Big Tech winning battle with 'patent trolls'

Wed Oct 22, 2014 8:05am EDT
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By Andrew Chung and Dan Levine

(Reuters) - For two decades, companies that buy software patents to sue technology giants have been the scourge of Silicon Valley. Reviled as patent trolls, they have attacked everything from Google's online ads to Apple's iPhone features, sometimes winning hundreds of millions of dollars.

But now the trolls are in retreat from the tech titans, interviews and data reviewed by Reuters show.

In the wake of several changes in U.S. law, which make it easier to challenge software patents, patent prices are plummeting, the number of court fights is down, and stock prices of many patent-holding companies have fallen. Some tech firms say they are punching up research budgets as legal costs shrink, while support for major patent reform is under fire as trolls get trounced.

"Their entire business model relies on intimidation, and that has lost its edge," said Efrat Kasznik, president of intellectual property consulting firm Foresight Valuation Group. "If the patents are not enforceable in court anymore... the troll has no legs to stand on."

Brokers who work with the patent acquisition companies acknowledge the new climate.

"In some cases, there are just no current buyers for these patents at all," said Robert Aronoff, founder of the patent brokerage Pluritas, citing new legal standards for the change.

NetApp, a Silicon Valley maker of sophisticated data storage devices, last month used a new legal precedent to force a patent holder to pay its legal fees. The judge called the case "reckless and wasteful."

The new playing field allows NetApp to spend more on developing its own patents, as opposed to litigation defense. "It is freeing up dollars," said Douglas Luftman, NetApp's chief intellectual property counsel.   Continued...

A visitor walks past a Cisco advertising panel as she looks at her mobile phone at the Mobile World Congress in Barcelona February 27, 2014. REUTERS/Albert Gea