Patent competition in the US is usually a fierce arena for private companies, but now the South Korean and French governments are suiting up.
Both countries have launched patent-acquisition companies, with the goal of helping domestic technology firms and possibly making some money in the process. China and Japan are making moves into the business too.
The Korean and French firms, dubbed Intellectual Discovery and France Brevets, are similar to the handful of private patent-acquisition firms in the US derisively called “patent trolls.”
US patent aggregators such as closely-held Intellectual Ventures — which do not produce products — are often accused of unfairly targeting companies that actually build things by threatening to sue unless they are paid royalties.
The firms say they create a more liquid market for valuable intellectual property (IP), and help assure that legitimate inventors — especially those who do not work for big corporations — get paid for their breakthroughs. The French and Korean firms have not yet filed any US lawsuits.
The advent of state-sponsored intellectual property dealers adds a fresh geopolitical element to the debate about patent trolls and how to protect legitimate inventions without stifling innovation. It could also complicate efforts to improve global cooperation on trade-related matters such as online piracy and computer security.
US Congressman Peter DeFazio, a Democrat from Oregon and co-sponsor of a bill designed to limit patent litigation, called the new government-backed patent entities a form of “protectionism” that nobody had anticipated.
“This is a whole new level of jeopardy,” said DeFazio, who had not been previously aware of them.
Government-sponsored aggregators are still comparatively minor players in the patent deals market, and officials involved with Intellectual Discovery and France Brevets say they have no intention of pursuing aggressive litigation strategies.
Intellectual Discovery presents itself as a defensive alliance: If a South Korean company finds itself targeted in a lawsuit, for instance, it can access the patents being compiled by Intellectual Discovery to hit back.
“It is still in an incubating stage and focusing pretty much on aggregating IP,” said Park Jong-pil, deputy director at South Korea’s Ministry of Knowledge Economy, in reference to Intellectual Discovery. “It is not close to a stage of earning big revenues or identifying entities violating our patents or taking legal action.”
Intellectual Discovery has bought over 200 US patents, including one for retinal eye scan technology from Singaporean chipmaker Avago Technologies Ltd last July, US government records show.
And in a sign that its strategy is not limited to aiding Korean companies, it promptly sold that patent to Google Inc, which is busy developing its Google Glass product. A source familiar with the deal said the price was less than US$100,000.
France Brevets, for its part, owns only four patents in the US and 50 total patent “families,” according to vice president Yann Dietrich and US patent records. He did not disclose the total number of patents worldwide.
Dietrich said the goal was investing in quality IP so French companies can better monetize their technology.
“We are not playing with the rules to extract money,” Dietrich told reporters.
Patent reform advocates say patent aggregators have exploited loopholes in the system and are often little more than quick-settlement artists who threaten lawsuits with flimsy patent claims registered years after a product hits the market.
However, big players such as Intellectual Ventures, launched by former Microsoft Corp chief technology officer Nathan Myhrvold, say they prevent upstart companies and independent inventors from being ripped off and create a much-needed market for innovation.
Several tech companies, including Microsoft and Google, as well as universities and foundations, are investors in Intellectual Ventures, according to court filings.
Stanford Law School professor Mark Lemley said the emergence of state-sponsored companies could drive more support for the bill, now in committee. Legislators may view them as foreign governments sucking away the fruits of US research, Lemley said, regardless of whether that is a realistic threat.
So far, the government-backed aggregators do not have nearly the same scale as Intellectual Ventures, which says it has over US$5 billion in committed capital and owns roughly 70,000 intellectual property assets.
France Brevets was launched in 2011 with 100 million euros (US$128.7 million), half from the state and half from the Caisse des Depots, a publicly managed investor in French economic development.
Korea’s Intellectual Discovery, which was started in 2010 amid government fears that domestic companies were losing key patents that could be used against them by foreign companies, has a US$140 million government commitment.
Meanwhile, the Innovation Network Corp of Japan, a joint public-private investment company, launched a fund in 2010 to acquire and license life-sciences patents. Officials there were unavailable for comment.
China has plans to set up about 20 IP “investment service platforms,” as well as exploring a joint government-industry-university patent funding model and extending pilot programs for patent insurance, according to a strategy plan for this year from the state intellectual property office.
Taiwan’s national research lab set up an “IP service company” but it is not government funded, said Sean Wang, a representative for the lab in the US in an e-mail to reporters. He did not respond to follow-up questions.