Jay Walker (left) and Jon Ellenthal (right)

Jay Walker has been in the news over the last several months. But it hasn’t been because of his large patent portfolio, or as the result of his status as the founder of Priceline.com. Instead, it is as the result of a new endeavor he is behind called Patent Properties. But what is Patent Properties?

The company develops and commercializes its own portfolio of assets and is offering a licensing solution for the mass market of patent owners and users. It was formed in September 2013 with the completed merger of GlobalOptions Group, Inc. and Walker Digital Holdings, LLC, which was a wholly owned subsidiary of Walker Digital, LLC. Initially, the newly formed entity consisted of the patent portfolio created by Walker Digital, which included 379 granted patents, 93 pending patent applications, intellectual property in development and 19 litigation matters.

Jon Ellenthal, CEO of Patent Properties, has described the thinking behind their new licensing model this way:

We believe the biggest problem is the sheer expense of patent litigation. Many companies cannot afford to defend themselves even when the merits are on their side. But it’s also true that many legitimate patent owners cannot afford to avail themselves of the court system because of the very high costs…

The crazy thing is that any industry that does all of its deals in the court system is not in good shape. And that’s how the IP marketplace works today. So for us to really unlock the full economic value of this asset class which I do believe is very important to the economy we need to figure out how we’re going to do deals in a simple and affordable way outside of the court system. We need to figure out how to do business outside the court system because the court system is inaccessible to almost everybody…

So if we’re going to continue to do deals based on a legal standard, all we’re going to do is argue over how to split the pie as its exists today. If we’re going to figure out how to create a commercial standard for deal making, licensing, that’s scalable then we can start to talk about how to diffuse patented innovation into the economy and grow the pie.

The way that Patent Properties proposes to fulfill this mission is through the creation of  a neutral entity called The United States Patent Utility, which will administer a new kind of licensing deal designed to work for both inventors and companies. It’s called a No-Fault Patent License.

I recently had the opportunity to speak with Walker on the record. See A Conversation with Priceline.com Founder Jay Walker. When I spoke with Walker, he described Patent Properties and likened the Patent Utility to an ASCAP-like licensing program for patents. He explained:

If you look at ASCAP, what was the bargain? With ASCAP the bargain was if you’re a musician you’re not going to go to every radio station in America and extract royalties for your music. It’s just not gonna happen. So you listed your music in the ASCAP or the BMI or the SESAC Catalog. And you basically said, look, why don’t you guys go out and secure revenue for me on a nonexclusive basis and give me the vast majority of what you collect. And that model worked a hundred years ago for a lot of small musicians who wanted better than nothing revenues.

So when you go to the modern world a hundred years later and you talk to a million patent owners who are getting nothing today and you say, look, instead of getting a lot of money from a few people which you’re never going to get, how about I get a little bit of money from a lot of people, give you 85% of what I collect, never take ownership of your property, never prevent you from selling it or licensing it or withdrawing from the system on a going forward basis, you’ve got all the rights you want, I’m not taking over. I’m never going to sue anybody because I’m not even the owner of your patent. That’s not what I do, right? So literally if you have patents, and I own hundreds of patents so I know what the answer to this question is, and I’ve had the resources to bring litigation when it’s appropriate. I know better than nothing is going to be a very attractive proposition to a lot of patent holders. And I’m not just talking about solo inventors here, I’m talking about small companies with ten or 15 patents and I’m talking about universities with hundreds of them.

Some have sugested that Walker is planning the creation of a super patent troll, which he disputes. I posed that question directly to Walker.

QUINN: You’ve probably seen it or heard that there are some folks on the Internet who are saying that Jay Walker and his Patent Properties are just a patent troll and they’re going to be this mega patent troll. You know, an end of the world type rant. So I’d like to get your take on that.  I mean my take on it is is that anybody who seriously looks at what you’re doing simply cannot come to the conclusion that this is anything like a patent troll model.

WALKER: Here’s why it can’t be right.  A patent troll, whatever that means, sues people.  We don’t own any of these patents.  We’re the nonexclusive agent.  We can’t sue.  We have no standing to sue anyone.  Therefore, whatever you want to call a troll, which is the world’s most ill-defined term, we can’t possibly be a troll in the patent utility because the utility doesn’t own any patents.

QUINN: Right.  And it’s really just that simple. Even if you tried to sue you would get bounced on a motion to dismiss in a millisecond.

WALKER: It’s that simple.  We don’t own any patents. We have no standing.

There have been other attempts to commoditize patent licensing, but if anyone can do it, the founder of Priceline.com, who has changed the way travel and hotel rooms are purchased, seems to have the potential to succeed.

Tags: Jay Walker, Licensing, patent, Patent Properties, patents

This entry was posted on Tuesday, July 22nd, 2014 at 18:45 and is filed under Patent Issues, Patent Licensing. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.