My untutored impression is that their business model is more about licensing than litigation, though of course the threat of the latter affects the price negotiable for the former.
But it might not be a negative; one thing that really impressed me about the FTC report was in chapter 7 where they take an example case and examine different approaches to calculating damages. Although I'm not a lawyer or economist, I am very interested in this branch of legal theory and this seems to reflect many of the ideas that have influenced the law of antitrust and property damages in recent years.
Up to now the prevailing approach to estimating damages has been set by a case known as Georgia Pacific, where the plaintiff offers evidence about 15 different economic and legal factors of economic loss. That's fair on one level, but the problem is that the jury gets overwhelmed and tends to award enough damages to compensate for multiple injuries, not all of which necessarily happened - thus huge awards followed by expensive appeals and so on and on. The FTC report seems to favor a much more methodical approach to calculating the true economic costs of patent infringement, without worrying so much about questions of fault during this process. An economic idea known as the Coase theorem (basically) says that whether A pays B not to do something, or B does something and has to pay damages to A afterwards, the total economic costs tend to be the same in both cases, and suggests objective methods for working out what those costs are. Then the verdict is just a matter of apportioning them appropriately.
Of course I am drastically oversimplifying here. But the basic idea is to make patent litigation less of a morality play and more of a problem-solving exercise, in which the public's interest is considered along with those of the parties at suit. Although this may seem cold and mechanical, 'justice is the tolerable accommodation of the conflicting interests of society.' Addressing these problems systematically usually leads fairer results, and more predictable ones too - a big plus for any business.
The recommendations in this report are just recommendations, but they're so comprehensive and well-presented that they may be adopted and refined into a standard very quickly. Everyone is sick of the current situation and patents don't mix well with politics, so a consensus is distinctly possible.
Regarding Intellectual Ventures's business model, ultimately, seeking to license patents out loses steam unless you eventually bring litigation against unwilling parties, which Intellectual Ventures did in December, when it filed three different patent infringement suits against a total of nine companies for infringing a total of 16 different patents.
I made a confusing mistake when I wrote that - the start of the third paragraph should say '15 different factors in their financial loss.' Economic loss is something quite different. I shouldn't have posted right before sleep!
But it might not be a negative; one thing that really impressed me about the FTC report was in chapter 7 where they take an example case and examine different approaches to calculating damages. Although I'm not a lawyer or economist, I am very interested in this branch of legal theory and this seems to reflect many of the ideas that have influenced the law of antitrust and property damages in recent years.
Up to now the prevailing approach to estimating damages has been set by a case known as Georgia Pacific, where the plaintiff offers evidence about 15 different economic and legal factors of economic loss. That's fair on one level, but the problem is that the jury gets overwhelmed and tends to award enough damages to compensate for multiple injuries, not all of which necessarily happened - thus huge awards followed by expensive appeals and so on and on. The FTC report seems to favor a much more methodical approach to calculating the true economic costs of patent infringement, without worrying so much about questions of fault during this process. An economic idea known as the Coase theorem (basically) says that whether A pays B not to do something, or B does something and has to pay damages to A afterwards, the total economic costs tend to be the same in both cases, and suggests objective methods for working out what those costs are. Then the verdict is just a matter of apportioning them appropriately.
Of course I am drastically oversimplifying here. But the basic idea is to make patent litigation less of a morality play and more of a problem-solving exercise, in which the public's interest is considered along with those of the parties at suit. Although this may seem cold and mechanical, 'justice is the tolerable accommodation of the conflicting interests of society.' Addressing these problems systematically usually leads fairer results, and more predictable ones too - a big plus for any business.
The recommendations in this report are just recommendations, but they're so comprehensive and well-presented that they may be adopted and refined into a standard very quickly. Everyone is sick of the current situation and patents don't mix well with politics, so a consensus is distinctly possible.