APTWater makes water treatment systems that clean up polluted groundwater and wastewater. You’ve probably never heard of APTWater. I hadn’t, nor had a friend who lives near their headquarters and works on water issues.
Of course, that didn’t stop a patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. from suing APTWater over their wastewater treatment technology. APTWater wasn’t the only one sued—at least two other water treatment companies were sued as well.[1][2]
But instead of being forced to litigate to defend itself, or taking an unfavorable settlement offer, APTWater responded by filing a petition for inter partes review (IPRIntellectual Property Rights. Usually associated with formal legal rights such as patent, trademark, and copyright. Intellectual property is a broader term that encompasses knowledge, information, and data considered proprietary whether or not it is formally protected.). Using IPRIntellectual Property Rights. Usually associated with formal legal rights such as patent, trademark, and copyright. Intellectual property is a broader term that encompasses knowledge, information, and data considered proprietary whether or not it is formally protected., APTWater succeeded in achieving a quick (and likely reasonable[1. While the settlement terms are confidential, when a patent owner settles shortly after an institution decision finds their patent to be reasonably likely to be invalid the settlement is typically reasonable for the petitioner.]) settlement from the patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. after the PTABPatent Trial and Appeal Board. Reviews adverse decisions of examiners on written appeals of applicants and appeals of reexaminations, and conducts inter partes reviews and post-grant reviews. The Board also continues to decide patent interferences, as it was known as the Board of Patent Appeals and Interferences (BPAI) before the AIA. determined that the patents were likely invalid.
Trolls As Shields
ThinkVillage-Kerfoot is the company that sued APTWater. ThinkVillage claims to help inventors get products on market; in practice, they seem to be a set of holding companies which don’t make anything, just sue people. (None of these companies appear to actually market a product or service.) That’s the ThinkVillage part of the name—the second part refers to the source of the patents.
In the case of APTWater case, the “Kerfoot” part of the name refers to Kerfoot Technologies, an actual company. Kerfoot also makes water treatment systems and competes with APTWater. If Kerfoot had sued APTWater directly, then APTWater might have filed counter-claims. By spinning the patents out to a third entity, any lawsuit by APTWater would have to be a separate lawsuit, heard in a separate case by separate jurors. Jurors in the suit brought by ThinkVillage-Kerfoot wouldn’t be aware of the counter-claims and wouldn’t hear the full dispute.
This type of arrangement, often referred to as “privateering,” is intended to protect the original patent owner from any backlash from patent assertion while still allowing the patent owner to benefit. Typically, the original patent owner receives a portion of any licensing and litigation revenues generated by the privateerA patent assertion entity (PAE) used indirectly by a producing entity to assert patents against rivals. The privateer is better positioned to damage the rival because it is not vulnerable to counterassertions (as a non-producing entity it cannot be liable for patent infringement) and need not be concerned with adverse publicity. The producing company may spin off the privateer, sell, giving the original owner an ongoing financial interest in the privateer’s success, while the formal separation of the privateerA patent assertion entity (PAE) used indirectly by a producing entity to assert patents against rivals. The privateer is better positioned to damage the rival because it is not vulnerable to counterassertions (as a non-producing entity it cannot be liable for patent infringement) and need not be concerned with adverse publicity. The producing company may spin off the privateer, sell as a company allows the original patents to maintain deniability.
But even if the original patent owner can’t be directly targeted, there’s one thing that the privateerA patent assertion entity (PAE) used indirectly by a producing entity to assert patents against rivals. The privateer is better positioned to damage the rival because it is not vulnerable to counterassertions (as a non-producing entity it cannot be liable for patent infringement) and need not be concerned with adverse publicity. The producing company may spin off the privateer, sell holds that’s valuable to the original owner—the patent itself.
IPRIntellectual Property Rights. Usually associated with formal legal rights such as patent, trademark, and copyright. Intellectual property is a broader term that encompasses knowledge, information, and data considered proprietary whether or not it is formally protected. Gets Around The Privateering Shield
By allowing APTWater to challenge the patent directly, with a quicker resolution, IPRIntellectual Property Rights. Usually associated with formal legal rights such as patent, trademark, and copyright. Intellectual property is a broader term that encompasses knowledge, information, and data considered proprietary whether or not it is formally protected. allowed APTWater to cut through the advantages of the privateering structure. Instead of several years of litigation, APTWater had an indication of likely invalidity within 6 months of filing their petition and a settlement within 7 months. This cut the legs out from under ThinkVillage-Kerfoot’s litigation campaign. While the patents still technically exist, if Kerfoot ever asserted them, the new defendant could simply file the same IPRIntellectual Property Rights. Usually associated with formal legal rights such as patent, trademark, and copyright. Intellectual property is a broader term that encompasses knowledge, information, and data considered proprietary whether or not it is formally protected. that APTWater filed.
With their patents effectively unusable, ThinkVillage-Kerfoot hung up their privateer’s cutlass. The other cases were also settled. ThinkVillage-Kerfoot was dissolved and the patents were given back to Kerfoot Technologies, the original patent owner.
By filing a petition for inter partes review, APTWater saved money not only for themselves, but for other water treatment companies targeted by ThinkVillage-Kerfoot. That money is money APTWater can spend developing new technologies for water treatment.
