Cloudigy Law's Founder and CEO, Antigone Peyton, discusses patent troll firms and how they operate.

1. Rise of the Trolls: An
Innovation Story
Antigone Peyton
CEO & Founder
Cloudigy Law
An Intellectual Property &
Technology Law Firm
#DCTrolls
#DCWeek

2. Here’s How It Began . . .
It’s an old story
Figure out a system,
then figure out how to game it

3. • Patent rights are not
contingent on using
an invention
You create something new
You file with the USPTO
You disclose your invention
You get your patent

4. Patent Rights
• Right to exclude others
• Violation=infringement
• Using
• Making
• Selling
• Offering to sell
• Importing

5. Now, the game
It’s the 1990s . . .
And the patent litigation business was
born.

6. Patent Litigation Model
• Business=make more
$$ off IP
• Purchase patents for
little $
• Don’t make products
or commercialize
technology
• Lack R&D function

7. Patent Litigation Model
• File lawsuits & send
infringement letters
• Sue many companies at
once
• Several firms make
their reputation on
these suits
• Seek early settlements
for $$$
• Contingent fee or low
effort before trial

8. Sometimes it feels like . . .

11. And the Moniker Was
Born
Non-Practicing Entities
(NPEs)

12. Non-Practicing Entities
(NPEs)

13. A Case Study

14. In the Beginning . . .
• Nathan Myrvold - • Investors included
former Microsoft Microsoft, Apple,
exec Nokia, eBay, Google
• Approached Silicon
Valley’s large tech
companies
• Buy patents and
create a pool to keep
them away from trolls

15. The Metamorphosis
• Intellectual Ventures • Other companies
did not sue directly would sue or send
licensing letters
• Set up shell
companies to place IP • Over 1,300 companies
assets traced to IV
• Sold patents to other
companies

16. The Metamorphosis
• IV now suing directly • Sued Motorola Mobility
for infringement of 6
• Used more than $1.5B patents
of $5B investor capital
• Google acquiring
• Over 35,000 IP assets company
• Over $2B in licensing • Google also an early
revenue investor in IV

17. The NPE Game Plan
• A small town in TX • Has over 2,000 pending
(Eastern District of TX) patent cases
• Known to be Plaintiff • No real TX business
friendly activity required

18. The NPE Game Plan
• License or sue
• Defense litigation
costs approx. $2-5M
• Get settlement
• Give patent license

19. The NPE Game Plan
• Monetizing IP
• More than a nuisance
fee
• Leverage risk of
litigation loss
• Gag on settlement
term disclosure

20. JPEG Patent Attacks
• Forgent Networks &
Global Patent
Holdings patents
• Forgent collected
over $100 million in
licensing fees before
patent was
invalidated
• Licensed to 30
companies & sued 31
more

21. High-Profile Win
• Research in Motion
gave over $612M to
NTP (a patent holding
company) to keep its
Blackberries on

22. What’s the Problem?
• Fees extracted out of • Dragging down
line w/perceived IP companies w/lawsuits
value
• Cost passed on to
• Not making or selling consumers
inventions
• Not bringing products
to market

23. Protection Issues
• Defensive patent suit involving company’s
own patents ineffective
• Not trackable like competitors
• Antitrust & patent misuse charges don’t
work
• No market power
• Suing isn’t patent misuse

24. Minimizing Risk
• Design around costs • Fight clumping of
reduce value of parties with different
potential license products
• Patent watch and • New patent laws don’t
clearances allow one suit against
multiple parties that
• Oppositions in Europe “infringe” a patent
and other countries &
reexaminations at
USPTO
• Centralizing invalidity
research & analysis

25. Minimizing Risk
• Litigating for • Patent aggregation
everyone behaviors and
agreements
• Collaboration among
defendants
• Early settlement
• Patent infringement
insurance

26. Defensive Buying
• Allied Security Trust • RPX Corporation
• 11 high-tech • Defensive Patent
companies that Aggregation
identify & purchase program pulls
key tech patents patents off the open
market

27. Defensive Buying?
• Nortel Patent
Auction-6K patents
• $4.5B defense
arsenal purchase
• Nortel 6-Ericsson,
EMC, Sony, RIM,
Apple, Microsoft
• $750,000/patent

28. Closing Thoughts
• IP monetization • Behaviors drive use
business is here to of pejorative term
stay “troll”
• Innovative $$
strategy
• Well-known “patent
trolls” are similar to
patent pools or
consortiums

29. Antigone Peyton
CEO & Founder, Cloudigy Law
(703) 436-2033
antigone.peyton@cloudigylaw.com
Twitter: @antigonepeyton @cloudigylaw
Facebook: http://www.facebook.com/CloudigyLaw
LinkedIn: http://www.linkedin.com/in/antigonepeyton
Cloudigy Blog: http://cloudigylaw.com/news/