Wednesday, September 02, 2015

Forbes talks about patent privateers

From Forbes post titled Attack of the Patent Privateers

One example of this growth is the emergence of so-called patent privateering, which contributes to an ever-greater amount of frivolous or abusive patent litigation. Privateering is a pleasant euphemism for empowering a pirate to attack your competitors for profit. Patent privateering occurs when a company lends or sells a portion of its patents to another litigious company to sue alleged patent infringers who are all too often the competitors of the original patent recipient company that was under the impression it had licensed the entire portfolio. As increasing numbers of startup companies fail for one reason or another, the trend of patent privateering will likely accelerate as will the harm caused to successful businesses of all ages, levels of success and sizes.


There is nothing usual about the growth of patent privateering. Failing or failed startups are seeking to recoup investors’ money, increase profits or advance their competitive position by selling their patents to litigators expressly to instigate lawsuits against the startups’ competitors. Selling the assets – including the patents – of a business is natural part of the business cycle, but only when the patents sold are used by the purchaser for building or enhancing products or services or to defend against other patent trolls’ frivolous claims.

One recalls that Orville Wright, after Wilbur's death, sold out his interests, and much of the pre-World War I patent fights, leading to the patent pool, were carried out by investors.


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