Monday, May 28, 2012

Rockstar Consortium Patent Troll Emerges

Apple And Microsoft Behind Patent Troll Armed With Thousands Of Nortel Patents


You may recall last summer that Apple, Microsoft, EMC, RIM, Ericsson and Sony all teamed up to buy Nortel's patents for $4.5 billion. They beat out a team of Google and Intel who bid a bit less. While there was some antitrust scrutiny over the deal, it was dropped and the purchase went through. Apparently, the new owners picked off a bunch of patents to transfer to themselves... and then all (minus EMC, who, one hopes, was horrified by the plans) decided to support a massive new patent troll armed with the remaining 4,000 patents. The company is called Rockstar Consortium, and it's run by the folks who used to run Nortel's patent licensing program anyway -- but now employs people whose job it is to just find other companies to threaten:

But Widdowson is a specialist. He's one of 10 reverse-engineers working full time for a stealthy company funded by some of the biggest names in technology: Apple, Microsoft, Research In Motion, Sony, and Ericsson. Called the Rockstar Consortium, the 32-person outfit has a single-minded mission: It examines successful products, like routers and smartphones, and it tries to find proof that these products infringe on a portfolio of over 4,000 technology patents once owned by one of the world's largest telecommunications companies.

When a Rockstar engineer uncovers evidence of infringement, the company documents it, contacts the manufacturer, and demands licensing fees for the patents in question. The demand is backed by the implicit threat of a patent lawsuit in federal court. Eight of the company's staff are lawyers. In the last two months, Rockstar has started negotiations with as many as 100 potential licensees. And with control of a patent portfolio covering core wireless communications technologies such as LTE (Long Term Evolution) and 3G, there is literally no end in sight.

The article admits that Nortel got most of these patents because it wanted them for "defensive" reasons. And now look at how they're being used. Remember that the next time you hear a company promise to only use its patents defensively. There's also a ridiculous quote from Rockstar's CEO, John Veschi:

“A lot of people are still surprised to see the quality and the diversity of the IP that was in Nortel,” he says. “And the fundamental question comes back: ‘How the hell did you guys go bankrupt? Why weren’t you Google? Why weren’t you Facebook? Why weren’t you all these things, because you guys actually had the ideas for these business models before they did?’"

The real answer, of course, is because patents are meaningless. Ideas are worth nothing by themselves. Ideas only matter if you execute, and anyone who's ever actually executed on an idea will tell you that the original idea almost is never reflected in the final product. The process of going from idea to actual product is a process by which you learn that what matters is not what you thought mattered. And yet, for reasons that make no sense to anyone who has ever actually built a product, creating monopolies around the ideas only serves to create a massive tollbooth towards actual innovation. And that's what we have here -- and it's funded by Apple and Microsoft.

Once again, we see that these two large companies are using the patent system not to innovate, but to stop up and coming competitors from innovating. The patent system isn't being used to encourage innovation but to protect incumbents from an open market.

Oh, and worst of all, the reason that the antitrust effort was dropped was because Apple and Microsoft promised to license the key patents under "reasonable terms." But... Rockstar is not subject to that agreement.

But the new company — Rockstar Consortium — isn’t bound by the promises that its member companies made, according to Veschi. “We are separate,” he says. “That does not apply to us.”

That seems quite problematic, and perhaps worthwhile for the government to reopen its investigation...

See also Wired Article: