Monday, December 06, 2004

Auction of Commerce One patents today (Dec. 6, 2004)

According to an article by Deborah Lohse in the San Jose Mercury News, eight entities have registered to bid at least one million for the Commerce One patents at the auction today (Dec. 6, 2004) in San Francisco. The Van Pelt consortium apparently isn't one of them.

The article states:

-->[Jason] Shultz and Deidre Mulligan of the University of California-Berkeley have written to the bankruptcy trustee in hopes of delaying the auction.

They say Commerce One told industry groups that it wanted businesses to be able to use the technologies for free. And once a promise is made that a patent is royalty-free, any future owner of that patent has to honor that promise, they say.<--

Of course, if the inventors had really wanted to dedicate the technology to the public, they could merely have published the work in a journal, or, for a bit of money, published a SIR. They didn't, so one might question their intent to dedicate the technology.

The Mercury-News also reports:

-->Still, even if companies have a strong legal argument that they don't owe royalties, it could be too costly to prove it in court. A company that owns the patents ``could still go around to small businesses who can't afford to hire a $500-an-hour lawyer, and shake them down,'' said Schultz.

Eight individuals or firms have registered to bid at least $1 million for the patents at auction, according to a securities filing Friday.

There had been talk of an industry consortium banding together to buy the patents, and in essence retiring them -- similar to the way that nature conservancies buy up land to prevent development. But Van Pelt, who had tried to arrange one such consortium, said he couldn't get a group together in time.<--

The arguments of Shultz and Mulligan are related to the paper by Merges which criticized Lemley's position on rational ignorance [refer to earlier post]. Different entities have different incentives, and resources, to resolve patent validity in litigation. Further, once a challenge is mounted, the challenging entity does not want to share the benefits of the challenge with other competitors, so a settlement (which excludes competitors)is a rational option.


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