InterDigital Inc (IDCC)

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Patent Company: walk on the edge of the technology industry, "Invisible Spender"
2013-2-11, 12:00 | Hu Month


In the technology industry in the world, there is such a group of people, they are neither engineers nor entrepreneurs, not to mention the designer or interactive expert. They shuttle between those tech giants, while glued to the entrepreneurial technology companies; scope of their activities to Asia from the Silicon Valley in the United States, South Korea, China, from the silicon wafer to biomedicine, and any that may arise because of the power of technology great value in the field, they appeared.

Google, Microsoft, Apple tech giants concern the media spotlight is the king of the jungle in this industry, then this group is obviously the walk at the edge of the jungle world unknown stealth hunter. They are low-key, but enough to earn their own profits in this competitive world of technology in a near-naked capital attitude.


Understated speculators

Patent licensing and cooperation between the last two years the patent war between Apple, Samsung and HTC, or Google, Microsoft, Apple, AOL, reveals the important role of science and technology on the battlefield patent.

Patent (Patent) is used to exclude other competitors in the manufacturing and production in the traditional industrial age, companies protected by law. However, along with specialization, patent becoming the cooperation between the various companies in the industry chain, exchange or allocation of the carrier, is also in the process, the emergence of a number of specialized use of the patent-profit company, they are called manufacturing entity is not used to the NPE (Non-Practicing Entities), simply from the external acquisition patent collection over to bring an infringement action, but others, and finally, these technology companies are eyeing part will choose reconciliation, to pay patent licensing fees.



Some of these NPE was called Patent Troll, in translated patent cockroaches, patent the devil or patent fisherman, etc., they are cheap acquisition of patents and then specifically looking for a large technology company as the object of the litigation (see above) to profit . Former subsequently developed Anti-Pantent Troll, aims to provide patent protection services for corporate clients through patent pools or patent portfolio (Patent Portfolio), including the avoidance of potential patent litigation. Patent Troll relative to active attacks, Anti-Pantent Troll is a passive defense services.Patent Troll, in translated patent cockroaches, demons or patent fisherman, etc., they are low-cost acquisition of patents and then specifically looking for a large technology companies as the object of the litigation to profit (see Figure). Former subsequently developed Anti-Pantent Troll, aims to provide patent protection services for corporate clients through patent pools or patent portfolio (Patent Portfolio), including the avoidance of potential patent litigation. Patent Troll relative to active attacks, Anti-Pantent Troll is a passive defense services.

A few days ago, one of Kodak's patent auction news reports after a number of large technology companies, there have been two franchised companies RPX and Intellectual Ventures (Chinese name: Gao Zhisheng, respectively). Compared with other technology companies have also mentioned the name of it, they can not become the focus of the public, but if you learned their development context, maybe you will be amazed at patent empire they built up. Which was no less than the previous active technology giants in the table.

This is a low-key industry profitable low-key, low-key things. Even the names look how many are a bit shell companies feel the company's patent, but it is a lot a lot of muffled fortune. Them how low-key?

January 2012 article published in the Stanford Law Review (Stanford Technology Law Review) Intellectual Ventures operating practices and operations expose the ( reported link and the full survey report ). Robin Feldman, the author of the article, UC Hastings Professor of Law at the University of lawyer Tom Ewing said in an interview:

Others prior to the survey told us, "You can not find any news about them", "Do not be wasted effort". That argument spread inside the intellectual property industry for many years.

Having a low-key, look at how much they make money?

Intellectual Ventures Chinese name called Chi, the their Chinese website above, the company is to introduce them to the business:

We work both inside and outside the company inventor - and for scientists and engineers have made creative invention and innovation gives way to a professional business.

Nathan Myhrvold, founder of the company is also mentioned in the HBR an interview :

We have often been misunderstood as patent cockroaches (Patent Troll), but we actually do is hope for the inventor of the capital market, to establish a similar relationship between venture capital and start-up companies to support the growth of entrepreneurial companies.

In fact, from large technology companies such as Microsoft, Intel, Sony, Nokia, Apple,, Google, SAP, Nvidia and eBay and other investment companies financing the $ 5.5 billion. Use the money to buy a large number of patents. Reported in March 2012, according to BI: their hands gathered around 30000-60000 patent shell companies operate all over the world (Shell Company) over 1200. And those who invest in their enterprises as their shareholders, but also their customers.eBay and other investment companies financing the $ 5.5 billion. Use the money to buy a large number of patents. Reported in March 2012, according to BI: their hands gathered around 30000-60000 patent shell companies operate all over the world (Shell Company) over 1200. And those who invest in their enterprises as their shareholders, but also their customers.

However, the most controversial of these businesses is that, IV will be interested in some patent licensed to third-party companies and highly offensive to allow them to sue other companies, thus affecting the entire market. Although this argument is not valid proof, but widely circulated IV can move to convince new customers to buy their patent licensing, as well as old customers continue to use their proprietary services.

Look at RPX. RPX was founded in 2008, early investors include KPCB, Index Ventures this VC. From the beginning of the founder, has stated that the main confrontation NPE (Non-Practicing Entities). In other words, RPX role is to help its customers to prevent from NPE patent litigation. Founded on earnings, since has been to maintain profitability. In May 2011, the listing of the Company (NASDAQ: RPXC). Inside two years, the market capitalization of 500 million U.S. dollars, the peak time of market capitalization reached 10 billion U.S. dollars.

Whether they Patent Troll, or Anti-Pantent Troll, these patents war in the industry caused a huge controversy.

For example, Hewlett Packard CTO Shane Robison high intellectual behavior will be described as the Patent Troll, protested that they collect these patents is not intended in order to carry out the development of the product, but to find these big companies, forcing them to pay huge patent fees. According to the investigation report before mentioned article, these companies rely on other litigation and licensing company profits, rather than from the invention itself.

The business model of the new era

Open RPX company's official website, home to write this sentence:

Patent litigation is used as a legal weapon. But today, it seems to develop into a business model.

Around intellectual property NPE have established the industrial scale of up to tens of billions of dollars a year profit, in a new business model, patent is an important asset, and the authorization to run the foundation, the operators of these the assets of the company therefore has been a source of profit. After years of development, the upstream and downstream industry chain built up around the patent, has also developed a number of business models.

(Note: The table mentioned IP Intellectual Property here mainly refers to the patent)



the " patent litigation

Patent litigation is not a new concept, but after NPE into this industry, it can be said to open a new generation. According to statistics of PatentFreedom, from 2001 to 2012, NPE patent litigation increased from 145 to 2923 onwards. Really began to realize the "Great Leap Forward" of the time, in fact, the last two or three years from 2010. Such trends can be seen from the following chart, 2010, rising curve with a steep growth rate.



On the other hand, for the campaign the U.S. market, the company, the day has not fared well. The following table lists the NPE litigation technology companies. First Apple Apple these years non-human red patent litigation is also increasing for years, as "fat" NPE are constantly eyeing.

Asian companies, South Korea's Samsung, LG and Japan's Sony, Panasonic, Toshiba, Sony Ericsson, Kyocera, Taiwan's HTC, Acer, Asus also encountered the same situation, especially now the heady Samsung, from 08 years 12 to 37 in 2012, 200% increase in the number of litigation cases. (See ranked No.3).

No wonder some people will say, a company is in the mainstream in the U.S. market, take a look at its patent litigation can get some idea.



The point of view of the Asian countries and regions to look at this issue. In 2011, Taiwan companies pay to foreign manufacturers patent royalties and trademark costs up to $ 5.8 billion, What is this concept? According to the statistics of the Directorate General of Customs in Taiwan, Taiwan's total exports in 2011 reached 291.48 billion U.S. dollars, Taiwan's foundry manufacturing industry, to calculate the gross profit margin of 5%, the profit is 14.57 billion yuan, and trademark and patent rights costs accounted for $ 5.8 billion, one-third of the gross profit of these companies in Taiwan bloody sweat hard to fight off.

Look at the circumstances under South Korea, according to South Korea's financial investment in the industry and the news of the Bank of Korea, the scientific and technological enterprises of the ICT industry in South Korea in 2012 paid to foreign patent costs estimated at about 10 trillion won (about 58.3 billion yuan), which a large proportion of the royalties paid to the NPE.

The world's largest NPE - Gao Zhisheng (Intellectual Ventures) 3G patent lawsuit from Korean companies who earn more than 1 trillion won, equivalent to about 5.8 billion yuan. In 2011, InterDigital, MOSAID, RPX from Korean companies who earn up to 174 billion won, about 1 billion yuan. InterDigital 2011 39.1% of the total sales from patent litigation with Korean companies. MOSAID 2011 46.8% of the total sales from Samsung Electronics, LG Electronics, SK Hynix patent litigation earned.

David Drummond, Google's Chief Legal Counsel mentioned, a smartphone up may receive 250,000 kinds of patent lawsuits. Schmidt, Google's executive director of the recently released book - the new digital era "(The New Digital Age) also mentioned that:

... They (technology companies) will have to hire more lawyers. Litigation will always go beyond legal reform in the true sense, the face of a steady stream of intellectual property rights, patent rights, privacy and other technology giant lawsuit will confirm this. ......

Whether it is the emergence of patent speculative companies, technology companies, patent litigation, when the time to look at this problem in a global perspective, the extensive application of the patent granting system, the support of financial derivatives, as well as a sound legal system, today This industry is able to generate and important foundation for development and growth.

In the future, more patent war may only just beginning!

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