Any international investor, or would-be innovator, would possibly gaze throughout on the ice wall of patent data surrounding US tech firms and conclude it can’t be breached. Plainly if any group creates a means across the present engineering strategies, they’ll solely be torn to items by aggressive US attorneys.
However ice partitions soften and authorized techniques can activate know-how monopolists. That occurred to Thomas Edison with film patents, AT&T with telephony, and could also be occurring now available in the market for interactive voice response (IVR).
IVR is presumably essentially the most annoying set of applied sciences ever developed: they management what you hear as you repeatedly bang down on the “0” trying to get a human customer support consultant.
For the previous couple of a long time, the IVR market has been dominated by Nuance Communications of Massachusetts. Nuance’s share worth has risen by greater than 118 per cent prior to now yr, because it has lastly slipped into revenue.
And why shouldn’t or not it’s a part of the monopoly-US-tech-stock-market? In any case, as its investor relations internet web page says, Nuance has about 3,000 patents. A lot of these have been acquired from, or licensed from, IBM. Others have been acquired in the middle of a 2005-18 acquisition binge carried out by Paul Ricci, Nuance’s former CEO.
Nuance acquired not simply firms, however one thing of a status as an aggressive patent litigant. Simply how aggressively the corporate makes use of its patent portfolio to pursue not solely markets, however potential acquisitions is now the topic of two countersuits by IVR firms, MModal and Omilia.
They assert that Nuance engages in “sham patent litigation” which, if the courts agree with them, would implies that the authorized monopoly conferred by patents is withdrawn, and Nuance might be charged with antitrust violations permitting its challengers to say as much as treble damages.
None of the present IVR litigants agreed to go on the document. However a studying of the filings within the lawsuits and discussions with authorized specialists present there appears to be 4 hurdles for succeeding at sham patent litigation proceedings.
First, there has to have been some negotiations over a cope with the alleged patent violator, with the monopolist counterparty threatening costly infringement fits. Second, the defending firm ought to have a very good case on the face of it that the patents are too obscure or in any other case inapplicable.
Third, the much less monied know-how competitor has to get some exterior cash that provides it confidence to outlast the patent-heavy monopolist. (MModal is now backed by 3M and Omilia by Grafton Capital of London.) Lastly, it helps to have a document of different makes an attempt by the alleged unlawful monopolist to make use of patent holdings as a negotiating software.
Most people who find themselves not each attorneys and engineers are intimidated by patents. However many patents within the industries I’ve researched are so vaguely written, and canopy “improvements” which might be so just like prior artwork, that they need to not likely be enforceable.
“Nuance values its patent portfolio fairly extremely, though I’m not certain why. For instance, with out the technical expertise that goes with the (IBM) patents, these have restricted worth to Nuance,” says Walter Tetschner, a very long time advisor for the IVR business.
In truth Nuance has already misplaced two patent fits, one in 2013 to a character-recognition firm referred to as ABBYY and one other in 2011 to Vlingo, one other IVR firm.
It might be argued that the costly firms acquired in Nuance’s merger binge defend the corporate’s administration from takeovers, since Nuance’s $4.09 guide worth (towards a inventory worth of $31) turns right into a unfavorable -$4.32 tangible guide worth when goodwill is subtracted.
I wrote to and referred to as Nuance asking them for any examples the place the corporate had gained a last judgment on a patent lawsuit, and acquired no reply.
An investor within the IVR business philosophically says: “Nuance is being a rational actor. If they’d enough subsequent era merchandise to take care of their $500m of recurrent income, they’d. As a substitute they only defend the present merchandise any means they’ll.”
How a lot of the US tech inventory bubble represents true innovation, and the way a lot represents the socially ineffective prices of an costly authorized system?