Sickening profile of Canada's weapons-grade patent trolls

By at 1:21 pm Monday, May 21

In Wired, Robert McMillan profiles Rockstar, a world-class patent troll based in Canada, which was capitalized to buy up Nortel's "defensive" patent portfolio for billions of dollars and now does nothing but look for companies that make stuff that people like and use, so it can send them legal threats. Rockstar itself has no products, aside from legal threats. Reading this left me with the taste of sick in my mouth, and a sense that the patent system has to be reformed or taken down altogether, before it turns parasitism and lawsuits into the only viable technology business-models.

But Widdowson is a specialist. He’s one of 10 reverse-engineers working full time for a stealthy company funded by some of the biggest names in technology: Apple, Microsoft, Research In Motion, Sony, and Ericsson. Called the Rockstar Consortium, the 32-person outfit has a single-minded mission: It examines successful products, like routers and smartphones, and it tries to find proof that these products infringe on a portfolio of over 4,000 technology patents once owned by one of the world’s largest telecommunications companies.

When a Rockstar engineer uncovers evidence of infringement, the company documents it, contacts the manufacturer, and demands licensing fees for the patents in question. The demand is backed by the implicit threat of a patent lawsuit in federal court. Eight of the company’s staff are lawyers. In the last two months, Rockstar has started negotiations with as many as 100 potential licensees. And with control of a patent portfolio covering core wireless communications technologies such as LTE (Long Term Evolution) and 3G, there is literally no end in sight.

“Pretty much anybody out there is infringing,” says John Veschi, Rockstar’s CEO. “It would be hard for me to envision that there are high-tech companies out there that don’t use some of the patents in our portfolio.”

How Apple and Microsoft Armed 4,000 Patent Warheads

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Cory Doctorow

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Showing 18 comments

  • angusm 1 comment collapsed Collapse Expand

    Well, that's certainly promoting the progress of science and the useful arts.

  • LikesTurtles 2 comments collapsed Collapse Expand

    Correct me if I'm wrong but doesn't the structure of WIPO pretty much guarantee that every time a country passes a bad IP law that it gets propogated to all other members?

  • Antinous / Moderator 1 comment collapsed Collapse Expand

    That way nobody can accuse them of not sharing.

  • Aaron Swain 1 comment collapsed Collapse Expand

    It's kinda like Apple and MS just got the patent troll equivalent of their own Super PAC

  • dan7000 3 comments collapsed Collapse Expand

    Cory, just to play devil's advocate: 

    Assume for the sake of argument that a company like Nortel does  some useful hard-core science and ends up inventing some ground-breaking new technology, and patents it.  Then why would it not be ok for that company to sell that IP to someone else, who can then enforce it?  Doesn't it make sense to allow inventors to outsource the hard work and risk of enforcing their IP rights?  Why should the inventor himself or herself have to personally enforce the patent?

    Also, I'm sure that you agree that just because a company doesn't produce anything doesn't mean it shouldn't get patents.  Universities do tons of pure research that they then get patents on and use the license revenues to fund more research, which clearly promotes the progress of science.  

    I agree there is abuse of patents, particularly in areas like software, and that a massive over-abundance of patents in some areas can seriously hamper innovation.  But I'm not sure that so-called non-practicing entities don't have a role to play in a more rational patent universe.  

  • jandrese 1 comment collapsed Collapse Expand

    The problem is when Patents are awarded too freely, on the solution that anybody would take given the same situation.  That's the world we are living in now.  Basically, "non-obvious" is a difficult thing to quantify, and Patent examiners have been erring on the side of awarding patents regardless of obviousness for decades now.

    You can't blame them, what's obvious to someone working in the industry might look quite novel to someone who's job it is to read patent applications all day. 

    That's why "defensive patents" exist, because you can create a mutually assured destruction scenario with them.  That doesn't work if the other guy doesn't make anything though, defensive patents only protect against people who make products.  So Rockstar gets free reign to leech off of pretty much every company in the world thanks to their overly broad patent portfolio.  You can forget about trying to invalidate patents based on prior evidence not discovered by the examiner or sheer obviousness either, the courts have been extremely friendly towards patent holders in most cases. 

  • sigdrifa 1 comment collapsed Collapse Expand

    "I'm sure that you agree that just because a company doesn't produce anything doesn't mean it shouldn't get patents."

    As a matter of fact, I was just thinking in this kind of direction. Only make that "buy patents" instead of "get patents". Make a law that states if  a company buys a patent they have to use it to actually make something. That wouldn't mean that you can't patent an original invention if you don't plan to go into production yourself; it would only stop "companies" (read "vultures") from doing exactly this kind of thing the article talks about. If you don't start producing within a reasonable time frame after acquisition (a year? six months?) the patent goes back to the original owner. And no, you won't get your money back.

  • Jim Saul 1 comment collapsed Collapse Expand

    Few of these could survive a challenge on prior art. They never would have been granted patent status in the first place if our examination system was anything but a rubber stamp factory.

    The theory that the system will work itself out in court to invalidate fraudulent patents has utterly failed, since the litigation costs are so insurmountable, and since the patent holder can get a business-killing court order with nothing but an affidavit.

  • Finnagain 1 comment collapsed Collapse Expand

    Bogus financial 'products' and patent trolling. That's what the best and brightest have to offer.

  • dweller_below 1 comment collapsed Collapse Expand

    The most important thing you need to know about the vast, deep chasm of the Patent environment is this is not a natural feature. Many bright, intelligent people spent their lives creating this pit.

    You can get a good measure of the scope of the patent problems by reading the US Patent and Trademark Office FY 2013 President's Budget: www.uspto.gov/about/stratplan/...

    Some of the more imposing features include:

    Page 12: Budget and Performance at a glance:
     * 506,924 patents filed.
     * 669,625 patents backlog.
     * So, currently 1,176,549 patents being examined.

    Page 30: applications, backlog, examiners
     * about 6600 examiners.
     * So, about 178 patents per examiner this year.

    Page 31: Patent Budgetary Resources vs Budgetary Requirements
     * 2011 about $1901 fee per patent.
     * 2012 about $2294 fee per patent.

    Page 37:
     * "..More than half of all patent fee collections are from issue and maintenance fees, which essentially subsidize examination activities."
     * "Patent fee collections are estimated to be between $2,569 and $2,842 million for FY 2013."

    Page 60: Gap Assessment:
     * "Meeting this commitment assumes efficiency improvements brought about by reengineering many USPTO management and operational processes (e.g., the patent examination process) and systems, and hiring about 3,000 patent examiners in the two-year period FY 2012 and FY 2013 (including examiners for Three-Track Examination)."

    So, the US Patent Office is a great machine that:
     * Is central to our economy.
     * Can only survive by approving patents.
     * Is currently in pain because it can't approve patents fast enough.
     * Is currently creating about 200,000 patents per year.
     * You have to go to court to find out if a patent is valid, and what it covers.
     * It costs about $20,000,000 to go to court.
     * 200,000 * $20,000,000 = $4,000,000,000,000 (4 Trillion dollars) just in court costs. AND that is just this years patents.

    The funding model drives much of the US Patent Office behavior. See:
     * http://www.nature.com/nbt/jour... [nature.com] (Nature paper on patent office funding.)
     * http://www.bloomberg.com/news/... [bloomberg.com] (Bloomberg article on Patent Fee diversion.)

    One of the big problems is, the USPTO charges a small fee to file and a much larger fee, once your patent is granted. The ratio is about 1 to 3. So, inherent in the funding model is a perverse incentive to approve patents REGARDLESS of the merits.

    The next important thing you have to know about the patent mess is it can be fixed. Patents actually belong to society, not the patent holder. Patents are restrictions imposed on EVERYBODY BUT the patent holder. Patents are voluntarily imposed on a society, by that society, for the good of the society. If a patent was the property of the patent holder, it would be worthless, since no patent holder has the ability to enforce a patent. Only society has the ability to enforce a patent.

    Since patents belong to society, then they can (and ultimately must) be managed for the good of society. It may take decades (or centuries), but we can fix this.

    Some obvious things to try include:
    * CHARGE ALL THE FEES UP FRONT on application.
    * Don't tolerate modification after submission. This just allows people to game the system.
    * One nation should never respect another nation's patents. This just lets a bad patent system wage war on everybody's economy.
    * Incoming patents must be clearly rated on the clarity of the invention description. Only the most clear should be approved. Unclear descriptions enable patent war.
    * Incoming patents must be clearly rated on the precision of their claims..
    * Incoming patents must be clearly rated on their lack of originality. Only the most original should survive.
    * A society should only pay for as many patent examiners as they can afford. More examiners always yields more patents. More patents are not better than fewer, higher quality patents.

    Miles

  • bwcbwc 1 comment collapsed Collapse Expand

    Proposed reform #1: In order to receive any damages, patent holder must show actual damage to sales or competitive advantage lost because of a business process being used illegally. In other words in order to receive the greater of statutory or actual damages, the plaintiff must still prove actual damage. If they aren't using a patent in an actual business product or process,  and they do not operate in the line of business where the respondent used the patent, they cannot prove actual damage, so no award.

    A patent troll could still try to drain an opponent's coffers with legal fees, but that would be just as likely to work against them.

  • Fred Talmadge 1 comment collapsed Collapse Expand

    The other problem not just with patents but all lawsuits is that companies settle.  The lawyers know this and so they sue everyone just hoping for a settlement.  If companies would of fought these lawsuits in the begining we might not be in the litigious state we are in now.

  • Jonathan Colvin 3 comments collapsed Collapse Expand

    This is NOT a straightforward case of patent trolling. Nortel's patent portfolio was not merely "defensive"; before it went broke, Nortel was one of the oldest and most innovative telecoms in the world, and like Kodak, its IP portfolio was one of its major assets. There's no evidence in this article that the patents in the portfolio are dubious; on the contrary, the core wireless telecom structures covered (LTE and 3G) are far from obvious. This is not a case of "patenting the wheel".

  • Rindan 1 comment collapsed Collapse Expand

    This is patent trolling.  This is a net drain on society.  Patents are not some moral right.  They are there for two and only two reasons.  

    1) The original use was to get information out to the public.  Guilds would horde secrets.  The patent system granting them a limited monopoly for a limited time was done to encourage them to share.

    I think that there can be absolutely zero question that this patent troll sure as shit isn't help with #1.  

    2) It is to encourage people to innovate by giving them a temporary monopoly on novel inventions so that they could make a buck before it was copied into oblivion.

    You could argue that they are propping up the price of patents by leeching money from productive companies.  It certainly is true that because of shitheads like these folks the value of a patent has gone up.  The downside of course is that the money is going to lawyers, not innovators.  Lawyers can, frankly, go fuck themselves.  They don't need to be "propped up".  Innovators are not innovating faster because patents are valuable.  They are innovating at the normal old rate demanded by business, but then having lawyers patent every stupid little non-invention that isn't worth the paper it is written on.  

    It isn't encouraging innovation.  It is encouraging patenting shit.  Don't confuse the two.  

    Innovation is when the cell phone makers wades waste deep in a blood battling to drive down cost and produce the next best thing.  Patenting shit is when the battle gets put on hold and everyone who doesn't have a few billion dollars to hire an army of lawyers and buy useless defensive patents gets booted from the market.

    These people are leaches on society.  They are only doing it harm.  They are encouraging people to patent every single stupid non-invention in a desperate attempt to build up a defensive portfolio.  Scum like these fuckers get their hands on these useless patents when companies go bankrupt and proceed to terrorize entire industries, leeching away money and man power from companies doing productive work to deal with scum like these shit heads.

    If all of a sudden every patent troll in the world dropped dead, the tech economy wouldn't collapse, it would explode into productivity.  If a Silicon Valley start up could build a cell phone and fab it the making of it to China without living in terror of being curb stomped by lawyers, you would have a thousand and one start ups doing just that in countless industries that are now just glorified patent cartels.

    These people are scum and leeches.  They world would be better if they had never been born.

  • David Witt 1 comment collapsed Collapse Expand

    Your response is true, but only for Nortel. If they are dead, then their patents should die as well. This is similar to the 'Sonny Bono' law where the descendants claim the right to perpetually profit off what their dead forebears made - and in this case, they aren't even relatives, just a pile of stuff bought at a garage sale.

  • johng 1 comment collapsed Collapse Expand

    Sick...
    I propose 5-10 years for both copyright and patents... but this world is full of greedy non creator parasites that will selfishly stop at nothing to ride on the coat tails of artists, makers, and scientists, while ignoring the greater good of the human race.

  • Word Gym 1 comment collapsed Collapse Expand

    Hm. One legislative change in particular would make a big difference. It wouldn't stop patent trolling by Big Industry, but it would prevent this "pure" trolling, at least initially. And that would be to make it illegal to sue people under patent law unless your company is actually using - and can demonstrate that it is using - the patents in question. Simply sitting on ideas and suing people for using them runs counter to the whole concept of patent legislation, which was originally introduced to protect inventors and allow them to use their ideas safely and without ruthless copying for a limited period of time (the limit was imposed precisely in order to ensure that the patents were put to good use,  rather than simply left to rot in a drawer). If patents are not being used by their owners, they should be passed on to somebody else or released into the public domain.

  • Ryan Lenethen 1 comment collapsed Collapse Expand

    Two things:

    1) "...has started negotiations with as many as 100 potential licensees." So basically they have done nothing yet.

    2) "Apple, Microsoft, Research In Motion, Sony, and Ericsson" Look at the sponsors, and see who is not there. They are not going to sue themselves or each other using the acquired patents.

    To me this looks to be like "what do you do with a country that has WMD and falls apart"... None of these companies want a single company to acquire those patents, and those that don't buy into the deal, then become targets. These things are weapons in a very real sense. To be fair, all these large companies sue the bejesus out of each other over patents, this is nothing new. Its only when they start to try and squash small fry from innovating that this becomes a bit disgusting. Though they are likely to buy them up just as much for the asset rather than to just destroy them.

    The writer is wrong about this being about a patent troll that makes nothing, etc... That is a very simplistic viewpoint. Yes they make nothing, but they are owned by plenty of people that do, and in the relevant industry, Apple, MS, RIM, Sony, Ericsson, they do make a FEW products we use everyday. This company will be suing competitors that are not part of the consortium for whatever reason.

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