IAM Blog - "Did the ICAP OT auction change the IP litigation rules in the US?"

At the Spring 2011 Live IP Action on March 31, the intellectual property broker ICAP Ocean Tomo auctioned off a five-year Covenant Not to Sue from Round Rock Research LLC. GPC's Alexander Poltorak and Rich Ehrlickman commented on this unusual auction in an IAM Magazine blog post ("Did the ICAP OT auction change the IP litigation rules in the US?", April 1, 2011).

Round Rock, which holds about 4,200 patents in several industries, limited bidders to companies that are not in the semiconductor industry. Alexander Poltorak and Rich Ehrlickman were at the auction and wrote:

"The covenant not to sue excluded semiconductor manufacturers, which sparked speculation that the anonymous buyers seated in the front row represented a handset manufacturer. On the other hand, this may have been not a single company but, more likely, a patent aggregator, such as RPX, representing a consortium of several buyers. Be that as it may, this is a first. It is very significant because it illustrated the fact that a patent is nothing but a licence to sue. In fact, courts have said all along that a non-exclusive licence under a patent is synonymous with a covenant not to sue. Patents are instruments of litigation. Instead of waiting to be sued for infringing some of Round Rock’s patents, an infringer (or a group of infringers) bought peace. The calculation was simple: pay $35 million now; or pay much more later in damages, defence costs, time and aggravation. Smart move indeed."

Read full blog post at IAM-magazine.com