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Intellectual Ventures, which acquires old patents in order to extract tribute from technology and retail companies, appears unconcerned with growing revulsion about its business model.
On a day that the White House declared it was “taking on patent trolls,” IV announced two new lawsuits against JP Morgan and other banks for infringement of its patents, including one that issued in the year 2001 for “Systems and methods for authorizing a transaction card.” The patent, which lasts until 2018, appears to cover a basic verification system:
Intellectual Ventures has gained notoriety for promulgating so-called “patent trolling,” in which shell companies that don’t produce anything but acquire old patents in order to threaten lawsuits against companies that do. Since a patent defense in federal court costs millions of dollars, most companies — especially startups — acquiesce to the trolls’ demands for a license.
IV’s founder, former Microsoft executive Nathan Myhrvold, has remained impervious to criticism that he is damaging the economy through his decision to game a broken patent system. Even as technology startups and small businesses protest the sprawl of patent litigation, Myhrvold and the company have instead tried to foster goodwill by casting themselves in the tradition of America’s great innovators.
IV’s charm offensive may be wearing thin, however, as a growing legion of opponents criticize the trolling business. On Tuesday, the White House published a blog post announcing executive action to curb troll activity, and a report that notes how trolls:
have “over-asserted” their patents, pursuing legal action in a way that does not increase incentives for innovation, and in fact reduces these incentives and complicates normal business operation.”
The White House initiative may have limited effectiveness, however, as critics note the troll problem may lie in a system that permits overly broad patents in the first place. To curb trolling, influential financial blogger Felix Salmon has proposed using the SEC and other federal institutions to prosecute the trolls.