This last week, an East Texas court ordered Apple to pay upwards of $368 million to a patent holding company called VirnetX. Never heard of it?
You’re not alone.
Welcome to the world of patent privateering, where large companies sue other large companies without ever revealing their stripes at all.
UPDATE: The FTC and DOJ are preparing an investigation into whether such privateering amounts to a lack of transparency — a lack of transparency that adds up to anti-competitive behavior under U.S. FTC guidelines. The USPTO has been collecting comments on changes to patent law that would force companies to be more transparent. Scroll below the fold for UC Hastings law professor Robin Feldman’s letter to the USPTO on that.
As for the Apple win, it was the second big one. VirtnetX, a non-practicing entity (NPE) went after Microsoft in 2010 and won. Microsoft at the time claimed VirnetX was created solely to sue it? But by whom?
There are no names attached to its website but a sole PR guy. So, as we watched the election results drag along tonight, we did a little digging.
More intriguing at first was that, VirnetX sued Apple with a partner plaintiff — SAIC. Who is SAIC? That’s Science Applications International Corp, a firm reportedly associated by CIA and NSA folk. This article explains more. Another piece, from Corp Watch, is a bit more melodramatic. But it characterizes SAIC as a “company of spies.”
According to a report, SAIC is “together with Booz Allen Hamilton, San Diego-based SAIC stands like a private colossus across the whole intelligence industry. Of SAIC’s 42,000 employees, more than 20,000 hold U.S. government security clearances, making it, with Lockheed Martin, one of the largest private intelligence services in the world.
SAIC’s largest and most well-known customer in the intelligence community is the National Security Agency. Indeed, so many NSA officials have gone to work at SAIC that intelligence insiders call the company “NSA West.” SAIC also does a significant amount of work for the Central Intelligence Agency, where it is among the top five contractors.” SAIC officials have not returned calls at this writing.
SAIC has a somewhat symbiotic relationship with the NSA, several reports in the public domain do show. The agency is the company’s largest single customer, and SAIC is the NSA’s largest contractor. The company’s penchant for hiring former intelligence officials played an important role in its advancement. Is data processing just a codeword for what SAIC really does which includes, among other things, joining up with non-practicing entities (most call such firms “patent trolls”) and suing the crap out of firms like Microsoft, Apple, Cisco, Ayaya and others.
So why is a company surrounded by NSA and/or CIA people suing Apple and what does it have to do with the mysterious VirnetX?
And it gets weirder.
On its face, VirnetX Inc. is a Nevada Corporation, publicly traded on the AMEX exchange. It also is a California registered holding company, based in Scotts Valley, Calif., and holds what its legal docs claim are standard, essential patents in the 4G wireless arena.
But it has non-apparent links to GE Capital, which funds the many litigating entities that General Electric uses to enforce patents in court, entities such as Fundamental LLC, CIF, SightSound and others. There are stronger links to IBM, via executives. John Cronin and John F. Slitz are listed online as having served as upper level execs at GE and IBM, respectively. Seeking Alpha has its own opinions as to who these folks are.
In the Apple case, interestingly, its co-plaintiff is none other than SAIC. Vanity Fair did an astonishing piece on how SAIC works and who that entity really is.
Back to the knitting, notice that IBM posts VirnetX press releases on its PR site. And then there’s this from the ever-handy corporation wiki bot tool, showing Cronin and Slitz ties to Virnetx Holding, Virnetx Inc. and Virnetx CEO Kendall Larsen via the connections below.
VirnetX won a suit against Microsoft two years ago, during the course of which Microsoft accused it of being a patent troll. Microsoft even went so far as to state that VirnetX was expressedly created to sue it.
Note also that VirnetX is embroiled with Apple at the international level — it has filed a complaint against Apple with the U.S. International Trade Commission. It has cases pending against Cisco, Avaya and others.
Developing … we await comment from VirtnetX, Apple, IBM and GE reps …
Here’s the VirnetX Inc and SAIC complaint against Apple. Below that is the full text of Robin Feldman’s letter to the USPTO urging more transparency in patent assignments, an act that would force companies to reveal who they are so that companies know they’re dealing with when selling, licensing, buying or paying fees on IP.
Robin Feldman’s letter to the USPTO is below.