Monday, June 30, 2008

"Coalition for Patent Fairness" morphs into Allied Security Trust?

The WSJ noted:

Several tech-industry heavyweights are banding together to defend themselves against patent-infringement lawsuits. Their plan: to buy up key intellectual property before it falls into the hands of parties that could use it against them, say people familiar with the matter.

Verizon Communications Inc., Google Inc., Cisco Systems Inc., Telefon AB L.M. Ericsson and Hewlett-Packard Co. are among the companies that have joined a group calling itself the Allied Security Trust.

The WSJ also stated:

The new Allied Security Trust aims to buy patents that others might use to bring infringement claims against its members. Companies will pay roughly $250,000 to join the group and will each put about $5 million into escrow with the organization, to go toward future patent purchases, the people familiar with the initiative said.

Tech companies have tried various ways to protect themselves, including investing in Intellectual Ventures LLC, a patent-holding firm founded by former Microsoft Corp. executive Nathan Myhrvold. The companies provide money to help Mr. Myhrvold buy patents, and he in turn grants them a license to his portfolio. But some in the tech industry fear Mr. Myhrvold's venture, which has collected thousands of patents in areas such as networking and software, may itself become an aggressive patent enforcer down the road. Mr. Myhrvold has said litigation isn't part of IV's strategy, but hasn't ruled it out.

CNET, discussing the WSJ piece, stated:

Allied Security Trust isn't intended to be a revenue generator for the companies involved, but rather a protective shield against patent trolls big (Intellectual Ventures, which was recently torched in The New Yorker) and small (Acacia).

Will it succeed? Who knows? But any efforts intended to bring some sanity to the patent-litigation racket are very welcome.

IPBiz notes this as further evidence that the issue was NOT "patent quality," but simply "patent damages." Patent quality, and the (fantasy) high grant rate of Quillen and Webster were merely props to get to patent damages. Nobody in the CPF really cared about patent quality.

****UPDATE (July 3)

EE Times added some information.

Allied Security Trust I came out of stealth mode this week following a report Monday (June 30) in the Wall Street Journal. In an interview with EE Times Wednesday (July 2), the group's chief executive, a former vice president of IP and licensing at IBM, provided the most detailed disclosure to date about the group's goals and operations.


Allied's members include Cisco Systems, Ericsson, Google, Hewlett-Packard and Verizon and six other companies who do not want to be named. As many as three other companies are expected to become members in the next 30 days, said Brian Hinman.

"I am interested in only the patents that are strategic or potentially problematic for a subset of our members," said Hinman, who refused to disclose the number of patents he has bought or sold since the group was formed with four members in March 2007.

IPBiz notes that March 2007 is shortly after the Berman hearing on patent reform. Apparently, the IT folks were hedging their bets all along.

EE Times also stated:

Allied works with a network of 38 patent brokers who compile a weekly list of available patents that Allied circulates to its members. They can choose to contribute any amount they wish to buy any number of the patents on the list. Allied eventually re-sells the patents with proceeds going back to the companies who paid to buy them.

"It's a catch-and-release formula handled on an opt-in basis," said Hinman.

"Patents have to be gone is a fixed amount of time," he added. "The objective is to recoup a portion of the cost of the investments because we are not a patent-holding company."

Allied's name was deliberately generic to provide a degree of confidentiality. The company creates an independent legal entity when it buys and sells patents to further obscure its identity so that buyers and sellers do not realize its big-company backing and raise or lower prices accordingly.

To keep its costs low, Allied operates on something of a shoestring with a chief technologist and finance officer and small administrative staff but all legal and IT functions outsourced. It does plan to expand its technical staff to increase its capability for handling due diligence on patents.


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