Jay Walker Refuses to Yield

Walker Digital owns about 200 issued U.S. patents , and they endeavor to license their properties to companies engaged in e-commerce solutions. Jay Walker, founder of priceline.com, is the chief inventor, and it’s now clear he has decided to invest a substantial portion of WD’s reported $200M in licensing revenues in patent protection lawsuits, having recently filed against more than a hundred companies.

There is one line in the announcement that is most telling as to strategy employed by technology companies.  Jon Ellenthal, Walker Digital’s CEO, states that “after reaching out to so many companies in an effort to secure reasonable licenses, we were consistently told that without litigation our requests would not be taken seriously.” There it is.  An organization must be willing to defend its IP in order for there to be real value, and, organizations increasingly are relying on the court system to sort out the technical lines that distinguish one property from another and what ownership rights apply. It's not infringement unless a court says it's infringement. As this trend grows exponentially, so to does the need for qualified and communication-wise expert witnesses. Interpretation of the law by the judiciary we can rightfully expect. But can we also expect judges to be able to sort through the technical (and ethical) nuances that inevitably determine patent validity? Does patent reform as presently being debated in the House address this even marginally?

Less obvious, except to the “quants” who live in this world, is another strategic reason for litigation, and it stems from straight investment analysis.  Litigation ties up a patent owner’s resources (theoretically depriving the owner of investment dollars that could exploit the IP) while simultaneously eating into the patent’s useful life.