Facebook: A Soldier of Fortune? Tom Ewing Investigates

Capture credit: Tom Ewing for aNewDomain.net

Pictured above: One of only two homegrown Facebook patents the company is using in its countersuit against Yahoo. The other eight patents in its countersuit are so-called just-in-time patents.


Capture credit: Tom Ewing for aNewDomain.net
Pictured above: One of only two homegrown Facebook patents the company is using in its countersuit against Yahoo. The other eight patents in its countersuit are so-called just-in-time patents.

In simpler times, if a company discovered a competitor making a knockoff product, the legal team would sift through the company’s yellowing and moldy patent portfolio and locate the patents corresponding to the product.

It then would either sue the competitor for patent infringement or demand that it take a royalty-bearing license that cut deep into the usurper’s profits.  The underlying theme in the lawsuit and in press releases was: Hey! You ripped us off! Quit it!

No longer. These days – when multibillion dollar patent aggregators offer “just in time patents” to companies who pay dearly for the privilege – buying and exploiting patents from others to attack your competitors is the morality-lite norm. Think of them as just-in-time patents or, as I like to call then, soldier of fortune patents.

Consider. On April 3, Facebook countersued Yahoo after the latter sued it for patent infringement. Facebook struck back with 10 patents it said Yahoo infringed, but only two of the 10 patents it used in the complaint were for Facebook homegrown inventions. The other eight were soldier of fortune patents. That is, Facebook bought or acquired them. Of those eight, three came from New York University, two came from a solo inventor, Chris Cheah, two came from mass patent entity IPG (such companies make money by brokering patents for just such purposes) and one came from a firm, Rightpoint, LLC.

Four of those eight were patents Facebook acquired after Yahoo! sued it. That is what I mean by a just-in-time patent. Check out the documents below and the dates on them. Facebook initiated purchase of this NYU patent, below, on March 30 fewer than two weeks after Yahoo! sued it.

What about Yahoo? Well, when Yahoo! sued Facebook for patent infringement on March 12, the market incumbent followed the old-school strategy – it sued Facebook over 10 patents that had been in its portfolio for a number of years, over a decade for some of them.  Half of those were invented at Yahoo! The rest came via its acquisitions of Overture (4 patents) and Launch Media (1), respectively.

It isn’t illegal for Facebook to do what it did – it is the modern way. And it is the norm these days, when the issue  isn’t whether a firm has a patent on a tech but whether it’s possible to buy one from someone who does. With 2 million currently active U.S .patents, chances are good that someone else does have a patent on whatever it is the company wants.

Facebook isn’t alone in this arms dealer-like activity. Such companies as Verizon, Vlingo, Acer and Samsung have also used this approach in responding to patent infringement litigations.  The strategy has become so trendy that giant patent aggregator — Intellectual Ventures — even offers a service called “IPD,” which stands for “IP for Defense.”  That allows companies to buy patents from Intellectual Ventures’ 35K plus patent portfolio – that’s enormous – for use in crafting counterclaims in patent infringement lawsuits.

Microsoft’s purchase of AOL’s patent portfolio for $1 billion, the Apple-led coalition that bought Nortel’s patent portfolio for $4.5 billion; Google’s purchase of Motorola Mobility and its patents for $12.5 billion plus Google’s purchase of 1,000 IBM patents, and Facebook’s purchase of 750 patents from IBM of late suggests that modern patent strategy involves much more than shaking an angry fist using just homegrown patents.

What’s your take on just-in-time patenting – and soldier of fortune patents? We’d love to hear from you. For aNewDomain.net, I’m Tom Ewing.

 

About the author

Tom Ewing

Based in San Francisco, Tom Ewing leads our legal coverage here at aNewDomain.net. He also is a commercial lawyer specializing in intellectual property and the founder of avancept.com. IAM Magazine has named Tom one of the world’s top 250 IP strategists each year since 2009. Email him at Tom@aNewDomain.net. He's +Tom Ewing on Google+