Patent trolls reel as court smackdowns lead to collapse in share price

10 Comments

Credit: Tom Wang

Few people cheer an economic downturn but, when it comes to the patent troll economy, many in the tech industry are likely watching its recent struggles with glee.

As Bloomberg News noted, recent court rulings have caused the share price of two publicly-traded patent trolls, which make their living by way of extortionate lawsuits, to collapse. Here’s a chart of what the market did to a troll called [company]VirnetX[/company] holdings after an appeals court on Tuesday threw out a $368 million jury verdict it had won against Apple:

VHC Price Chart

VHC Price data by YCharts

Another troll called [company]Vringo[/company] suffered a similar fate last month after an appeals court found two patents it was using to sue Google Adwords were invalid because they were obvious:

VRNG Chart

VRNG data by YCharts

The collapse of VirnetX and Vringo is directly tied to those two court rulings, but there are also dark clouds gathering around the patent troll economy in general. In particular, a Supreme Court ruling in June has led a series of court decisions declaring that various software-related patents are invalid because they are no more than old ideas applied on a computer.

At the same time, another Supreme Court ruling has made it easier for the targets of patent trolls to recoup their legal fees. This finally introduced an element of risk for patent trolls, which are normally immune from counter lawsuits since they are structured as shell companies that contain no assets.

While it may be too soon to declare a cause and effect, three other troll companies have also been faltering since the Supreme Court rulings. Here is a chart of the performance of [company]Interdigital[/company], [company]Rambus[/company] and [company]Acacia[/company], all of which appeared on a list of “Tech’s 8 Most Fearsome Patent Trolls.”

IDCC Chart

IDCC data by YCharts

The chart shows how the share price of two of the three trolls have fallen more than 10 percent, while that of Acacia is flat, during a period when the tech-heavy NASDAQ index is up five percent.

Meanwhile, the performance of other well-known patent trolls, like RoundRock and Intellectual Ventures (IV), is harder to gauge since they are privately-held, and don’t publish their financial statements. IV’s decision to lay off 20 percent of its workforce last month suggests, however, that it is on hard times too.

All of this could be good news for in the tech sector. If patent trolling becomes less lucrative, it may lead to fewer trolls, which will turn allow productive companies to more spend money on research or hiring — rather than sinking millions on defending troll claims.

Conversely, the trolls’ troubles could also bring new danger if they grow desperate in search of new revenue. Unlike real tech companies, some of the troll firms are no more than lawyers backed by private equity, which will make it hard to pivot into a constructive line of work.

10 Comments

tyelmene

This is wonderful news! Let’s just hope these East Texas scoundrel lawyers, accountants and thieves who are devoid of any business acumen or even any honor, just shrivel up and… just go away!

I never understood the rationale in allowing patents to be sold as assets in the first place. Patents should NOT be transferable from those who were granted the patent. The purpose of a patent was simply to entice innovation by granting a legally enforceable head start to those who could/would invent better goods and services. Patents were meant as a recourse against those who would unfairly ‘take’ benefit from the inventor’s ingenuity – not a product that the inventor was making, just a protection sought.

I’m sure some average lawyer (in other words, corrupt lawyer) came up with the ideas of selling off patent portfolios as assets in a desperate play when one of their failing corporate clients could no longer be milked for bill-ables any other way! Damn lawyers and accountants! Those scoundrels have no concept of actually trying to create something for which a ‘customer’ would realize real ‘value’. Lawyers and accountants are professions whose basis is devoid of understanding the goodness in making something for which a margin could be reasonably earned as a true badge of honor.

Again, I couldn’t be more pleased by the demise of these trolls reported here.

Steven Pollack

Interesting that someone who patents something and does not actually bring the tech to market is a troll, but a company that does the same thing to prevent competitors from using the technology, that is seen as a patent portfolio.

mike

You should entitle this article “Someone has a conjecture, so I’ll assume it’s true, and then also assume a bunch of other things.”

This is journalism at its worst. Come on Roberts. Why? Just read it. Here is some of what you said:

>> “… it LOOKS LIKE the market IS …”
Making a definitive statement (“is”) about the market by what something looks like? Really?

>> “… many in the tech industry are LIKELY … ”
Likely. As in Facebook “like”ly.

>> “… there are also DARK CLOUDS gathering around … IN GENERAL … While it MAY BE TOO SOON TO DECLARE A CAUSE AND EFFECT … [I’ll go ahead and make an assumption anyway.], three other troll companies … [but wait, actually only two] … The chart shows how the share price of two of the three … ”
I can’t make this up.

>> “Meanwhile, the performance of other[s] is HARDER TO GAUGE since they are privately-held … [But I’ll go ahead and suggest something anyway] … “IV’s decision to lay off 20 percent of its workforce last month SUGGESTS …”
Can’t make this up either.

>> “All of this COULD BE good news for in [sic] the tech sector.”
Coulda woulda shoulda.

>> “IF patent trolling becomes less … it MAY LEAD to … which will turn allow [sic] productive companies to”
>> “Conversely, the trolls’ troubles COULD also bring new danger IF …”

I’ll just quote Don Meredith: “If ‘ifs’ and ‘buts’ were candy and nuts, we’d all have a Merry Christmas.”

Clipping Path India

I am read your article i am just say we might be able to do some business and innovate again.

chrisw52

This is great news! Finally wall street is waking up to the situation. Now if we can start reeling in all those crazy patent applications we might be able to do some business and innovate again.

Bill Arnot

Here’s a suggestion – the patent office who granted these ridiculous patents in the first place should be made to pay the legal costs of both parties resulting from this stupidity.

spartacus2030

What can I say? I hope a Troll doesn’t find this! LOL!

I’m sorry I must apologize for others. I believe they’re not answering you because you’re listed as a corporation, and corporations aren’t the people’s best friends right now. Just telling you straight up. Perhaps you should pick a different name. Perhaps something with a personal touch, like: ‘Jeff Roberts Good-fellows site or something.

I’m not putting you down. I believe you publish some intriguing material here and more people should be responding…

Comments are closed.