Tuesday, 15 June 2010

More news on the Micron patent sale: what is really happening behind the curtains?

On June 1st Darren Oliver relayed an interesting news item (click here and here for the original article) about the acquisition by Round Rock Research LLC of a portfolio of 4,500 patents from Micron Technology Inc., which is the biggest U.S. maker of computer-memory chips. Round Rock is a so-called non-practising entity that has been (or NPE) founded by former Kirkland & Ellis lawyer/patent counsel John Desmarais, who used to represents many leading technology firms in patent infringement cases (he notably won a $1.52 billion verdict for Alcatel-Lucent against Microsoft in 2007.)

The technological spectrum of this portfolio is very broad, as it contains patents related to chipmaking technology, patents on photo imaging, telecommunications and search engine technology, as well as the largest RFID patent cluster. Whereas such diversity does not prevent the risk of buying junk patents, it seems that Mr Desmarais took precautions. A study conducted by CPA Global’s monetzation specialist Rahul Jindal for the IAM(Intellectual Asset Management) Magazine (that you can find here) notably concluded that 20% of the patents sold by Micron are of very high quality. Considering that only 5% of all USPTO reach this level of quality, Desmarais closed an interesting deal with the US chipmaker. Indeed although the value of this transaction has not been publicly revealed, it appears that the amount of money paid for this portfolio - which represents one 1/5 of Micron's entire patent portfolio - is not as high as one could think: as IAM Magazine's Joff Wild pointed out, the sum has been considered as "not material enough to announce to shareholders or the regulatory authorities".

The dubious confidentiality of this transaction leaves some room for much speculation: did Micron’s senior management make a blatant mistake by sanctioning it or does Micron have a vested interest in Round Rock? Although Micron has a licence to use the patents royalty-free, such a large-scale sale does not seem to be the best strategy to recoup R&D investment (which was however the reason behind this patent sale according to the chipmaking firm). Joff Wild did a great job of investigation and tried to get some answers from Micron ... in vain. For him Micron might be involved in some ways with the NPE, contrary to the very anti-patent troll stance recently taken by its CEO. Given the powerful arguments raised by the IAM editor (by the way, the registration to the IAM blog is free and recommended) it is hard not to be suspicious towards Micron. However it might be too early to accuse Micron of hypocrisy. Joff Wild will hopefully keep on investigating and find out what's really happening behind the curtains.

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