dsc_00601In a report yesterday, Bloomberg shed light on what PatentFreedom is calling the 2nd largest NPE in the country.  Second, of course, to Intellectual Ventures.  John Desmarais, a former big-firm lawyer and defender of large corporations in patent infringement cases, has taken the independent train to NPE-ville.  According to the report, Desmarais left his firm in May to form Desmarais, LLP.  But this wasn’t the usual “big time partner leaves big firm to start small shop” deal.  No, Desmarais seems to have had a plan in place for some time now - a thought-out plan; the kind that tastes like an early retirement fund.    Bloomberg reports that Desmarais, who spent the greater portion of his professional life defending large corporations from NPE’s and other patent asserters, purchased a portfolio of roughly 4,500 patents from Micron Technology, Inc. (a client of Desmarais) which he now intends to assert and license through the resources of - guess who . . . Desmarais, LLP.   A business-savvy move for Desmarais, yet also probably a bittersweet and frustrating event for operating companies such as Desmarais’ old clients.  Such a move lends further proof to the notion that, while the ethics and efficiencies surrounding such an NPE assertion program remain in question, the business model works and is inescapable under the current legal regime.  To a business-savvy person like Desmarais, who probably found himself in the right place at the right time while being equipped with a working knowledge of the business model, this move was probably too good to pass up. 

Now, Round Rock Research, LLC, the holding company which Desmarais created to hold this patent portfolio, is the second largest owner of patents among NPE’s in the country according to PatentFreedom.  And they have a roster of free lawyers to utilize - including one of the best patent litigators in the world.  That alignment of resources is akin to creating a new NBA team with Kobe Bryant and Lebron James and bestowing ownership of the team in the National Basketball Referees Association.  If it was allowed, after crying “unfair!”, people would be left with no choice but to applaud such a business savvy move.  That choice is similar in Desmarais’ venture. 

According to the report, no litigation has been filed yet, and no licensing transactions have been executed yet.  This will be an interesting developmeng to watch.  For now, the following quote from the report can suffice as the general sentiment or conclusion drawn from an endeavor such as this:

“There is a good story about nonpracticing entities . . . and a bad story about nonpracticing entities. The good story about nonpracticing entities is that they are developing liquidity in the market for these patent rights.  On the negative side, they are given patent rights for goods or services they don’t make and can sue other companies for infringement.” - John F. Duffy, a law professor at George Washington University.

(pictured here is a bench and dogwood trees from Vanderbilt’s campus)

This entry was posted on Wednesday, June 2nd, 2010 at 11:54 am.
Categories: Burgeoning Business, Patent Prospects ~ by Ian McClure.

One Comment, Comment or Ping

  1. Great post, Ian. Nice to see you back. I made the following changes to the quote from Professor Duffy amended as in the brackets to highlight the BS nature of this “expert” opinion:

    “On the negative side, they are given [the deed] for [land] they don’t [live on] and can sue other companies for [trespassing].”

    Oh, well, guess he doesn’t hang out with the Property Law professor at GW.

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