
IV: Don't Mind Our 2000 Shell Companies, That's Totally Normal - mtgx
http://www.techdirt.com/articles/20121220/02365821447/intellectual-ventures-dont-mind-our-2000-shell-companies-thats-totally-normal.shtml
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macchina
>Moreover, were we to publish the entirety of our holdings we, or any other
company for that matter, could find ourselves mired down in a series of
tactical declaratory judgments and reexaminations.

Yeah, obviously they don't want to be involved in a bunch of frivolous
lawsuits....

~~~
jeltz
Indeed, then they would not be able to focus on their business.

~~~
ristocat
The business of miring companies down in a series of tactical declaratory
judgments and reexaminations.

~~~
angersock
Really, it's a shame, being distracted from your primary revenue stream in an
economy like this.

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arbuge
Most people don't realize how bad the patent troll situation is. You can be
hit by patent trolls for operating a boring online store with nothing more
sophisticated than a shopping cart. Happens all the time. Here's just one
example:

<http://www.plainsite.org/flashlight/case.html?id=1888562>

At least some of those defendants ended up settling and paying off that
particular troll by the way. Petmeds is a public company and mentioned that in
one of its 10K filings.

ps. my understanding is that many/most trolls demand non-disclosures from
companies they settle with, which would explain why you don't hear more from
the victim companies getting mugged by these crooks.

~~~
lnanek2
Haha, yeah. It's always pretty funny when in a room with successful app
developers and seeing how many have been hit with litigious welcome packages
for having an upgrade [to pro version] button like myself, or other trivial
feature in their app. It's like a coming of age marker for app developers.
Once you get successful enough to look like you have money, you are going to
get a welcome package. A lot of devs won't even say what specifically since
the settlements forbid it.

~~~
javajosh
Of course, this practice of settling and signing an NDA needs to end. I think
there's room for a company of lawyers that does nothing but fight patent
trolls very publicly- perhaps with a solid dose of anti-patent lobbying on the
side. The key question, of course, is whether such a service could be priced
reasonably - clearly the age of $500/hr lawyers doing bespoke work to respond
to computer-generated paperwork is not really working out so well.

I suppose whether such a company would fly hinges on whether or not there are
lawyers willing to work for ordinary salaries. The interesting thing here is
that if this company is technologically savvy then I'd imagine that a great
deal of the litigation effort could be automated, again yielding good cost
savings.

As a programmer and a concerned citizen I would jump at the chance to start
and/or work for a company like this.

~~~
rayiner
If I were putting together something like this, I'd hire a bunch of competent
but relatively inexperienced lawyers starting at $35k/year in a place like
Iowa or North Dakota. Spend six months training them to quickly bat down
truely meritless suits, and to recognize when they get something possibly
meritorious that needs to be kicked up the chain. It would be quite doable at
those prices, and is indeed more or less the model used for e.g. run of the
mill insurance work.

I think you still need changes in the law to make it easier to distinguish
meritorious from unmeritorious litigation. Getting rid of things like the
presumption of validity, raising the bar for novelty and obviousness, etc,
would all make it easier to handle each case cheaply.

~~~
javajosh
_I'd hire a bunch of competent but relatively inexperienced lawyers starting
at $35k/year_

That was my initial thought, too, although I was thinking more like 80k. At
that rate you could attract idealistic, smart lawyers. At 35k you're
attracting desperate lawyers.

Also, the place to setup shop would be SF proper. That is where the customers
are, and for any business, especially one like this, customers are most
important. That said, from what I've read the trolls do a lot of business out
of East Texas, so that would make sense too.

The interesting thing about this business is that it's intended to be a
stopgap measure until the law changes. That is, if it is very successful it
will go away. Also, to avoid becoming the enemy (from what I've read IV sells
"patent insurance" - basically protection money against IV) I'd make it as
transparent as allowed by statute, and a non-profit.

~~~
arbuge
Some interesting ideas in this thread... couple of points re: the above:

\- clients are all over, not just SF. Like I said all it takes is just a
simple online store for the trolls to come after you, i.e. it's not just
software developers getting sued. It's also their clients.

\- don't hold your breath about the law changing. The goal here should really
be invalidating software patents lock, stock, and barrel - that's not
something likely to happen anytime soon.

\- the non-profit idea is a good one. If enough companies contributed 1% of
revenue/profit/funds raised to an effort like this one, it could probably get
going... I personally wish I had the time to organize something like this.

~~~
rayiner
> If enough companies contributed 1% of revenue/profit/funds raised

I think you're overestimating how much companies spend on patent litigation.
People have been throwing around the number $100 million for how much Apple
spent on patent litigation in 2011. That's 0.1% of their 2011 revenues. At a
typical Fortune 1000-ish company, total spending on outside counsel (which
includes not just litigation, but transactional advice, tax advice, etc) is on
the order of 0.2% of revenues.

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modeless
_Do stock brokers broadcast tips to their competitors? Does Warren Buffet tell
the world where he’s investing next? Does Disney broadcast which plots of land
it is planning to buy for its next theme park?_

This statement is telling because it is contrary to the basic principles of
the patent system. Patents are _intended_ to disclose inventions; to provide
an alternative to secrecy that allows mutually beneficial cooperation between
competitors. Intellectual Ventures has abandoned all pretense of using patent
law as it was intended.

~~~
tzs
The patents were all disclosed the moment they issued, so I'm not following
your argument.

~~~
modeless
The "disclosure" represented by a patent issued to a random shell corporation
is minimal considering the opaque (and yet still ambiguous) legal jargon they
are written in and the sheer volume of junk patents issued. This is, of
course, part of the tragedy of today's lamentable patent system.

If Intellectual Ventures was actually interested in performing a service for
the industry they would publish all sorts of information about all their
patents in their portfolio (starting with _which patents they control_ ), so
that potential licensees could actually collect and license valuable ideas.
But of course it's much more profitable to make patents as confusing, opaque,
vague, and secret as possible, then wait for someone to unknowingly infringe
and sue them a couple of years after it's too late to stop infringing.

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s353
A company with a page on its site, written by the co-founder, entitled "The
Red Herring of Transparency".

Surreal.

He admits patent quality is poor and then at the same time wants you to pay to
license IV's low quality patents. He's afraid of DJ's and reexams. Gee, I
wonder why.

Maybe it's because many of IV's patents would never survive the scrutiny (that
they should have gotten by the USPTO during prosecution).

Have you ever paid repeatedly for some thing only to find out later you did
not have to? How did that make you feel? DJ's and reexams might save the
present and future licensees of IV's patents a lot of money.

[http://www.intellectualventures.com/index.php/insights/archi...](http://www.intellectualventures.com/index.php/insights/archives/the-
red-herring-of-transparency)

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leoh
"Do stock brokers broadcast tips to their competitors? Does Warren Buffet tell
the world where he’s investing next? Does Disney broadcast which plots of land
it is planning to buy for its next theme park? Of course not, and IV takes a
similar approach to our investments."

Does North Korea say where it's nuclear silos are located?

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sgdesign
The thing that seems different about IV is that they try really hard to not
seem like a patent troll.

I find it a little insulting, at least the other trolls are pretty
straightforward about it and don't try to pretend they're coming up with
inventions or advancing science.

~~~
paulgb
Interestingly, one of the managing partners of IV, Peter Detkin, is credited
for popularizing the term "patent troll".

~~~
NelsonMinar
I continue to hold out this vain hope that Intellectual Ventures is an
elaborate satire, an effort by some smart technologists to demonstrate how
broken the US patent system is by exploiting it in such a comically villainous
fashion.

~~~
rhizome
Yeah, I've thought that they're trying to be a patent martyr too, that they're
using every trick that can be used in hopes that eventually it brings about
change. Smart people, long game, etc. However, the fact remains that engaging
in the bad behavior is...bad.

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hkmurakami
_> This is a common practice for asset management firms, and it’s just common
sense. Do stock brokers broadcast tips to their competitors? Does Warren
Buffet tell the world where he’s investing next? Does Disney broadcast which
plots of land it is planning to buy for its next theme park? Of course not,
and IV takes a similar approach to our investments._

Those guys declare what they did _after the fact_ though to put things into
the open, which I don't think IV does.

~~~
VengefulCynic
Moreover, in all of these examples, the outcomes are all available as a matter
of public record as controlled by a government entity. If an IV shell company
sues someone and actually finalizes the lawsuit, it's still (frequently) not
revealed that the shell company was acting on behalf of Intellectual Ventures
all along.

In fact, IV attempts to have the records sealed and, if they settle out of
court, they require the settling company to sign an NDA so as to ensure that
there's no record at all.

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dreamdu5t
Intellectual property is a farce. Intellectual property is state-sponsored
monopoly. Ideas are not property. Reading a book is not theft. Looking at a
picture is not trespassing.

The assertion that we would not have a vibrant economy without intellectual
property is historically and factually false.

But of course, the response from any defender of non-sensical and arbitrary
government intervention is: Not the "right" regulations at the "right" time.

~~~
lutusp
> Ideas are not property. Reading a book is not theft.

You're confused. The two sentences above have no common ground. Reading a book
is not theft, but falsely claiming ownership of a book's content certainly is
theft.

~~~
throwaway64
Replay from Intermernet who is dead:

Yes, but being inspired to write a similar book is now a grey area.

As a some-time composer / musician, I like to play around with existing themes
and thus create new themes. Many of history's greatest musical pieces
reference other pieces (J.S. Bach referenced traditional church pieces,
Mussorgsky referenced many traditional folk songs, the list is probably
endless), indeed the vast majority of popular music rarely strays from a
handful of progressions around a limited palette of chords. Imagine if someone
had managed to patent the 12 bar blues early on... No blues explosion, no Rock
& Roll, no Elvis, no Beatles, etc. etc.

The argument that patents are for protecting original ideas is becoming more
specious with time. It seems that the primary reason many companies now apply
for patents is to either protect themselves from future patent cases, or, as
is the case with IV, to prosecute any company or individual who tries to bring
a similar idea to market.

~~~
Intermernet
"The reports of my death are greatly exaggerated"

------
michaelfeathers
This sounds like a plot line in Charles Stross's Accelerando.

~~~
javajosh
Yes. One has to wonder whether IV actually has software that generates new
companies at will.

~~~
jwoah12
If they don't, you should patent said software and license it to them.

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6ren

      Second, it assumes that the USPTO's search actually works well (it does not). 
    

Google Patent Search may help <https://www.google.com/?tbm=pts>

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geoka9
What would it take to patent some crucial process in IV's "business" model
(like establishing shell companies to avoid declaratory judgements) and then
sue them?

~~~
ohazi
You can't really sue an entity that doesn't hold any assets. That's why it's
been essentially impossible for companies that fight IV and win to counter
sue. Even if they won the suit, the particular IV shell would just declare
bankruptcy and get "reorganized" somewhere else.

A worthwhile counterattack would either need to fix the patent system (hard)
or go after the IV stakeholders personally in a way that would make the risks
of their endeavor far outweigh any potential benefits (unlikely).

~~~
oh_sigh
The patents don't count as assets?

~~~
DanBC
Each shell company only owns as many patents as it needs.

Thus, a loss in court means the patent is worthless, and so it's no loss if
the shell company has to give it away.

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roc
> _"what IV is almost certainly worried about is that, if the extent of its
> activities were known, there would be more fodder for real and necessary
> reform against trolling"_

I think they're more worried about the situation where, if they were to sue
directly and lose, they would have actual assets for a wronged party to
pursue.

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frogpelt
The "regulated" market (as opposed to the free market) produces what will be
consumed.

IV is the symptom. The disease is the current implementation of patent law.
I'm not claiming that they are guiltless. But they are filling a space created
by the "regulated" market.

~~~
rayiner
The "free market" is an oxymoron. You can't have markets without at least
property rights, and property rights are a regulation that take away the most
basic freedom of the human animal: the freedom to kill what it can and take
what it can.

Don't pretend that we are arguing about anything more than the merits of
particular kinds of regulations. It's intellectually lazy.

~~~
1123581321
"Free Market" is a consistent term that refers to a set of laws that allow
commerce to happen with as few restrictions as possible. I agree that some
people forget that those basic laws, such as property rights, are required.
However, those laws are so simple compared to the current state of commercial
regulation that the free market is often called regulation-free as shorthand.

That said, I personally do not think software patents have a place in either
what is conventionally called a free market or in a well-regulated market.

~~~
rayiner
It's not "shorthand" it's "intellectually dishonest." It's an attempt to hide
the fact that what you're really asserting isn't that "regulation is bad" but
rather "I think these particular regulations are bad, but I'm very much
attached to these other regulations." It's a lazy attempt to get out of
arguing against the merits of particular regulation through an appeal to the
theoretical merits of an "unregulated market."

~~~
1123581321
I think it's more like calling someone a good person even though everyone
understands a good person has flaws, or calling someone a bad person even
though they've done a few good things, if you like.

Regardless of your personal feelings, when someone advocates a regulation-free
environment, they mean one with those minimal market regulations. This is
understood in any conventional( * ), practical discussion as well as most
philosophical, legal and economic debates. If all parties understand this, and
would prefer to use shorthand in order to quickly arrive at the heart of a
particular matter, then I question whether it can be considered dishonest.

* By conventional, I mean to exclude, for example, a discussion between two anarchists -- I mean a mainstream discussion taking place in Western civilization.

Edit: I need to clarify that while this is all understood, it may be forgotten
by someone in any particular moment. However, if reminded they will likely
have no objection. This is what I meant when referring to people who forget in
my earlier post.

------
scotty79
Can't you just register company in another country to avoid trolls?

------
benlower
Does IV stand for "Intellectual Vultures"?

------
boboblong
Disclaimer: I have never been sued and don't know who any IV executives
actually are, and I'm speaking purely hypothetically.

Hypothetically, if a legal firm is engaging in clearly predatory behavior, can
a point be reached at which it is morally justifiable to retaliate against
said firm in an extralegal manner? Perhaps law firms that walk the line of
ethical behavior but are clearly behaving immorally by any reasonable standard
present a sort of edge case. Usually, a moral person should settle his
disputes in a civilized manner by going through the proper legal channels.
However, if a moral person is being abused by a law firm that is capable of
outmaneuvering him in all or almost all legal proceedings, what recourse does
that person have? A good analogy is a battered wife who is reasonably certain
that going to the police will result in her husband murdering her. In such
cases, courts have ruled that a wife may initiate force against her husband
and yet be acting in self-defense.

Another analogy is the idea that it's possible for the US government to become
so corrupt and/or abusive that revolution becomes justified. If the people of
the US were ever to attempt a revolution, however, they would certainly be
labeled terrorists by the US government, and their actions would be considered
treasonous. Nevertheless, there is a point at which revolution is
theoretically justifiable, despite being treasonous. That point is when it
becomes impossible to participate in the political process. The actions of an
oppressive government amount to legal abuse, much like the actions of a
predatory law firm.

I'm not trying to rile anyone up here, but all I see are comments that come
off as totally defeatist. We tell our kids to use their words, but no one can
be bullied forever. Eventually, something's gotta give.

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martinced
It reminds me of the Enron scandal.

They were creating so many shell companies that they were using names from
places / people from the Star Wars universe. They even had a "death star"
technique IIRC.

I wonder what "theme" is IV using to name all their shell companies.

