Federal court dismisses lawsuit from Microsoft-, Google-backed patent troll

Intellectual Ventures' suit against Capital One has been thrown out, leaving the validity of its suits against other financial institutions in question

Patent troll Intellectual Ventures (IV) is wiping egg off its face in the aftermath of its lawsuit against Capital One Financial.

The lawsuit is one of many that IV has recently launched against financial institutions over the alleged use of patents covering various processes -- not all of which appear to be eligible for patent protection.

Like other companies designated as patent trolls, IV works as a clearinghouse for patents it has acquired and doesn't actually make products of its own. IV's case against Capital One was thrown out last week, when a federal judge found that the patents in question simply described ways of doing things that could be done without the aid of a computer -- namely, "monitoring expenditures according to preset limits" or "determining what would appeal to a particular user from a particular website."

Capital One is among a slew of banks that IV has brought suit against for allegedly infringing an array of patents used to cover basic banking activities such as online transactions, ATM functions, and even the use of cryptography to protect data per PCI DSS.

Other IV suits pending against banks involve patents that were licensed to them from companies such as Eastman Kodak and Entegrity Solutions. But the wording of the suits is dodgy, according to one analyst of the pending litigation, and doesn't take into account the possibility of indemnification rights that may have been provided to them through third parties.

What's more, the Capital One patents weren't filed by inventors looking to recoup a royalty from big corporations using their work without permission or by a company interested in allowing its work to be sublicensed to others. Rather, as Ars Technica reported, the patents were created by a husband-and-wife pair of patent lawyers, whose work was licensed to IV under terms they declined to discuss.

IV's penchant for suing may even be doing damage to some of its own investors. Last year IV brought suit against Motorola for allegedly infringing patents it held related to text messaging, docking stations, and software push technology. Google, which bought Motorola's mobile unit in 2011, was an investor in IV. (Google retains most of Motorola's patent portfolio even after selling the company to Lenovo.) While Google didn't invest in the arm of IV that brought the lawsuit against Motorola, it reflects badly on the company and its choice of targets. 

So far, IV's track record in court has been ignominious. Aside from its now-dismissed suit against Capital One, one of the Motorola suits ended in a mistrial earlier this year -- although IV plans to bring that case back into court.

IV benefits from a roster of third-party investors apart from Google. Microsoft and Sony, for instance, have invested "an undisclosed sum" in IV. It's not surprising Microsoft is a contributor, since former Microsoft CTO Nathan Myhrvold is a co-founder of IV. Despite the growing sentiment against patent abuse -- and against patents generally -- in the tech industry, the biggest tech companies seem too willing to cozy up to patent trolls when it benefits them.

This story, "Federal court dismisses lawsuit from Microsoft-, Google-backed patent troll," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

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