From arms race to marketplace: The complex patent ecosystem and its implications for the patent system

Hastings Law Journal

Volumn 62, Issue 2, 2010, Pages 297-356

  Chien, Colleen V ^a  

^a SANTA CLARA UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 79952126406     PISSN: 00178322     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (459)

1. See infra Part I.A.
2. See generally Stuart J.H. Graham et al., High Technology Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey, 24 BERKELEY TECH. L.J. 1255 2009) (reporting on surveys that confirm that companies in high-tech industries amass patents as bargaining chips against other patentees and to prevent suits by others);
3. Bronwyn H. Hall & Rosemarie Ham Ziedonis, The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1970-1095, 32 RAND J. ECON. 101 2001) (examining the propensity of semiconductor firms to obtain patents despite their ineffectiveness in appropriating returns to research and development ("R&D"))
4. James Bessen & Robert M. Hunt, An Empirical Look at Software Patents 4 (Fed. Reserve Bank of Phila., Working Paper No. 03-17/R, 2004), available at http://www.researchoninnovation.org/ swpat.pdf(providing empirical accounts of the apparent "arms race" in the semiconductor and software industries)
5. Wesley M. Cohen, Richard R. Nelson & John P. Walsh, Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not) 26-27 (Nat'l Bureau of Econ. Research, Working Paper No. 7552, 2000), available at http://www.dklevine.com/archive/cohen-survey. pdf("[Prevention of suits [is] one of the most important uses of patents across all industries."). For anecdotal accounts,
6. See statements of Robert Barr and Russ Slifer, infra notes 16,40 (giving public testimony about their companies' participation in the patent arms race) and Patents: Smart Assets, ECONOMIST, Feb. 19, 2005, at 60, 60.
7. See infra Part I.B.
8. For example, Intellectual Ventures ("IV"), founded in 2000, has alone acquired tens of thousands of patents. Nathan Myhrvold, The Big Idea: Funding Eureka!, HARV. Bus. REV., Mar. 2010, at 41,41
9. See also infra note 114.
10. This definition resembles Justice Kennedy's description in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 396 2006), of "firms [that] use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees." For further discussion,
11. See infra Part II.B.2.
12. See Colleen Chien, Of Trolls, Davids, Goliaths, and Kings: Narratives and Evidence in the Litigation of High-Tech Patents, 87 N.C. L. REV. 1571, 1577-79 2009).
13. The term "patent ecosystem" was used, though not defined, by Brian Kahin in his testimony to the Federal Trade Commission (FTC) on December 5, 2008. Brian Kahin, The Patent Ecosystem in IT: Business Practice and Arbitrage (Dec. 5, 2008) (submission based on remarks before the FTC), avaliable at http://www.ftc.gov/bc/workshops/ipmarketplace/dec5/docs/bkahin2.pdf.
14. See infra Part III.C.I-2.
15. See infra Part III.A.
16. See discussion infra Parts I.B.2.a, IV.A.
17. See empirical analysis of same, reported infra at Part III.B.
18. Valuation literature making these assumptions is described infra notes 299 and 336.
19. See generally DAN L. BURK & MARK A. LEMLEY, THE PATENT CRISIS AND HOW THE COURTS CAN SOLVE IT 2009) (describing the industry-specific "macro" and "micro" policy levers that tailor the patent system to the needs of different industries).
20. See discussion infra Parts I.A.1-2, I.B.I.
21. This Article informs a larger body of work focused on the so-called "fourth pillar" of the patent system: patentees themselves. This Article treats patentee behavior not as the predetermined outcome of the patent system, but as an agent of change within the patent system, an independent force to be understood and harnessed. Colleen Chien, The Patent System's Fourth Pillar (project in development)
22. See also Colleen Chien, Patent Amicus Briefs: What the Courts' Friends Can Teach Us About the Patent System, I. U.C. IRVINE L. REV. (forthcoming 2011), draft available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1608111 (exploring the shape and impact of one form of patentee behavior-amicus briefs filings at the Federal Circuit and Supreme Court).
23. See, e.g., Robert Greene Sterne et al., The 2005 U.S. Patent Landscape for Electronic Companies, in PRACTISING LAW INSTITUTE COURSE HANDBOOK SERIES: ANNUAL INSTITUTE ON COMPUTER & INTERNET LAW 3 2005), available at http://64.237.99.107/media/pnc/7/media.507.pdf("The 1980s saw an amazing business phenomena in the U.S. of creation of many start up electronic companies, some of which broke out of the pack of their competitors to become very large companies in their own right. Notable examples are Apple, Microsoft, Oracle, Cisco, Sun, [and] AOL.... As upstarts, these companies in general did not embrace patents in the slightest.")
24. See also KEVIN G. RIVETTE & DAVID KLINE, REMBRANDTS IN THE ATTIC: UNLOCKING THE HIDDEN VALUE OF PATENTS 41-42 2000) (describing ignorance and antipathy towards software patents as among the reasons companies did not file for them).
25. See, e.g., RIVETTE & KLINE, supra note 15, at 4. ("[In 1990] Microsoft had one patent; [in 2000] it ha[d] close to 800. Sun, Oracle, Novell, Dell and Intel have likewise boosted the size of their patent portfolios by more than 500 percent just in the last few years.")
26. See also Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy: Joint Hearings Before the Fed. Trade Comm'n & Dep't of Justice 674 (Feb. 28, 2002) [hereinafter Competition FTC Hearing II] (statement of Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.), available at http://www.ftc.gov/opp/intellect/020228ftc. pdf("Between 1984 and [19]93, the first [ten] years of the company, [Cisco] filed only one patent....[In] 1994 the company had grown to over [$1 billion] in annual revenue. This growth was obviously not fuelled [sic] by patents, it was fuelled [sic] by competition and by open, nonproprietary interfaces. But in 1994, the company... [started] a program to obtain more patents....We filed six patents in 1994....We increased each year... [and] we're now [in 2002] filing over [750] patents a year.").
27. Daniel P. McCurdy, Patent Trolls Erode the Foundation of the U.S. Patent System, Sci. PROGRESS, Fall & Winter 2008/2009, at 78, 78-79 (characterizing the emergence of "patent trolls" as representing the most significant and destabilizing change in the patent environment since 2003)
28. See also Chris Coletta, Red Hat Among Companies in Crosshairs of License Suit, TRIANGLE BUS. J., May 16, 2008, http://triangle.bizjournals.com/triangle/ stories/2008/05/19/story13.html ("Trolls are widely perceived ... as the bane of the patent system." (quoting Colleen Chien, Assistant Professor of Law, Santa Clara University) (internal quotation marks omitted)).
29. Harold C. Wegner & Stephen B. Maebius, Patent Flooding: America's New Patent Challenge 11 (Spring 2002) (unpublished paper, George Washington Univ. Law School), available at http://www.foley.com/files/tbl-s31Publications/ FileUpload137/844/wegner-patentfloodingFTC.pdf("Ford's successors maintained a defensive posture and proudly never enforced their patents. The relatively large number of patents obtained by Ford was matched by General Motors and other competitors. They all created a defensive patent pool that was used to permit everyone to operate, essentially, free from the patent system.").
30. This paper was also presented as part of the testimony of Stephen B. Maebius in joint hearings before the FTC and DOJ. The Supreme Court's 1908 decision in Continental Paper Bag v. Eastern Paper Bag Co., 210 U.S. 405, 429 (1908), establishing the lack of a working requirement, has also been credited with bolstering the ability of firms to patent defensively.
31. DAVID C. MOWERY & NATHAN ROSENBERG, PATHS OF INNOVATION: TECHNOLOGICAL CHANGE IN 20THCENTURY AMERICA 17 (1998).
32. 19. Id.
33. RIVETTE & KLINE, supra note 15, at 125 ("Texas Instruments... was reportedly saved from bankruptcy in the mid-1980s by an all-out patent licensing and litigation effort. In 1992 alone, TI earned $391 million from patent licenses-43 percent more than its $274 million in operating income for that year. Its current licensing revenues are thought to be about $800 million a year. All told, analysts estimate that TI has earned more than $4 billion in royalties since it began enforcing its patents in the mid-1980s." (footnote omitted)).
34. Id.
35. JULIE L. DAVIS & SUZANNE S. HARRISON, EDISON IN THE BOARDROOM: How LEADING COMPANIES REAUZE VALUE FROM THEIR INTELLECTUAL ASSETS 80-81 exh.3.6 2001) (statement of Jerry Rosenthal, Vice President, IBM).
36. Emery Simon, Counselor, Policy Council of the Bus. Software Alliance, Remarks at the Brookings Institute Panel on Software and Law: Is Regulation Fostering or Inhibiting Innovation? 15 (Dec. 7, 2005) [hereinafter Brookings], transcript available at http://www.brookings.edu/comm/ events/20051207software. pdf
37. See also Sabrina Safrin, Chain Reaction: How Property Begets Property, 82 NOTRE DAME L. REV. 1917, 1921 2007) (describing a "chain reaction theory" for why intellectual property rights, including through the patent "arms race," have expanded).
38. Nicolas S. Gikkas, International Licensing of Intellectual Property: The Promise and the Peril, 1 J. TECH. L. & POL'Y 6, paras. 42-43 (1996) (describing TI's 1986 International Trade Commission case against Asian Dynamic Random Access Memory manufacturers resulting in royalty payments of $1.5 billion from 1986 through the first half of 1993); accord Competition FTC Hearing II, supra note 16, at 653 (statement of Fred Telecky, Senior Vice President and General Patent Counsel, Texas Instruments, Inc.) (describing TI's campaign of suing Japanese and Korean semiconductor companies in response to competitive threats and leading to the company's patent licensing program).
39. Kristopher Boushie & Christopher Spadea, To Maximise IP Value a Company Needs the Right Culture, INTELL. ASSET MGMT., Nov./Dec. 2003, at, 22, 22-23 ("Another very conscious shift was in TI's willingness to pursue litigation.").
40. Id.
41. Harold C. Wegner, Patent Reform "Quality" and "Pendency": Drilling Down to "Backlog", "Deferred Examination", "Patent Worksharing" and Other Integers to Achieve Primary Goals, 2011 STAN. TECH. L. REV. (forthcoming 2011) (manuscript at 18), available at http://www.grayonclaims.com/ storage/StanfordFeb26versJan18.pdf.
42. TI Patents from 1986-1995, USPTO PATENT FULL-TEXT & IMAGE DATABASE, http://patft.uspto.gov/netahtml/PTO/search-adv.htm (search string "AN/"texas instruments" AND ISD19760101->19851231" in the query form yields 1639 patents while "AN/"texas instruments" AND ISD19860101->19951231" yields 3537).
43. Brookings, supra note 23
44. See also Use of the Patent System to Protect Software-Related Inventions: Hearing Before the U.S. Patent & Trademark Office 17 (Jan. 26, 1994) (statement of Douglas K. Brotz, Principal Scientist, Adobe Systems Inc.) ("[W]hen we at Adobe founded a company [in 1982] on the concept of software to revolutionize the world of printing, we believed that there was no possibility of patenting our work. That belief did not stop us from creating that software, nor did it deter the savvy venture capitalists who helped us with the early investment. We have done very well despite our having no patents on our original work.").
45. DAVIS & HARRISON, supra note 22 ("We have been filing for patents for about 100 years, literally since the company was founded.").
46. The era of software patenting was ushered in in large part by the Supreme Court's decision in Diamond v. Diehr, 450 U.S. 175, 192-93 (1981), that a rubber-curing process comprised patentable subject matter.
47. See, e.g., Pamela Samuelson, Benson Revisited: The Case Against Patent Protection for Algorithms and Other Computer Program-Related Inventions, 39 EMORY L.J. 1025,1093 (1990).
48. ROBERT PATRICK MERGES & JOHN FITZGERALD DUFFY, PATENT LAW AND POLICY: CASES AND MATERIALS 155 n.9 (3d ed. 2002).
49. See In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995)
50. See also Victor Siber & Marilyn Smith Dawkins, Claiming Computer-Related Inventions as Articles of Manufacture, 35 IDEA 13-15 (1994).
51. MERGES & DUFFY, supra note 32, at 155 n.10.
52. MARSHALL PHELPS & DAVID KLINE, BURNING THE SHIPS: INTELLECTUAL PROPERTY AND THE TRANSFORMATION OF MICROSOFT 24-25 2009) (describing IBM's corporate strategy).
53. See also Brookings, supra note 23.
54. Sterne et al., supra note 15, at 5.
55. Id.
56. See also CHETAN SHARMA, WHAT IS YOUR PATENT PORTFOLIO QUOTIENT (PPQ)? 3 n.2 2007), available at http://www.chetansharma.com/ What%2ois%20your%2oPatent%2oPortfolio%2oQuotient.pdf.
57. Sterne et al., supra note 15, at 3.
58. See, e.g., The Evolving IP Marketplace: The Operation of IP Markets: Hearing Before the Fed. Trade Comm'n 82 (Mar. 18, 2009) [hereinafter Evolving Marketplace /] (statement of Russ Slifer, Chief Patent Counsel, Micron Technologies, Inc.), available at http://www.ftc.gov/bc/workshops/ ipmarketplace/mar18/090318transcript.pdf("[In the] late '70s, early '80s, we were somewhat late to the game, if you will....There was already an awful lot of innovation from Texas Instruments, IBM and others in a large patent portfolio, so we found ourselves in a position where[,] to be able to participate in the industry, we had to pay license fees to those companies, and we did so. As we were paying those fees and innovating our own technology, we sought our own patent portfolio as the technology advanced. We acquired a fairly substantial patent portfolio based on strong innovation, which allowed us to enter into cross-licensing agreements with other manufacturers.").
59. Competition FTC Hearing II, supra note 16, at 660 (statement of Bronwyn Hall, Professor of Economics, University of California, Berkeley) ("[T]he semiconductor industry had a patenting rate per R&D dollar which doubled over about 10 years. In other words, the patenting rate had gone up enormously between 1985 and 1995.").
60. Bessen & Hunt, supra note 1, at 47 tbl.1.
61. id. at 23 ("Thus the majority of the growth in software patenting is not attributed to any of [a variety of factors including R&D intensity] and can be attributed, instead, to rapidly rising patent propensity.").
62. Hall & Ziedonis, supra note 1, at 109.
63. Id.
64. Wegner & Maebius, supra note 18, at 15-16.
65. Sterne et al., supra note 15, at 4; accord Hall & Ziedonis, supra note 1, at 109 ("[Our industry participant] interviewees were well aware of the strategies that Texas Instruments had put in place to manage-and profit from-its patent portfolio.....").
66. Hall & Ziedonis, supra note 1, at 109.
67. See generally DAVIS & HARRISON, supra note 22, (devoting chapter six to a case study of Dow Chemical Company)
68. RIVETTE & KLINE, supra note 20 (describing the patent strategies of, for example, IBM, Texas Instruments, and Xerox).
69. Sterne et al., supra note 15, at 22-23 (describing a "patenting anything and everything" approach and explaining that the trigger for this rapid accumulation, in turn, was often the growth of a company to the point that it could be on the radar of an IBM or TI).
70. Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy: Joint Hearings Before the Fed. Trade Comm'n & Dep't of Justice 351 (Feb. 27, 2002) [hereinafter Competition FTC Hearing 1] (statement of Robert Kohn, Vice-Chairman of the Board and Director, Borland Software Corp.), available at http://www.ftc.gov/opp/intellect/020227trans.pdf.
71. Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy: Joint Hearing Before the Fed. Trade Comm'n & Dep't of Justice 33 (Mar. 20, 2002) [hereinafter Competition FTC Hearing III] (statement of Richard Thurston, Vice President and General Counsel, Taiwan Semiconductor Manufacturing Co.), available at http://www.ftc.gov/opp/intellect/ 020320trans.pdf("Our goal now is to file about 500 patents a year... largely for defensive purposes.").
72. Sterne et al., supra note 15, at 22 (describing a benchmarking approach based on patents issued and revenue).
73. The Evolving IP Marketplace: The Operation of IP Markets: The IP Marketplace in the IT Industry: Hearing Before the Fed. Trade Comm'n 132 (May 4, 2009) [hereinafter Evolving Marketplace III] (statement of Ron Epstein, Chief Executive Officer, Ipotential, LLC), available at http://www.ftc.gov/ bc/workshops/ipmarketplace/may4/090504transcript.pdf.
74. Competition FTC Hearing II, supra note 16, at 743 (statement of Fred Telecky, Senior Vice President and General Patent Counsel, Texas Instruments Corp.).
75. Kahin, supra note 6, at 9;
76. See, e.g., Tex. Instruments v. Hyundai Elees. Indus., 49 F. Supp. 2d 893, 901 (E.D. Tex. 1999) ("[I]t is almost impossible on a patent-by-patent, country-by-country, product-by-product basis to determine whether someone is using a company's patents.").
77. See, e.g., FED. TRADE COMM'N, TO PROMOTE INNOVATION: THE PROPER BALANCE OF COMPETITION AND PATENT LAW AND POLICY 33 2003), available at http://www.ftc.gov/os/2003/10/ innovationrpt.pdf("Defensive patenting is primarily motivated by a desire to ensure freedom to operate and includes the use of patents as bargaining chips in cross-licensing negotiations." (internal quotation marks omitted)).
78. id. at 52 ("[F]irms pursue defensive patenting: (1) to maintain detente with rivals; 2) to obtain portfolio cross-licenses from rivals; and (3) to raise a patent infringement counter-claim should a rival sue..."). Defensive patenting is practiced in other countries as well.
79. See, e.g., DIETMAR HARHOFF, ET AL., INNO-TEC, THE STRATEGIC USE OF PATENTS AND ITS IMPLICATIONS FOR ENTERPRISE AND COMPETITION POLICIES 253 2007), available at www.en.inno-tec.bwl.uni-muenchen.de/research/proj/ laufendeprojekte/patents/stratpat2007.pdf(describing portfolio maximization strategies in Europe)
80. Sachiko Hirao, Japanese Firms Urged to Better Protect Patents, JAPAN TIMES ONLINE, Nov. 8, 2001, http://search.japantimes.co.jp/cgi-bin/nn20011108bl. html (reporting on a 1999 survey by the Japan Intellectual Property Association in which approximately 80% of member companies claimed that the purpose of their patents was defensive).
81. Competition FTC Hearing III, supra note 55, at 33 (statement of Richard Thurston, Vice President and General Counsel of Taiwan Semiconductor Manufacturing Co.).
82. R. Polk Wagner, Understanding Patent Quality Mechanisms, 157 U. PA. L. REV. 2135, 2155 2009)
83. See also generally Gideon Parchomovsky & R. Polk Wagner, Patent Portfolios, 154 U. PA. L. REV. I 2005).
84. HARHOFF ET AL., supra note 61, at 9-10. Of course, large portfolios can be used for not just defensive, but also potentially anticompetitive purposes, including patent "flooding," in which a dominant firm files for a large number of patents in order to deter entry into the market by rivals or by forcing cross-licensing of core technology. ORG. FOR ECON. CO-OPERATION & DEV., COMPETITION POLICY ROUNDTABLES: COMPETITION, PATENTS AND INNOVATION (II) 16-17 2009), available at http://www.oecd.org/ dataoecd/26/33/45019987.pdf.
85. See, e.g., Public Hearing on Use of the Patent System to Protect Software-Related Inventions: Hearing Before the U.S. Patent & Trademark Office 48-50 (Jan. 26, 1994) (statement of Jim Warren, Director, Autodesk, Inc.), transcript available at http://www.uspto.gov/web/offices/com/hearings/ software/sanjose/sjhrng.pdf
86. See also Competition FTC Hearing II, supra note 16, at 677-78 (statement of Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.);
87. Competition FTC Hearing 1, supra note 54, at 376 (statement of Jordan Greenhall, Chief Executive Officer, Divx Networks) ("I have now issued a directive that we reallocate roughly 20 to 35 percent of our developer's resources and sign on two separate law firms to increase our patent portfolio to be able to engage in the patent spew conflict.").
88. Competition FTC Hearing II, supra note 16, at 713 (statement of Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.) ("[W]e've entered this game five, six years ago in full force for the wrong reason and we're contributing to the proliferation to mutually assured destruction.").
89. As Polk Wagner argues, "even if most firms would be better off with high-quality patents (and fewer of them), adopting such a strategy in the face of others' more numerous (and lower quality) patents is disadvantageous. Thus firms maintain the suboptimal strategy." Wagner, supra note 63.
90. Brookings, supra note 23 ("The practice generally in the technology industry with respect to patents is not so much to license for cash, 'You can use my invention for $12.95.' It's much more of a cross-licensing pattern, 'So I have a few patents, you have a few patents, and we'll license each other.'").
91. Survey: The Arms Race, ECONOMIST, Oct. 22, 2005, at 10, 10 ("The best that can happen is nothing happens." (quoting Joe LaSala, General Counsel of Novell)).
92. FTC Workshop: The Evolving IP Marketplace, FED. TRADE COMM'N, http://www.ftc.gov/bc/ workshops/ipmarketplace/ (last visited Dec. 17, 2010).
93. eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 396 2006) (Kennedy, J., concurring) ("In cases now arising, trial courts should bear in mind that in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases. An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees. For these firms, an injunction, and the potentially serious sanctions arising from its violation, can be employed as a bargaining tool to charge exorbitant fees to companies that Seek to buy licenses to practice the patent." (citation omitted)).
94. See, e.g.. Patent Reform Act of 2009: Hearing on H.R. 1260 Before the H. Comm. on the Judiciary, 11th Cong. 94-95 2009) (statement of Mark Chandler, General Counsel and Senior Vice President, Cisco Systems, Inc.), http:/www.patentfairness.org/pdf/Chandler%2oTestimony%2oCisco%20043009.pdf (last visited Dec. 17, 2010) ("[Current] protections... are not effective against NPEs. Far from deterring the filing of such claims, the current rules [] encourage patent-holding entities to pursue [] opportunistic lawsuits." (emphasis omitted)).
95. B. ZORINA KAHN, THE DEMOCRATIZATION OF INVENTION: PATENTS AND COPYRIGHTS IN AMERICAN ECONOMIC DEVELOPMENT, 1790-1920, at 155 & n.50 2005) (describing how, in 1878, Maria Beasley sold rights over her patented footwarmer to Osborn Conrad of Philadelphia, a few months after the patent issued, and how she also agreed to transfer half of the rights in an unfinished invention to James Henry of Philadelphia in exchange for funds to finish it).
96. Id.
97. RIVETTE & KLINE, supra note 15, at 71 (describing IP-enabled "grow" strategies in which the purchase or development of intellectual property is used to support new product lines or expansion into new markets).
98. The Evolving IP Marketplace: The Operation of IP Markets: Hearing Before the Fed. Trade Comm'n 39-40 (Apr. 17, 2009) [hereinafter Evolving Marketplace II] (statement of Jim Malackowski, President and Chief Executive Officer, Ocean Tomo, LLC), available at http://www.ftc.gov/bc/ workshops/ipmarketplace/apr17/ transcript.pdf(describing early markets, such as Yet2.com, as being focused on selling new product development opportunities).
99. Chien, supra note 5.
100. Lew Zaretzki, Rising Prices and Changing Strategies, INTELL. ASSET MGMT., Feb./Mar. 2008, at 61, 61.
101. Jerome Lemelson's Patents, SMITHSONIAN LEMELSON CTR., http://invention.smithsonian.org/ about/about-patents.aspx (last visited Dec. 17, 2010)
102. See also A Special Tribute to: Jerome Lemelson, AM.'s INVENTOR ONLINE, http://www.inventionconvention.com/americasinventor/dec97issue/ section 16.html#Friday (last visited Dec. 17, 2010).
103. Mary Waldron, The Patent Prosecution Pioneer: Intellectual Property Attorney Gerald Hosier, LAWCROSSING, http://www.lawcrossing.com/article/pdf/ 3445.pdf (last visited Dec. 17, 2010) ("To date, Hosier has retrieved about $1.5 billion from more than 950 companies for Jerome Lemelson and his estate.").
104. Id.
105. Bernard H. Chao, After eBay Inc. v. MercExchange: The Changing Landscape for Patent Remedies, 9 MINN. J. L. SCI. & TECH. 543, 558 n.74 2008)
106. See also Adam Goldman, Some Claim Inventor Lemelson a Fraud, USATODAY, Aug. 21, 2005, http://www.usatoday.com/tech/science/ discoveries/2005-08-21- lemelson-fraud-x.htm. Although Jerome Lemelson's patent enforcement campaigns predated those of others, he was not the first opportunistic licensor.
107. See Gerard N. Magliocca, Blackberries and Barnyards: Patent Trolls and the Perils of Innovation, 82 NOTRE DAME L. REV. 1809, 1811 2007) (describing nineteenth century "patent sharks," who bought dormant patents and used them to sue farmers).
108. Wegner & Maebius, supra note 18, at 13 (describing the mold-breaking Jerome Lemelson paradigm of an inventor outside the industry suing within the industry).
109. Waldron, supra note 80.
110. Brenda Sandburg, You May Not Have a Choice. Trolling for Dollars, RECORDER (July 30, 2001), http://www.phonetel.com/pdfs/LWTrolls. pdf("[Gerald Hosier is] the best-known lawyer in the patent-enforcement industry.").
111. Myhrvold, supra note 3.
112. id. This number does not include patent applications, which are likely to be numerous.
113. See, e.g., AVANCEPT, A STUDY OF: THE INTELLECTUAL VENTURES PORTFOLIO IN THE UNITED STATES: PATENTS & APPLICATIONS 6 2d ed. 2010) (on file with the author) (estimating IVs portfolio, at the end of 2009, to include at least 25,000 to 50,000 patents/applications and possibly even more patent assets).
114. Zaretzki, supra note 78, at 62
115. See also Carlyn Kolker, Billion-Dollar Lawyer Desmarais Quits Firm to Troll for Patents, Bus. WK. (June 1, 2010, 12:04 AM EDT), http://www. businessweek.com/ news/2010-06-01/billion-dollar-lawyer-desmarais-quits-firm-to- troll-for-patents.html;
116. Jeff Kuester & Brett Bartel, Evolution of the IP Market, INTELL. ASSET MGMT., Sept./Oct. 2009, at 30, 32 ("IV... has 'represented half of the purchasing market for US patents over the last few years' [as of 2009]." (quoting Steven Hoffman, Chief Executive Officer, ThinkFire)).
117. See, e.g., analysis reported infra note no (describing the top sellers in Ocean Tomo auctions as being Sun, AT&T, and IBM).
118. See, e.g., Chien, supra note 5, at 1580 (describing the reasons non-practicing entities have focused on high-tech inventions).
119. See, e.g., Richard Brandt, Net Assets: How Stanford's Computer Science Department Changed the Way We Get Information, STANFORD MAG., NOV./Dec. 2004, at 46, 50 (describing the Stanford patent that Google was founded to develop and commercialize).
120. For example, Commerce One sold its web services patent portfolio during bankruptcy proceedings, in 2004, to Novell. Robert Cover, Commerce One Auctions Web Services Patents, COVER PAGES (NOV. 17,2004), http://xml.coverpages.org/ CommerceOnePatents.html. The patents may also be auctioned on eBay.
121. See, e.g., Adam Jones, Looking to Sell Your Patent Portfolio? Put It on eBay, IP LAW BLOG (Oct. 26, 2005), http://www.theiplawblog.com/archives/-patent- law-looking-to-sell-yourpatent-portfolio-put-it-on-ebay.html (describing patents for sale on eBay).
122. David Hetzel & Kirk Dailey, Shooting the Patent Divestiture Rapids, INTELL. ASSET MGMT., Feb./Mar. 2008, at 13,13-18 (describing various reasons companies divest their patent assets).
123. See, e.g., John R. Allison & Mark A. Lemley, Who's Patenting What? An Empirical Exploration of Patent Prosecution, 53 VAND. L. REV. 2099, 2116-17 2000) (describing this diversity of patent owners).
124. OCEAN TOMO, OCEAN TOMO 2007/2008 AUCTION GUIDES 2008) (on file with the author) (describing offerings from entities including NASA, The University of California, AT&T, 3Com, Boeing, Free Publication Systems, Inc., and a number of individual inventors).
125. Myhrvold, supra note 3, at 48-49 (describing IV as acquiring patents from these sources).
126. Evolving Marketplace III,supra note 57, at 95.
127. The reasons for and implications of which are discussed infra Parts II-IV.
128. Evolving Marketplace II, supra note 76, at 42-43 (statement of Steven J. Hoffman, Chief Executive Officer of ThinkFire) ("[T]he number of large corporations that have started to consider selling their portfolios or at least part of their portfolios has dramatically increased over the last couple of years.")
129. id. at 44 (statement of Marcus Delgado, Chief IP Counsel, Cox Communications, Inc.) ("[J]ust looking at Ocean Tomo's markets, I have followed the lot since they began offering those patents at auction, and you can See the progression from smaller independent inventors to very sophisticated companies now that provide their patents to that auction pool....").
130. Myhrvold, supra note 3, at 49.
131. ACACIA TECHS., LLC, ACACIA TECHNOLOGIES: LEADER IN PATENT LICENSING AND ENFORCEMENT 3, http://acaciatecnnologies.com/docs/CorporateBrochure.pdf (last visited Dec. 17, 2010).
132. Tom Ewing, Inside the World of Public Auctions, INTELL. ASSET MGMT., July/Aug. 2010, at 63, 63.
133. Based on catalogs from the Fall 2006, Spring 2007, Fall 2007, Spring 2008, Fall 2008, and Spring 2009 auctions obtained from www.oceantomo.com. Independent analysis is on file with the Author and copies of the catalogues are on file with the Hastings Law Journal.
134. OCEAN TOMO, OCEAN TOMO FALL 2008 LIVE IP AUCTION CATALOGUE 64 2008) (3Com);
135. OCEAN TOMO, SPRING 2006 LIVE PATENT AUCTION 137 2006) (Motorola).
136. OCEAN TOMO, OCEAN TOMO FALL 2008 LIVE IP AUCTION CATALOGUE 266 2008) (Phillips);
137. OCEAN TOMO, OCEAN TOMO AUCTIONS: FALL 2007 CATALOGUE 223 2007) (Kimberly-Clark)
138. OCEAN TOMO, SPRING 2006 LIVE PATENT AUCTION 139 2006) (Ford Motors).
139. See generally OCEAN TOMO, OCEAN TOMO FALL 2006 INTELLECTUAL PROPERTY AUCTION 3 2006).
140. Zaretzki, supra note 78, at 63
141. See also Ewing, supra note 102, at 63-64 & fig.I (describing IV as buying 75.8% of publicly auctioned patent lots)
142. Kolker, supra note 88; Kuester & Bartel, supra note 88, at 32 ("IV... has 'represented half of the purchasing market for US patents over the last few years' [as of 2009]." (quoting Steven Hoffman, Chief Executive Officer, ThinkFire)).
143. Kolker, supra note 88.
144. See sources cited supra note 106.
145. Ewing, supra note 102, at 64.
146. The assets available in public auction are perceived to be of higher quality than assets otherwise available on the market.
147. Id. at 66 (calling patent auction assets "generally higher" quality than patent assets from other sources).
148. Id. at 66.
149. ThinkFire, Presentation at the Berkeley Center for Law and Technology Conference: Patent Valuation Conference 16 (Feb. 6, 2008), available at http://www.law.berkeley.edu/files/zaretzki.pdf.
150. Id.
151. For a comprehensive and in-depth summary, see Raymond Millien & Ron Laurie, Meet the Middlemen, INTELL. ASSET MGMT., Feb./Mar. 2008, at 53, 55
152. see also Peter Detkin, Founder & Vice Chairman, Intellectual Ventures, Presentation at the Federal Trade Commission's Hearings: The Evolving IP Marketplace: The Operation of IP Markets 11 (Dec. 5, 2008), presentation available at http://www.ftc.gov/bc/workshops/ipmarketplace/dec5/docs/pdetkin.pdf
153. Raymond Millien, Chief Executive Officer, PCT Capital, LLC, Presentation at the Federal Trade Commission's Hearings: The Evolving IP Marketplace: The Operation of IP Markets 8-9 (Dec. 5, 2008), presentation available at http://www.ftc.gov/bc/workshops/ipmarketplace/dec5/docs/1millien.pdf (describing
154. Ewing, supra note 102.
155. Daisy Ku, UPDATE I-UK's ICAP Buys Patent Broker Tomo for $10 Mln, REUTERS (June 16, 2009), http://www.reuters.com/article/idUSLG50594520090616.
156. See Jamie Ludowitz, PLX Announces Plans to Revolutionize $3.5 Billion Patent Industry Through Global, Internet-Based Patent Auction Market, EUREKALERT! (Jan. 22, 1999), http://www.eurekalert.org/pub-releases/1999-01/FI- PAPT-220199.php%23
157. see also Hans Ibold, Intellectual Property Auction Site Draws Heavy Action, L.A. Bus. J., Dec. 4, 2000, at 16, 16.
158. See Glenn Wheeler, What's Your Strategy at the IP Auction, TAEUS INT'L CORP., http://www.taeus.com/article.php?id=72 (last visited Dec. 17, 2010).
159. See, e.g., Ewing, supra note 102, at 67 (approximating IVs acquisition expenditures through public auction to be 5% of its total acquisition expenditures).
160. Millien & Laurie, supra note 114, at 55.
161. Matthew Fawcett & Jeremiah Chan, March of the Trolls: Footsteps Getting Louder, 13 INTELL. PROP. L. BULL, I, 10 (2008).
162. See Mike Masnick, Patent Holder Sues McAfee, Gets $25 Million... But May End Up Losing $5 Million Due to Everyone It Has To Pay Off, TECHDIRT (Nov. 4, 2009, 12:51 PM), http://www.techdirt.com/blog.php?company= altitude+capital+partners&edition-;
163. Nathan Vardi, Patent Payday, FORBES.COM (Feb. 12, 2008, 6:00 AM), http://www.forbes.com/2008/02/11/patents-legal-rembrandt-biz-cz-nv-0212patent. html.
164. Shareholders Major ACTG Acacia Research Corporation Shareholders, MORNINGSTAR, http:/investors.morningstar.com/ownership/shareholdersmajor.html?t= ACTG®ion=USA&culture -en-US+%28%29 (click tab for "Institutions" to see Oppenheimer Funds) (last visited Dec. 17, 2010).
165. Nicholas Varchaver, Who's Afraid of Nathan Myhrvold?, FORTUNE, July 10, 2006, at 110, 112.
166. Fawcett & Chan, supra note 121, at 9
167. see also Zusha Elinson, Intellectual Venture Takes Indirect Route to Court, RECORDER (Sept. 1, 2009), http://www.law.com/jsp/law/LawArticleFriendly. jsp?id=1202433490140 ("The widely used insult 'patent troll' was coined to describe Niro and his clients by Peter Detkin, then an Intel Corp. lawyer. Detkin is now co-founder and vice chairman of Intellectual Ventures.").
168. Mark A. Lemley & Nathan Myhrvold, How to Make a Patent Market, 36 HOFSTRA L. REV. 257, 257-58 (2007).
169. One example of this imbalance was Ocean Tomo's failed spring 2009 auction, in which only six out of eighty patent lots sold. Joe Mullin, Bummer Before the Summer: Ocean Tomo Auction a Bust, THE PRIOR ART (Mar. 30, 2009, 6:22 AM), http://thepriorart.typepad.com/the-prior-art/2009/03/ocean-tomo-2009- spring-auction-results.html.
170. Zaretzki, supra note 78, at 66.
171. See generally Myhrvold, supra note 3 (describing his vision of an invention capital market that would provide funding and strong patents for inventors, among other roles)
172. Joe Mullin, Patent Enforcement Companies Speak at SF Conference, THE PRIOR ART (May 28, 2010, 12:16 PM), http://thepriorart.typepad.com/the-prior- art/2010/05/patent-enforcement-companies-speak-at-sfconference.html (describing Erich Spangenberg's projection that the patent market will become more liquid and transactional).
173. Chien, supra note 5, at 1579.
174. See, e.g., McCurdy, supra note 17, at 80 ("[P]atent enforcement entities... are highly selective in their purchases. They have relatively small and focused patent portfolios.").
175. Pake's Patents: Paice and Toyota, PAICE, http://www.paice.net/paices- patents/paice-v-toyota(last visited Dec. 17, 2010).
176. Pake's Patents: List of U.S. Patents, PAICE, http://www.paice.net/paices- patents/list-of-u-s-patents(last visited Dec. 17, 2010).
177. NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1287 (Fed. Cir. 2005).
178. RICHARD RAYSMAN ET AL., INTELLECTUAL PROPERTY LICENSING: FORMS AND ANALYSIS §6.02A (2010).
179. MIKE LLOYD & JUSTIN BLOWS, WHO HOLDS THE POWER? LESSONS FROM HYBRID CAR INNOVATION FOR CLEAN TECHNOLOGIES 10 tbl.2 (2009).
180. Timo Fischer & Joachim Henkel, Patent Trolls on Markets for Technology-An Empirical Analysis of Trolls' Patent Acquisitions 18 (Dec. 2009) (working paper), available at http://papers.ssrn.com/sol3/papers.cfm?abstract- id=1523102.
181. Mallun Yen, Panel on Developing Business Models: View from the Industry 3 (Dec 5, 2008) (prepared statement submitted to the FTC), available at http://www.ftc.gov/bc/workshops/ipmarketplace/dec5/docs/myen2.pdf ("[M]ore often, the assertions we receive present patents of dubious validity and weak arguments of infringement.....").
182. Clarisa Long, Patent Signals, 69 U. CHI. L. REV. 625, 651-53 (2002).
183. See supra note 35 and accompanying text
184. see also, e.g., Robert Jaques, IBM Sets Record for Most Patents Lodged in a Year, AUSTRALIAN PC AUTH. (Jan. 12, 2007), http://www.pcauthority.com.au/ News/71117, ibm-sets-record-for-most-patents-lodged-in-a-year.aspx.
185. Described generally in Chien, supra note 5.
186. See, e.g., Press Release, Acacia Research Corp., Acacia Research Reports First Quarter 2009 Financial Results (Apr. 23, 2009), http://acaciatechnologies. com/pr/0423091stqtrfinancials.pdf(describing Acacia's more than 100 patent portfolios, held collectively by its many subsidiaries)
187. Avancept, supra note 87, at 18 (estimating that IV has up to 1100 shell companies)
188. see also Mullin, supra note 129 ("[Erich Spangenberg has a] very large network of patent-holding companies, several of which are named after Greek gods.").
189. See Chien, supra note 5, at 1579 n.34.
190. Ewing, supra note 102, at 69 ("CFOs nervously roll IP licensing expenses into the costs of goods produced to avoid any public slip. Miniature versions of actual sales documents are publicly recorded to thwart greater disclosure. Creating a limited liability company to hold IP assets provides still greater uncertainty.").
191. Chien, supra note 5, at 1581.
192. Avancept, supra note 87, at 18.
193. About Us, PATENT FREEDOM, http://www.patentfreedom.com/aboutus.html (last visited Dec. 17, 2010).
194. See Apple, Inc., Annual Report (Form 10-K) 56, 62 (Oct. 27, 2009). Apple's income statement shows "sales" as the single category of income, which in turn is comprised of "revenue from the sale of hardware, software, digital content and applications, peripherals, and service and support contracts."
195. Id. at 62.
196. Dan McCurdy, Out of Alignment-Getting IP and Business Strategies Back in Sync, in FROM ASSETS TO PROFITS: COMPETING FOR IP VALUE AND RETURN 6 (Bruce Berman ed., 2009).
197. Id.
198. Cisco Systems, Inc., Annual Report (Form 10-k) (Sept. 10, 2009) (reporting that product sales generated 81 % of Cisco's income, specifically $29K million out of $36K million total).
199. Press Release, Stacy Williams, Cisco Patent Program Becomes Cornerstone of Continued Innovation (July 8, 2003), http://newsroom.cisco.com/dlls/ts- 070803.html (quoting Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.) (internal quotation marks omitted).
200. Id.
201. Id. (quoting Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.) (internal quotation marks omitted).
202. Jonathan Schwartz, Thank You, Network Appliance, JONATHAN SCHWARTZ'S BLOG (Sep. 6, 2007, 5:00 AM), http://blogs.sun.com/jonathan/entry/on-patent- trolling.
203. Patents Smart Assets, supra note 1, at 60.
204. NERMIEN AL-ALI, COMPREHENSIVE INTELLECTUAL CAPITAL MANAGEMENT. STEP-BY-STEP 147 (2003).
205. Id.
206. 159- See generally Josh Lerner et al., Cooperative Marketing Agreements Between Competitors: Evidence from Patent Pools (Nat'l Bureau of Econ. Research, Working Paper No. 9680).
207. But see Nick Bilton, What Apple vs. HTC Could Mean, Posting to Bits, N.Y. TIMES (Mar. 2, 2010, 7:00 PM), http://bits.blogs.nytimes.com/2010/03/02/what- apple-vs-htc-could-mean/ (describing a suit initiated by Apple against HTC, whose handsets use Google's Android technology).
208. Ranking of Operating Companies by Number of NPE Lawsuits, PATENT FREEDOM (Apr. 1, 2010), https://www.patentfreedom.com/research.html.
209. Rachael King, Tech Giants' New Way To Thwart Patent Suits, Bus. WK. (Feb. 1, 2010, 11:41 PM EST), http:// www.businessweek.com/technology/content/ feb2010/tc2010021-382392.htm(describing Cisco and Samsung as members of defensive buying company RPX).
210. See Patent Reform, Cisco, http://www.cisco.com/web/about/gov/markets/ patent-reform.html(last visited Dec. 17, 2010).
211. The term "IP revenue" refers to patent-related income generated by licensing, patent sales, and related uses of IP.
212. BERNICE LEE ET AL., CHATHAM HOUSE, WHO OWNS OUR LOW CARBON FUTURE? INTELLECTUAL PROPERTY AND ENERGY TECHNOLOGIES 6 (2009), (describing such a practice as "divestiture licensing").
213. See Chien, supra note 5, at 1577-78.
214. See, e.g., Joseph N. Hosteny, Litigators Corner: Is IBM a Patent Troll?, INTELL. PROP. TODAY, May 2006, at 26,26-27.
215. Wayne Reinke, Patents Should Be the Starting Point for a Solid Licensing Strategy, MASS HIGH TECH (Mar. 6, 2006), http://www.masshightech.com/stories/ 2006/03/06/focus4-Patents-should-be-the-starting-point-for-a-solid-licensing- strategy.html("GE has historically limited the licensing of its patent portfolio. However, according to Jim Aloise, director of global licensing development at GE Licensing, GE has stepped up its efforts in licensing its technology over the past few years.").
216. See Ellen Mann, CIF Brings Innovative Thinking and Resources to Their Customers, FINANCING ANSWER, July 2005, available at http://www.cefcorp.com/ commequip/toolsandresources/fajuly2005.pdf (describing the formation of Intellectual Property Group and explaining that it permits "customers to take advantage of intangible assets such as patents, trademarks and other intellectual property that might otherwise lie dormant, or expire without proper commercialization" and describing one such campaign undertaken for Motorola)
217. see also Phil Milford, GE Licensing Wins 7.6 Million Patent Award from LSI, BLOOMBERG (Feb. 17, 2009, 21:47 EST), http://www.bloomberg.com/apps/news? pid=conewsstory&refer-conews&tkr=MOT:US&sid=a48zmrkP.LxI (describing successful patent infringement suit brought by GE licensing unit, "CIF Licensing").
218. General Electric. Co., Annual Report (Form 10-K) 85 (Feb. 19, 2009).
219. See Reinke, supra note 168.
220. Milford, supra note 169.
221. Complaint, CIF Licensing, L.L.C. v. Lenovo Grp. Ltd., No. 09 CV 1849 (S.D.N.Y, Feb. 27, 2009).
222. General Electric Company Profile, HOOVERS, http://www.hoovers.com/ company/General-Electric-Company/rfjyci-i.html (last visited Dec. 17, 2010) (noting that GE's core business is broad, including aircraft engines, medical imaging equipment and kitchen and laundry appliances, but does not encompass modem and MPEG technologies).
223. McCurdy, supra note 149, at 7.
224. Id. at 9-10.
225. For one view that it is, see Hosteny, supra note 167, at 27.
226. PHELPS & KUNE, supra note 35, at xi, 27 (stating that while Marshall Phelps ran IBM's IP organization from 1971-2000, he "never sued anybody").
227. Stuart Macdonald, When Means Become Ends: Considering the Impact of Patent Strategy on Innovation, 16 INFO. ECON. & POL'Y 135, 141 (2004) ("Lucent Technologies... has an intellectual property business group with 266 employees to make a profit from... companies that come to [it]...."
228. (quoting David Rubenstein, Patent Profits, INDUSTRY WK. (Nov. 2, 1998), http://www.industryweek.com/articles/patent-profits-102.aspx)).
229. HARRIS CORP., http://www.harrts.com (last visited Dec. 17, 2010).
230. Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy: Joint Hearings Before the Fed. Trade Comm'n & Dep't of Justice 42 (Apr. 9, 2002) [hereinafter Competition FTC Hearing V] (statement of Leslie Hart, Vice President of IP, Harris Corp.), available a/http://www.ftc.gov/opp/intellect/020409ftctrans.pdf.
231. Id. at 41.
232. Id. at 42.
233. Id.
234. Evolving Marketplace II, supra note 76, at 38 (statement of Tracey R. Thomas, Chief IP Strategist and License Negotiator, American Express Co.).
235. For the decision, see State St. Bank & Trust Co. v. Signature Fin. Grp., Inc., 149 F-3d 1368, 1369 (Fed. Cir. 1998).
236. Evolving Marketplace II, supra note 76, at 38 (statement of Tracey R. Thomas, Chief IP Strategist and License Negotiator, American Express Co.).
237. Id.
238. RIVETTE & KLINE, supra note 15, at 59-60.
239. Id. at 125.
240. About Us: History, SISVEL, http://www.sisvel.com/engush/aboutus/ history(last visited Dec. 17, 2010).
241. U.S. ETHERNET INNOVATIONS, http://www.usethernetinnovations.com (last visited Dec. 17, 2010).
242. Corporate Information: 3Com @ a Glance, 3COM, http://www.3com.com/ corpinfo/en-US/index.html (last visited Dec. 17, 2010).
243. U.S. ETHERNET INNOVATIONS, supra note 190.
244. Evolving Marketplace II, supra note 76, at 43 (statement of Laura G. Quatela, Chief IP Officer & Vice President, Eastman Kodak Co.) ("We've begun to sell patents with a targeted program and a staff to support it recently for two reasons. First is to fund the transformation that the company is experiencing from an analog manufacturing space to a digital space, which is a highly expensive transformation, and the second reason is to give our inventors some sense of accomplishment if their inventions are not commercialized. There is a very real tangible satisfaction rate that goes along with picking patents that the company won't practice and putting them out on the market and realizing the return for the shareholder.").
245. See, e.g., Lawrence J. Bassuk, Patents, Standards, and Licensing: Working (Well) Together at Texas Instruments 2 (Jan. 29, 2010) (article presented at AIPLA's 33rd Mid-Winter Institute Program: IP Licensing), available at http://www.aipla.org/html/mw/2010/papers/Bassuk-Paper.pdf("TI gets and uses patents under three guiding principles, [including]... earning a return on our investment in research and development.").
246. However, they also come at a cost to society, through the disincentives provided to the commercializing infringer, who may in fact have independently invented the technology. If litigated inventions are representative of all patented inventions, then most infringers are likely to be independent inventors.
247. See Christopher A. Cotropia & Mark A. Lemley, Copying in Patent Law 2 (Stanford Pub. Law, Working Paper No. 1270160, 2009), available at http://papers.ssrn.com/s0l3/papers.cfm?abstract-id=1270160 ("A surprisingly small percentage of patent cases involve even allegations of copying, much less proof of copying.").
248. See supra Part I.B.2.
249. See, e.g., PHELPS & KUNE, supra note 35, at 138 ("The average grade for the executive management of patents today is probably a D-minus. Most patents are not managed at all; they just sit there." (quoting Nathan Myrhvold))
250. Sharon Oriel, Hooking the Corporation on the Value of Intellectual Assets, INTELL. ASSET MGMT., Sept/Oct. 2010, at 91, 91 (finding most companies are focused on creating and obtaining patents, but do not realize the significant income they are missing by ineffectively managing their portfolio).
251. See infra notes 342-46 and accompanying text.
252. See, e.g., John R. Allison et al., Extreme Value or Trolls on Top? The Characteristics of the Most Litigated Patents, 158 U. PA. L. REV. I, 10 tbl.I & n.20 (2009) (showing twelve entity-status classes).
253. McCurdy, supra note 17, at 80-81 (describing various actors in the "Patent Troll Realm").
254. Mark A. Lemley, Are Universities Trolls? 18 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 611, 612 (2008).
255. Jerry G. Thursby et al., Objective, Characteristics and Outcomes of University Licensing: A Survey of Major U.S. Universities, 26 J. TECH. TRANSFER 59, 65 (2001) ("The most important objective to the [technology transfer office) is clearly royalties and fees generated....").
256. See, e.g., Arti K. Rai et al., University Software Ownership and Litigation: A First Examination, 87 N.C. L. REV. 1519, 1525 (2009).
257. Letter from Teresa Stanek Rea, President, Am. Intellectual Prop. Law. Ass'n, to Suzanne Michel, Assistant Dir., Fed. Trade Comm'n (May 15, 2009), available at http://www.ftc.gov/os/comments/iphearings/540872-00045.pdf ("[T]echnology development companies... Qualcomm, ' Rambus, AmberWave, MOSAID, and Tessera... engage in research and development, but do not directly manufacture products.").
258. Though they certainly have been accused of launching surprise attacks, too. See, e.g.. ORG. FOR ECON. CO-OPERATION A DEV., supra note 64, at 35, 37 (describing alleged "patent ambushes" by Rambus and Qualcomm).
259. See Thursby et al., supra note 202, at 70 ("Most inventions which evolve from university research are disclosed at a very early stage of development....").
260. ASS'N FOR UNIV. TECH. MANAGERS, IN THE PUBLIC INTEREST: NINE POINTS TO CONSIDER IN
261. LICENSING UNIVERSITY TECHNOLOGY 6 (2007) [hereinafter PUBLIC INTEREST], http://www.autm.net/Nine-Points-to-Consider.htm ("In considering enforcement of their intellectual property, it is important that universities be mindful of their primary mission to use patents to promote technology development for the benefit of society.").
262. Patent Reform in the 111th Congress: Legislation and Recent Court Decisions: Hearing Before the S. Comm. on the Judiciary, 111th Cong. 240 (2009) (statement of Taraneh Maghame, Vice President, Tessera, Inc.).
263. QUALCOMM, THIRD QUARTER FISCAL 2010 EARNINGS (2010), available at http://investor.qualcomm.com/common/download/download.cfm?companyid= QCOM&fileid=388424& filekey=fceadfda-bfbc-4a4I-a755- e5cbd6o6eeee&filename=Q310EarningsWebFINAL.pdf;
264. Mark Lapedus, Qualcomm's Foundry Push Closes Gap with TI, EE TIMES (Sept. 8, 2006, 11:50 AM EDT), http://www.eetimes.com/electronics-news/4064790/ Qualcomm-s-foundry-push-closes-gap-with-TI.
265. Rambus Reports Second Quarter Earnings, Bus. WIRE, July 22,2010, releasedetail.cfm?ReleaseID=491256.
266. Licensing, RAMBUS, http://www.rambus.com/us/about/licensing/index.html (last visited Dec. 17, 2010).
267. WI-LAN, http://www.wi-lan.com/company/default.aspx (last visited Dec. 17,2010).
268. James Bagnall, Ottawa's Patent Power Outperforms, OTTAWA CITIZEN, Aug. 27, 2010, http://www.ottawacitizen.com/business/Ottawa+patent+powers+outperform/ 3448044/story.html.
269. Id.
270. Brad Feld, The Typical Kinds of Software Patent Plaintiffs, FELDTHOUGHTS (Apr. 13, 2010), http://www.feld.com/wp/archives/2010/04/the-typical-ktads-of- software-patent-plaintiffs.html (describing several classes of software patentee litigants including the "small fry troll," fund troll," and "big fish troll" (internal quotation marks omitted)).
271. The last of which is described Infra, at note 318 and accompanying text.
272. ACACIA TECHS., supra note ioi, at 3 ("[P]atent owners who engage with us are primarily inventors and small companies who have limited resources to deal with unauthorized users, but include some large companies looking to turn their patents into revenue.").
273. Letter from Paul Ryan, Chief Exec. Officer, Acacia Research, to Fed. Trade Comm'n (May 13, 2009), available at http://www.ftc.gov/os/comments/ iphearings/540872-00048.pdf.
274. McCurdy, supra note 17, at 80.
275. ACACIA TECHS., LLC PATENT LICENSING A TECH., http://acaciatechnologies. com/index.htm (last visited Dec. 17,2010).
276. Don Clark & Dionne Searcey, Big Patent Firm Sues Nine Tech Firms, WALL ST. J. (Dec. 9, 2010), http://online.wsj.com/article/ SB10001424052748703493504576007444122372926.html (describing a suit brought by IV against technology companies).
277. But see Myhrvold, supra note 3, at 46 ("While I don't rule [litigation] out, I see it as a highly undesirable recourse for several reasons: It's expensive, it's unpredictable, and it takes years.").
278. Victoria Slind-Flor, IV Moves from Myth to Reality, INTELL. ASSET MGMT., Aug/Sept. 2006, at 29, 32.
279. Amol Sharma & Don Clark, Tech Guru Riles the Industry By Seeking Huge Patent Fees, WALL ST. J., Sept. 17,2008, at AI.
280. Verizon Communications Inc., Quarterly Report (Form 10-Q) 15 (June 30, 2008) ("During the second quarter of 2008, we entered into an agreement to acquire a non-exclusive license (the 'IP License') to a portfolio of intellectual property owned by an entity formed for the purpose of acquiring and licensing intellectual property. We paid an initial fee of $100 million for the IP License, which is being amortized over the expected useful lives of the licensed intellectual property. In addition, we executed a subscription agreement (with a capital commitment of up to $250 million to be funded as required through 2012) to become a member in a limited liability company (the 'LLC') formed by the same entity for the purpose of acquiring and licensing additional intellectual property. In connection with this investment, we will receive non-exclusive license rights to certain intellectual property acquired by the LLC for an annual license fee.").
281. Intuit Inc., Quarterly Report (Form 10-Q) 24 (Apr. 30, 2009) ("On May 14, 2009, we entered into an agreement to Ucense certain technology for total consideration of $120 million payable over the next ten fiscal years.");
282. Zusha Elinson, Intellectual Ventures and Intuit Work Out $120 Million Licensing Deal, Say Sources, RECORDER, June 24,2009, http://www.law.com/jsp/article.jsp?id=1202431711930.
283. Myhrvold, supra note 3, at 44. Its investors include Microsoft, Apple, Google, and eBay.
284. See supra note 124 and accompanying text.
285. PUBLIC INTEREST, supra note 207.
286. To the extent it sells portfolios of patents to support the development of technology, IV, through some transactions, may also more closely resemble an R&D entity than a patent-assertion entity.
287. See, e.g., Elinson, supra note 125 (describing litigation by Picture Frame Innovations, LLC of patent acquired from an IV shell company).
288. Complaint at 1, Stragent, LLC v. Nokia Inc., No. 2:08-cv-293 (E.D. Tex. July 29,2008) (listing among others Nokia, Motorola, Palm, RIM, Sony Ericsson, AOL, Google, Microsoft, etc.).
289. Id.
290. Stragent Targets Slew of Tech, Car Cos. in IP Suits, LAW 360 (Apr. 30, 2010), http://www.law360.com/articles/165367 (on file with the Hastings Law Journal).
291. Based on a review of the assignment record, using the following link, sixty-five patents were found. Stragent, LLC and Stragent Technologies, LLC are presumed to be the same entity as they share identical address information. Assignments on the Web, U.S. PATENT A TRADEMARK OFFICE, http://assignments. uspto.gov/assignments/?db=pat (use search term "stragent" in searchbox "Assignee Name").
292. Steve Kanigher, Little Las Vegas Patent Firm Takes on Tech Giants, LAS VEGAS SUN (May 20, 2010, 2 AM), http://www.lasvegassun.com/news/2010/may/20/ little-Iv-patent-firm-takes-tech-giants/. Based on a review of the assignment record, using the following link, only seven patents were found.
293. Assignments on the Web, U. S. PATENT A TRADEMARK OFFICE, http://assignments.uspto.gov/assignments/?db=pat (use search term "synchrome" in searchbox "Assignee Name").
294. Ewing, supra note 102, at 68 ("At least four patent lots purchased at auction by NPEs have been used in patent litigation.").
295. Allison et al., supra note 199, at 35-37.
296. See supra notes 79-85 and accompanying text.
297. FLASH OF GENIUS (Universal Pictures 2008);
298. see Kearns v. Chrysler Corp., 32 F-3d 1541, 1543 (Fed. Cir. 1994);
299. John Seabrook, The Flash of Genius, NEW YORKER, Jan. 11, 1993, at 39,39.
300. Dionne Searcey, Microsoft Co-Founder Launches Patent War, WALL ST. J. (Aug. 28, 2010), http://online.wsj.com/article/ SB10001424052748703294904575385241453119382.html.
301. Sandburg, supra note 85, at 2 ("Niro, Scavone, Haller & Niro... tends to represent little guys who can't afford to litigate against major corporations.").
302. Chien, supra note 5, at 1574.
303. Id. at 1605 tbl.6
304. (showing so-called "David v. Goliath suits," suits initiated by independent inventors, as lasting 14.6 months on average, longer than any single category).
305. RPX Membership Jumps to 35 Companies, RPX (Feb. 16, 2010), http://www.rpxcorp.com/index.cfm?pageid=32&itemid=6 ("To date, RPX has invested over $200 million to acquire more than 1,300 patents and patent rights in the mobile, Internet search, telecommunications, networking, consumer electronics, and e-commerce-including data and transaction processing-markets. ").
306. Id.; Larry Dignan, RPX: Can it Defend Against Patent Trolls?, ZDNET (NOV. 24, 2008, 4: 11 AM), http://blogs.zdnet.com/BTL/?p=10993.
307. The "Free Rider" Fallacy, RPX, http://www.rpxcorp.com/index. cfm?pageid=14&itemid=8(last visited Dec. 17, 2010).
308. Victoria Slind-Flor, Sun, eBay, Rock & Republic, Troyer: Intellectual Property, BLOOMBERG (July 1, 2008, 12:01 AM), http://www.bloomberg.corn/apps/ news?pid=conewsstory&refer=conews&tkr=1149L:US&sid=al70xRS4IR9w (internal quotation marks omitted).
309. Allied Security Trust Announces Availability of Major Patent Portfolio: Providing Opportunity for Anyone to Take a License Prior to the Upcoming Portfolio Sale, MARKETWTRE (Jan. 26, 2010, 9:00 AM), http://www.marketwire.corn/ press-release/Allied-Security-Trost-Announces-Availabiuty-Major-Patent- Portfolio-Providing-Opportunity-1107124.htm.
310. Steven Lohr, Turning Patents Into 'Invention Capital,' N.Y. TIMES, Feb. 18,2010, at BI.
311. Antonio Davila et al., Venture Capital Financing and the Growth of Startup Firms, 18 J. Bus. VENTURING 689, 690-91 (2003).
312. Ronald J. Gilson, Locating Innovation: The Endogeneity of Technology, Organizational Structure, and Financial Contracting, 110 COLUM. L. REV. 885, 894-95 (2010) (describing the process by which startups are created initially, by forming an idea, securing venture capital, and then using that capital to develop the original idea to become successful).
313. Graham et al., supra note 1, at 1299, fig.2 (2009).
314. Id.
315. Although it has not stopped companies from engaging in significant patent battles, for example, over 3G wireless technology, see Chien, supra note 5, at 1584,
316. or smartphones, as described in Don Clark & Shayndi Raice, Corporate News: Tech Firms Intensify Patent Spats-Spate of Lawsuits Concentrate on Mobile-Phone Market as Rivals Aggressively Seek Strategic Edge, WALL ST. J., Oct. 4, 2010, at B3.
317. FED. TRADE COMM'N, supra note 60, at 52.
318. See 35 U.S.C. § 287 (2006).
319. I thank John Duffy for emphasizing this to me.
320. However, by obtaining a patent defensively, a company prevents someone else from obtaining a patent over the same invention and makes it harder for related inventions to be patented, by creating prior art. I thank Eric Friedman for making this point to me.
321. Chien, supra note 5, at 1604 fig.2 & n.168. Suits by individuals and nonprofits accounted for another 6% of suits in the dataset studied and were not included in this total.
322. See id. at 1600 tbl.3.
323. Yen, supra note 138, at 2 ("[V]irtually all of the litigation activity has been with nonpracticing entities with no appreciable business of making or selling products or services.").
324. Barack Obama, President of the U.S., Remarks at Hradcany Square, Prague, Czech Republic (Apr. 5, 2009), transcript available at http://www.whitehouse. gov/the-press-office/Remarks-By-President-Barack-Obama-In-Prague-As-Delivered.
325. Id.
326. I defined a "large company" as a public company or private company with an annual revenue of over $100 million. Chien, supra note 5, at 1612-14 app. A.
327. Id. at 1603 tbl.5. In comparison, non-practicing entity suits comprised 19% of the total, and suits brought by individuals ("David versus Goliath" suits) comprised 4% of the total.
328. Id.
329. Id. at 1605 tbl.6.
330. A suit in which the plaintiff and defendant each comprise a large company. See the methodology of identification described in Of Trolls, Chien supra note 5, at Part II.
331. Both code systems are used to describe various industries in U.S. commerce; the NAICS system was developed more recently. See North American Industry Classification System, US CENSUS BUREAU, http://www.census.gov/eos/www/ naics/ (last visited Dec. 17, 2010) ("The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. NAICS was developed under the auspices of the Office of Management and Budget (OMB), and adopted in 1997 to replace the Standard Industrial Classification (SIC) System.").
332. That is 29% of large company suits (referred to in the paper as "Sport of King" suits), which themselves comprised 28% of all high-tech suits. See infra tbl. I.
333. See James Bessen & Michael J. Meurer, The Patent Litigation Explosion 18 tbl.3 (Bos. Univ. School of Law Working Paper Series, Paper No. 05-18, 2005), available at http://ssrn.com/abstract=831685 (reporting that, among the 680 suits between public companies the authors studied, 29% involved "true competitors" in the same industry, 43% had overlapping product lines, and 28% had no industry overlap, based on comparison of party SIC codes).
334. Anne Layne-Farrar & Josh Lerner, To Join or Not To Join: Examining Patent Pool Participation and Rent Sharing Rules, INT'L J. INDUS. ORG. (forthcoming 2011) (manuscript at 2), available at http://papers.ssrn.com/sol3/ papers.cfm?abstract-id=945189.
335. Maisie Ramsay, Diving into the LTE Patent Pool, WIRELESS WEEK (May 20, 2009), http://www.wirelessweek.com/Articles/2009/05/Divtag-Into-the-LTE-Patent- Pool/ ("'[The proposed patent pools] are merely a preemptive attempt to quash the type of IPR fighting that happened in 3G and grow adoption for the technology,' says James Brehm, analyst with Frost & Sullivan." (alteration in original)).
336. Layne-Farrar & Lerner, supra note 269, at 13 ("Vertically integrated firms manufacture products embodying the standard and so they benefit from pools through lower costs in cross-licensing the necessary patents.").
337. Ramsay, supra note 270 (quoting Derek Aberle, President of Technology Licenses, Qualcomm).
338. Layne-Farrar & Lerner, supra note 269, at 6.
339. See, e.g., Parchomovsky & Wagner, supra note 63, at 31-39 (citing scale and diversity features of patent portfolios);
340. see also Stuart J.H. Graham & Ted Sichelman, Why Do Start-Ups Patent?, 23 BERKELEY TECH. L.J. 1063,1063-70 (2008) (listing reasons, including maintaining supra-competitive prices, generating license revenue, developing an arsenal for cross-licensing, securing investment and financing, shielding, bullying, blocking and preemptively patenting, substituting for nondisclosure agreements, and enhancing a company's image).
341. In 2009, for example, the top companies were IBM, Samsung, Hitachi, Microsoft, Canon, Intel, Panasonic, Toshiba, Fujitsu, and Sony. INTELL. PROP. OWNERS ASS'N, TOP 300 ORGANIZATIONS GRANTED U.S. PATENTS IN 2008 1 (2009), available at http://www.ipo.org/AM/Template.cfm?Section=Home&TEMPLATE=/CM/ ContentDisplay.cfm&CONTENTID=22339.
342. Evolving Marketplace III, supra note 57, at 128 (statement of Horacio E. Gutierrez, Corporate Vice President & Deputy General Counsel, Microsoft Corp.).
343. See, e.g., Evolving Marketplace I, supra note 40, at 87 (testimony of Sarah Harris, Vice President & Chief IP Counsel, AOL LLC) ("[AOL] ha[s] been able to come back and use our portfolio defensively, so that's really promoted and encouraged us to continue filing more patent applications.... ");
344. id. at 83 (testimony of Russ Slifer, Chief Patent Counsel, Micron Technology, Inc.) (describing that the need for a large portfolio continues to drive filing for a large number of patents).
345. See, e.g., ERIC VON HIPPEL, THE SOURCES OF INNOVATION 53 (1988) ([T]he true value [of a patent grant] is negative because it requires all to assume the overhead burden of defensive patenting.").
346. Robert P. Merges, Patents, Entry and Growth in the Software Industry 12-13 (Aug. 1, 2006) (unpublished article), available at http://ssrn.com/ abstract=926204
347. see also Rebecca S. Eisenberg, Noncompliance, Nonenforcement, Nonproblem?; Rethinking the Anticommons in Biomedical Research, 45 Hous. L. REV. 1059, 1061 (2008) (describing empirical studies that suggest fears that upstream patents will deter downstream research have largely failed to materialize);
348. Ronald J. Mann, Do Patents Facilitate Financing in the Software Industry?, 83 TEX. L. REV. 961, 968 tbl.I (summarizing the positive effects of patents for prerevenue startups, later-stage startups, and large firms).
349. See generally Parchomovsky & Wagner, supra note 63;
350. see also Craig Opperman & Carina Tan, Getting Less for More, INTELL. ASSET MGMT., Dec./Jan. 2008, at 8, 8-9, (discussing low-cost, volume-based patenting).
351. Sterne et al., supra note 15, at 22.
352. Id.
353. Opperman & Tan, supra note 280, at 8-9.
354. As compared to an average price of $ 10,993 for a relatively complex new electrical/computer application and $3165 for an amendment/argument. AM. INTELL. PROP. LAW ASS'N, REPORT OF THE ECONOMIC SURVEY app. at 1-73-1-74 (2007).
355. See supra note 55 and accompanying text.
356. 2007 USPTO ANN. REP. 10 [hereinafter USPTO ANN. REP.] ("[Fee] diversion, a larger percentage of complex applications, and applicant behavior have combined to create the 'perfect storm' of factors leading to historic levels of unexamined patent applications.").
357. See, e.g., Bill Barrett, Defensive Use of Publications in an Intellectual Property Strategy, 20 NATURE BIOTECHNOLOGY 191, 192 (2002) (discussing the strategy of patenting "incremental inventions").
358. Competition FTC Hearing II, supra note 16, at 675 (statement of Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.).
359. USPTO ANN. REP., supra note 286, at 9 (describing increases in overall pendency from twenty-five months in 1999 to thirty-two months 2007, and up to forty-three months in some art areas).
360. Performance and Accountability Report Fiscal Year 2008: Table 4: Patent Pendency Statistics, U.S. PATENT A TRADEMARK OFTICE, http://www.uspto.gov/web/ offices/com/annual/2008/oai-05-wlt-04.html (last visited Dec. 17, 2010) (showing applications examined in the computer architecture, software, and information security and communications technology centers as having longer times to first action and a longer average pendency than any other in the USPTO).
361. Patent Application Full Text and Image Database, U.S. PATENT A TRADEMARK OFFICE, http://appfti.uspto.gov/netahtml/PTO/search-bool.html (last visited Dec. 17, 2010). The table was created based on the information in this database.
362. See expansion of this sentiment in Competition FTC Hearing II, supra note 16, at 681 (statement of Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.).
363. See, e.g., DAVIS A HARRISON, supra note 22, at 145 (describing Dow's classification, in 1993, of its patents into three categories, including "No Business Interest (available for licensing, allow to expire, abandon)," and noting that 25% of its patents proved to be in this category).
364. PHELPS A KLINE, supra note 35, at 138.
365. McCurdy, supra note 149, at 15.
366. See supra Part I.B.2.a;
367. supra note 198 and accompanying text.
368. See Kahin, supra note 6, at 11.
369. See, e.g., John Allison et al., Valuable Patents, 92 GEO. L.J. 435,436-37 (2004) (developing a profile of valuable patents based on an empirical analysis);
370. Mark A. Lemley, Rational Ignorance at the Patent Office, 95 Nw. U. L. REV. 1495, 1507 n.55 (2001) (estimating that only 5% of patents are the subject of licensing and 1.5% are the subject of litigation, and noting that the balance is largely ignored);
371. Kimberley Moore, Worthless Patents, 20 BERKELEY TECH. L.J. 1521, 1522-25 (2005).
372. Allison, supra note 298, at 438 ("Our data conclusively demonstrate that valuable patents differ in substantial ways from ordinary patents both at the time the applications are filed and during their prosecution." (emphasis added)).
373. See, e.g., Steven Bennet & David Kappos, Inside Views: Deferred Examination: A Solution Whose Time Has Come, INTELL. PROP. WATCH (Mar. 12, 2009), http://www.ip-watch.org/weblog/2009/03/12/inside-views-deferred- examination-a-solution-whose-time-has-come/ (describing deferred examination as a process in which applicants can decide which appllications are "most important" and which are less important).
374. See Doug Lichtman & Mark A. Lemley, Rethinking Patent Law's Presumption of Validity, 60 STAN. L. REV. 45, 50 (2007);
375. see also Mark A. Lemley et al., What to Do About Bad Patents?, REGULATION, Winter 2005-2006, at 10, 12.
376. See discussion supra Part II.A.2.
377. See discussion supra Part II.A.2.
378. See Michael Risch, Untitled Empirical Study of Non-Practicing Entities 18-19 (unpublished manuscript) (draft on file with author).
379. Saxon Innovations Files Complaint in International Trade Commission, SAXON INNOVATIONS, LLC (Jan. 5, 2009), http://www.saxorunnovations.com/Press. html (select link entitled "Saxon Innovations Files Complaint in International Trade Commission").
380. About Saxon Innovations, LLC, SAXON INNOVATIONS, LLC, http://www.saxoninnovations.com/About.html (last visited Dec. 17,2010).
381. Zarlink Semiconductor Inc., Material Change Report (Form 51-102F3 ) 4 (June 25,2007).
382. Altitude Capital Partners Sells Saxon Innovations, PR NEWSWIRE (Feb. 18, 2010), http://www.pmewswire.com/news-releases/altitude-capital-partnere-sells- saxon-innovations-84701297.html.
383. Second Amended Complaint at 1, Saxon Innovations, L.L.C. v. Apple, Inc., No. 08-CV-00265-JDL (E.D. Tex. May 14, 2009).
384. Saxon Innovations, L.L.C. v. Nokia Corp., No. 6:07-CV-490, 2009 U.S. Dist. LEXIS 89933, at *I (E.D. Tex. Sept. 29,2009) (asserting, for example, patent 5247621).
385. Complaint at I, Saxon Innovations, L.L.C. v. Casio Computer Co., No. 09-CV-00270)-LED (E.D. Tex. June 25,2009) (asserting the same patent as it did against Nokia Corp.).
386. Complaint at 1, Saxon Innovations, L.L.C. v. Samsung Elees. Co., No. 09-CV-00067-LED (E.D. Tex. Feb. 18,2009) (asserting, for example, patent 5235635).
387. About Conexant, CONEXANT, http://www.conexant.com/company/about.html (last visited Dec. 17, 2010).
388. WIAV SOLUTIONS, LLC, http://wiavsolutions.com/ ("[WiAV] is in the business of developing advanced digital wireless technologies. [WiAV] also acquires, develops, licenses and enforces patents.") (last visited Dec. 17, 2010);
389. see also WiAV Solutions LLC v. Motorola, Inc, No. 3:o9cv447, 2009 U.S. Dist. LEXIS 96994, at *4 (E.D. Va. Oct. 20, 2009) ("[A]ll three of WiAV's employees work out of the [company's] Vienna office.").
390. Conexant Systems Inc., Amended Current Report (Form 8-K/A) F-I (Jul. 10, 2002).
391. Based on a review of the assignment record, using the following link, eighty-eight patents were assigned by Skyworks to WiAV. Assignments on the Web, U.S. PATENT A TRADEMARK OFFICE, http://assignments.uspto.gov/assignments/q?db= pat&reel=019899&frame=0305 (use "019899" and "0305" in searchboxes "Reel" and "Frame" respectively).
392. See Complaint at 1, WiAV Solutions LLC v. Kyocera Corp., No. 09-CV-00373-REP (E.D. Va. June 15, 2009);
393. Complaint at 1, WiAV Solutions LLC v. Research In Motion, Ltd., No. 08-CV-00627-REP (E.D. Va. Sept. 26, 2008).
394. Kolker, supra note 88.
395. Id.
396. Id.
397. Zach Lowe, John Desmarais Takes First Shot as Patent Holder, AM. LAW., Oct. 7, 2010, http:// www.law.com/jsp/cc/PubArticleCC.jsp?id= 1202473041370&John-Desmarais-Takes-First-Shot-as-Patent-Holder.
398. Gregoire Marino, More News on the Micron Patent Sale: What Is Really Happening Behind the Curtains?, IP FIN. (June 15, 2010), http://ipfinance. blogspot.com/2010/06/more-news-on-micron-patent-what-is.html.
399. Micron Technology, Annual Report (Form 10-K) 8 (Oct. 28, 2009) ("[Micron] has recovered some of its investment in technology through sales of intellectual property rights to joint venture partners and other third parties.").
400. See Competition FTC Hearing II, supra note 16, at 685-86 (statement of Joel Poppen, Dir. of Patent Litigation & Licensing, Micron Technology, Inc.).
401. Joff Wild, The Questions that Micron Technology Will Not Answer, IAM MAG. (June 8, 2010), http://www.iam-magazine.com/Blog/Detail.aspx?g=4768dI9e-57Ic- 452b-ac56-a3ba9e22fe19.
402. Hewlett-Packard Co. v. Acer, Inc., No. 02-07-CV-103-CE, 2008 U.S. Dist. LEXIS 25952, at 3 (E.D. Tex Mar. 31,2008).
403. See Patent Assignment Query Menu, U.S. PATENT A TRADEMARK OFFICE [hereinafter Assignment History], http://assignmenis.uspto.gov/assignments/?db= pat (search in "patent number" field for U.S. No. Patents "5977626", "6188132", "6788257", "6280021", showing execution dates to Acer in September and July of 2007).
404. Who We Are, INDUS. TECH. RESEARCH INST., http://www.itri.org.tw/eng/ about/article.asp? RootNodeId=010&NodeId=0101 (last visited Dec. 17,2010).
405. Erica Ogg, Acer Sues HP Again Over Patents, CNET NEWS BLOG (Oct 31, 2007, 3:40 PM PDT), http://news.cnet.com/8301-10784-3-9808687-7.html.
406. Press Release, Hewlett Packard, HP and Acer Settle Patent Litigation (June 8, 2008), http://www.hp.com/hptafo/newsroom/press/2008/080608a.html.
407. Brief of Plaintiff at 5, Matushita v. Samsung, No. 02-336, 2005 U.S. Dist. Ct. Motions LEXIS 32374 (D.N.J. 2005) ("MEI initiated this action against Samsung alleging infringement of three patents on January 25, 2002. In response, Samsung asserted five counterclaim patents against MEI: the '048 Patent, U.S. Patent No. 5,034,625 ('the '625 Patent'), U.S. Patent No. 5481,693 ('the '693 Patent'), U.S. Patent No. 5,781,750 ('the '750 Patent'), and U.S. Patent No. 6,076,155 ('the '155 Patent').").
408. See Assignment History, supra note 327 (search in "patent number" field for U.S. No. Patent "5481693", showing transfer from SonicBlue to Samsung with an execution date of 11/14/2002).
409. Eric Hellweg, SonicBlue's Bankruptcy: Big Media Wins, CNNMONEY.COM (Mar. 27, 2003, 10:26 AM EST), http://money.cnn.com/2003/03/27/technology/ techinvestor/hellweg/index.htm (describing SonicBlue's Chapter 11 filing).
410. See Assignment History, supra note 327 (search in "patent number" field for U.S. No. Patent 5181209, which was assigned from a Deutsche Forschungsanstalt fur Luft, Germany's aerospace research center).
411. See id. (search in "patent number" field for U.S. No. Patent 5781750, assigned from SonicBlue).
412. James E. Malackowski & Jonathan A. Barney, What Is Patent Quality? A Merchant Banc's Perspective, LES NOUVELLES: J. LICENSING EXECUTIVE SOC'Y INT'L, June 2008, at 123, 130, available at http://www.oceantomo.com/system/files/What- is-Patent-QualityJesNouvelles-6.08.pdf ("In sample after sample, we find that higher patent maintenance rates are significantly correlated to the following: a larger number of independent and dependent claims; a smaller number of words per independent claim; a smaller number of different words per independent claim; longer written specifications; higher forward citation rates (both raw and age normalized); a larger number of backward citations; and a larger number of related patent family members (both domestic and international). More importantly, at least from a merchant banc's perspective, the calculated maintenance probabilities are significantly correlated to other observed patent value measures, such as commercialization rates, licensing rates, and litigation rates.");
413. see also Allison et al., supra note 298, at 437-38 (describing valuable patents, defined as "litigated" patents, as being young, domestically owned, more cited and citing, spending longer in prosecution, and having more claims than ordinary patents).
414. See supra Part I.A.
415. See generally Wegner, supra note 27 (describing a host of different patent quality proposals).
416. Making a related point, Polk Wagner argues that incentives to seek quality patents, and not merely legal tools, need to be leveraged to improve patent quality. Wagner, supra note 63, at 2144.
417. William New, New Senate Patent Reform Bill Details Released, INTELL. PROP. WATCH (Mar. 4, 2010,10:29 PM), http://www.ip-watch.org/weblog/2010/03/04/ new-senate-patent-reform-bill-details-released/.
418. Press Release, IBM, IBM Earns Most U.S. Patents for 17th Consecutive Year; Will Offer Licenses to Patent Portfolio Management Know-How (Jan. 17, 2010), http://www.ibm.com/news/bh/en/2010/01/17/1544000b85854b33.html;
419. Andrew Nusca, Microsoft Awarded 10,000th U.S. Patent, ZDNET (Feb. 10,2009,11:52 AM), http://research.microsoft.com/en-us/um/people/sdrucker/press/ btl.htm.
420. Mike Dillon, The Patent Arms Race, LEGAL THING (May 26, 2008, 8:00 PM), http://blogs.sun.com/dillon/entry/the-patent-arms-race.
421. Competition FTC Hearing II, supra note 16, at 736 (statement of Robert Barr, Vice President for IP and Worldwide Patent Counsel, Cisco Systems, Inc.).
422. Dillon, supra note 342.
423. Id.
424. Id.
425. Michael Arndt, Cisco's Patent Strategy: It's More Than Numbers, Bus. WK. (Dec. 21, 2009), http://www.bustaessweek.com/tanovate/next/archives/2009/12/has- the-recessi.html ("The arms race approach doesn't pay off... It doesn't do you a lot of good to have a lot of patents." (quoting Mark Chandler, General Counsel and Senior Vice President, Cisco Systems, Inc.) (internal quotation marks omitted)).
426. Id.
427. Opperman & Tan, supra note 280.
428. Recordation within three months provides rights against subsequent purchasers of a patent, but no other statutory benefits. 35 U.S.C. §261 (2006).
429. Research Methodology and Value Proposition, PATENTFREEDOM, https:// www.patentfreedom.com/serviceofferings.html (last visited Dec. 17,2010).
430. Optional Core Module, PATENTFREEDOM, https://www.patentfreedom.com/ serviceofferings-ocm.html (last visited Dec. 17,2010).
431. Fawcett & Chan, supra note 121, at 7-18.
432. Lemley & Myhrvold, supra note 126, at 258.
433. Fawcett & Chan, supra note 121, at 19.
434. Id.
435. Oriel, supra note 197, at 94.
436. The likelihood of getting a stay varies from court to court. According to an analysis of recent published decisions, the Northern District of California granted stays 72% of the time (twenty-one out of twenty-nine stay requests) as compared to the Eastern District of Texas, which granted stays 46% of the time (eleven out of twenty-four stay requests). ThinkFire, supra note 112;
437. see also Yar Chaikovsky, Presentation at the Advanced Patent Law Institute, Santa Clara: Reexamination and Litigation 23, 25 (Dec. 2009) (copy on file with the author).
438. U.S. PATENT AND TRADEMARK OFFICE, INTER PARTES REEXAMINATION FILING DATA (2009) [hereinafter INTER PARTES FILING DATA], available at http://www.uspto. gov/web/patents/documents/inter-partes.pdf.
439. Stephen B. Maebius & Leon Radomsky, A Case for Strategic Use of Re-Examination, LAW 360 (July 23, 2009), http://www.law360.com/articles/112760 (copy on file with the Hastings Law Journal).
440. See, e.g., In re Swanson, 540F.3d 1368,1377 (Fed. Cir. 2008).
441. INTER PARTES FILING DATA, supra note 359.
442. Under 35 U.S.C. § 315(c) (2006), A third-party requester whose request for an inter partes reexamination results in an order under section 313 is estopped from asserting at a later time, in any civil action arising in whole or in part under section 1338 of title 28, the invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.
443. RALPH ECKARDT A MARK BLAXILL, INST, FOR PROGRESS, REEXAMINING INTER PARTES REEXAM (2008).
444. Declaratory judgment jurisdiction in patent cases is governed by Article III of the Constitution, the Declaratory Judgment Act, and most recently, by Medlmmune v. Genentech, 549 U.S. 118, 131 (2007) (holding that licensees do not have to breach their license before bringing declaratory judgment actions).
445. For a general overview of such agreements, see Thomas G. Pasternak & David R. Donoghue, Making Joint Defense Agreement Work, LITIG., Summer 2008, at 26,26.
446. ARTICLE ONE PARTNERS, http://www.articleonepartners.com/ (last visited Dec. 17,2010).
447. How it Works, an Overview, ARTICLE ONE PARTNERS, http://www. articleonepartners.com/how-it-works/ (last visited Dec. 17,2010).
448. Simon Owens, How Crowdsourcing Could Revolutionize Patent-Busting, MEDIASHIFT (Mar. 17, 2009), http://www.pbs.org/mediashift/2009/03/how- crowdsourcing-could-revolutionize-patent-busting076.html.
449. EFF: The Patent Busting Project, ELEC. FRONTIER FOUND., http://w2.eff.org/patent (last visited Dec. 17,2010).
450. PATENTFIZZ, http://patentfizz.com (last visited Dec. 17,2010).
451. PEER TO PATENT, http://peertopatent.org (last visited Dec. 17, 2010);
452. see also Andy Oram, Peer-to-Patent and Article One Drag the Reclusive Patent Onto the Thoroughfare, O'REILLY CMTY. (Jan. 30,2009), http://broadcast.oreilly.com/2009/01/peer-to-patent-and-article-one.html.
453. POST ISSUE PEER-TO-PATENT, http://www.post-issue.org (last visited Dec. 17,2010).
454. See supra note 370.
455. PATENT LENS, http://www.patentlens.net/daisy/patentlens/patentlens.html (last visited Dec. 17, 2010).
456. Fawcett & Chan, supra note 121, at 19.
457. For example, three of the most important titles about the patent system of the past decade have indicated the extent to which the patent system needs fixing. See generally JAMES BESSEN A MICHAEL J. MEURER, PATENT FAILURE: How JUDGES, BUREAUCRATS, AND LAWYERS PUT INNOVATORS AT RISK (2008);
458. BURK A LEMLEY, supra note 12;
459. ADAM B. JAFFE A JOSH LERNER, INNOVATION AND ITS DISCONTENTS: How OUR BROKEN PATENT SYSTEM IS ENDANGERING INNOVATION AND PROGRESS, AND WHAT TO DO ABOUT IT (2004).