Round Rock is the name of a patent trolling “business” run by an attorney who left a major law firm, bought a giant patent portfolio from Micron, and has now become THE example for how heinously broken the patent system is. The attorney has forced “licenses” out of major companies simply by threatening legal action, even though nobody is really sure what patents he has, or what exactly they cover. The whole thing is a crazy shakedown, and even staunch supporters of non-practicing entities (groups that hold patents but don’t produce anything) would have trouble defending Round Rock.
Last week, Round Rock took trolling to new heights, auctioning off a covenant not to be sued by the attorney in the future. There were four covenants put up for auction, and while only one sold, it sold for over $35 million. In terms of patent trolling, this is pretty heinous, because nobody really knows what the patents cover, and obviously the patents and Round Rock are adding nothing of value to society through this trolling. The auction probably seemed like a great way to make some quick money without the hassle of patent litigation, claim construction, or, you know, even READING the patents.
I wonder if the auction won’t come back to bite Round Rock later, though. Now, it’s not even clear that Round Rock will ever actually sue anybody; seems like “business” is booming on just the threats of suits. But if they ever sued and made it all the way to the damages phase, they are going to have set a precedent that the value of licensing their entire portfolio is $35 million. In a post-Ebay world, I couldn’t imagine a court giving Round Rock an injunction. Which means the court will be looking at some type of damages, and will likely wind up assessing a reasonable royalty, where a court will look at how much the patents have been licensed for in the past. With Round Rock having just publicly auctioned off a covenant not to sue (and there being some case law suggesting that such a covenant is akin to a license, albeit in a slightly different context), it wouldn’t surprise me if Round Rock just effectively capped the amount they can blackmail a company for at $35 million, a pretty low number, all things considered. Still way too much for patents that nobody has looked at, but probably less than Round Rock has already extorted out of some companies.
danielmarkmiller.net 