Wall Street Journal on patent trolls

All sorts of interesting reporting on the news side of the subscriber-only WSJ:

In one of Douglas Fougnies’s early business ventures, he provided phony new-vehicle titles for stolen cars. His partner, Larry Day, is a onetime blackjack dealer in Las Vegas.

Together, the two men have found a more lucrative line of work: suing cellphone companies for patent infringement. Earlier this year their company — which consists of four employees and six patents — won $128 million in damages from Boston Communications Group Inc. and four other companies over alleged misuse of a 1998 patent.

Suing can be as lucrative as manufacturing as a way to profit from a patent, sometimes a lot more so:

Lured by the potential returns, hedge funds and other institutional investors now are bankrolling businesses that buy up patent portfolios. More law firms, including some branching out from product-liability and malpractice work, are taking patent cases on a contingency basis. That means the law firms are paid a percentage of any damages awarded but little or nothing if the patent-holder loses.

(William M. Bulkeley, “Aggressive Patent Litigants Pose Growing Threat to Big Business”, WSJ, Sept. 14)(sub). For more, see Sept. 1, May 2 and many other entries on our technology/intellectual property page.

In a major development, however, the federal judiciary seems to be ringing down the curtain on the most successful and controversial patent-prosecution shop of all time (Aug. 23, etc.): “After hundreds of companies paid inventor Jerome Lemelson more than $1.5 billion in licensing fees, the U.S. Court of Appeals for the Federal Circuit has concluded that his patents aren’t enforceable after all. The Federal Circuit ruled Friday that Lemelson’s 18- to 39-year delay in prosecuting patent claims relating to machine vision and bar-code technologies was unreasonable.” (Brenda Sandburg, “Lemelson Patents Ruled Unenforceable”, The Recorder, Sept. 13; Dennis Crouch, Sept. 9; IP Litigation Blog, Sept. 11; David Jacobs, MassLawBlog, Sept. 15; TechDirt, Sept. 12; LemelsonInfo.com; AP two-part series reprinted in Miami Herald, Aug. 20 (part I) and Aug. 21 (part II)).

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