventures to Battle Google's Motorola Mobility over Patents - A Great Deal is at Stake

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Intellectual Ventures (IV) - the patent troll…whoops, we mean the IP acquirer that was founded by Nathan Myhrvold back in 2000 (we know, it now seems an ancient thing) - will be putting on the gloves and going head to head with Google with yet another tech patent infringement lawsuit. This particular case has been in the works for the better part of three years, dating back to 2011, and involves three specific patents IV owns that it claims are infringed by Motorola Mobility.

For Google it's just another day in patent court although the ramifications of losing aren't without potentially devastating side effects. For IV, believe it or not, it represents the first time it is really going to court.

Intellectual Ventures, for those few who may not know, was created by Myhrvold specifically to buy up patents from patent holders who were otherwise not doing anything to pursue licensing agreements or who were doing so nominally. Myhrvold has long held that there is huge untapped revenue to be had from these patents, although it’s a message more often than not disguised by a sometime sanctimonious sense of righteousness on the part of IV to protect the little guys.

Well, compared to IV the term "little guys" certainly fits like a glove when it comes up to the company buying up patents. The real issue of course is how to take patents that the original inventors either couldn't (often for lack of resources) or wouldn't spend their own time and money trying to monetize, buy them up for some number of dollars IV determined to be a fair price relative to the untapped real monetization potential and then go ahead and earn those real licensing dollars for itself.

IV is certainly the 800 pound gorilla these days - over the years it has received about $6 billion in investments to do what it does. Google itself was an original investor in IV's first investment round - though it hasn't participated in any others. Other early investors included both Microsoft and Apple.

In many cases many of the demands IV and other companies like it make for licensing fees amounts to a shot in the dark or a crapshoot. But by all accounts those investments continue to pay off for the company.

Many companies pay IV and its patent aggregation brethren simply to go away as it is more often than not far cheaper to pay up - even when the odds are the patents won't hold up in court. This has been the pattern following thousands of lawsuits IV has either filed over the years. Further, IV doesn't invent anything itself - even if the founder is Nathan Myhrvold and even as Myhrvold himself claims that IV drives innovation. Myhrvold will also tell you that his company helps inventors to collect royalties and licensing fees for innovations, and that it also helps inventors protect and manage their intellectual property.

But it depends on which side of the fence one sits on to agree or disagree.

These are the key reasons for the intentionally derogatory term "patent troll" that is often times used to refer to IV and the other companies in the game. For an additional perspective on "patent troll" check out our recent article on thermostat innovator Nest and its patent fight with Honeywell. This patent troll issue is a key topic in ongoing debate in Congress concerning ways to fix the current ways the United States Patent and Trademark Office works (USPTO).

The first real "headliner" patent case involved patent aggregator NTP and the old Research in Motion (aka RIM, now BlackBerry), who did battle for years before NTP finally won $612.5 million. That NTP victory however didn't settle the troll issue - if anything it exacerbated the troll argument.

IV and the others can drive up the cost and slow down the discovery, invention and implementation of innovation. Small companies and startups (who typically lack real legal resources) are likely to be driven out of business or otherwise forced to shut down or seek buyouts. Interestingly, Motorola Mobility fell exactly within this overall scenario when Google offered to buy it.

We all know the Motorola Mobility story by now and most of us know that Google bought up Motorola in part because Moto no longer had the resources to protect itself from the likes of IV. It also still owns its own patent portfolio, which many of us believe is the real reason Google spent $12 billion on Moto - so that it would own those patents and protect itself from the likes of IV.

Given the above it is not without irony that Google and Motorola still manage to find themselves now about to go head to toe with IV in court. IV claims that Motorola infringes three patents. Fortunately Google has more or less unlimited resources to fight this fight. IV has similar resources in hand, but it is worth repeating that this is in fact the very first time in all the years since it was founded that IV is actually going to trial.

Serious or Frivolous?

Myhrvold and IV maintain that IV does not simply and indiscriminately buy up patents. It also claims not to file frivolous lawsuits. It is certainly true that the current suit is the first highly visible lawsuit of its kind for IV and the first to actually go to trial, but it is also true that Google, unlike essentially all the other companies IV has licensing and royalty agreements with, has those resources (in fact it has overwhelming resources even compared to IV) to aggressively fight back.

We certainly do not see either side at this point giving as much as an inch and we can certainly expect that the trial will indeed take place. In real terms, jury selection is scheduled to begin on Tuesday, January 21, 2014 in the U.S. District Court, District of Delaware in Wilmington, Delaware. Even very large companies sometimes find it expedient to settle (Apple and Samsung are famously not among them) but in this case both Google-Motorola and IV have a great deal at stake.

If the court, judge and jury decide in favor of Intellectual Ventures it would strike a significant blow to the entire patent troll argument. How can anyone call IV a patent troll if it goes to court against giant Google and pulls off a huge patent victory? If Google-Motorola win it likely won't mean anything in terms of the patent troll debate - although the ongoing debate in Congress might take a turn against IV and the rest of the aggregators.

The debate in Congress is fueled in part by the notion that too many patents have been issued - and are still being issued - frivolously or incorrectly by the USPTO in the first place, that too many are reviewed by people not truly qualified to ascertain whether patents are based on truly original and groundbreaking innovation, and so on. In other words, the USPTO itself has created the scenario under which IV is able to effectively operate, and that serves to stifle true innovation.

The Patents in Question

The patents that IV claims Google-Motorola infringes on are, not surprisingly, smartphone-related though IV also has a patent issue with Google Play. How so?

Two of the patents at issue concern patents held by Richard Reisman and his company Teleshuttle. Intellectual Ventures believes that these two patents are infringed by various old Motorola mobile phones that make use of Google Play - which is of course Google's version of the App Store for Android. As is typically the case with patent issues, the patents tend to cover older technology (recall that as an example, much of what Apple and Samsung are battling over concerns technology that is already four years old, if not older).

And, as is almost always the case, Motorola argues that the patents in question should never have been issued because the inventions were known in the field already. Typically this is referred to as the availability of prior art when it comes to patents, and it underscores exactly what we noted earlier as one of the concerns surrounding how the USPTO currently operates. One of the patents in question dates back to 2004.

In the case we noted earlier concerning Nest and Honeywell, many of the patents Honeywell claims against Nest are, by Nest' accounting erroneously issued - in fact Nest claims that most of them are nothing more than retreads of old patents Honeywell already had which it simply resubmitted as new! This sort of thing is devilishly difficult for companies that don't have deep pockets to defend against. In many cases companies such as Honeywell aren't interested in negotiating fees - they simply want to ensure newcomers are prevented from competing.

IV came to own the Reisman patents by way of a company called Twintech EU, which in turn had acquired the patents from Resiman and Teleshuttle for $35 million and a cut of future royalties. We should note the rather antiquated the name "Teleshuttle" - it is telling of how old some patents are that end up in today's courts.

The other key patent IV claims is being infringed can be traced to Khyber Technologies, a company founded back in 1991. That patent, originally issued to Khyber's Rajendra Kumar in 2006, was then passed on by Khyber to Balustare Processing in July 2011 and which in turn was immediately acquired by IV a month later. The patent supposedly covers detachable handset technology of the sort Motorola used in its discontinued Lapdock product. Again, old technology that is no longer even available.

Are IV and Google warriors fighting important battles here? Or are they just greedy corporate players trying to constrain each other's inherent vices? We don't have a full opinion of IV but we tend to think of the company as a patent troll. Google, for all of possibly perceived good guy status here against a patent troll, is just as guilty of "patent trollitus" itself - witness its own recent court battle against Microsoft, when it thought it had multi-billion dollar arguments for Motorola FRAND (Fair Reasonable and Non Discriminatory) patents. The court rightly decided with Microsoft with that suit.

End Game: Congress and the USTPO

In the end, it will all require real action by Congress to address the serious flaws with the USPTO to put an end to the majority of lawsuits that patent trolls now engage in. At the very least it should become far more difficult for patent trolls to engage in carpet bombing style lawsuits to see what will shake out of the trees (as IV has successfully done in many cases).

We'll certainly keep our eyes on this lawsuit. Stay tuned - we should have some resolution by mid-February - which will then of course be subject to appeals and counter appeals no matter who wins. Then the damages trial will take place.

As the world turns, it all goes on seemingly forever. We do look forward to Congress eventually resolving the issue - or making it worse - always a possibility!




Edited by Cassandra Tucker

TechZone360 Senior Editor

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