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Analysis: Patent trolls target wind power

UNITED STATES: One of the biggest "patent trolls" is moving into American wind technology for the first time. Intellectual Ventures (IV) of Bellevue, Washington has quietly applied for at least five high-quality and widely applicable patents for reducing noise and birds strikes at utility-scale wind projects.

Patent trolls put wind in crosshairs (icon:  HaydenKerrisk.com)
Patent trolls put wind in crosshairs (icon: HaydenKerrisk.com)

Patent trolls enforce patent rights against alleged infringers and try to collect licensing fees or settlements. They do not use the patented technology themselves. "They gobble up IP and sue to make money," said an unnamed source. Or as IP lawyer Victor Cardona, of Heslin Rothenberg Farley & Mesiti, put it: "Pay the troll at the gate!"

According to Philip Totaro, founder of Totaro and Associates, and an intellectual property (IP) strategist and engineer who has worked for GE and Clipper Windpower, IV first applied for the patents in November 2012 through a holding company. Worryingly, the solutions appear to be usable for different turbine architectures.

In the IP marketplace, trolls are formally known as non-practicing entities (NPE). IV insists it is an NPE, enabling inventors and patent owners to thrive. Even so, NPEs tend to push up costs for an industry.

The US Patent and Trademark Office (PTO) published IV's wind-technology patents in May, a customary 18 months after their submission. Patents are typically issued within three years. "I'm highly confident that there will be a lawsuit from a patent troll or NPE within the next three years in the wind industry," predicted Totaro, of Totaro & Associates.

The holding company in question is not obviously associated with IV, which could give IV a strategic advantage and avoid patent prices being hiked because of its financial strength.

Co-founded by Nathan Myhrvold, ex-chief technology officer at Microsoft, IV has attracted investment from Intel, Sony, Apple and Microsoft. Since 2000, it has raised more than $6 billion, bought 70,000-plus patents in addition to making 3,000 or so patent applications for its in-house inventions. Although in April, Apple declined to join IV's latest funding round.

Second or third-tier wind manufacturers may be most exposed to trolls, especially as wind patents are currently relatively cheap, as they are during any downturn. Such manufacturers are a worthwhile target financially, may not have a robust IP strategy, and are far more likely to settle rather than fight in court.

But a troll might ultimately target a tier one, top ten company, after it has the backing of several patent licensees.

The cost of defending a patent suit in court, not including damages, is at least $650,000 and can reach several million dollars, says a study by the American Intellectual Property Lawyers Association.

NPEs filed 19% of all patent lawsuits in America from 2007 to 2011, according to the Government Accountability Office. The law firm Heslin Rothenberg Farley & Mesiti gauges that 49% of global wind patents from 2002 to 2013 were filed in the US. Germany, in second-place, was home to 19% of global patents from 2002 to 2013. The two largest NPEs in Europe are IPCom of Munich and Papst Licensing, also German.

Law professors James Bessen and Michael Meurer of Boston University estimate that the direct cost of NPEs asserting patents in 2011 for US business was $29 billion, not counting lost market share or delayed product launches. "Moreover, although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms, indicating that NPEs are not just a problem for large firms," warned the authors.

Totaro provided the name of IV's holding company, the inventors – some of whom used to work for a major US government laboratory — and the five application numbers so that Windpower Monthly could confirm them but on condition the names not be re-published.

Asked about the IV holding company, a spokesperson confirmed its relationship and added: "Intellectual Ventures does file some patents invented during sessions held by its in-house invention group... under the holding company [name withheld] to help maintain its patent portfolio."

He did not answer how many utility-scale wind patents IV has applied for. There could be many more than five, given the 18-month lag before publication, noted Totaro. Added the IV spokesman: "Intellectual Ventures declines to comment on [the] specific patent[s in question] or strategy related to wind power."

Another leading NPE is Acacia Research Corp. of Newport Beach, California. "They were certainly interested in wind in the past, but it's possible the market downturn turned them off," said Totaro. "There is a likelihood they will look at wind again in the future as market conditions improve and [because] the industry represents a lucrative opportunity."

A spokesman for Acacia, which partners with inventors and patent owners, said it does not currently have wind clients. "It is not a part of our focus now... and will not be for the foreseeable future," he said, stressing that Acacia is not a patent troll.

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