RPX Corporation was created to be the white knight that you describe. It is a for-profit company with a $600M mkt cap. Kleiner, CRV and Index invested significant capital in it (I believe Kleiner incubated it).

Basically, your company pays a % of revenues to be part of their patent protection scheme. They get to license your patents, which they allow other members to use. They purchase patents outright as well (though haven't been able to compete with bids from Apple, Google, Microsoft and the like).

From their website: "Our pioneering approach combines principal capital, deep patent expertise, and client contributions to generate enhanced patent buying power to manage patent risks and ongoing costs. By acquiring potential problem patents, we significantly reduce patent assertions directed at our client network. We will never assert or litigate the patents in our portfolio."

This doesn't solve the problem of large companies litigating frivolous patent claims, though it does fight against patent trolls.

Read their FAQ. They are also willing to sell patents, under a deal that indemnifies all current (but not future) members.

They already use this threat as a reason to sign up now instead of later.

The path from their current position to monetizing themselves off of patent trolls is very short. They have an incentive not to walk this path too obviously - right now they are acquiring patents at fire sale prices - but the temptation is always there.

Disclaimer I had a previous employer take out 3 patents in my name. Those patents have wound up in RPX's portfolio. I am not happy about this fact.

Ironically, this was more or less the original business model behind Intellectual Ventures themselves. I guess they quickly figured out that the money is on the other side.

I was rather fascinated by Myhrvold, and the IV gang a few years back. The promise of a "pure invention" company where hundreds of scientists were toiling away on big ideas, creating a true innovation market, seemed rather exciting.

This was after all the guy that founded Microsoft Research, which unlike most of MS, has produced some rather interesting and innovative tech.

The reality though is they seem to spend way more time buying up cheap patents and then sending out "an offer you can't refuse" to hundreds of companies, hoping they will invest.

Which ultimately amounts to a smart, sophisticated patent troll. A super-troll if you will :p

Furthermore they were in the habit of outsourcing the muscle to 3rd parties that do most of the dirty work like suing, so their reputation comes across more noble, at least on the surface of things.

It's not like they are all bad, and comprised solely of attorneys. They really did invent some stuff, like the tech behind TerraPower a traveling wave nuclear reactor.[1]

The trouble with IV is that suffers from bi-polar disorder. On the one hand they want to invent stuff, but yet suing everyone else and generally being shitty is what pays the bills.

>"Litigation is a huge failure," Myhrvold says. It's "a disastrous way of monetizing patents." (2006) [2]

Then in 2010 they filed the first lawsuits directly.

An Intellectual Ventures spokesperson added that the company expects people to use the “patent troll” term, but “this is simply our company protecting its assets.” [3]

Oh how the mighty have fallen.

[1] http://en.wikipedia.org/wiki/TerraPower

[2]http://www.businessweek.com/stories/2006-07-02/inside-nathan...

[3] http://www.xconomy.com/seattle/2010/12/08/intellectual-ventu...

Yep. One of the co-founders is a former lawyer who in fact coined the term "patent troll". Now they are world leader in patent trolling. "If you can't beat `em, ..."

It's great lesson in copouts. Instead of using your resources (e.g. a former Microsoft CTO's intelligence and amassed wealth) to fix a problem, you take the easy way out and exploit the broken system. What a tremendous success story.

> Well, for starters, imagine a legal organization with hundreds of millions of dollars in the bank. How many trolls would dare risk going up against them?

Uniloc[1] have gone up against Microsoft in an 8 year case. That's pretty significant.

The Wikipedia entry for patent troll[3] mentions a few companies, and who they went up against. (Techsearch vs Intel; Forgent Networks against 60 companies using JPEG (collecting over $100million from 30 of those companies before prior art made the patents invalid); RIM paid $625million (Canadian or US?) to NTP inc; MercExchange vs Ebay with damages at $30million but some secret deal worked out later.

It feels like these people won't care about the legal fund.

[1] (http://en.wikipedia.org/wiki/Uniloc#Patent_lawsuits)

[2] (http://www.bloomberg.com/news/2012-03-05/microsoft-settles-f...)

[3] (http://en.wikipedia.org/wiki/Patent_trolls)

If the patent troll doesn't produce anything, you have no power against them. They don't care if you own a million patents yourself, they can still sue you for infringement of their one patent with no fear of repercussions.

If you have enough money you countersue and aim to invalidate their patents. In other words, going up against you could result in the loss of their valued intellectual property.

Again, not a lawyer here, but I would imagine there are ways to cause trolls lots of financial and legal pain given enough money.

Patent infringement isn't restricted to manufacture: "Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent."

17 USC 271(a)

http://www.law.cornell.edu/uscode/text/35/271

Wow, even just using a patented invention counts as infringement. I didn't expect that.

On the upside, you can scarcely breath without infringing a patent these days. I doubt a patent troll can operate in a non-infringing manner should a sufficiently large portion of the patent-holding community decide to get pissed off at it.

Problem is that the trolls also have few or no assets, other than their portfolios, that is.

There are exceptions, and as you might guess they tend to be interpreted quite broadly. ;)

As others mentioned, this has been attempted in various ways, but not really succeeded. Perhaps it could though if done properly. I am skeptical though and think something else is needed.

First is some form of legal ju-jitsu. If you are sued by a patent troll, you need to make it so they have no chance of stopping your business. One possibility is to dissolve and reform your company in some manner, perhaps moving it to another jurisdiction in the process.

This would at minimum cause a lot more work for trolls. It also causes hassle for you, but perhaps a business model could be built around this - imagine if your small startup could be legally dissolved and recreated, with all current legal structure in places like equity, somewhere else, perhaps as a division of a larger company. With the option to reform as an independent company whenever you want. Just moving around would make troll's lives much harder, and this could be much cheaper than fighting in the courts.

Another interesting idea is, as mentioned by others, that you can be sued for patent infringement even for products you use but didn't make. Everyone uses Windows or OS X, and they surely infringe many (ridiculous) patents, so even patent trolls are vulnerable to this. Microsoft and Apple do provide protection though, so this might be problematic.

It is not ridiculous. But it does not solve the problem. It plays right into the problem. What you are describing is already done, and has been done for many years, in one form or another, between corporations e.g. in the semiconductor industry with patent pools and cross-licensing; but it is not a matter of discussion in web forums. The reason why this stuff is now discussed in web forums is because this sort of protectionist racket is now reaching beyond a circumspect group of companies and is touching the free software world.

The solution as any informed but objective observer can tell you lies in taking away the power to sue - the junk patents which give people the right to sue for frivolous i.e. overly broad patent claims - and taking away the financial incentives - high fees by patent offices, high fees by patent lawyers and even the court fees - one could imagine E.D. Texas must thankful for all the patent troll business all stemming from the issuance of junk software patents. Stop issuing these junk patents. We deliberately opened the door for these in the not too distant past and we can also close it.

Needless to say, there is a fair bit of capital moving through the business method patent racket. That's why it's difficult to shut it down. We need to have junk software patent trolling declared as a class of white collar crime and then get some Giuliani-style prosecutors to come in and clean this mess up. I'm joking but you get the idea. It's not easy to stop this machine.

Creating another protectionist "insurance" scheme is not the answer. The perceived need for something like that is a symptom of the problem itself. The risk should not exist to begin with.

While this is certainly a good idea, what happens when one member from the organization tries to sue another? Back to square one?? I'm just curious, I'm no patent lawyer either.

My suggestion would be to have all members agree in advance to submit disputes between members to binding arbitration.

I would also suggest it should be the stated policy of the organization not to defer at all to the PTO on the question of patent validity. Everyone should expect that the arbiters would consider most issued patents (at least, most issued software patents) to fail the obviousness test.

I obviously didn't work out all the details. I would imagine that there would have to be some kind of a mutual agreement to not go after member companies.

Also, in order to be accepted you can't be a pure IP business. You have to actually have products in the market. In other words, a real business.

Lots of details to work out mostly by legal minds.

The fundamental problem is that it assumes that all patents are invalid, and that no legitimate grievance can exist over the companies' intellectual property. While this may be a popular opinion on HN, I doubt many actual companies are going to be willing to sign away their right to sue when another member company brazenly steals their work.

Just needs to precise definition of patent troll to be right and only have the cross licensing in place when specifically defending against one.

A few such organizations exist. For instance, see OIN.

The problem is that each patent, by definition, is unique in its coverage. Hundreds of thousands of patents is worthless if a troll has valid patent claims that read on your business. Also, massive amounts of legal firepower don't always help, as others have pointed out -- trolls are experts in exploiting moral hazard, compartmentalizing their business venture down to the single patent, such that if they find themselves on the losing end of a legal battle, they just fold up shop and move on to the next.

There is a stereotype that all patent trolls use a flimsy set of claims to coax hapless defendants into settling, rather than face years in court. Not true -- sometimes trolls have shockingly applicable claims, and go after the big game head on -- Apple, Microsoft, Google.

Your second part unfortunately doesn't work at all against trolls. A non-practicing entity - a company that does nothing except hold IP for the purpose of suit, but doesn't produce anything - can't violate your patents, and so can't be countersued using your own patent portfolio.

That's why patent trolling is particularly pernicious. Their entire purpose is simply to slow innovation and get rich doing it. Period.

One problem with this is some of those members are potential patent trolls themselves. Witness the many Apple/Samsung/Google/Oracle cases.

Although there is some debate about the exact meaning of "patent troll", I would think that using the threat of litigation to prevent innovation falls under this.

My understanding of the term 'patent troll' is that it only applies to companies that own but do not actually use their patents to bring things to market themselves. Thus, the companies you mention don't qualify. Not to say that what those companies do is all peaches and cream but it's not patent trolling.

Apple, Samsung, Google and Oracle are all practicing entities. They're not trolls.

What they're doing law-suit wise is a power-play, a tit-for-tat that's started to escalate into dangerous nuclear territory.