Intellectual Ventures Steps Up Legal Battle with Memory Manufacturers, Brings H-P, Best Buy & Others Along for the Fight

7/12/11Follow @curtwoodward

[Updated at 2:30 pm with details of ITC complaint] Now it’s really getting serious. Intellectual Ventures, the Bellevue, WA-based intellectual property and invention firm, is stepping up its fight against a pair of Asian memory manufacturers with a complaint to the International Trade Commission seeking to block the companies’ products from being imported to the U.S. A related federal lawsuit was filed in Seattle yesterday.

Intellectual Ventures also targets a bunch of companies that make, market, and sell products with the Asian companies’ memory devices—including such household names as Dell, Hewlett-Packard, Best Buy and Wal-Mart. Those companies aren’t IV’s main adversaries; the firm is mainly going after Korea-based Hynix Semiconductor and Japan-based Elpida Memory. On its website this afternoon, Intellectual Ventures said that “ITC requirements” led it to include “several companies whose products contain infringing Elpida and Hynix memory devices.”

The lawsuit represents the second time overall that IV has gone to court to enforce its considerable patent holdings, but the ITC is a new level of seriousness. Hynix and Elpida (along with their American branches) also were targets in that first round of civil suits, filed in Delaware at the end of last year. In its blog post, IV says the ITC complaint is the next step in its legal moves against Hynix and Elpida. Intellectual Ventures lawyer Melissa Finocchio is quoted saying that the two manufacturers were “clearly” infringing on IV’s patents, but refused to make a licensing deal.

“We can file a patent infringement suit seeking money damages, which we did in December, and we can file a complaint with the ITC requesting an order barring importation of the infringing products into the U.S.,” Finnoccio said. “In the case of Elpida and Hynix, we see both courses of action as necessary to protect the value of our invention rights.”

Hynix and Elpida both make DRAM, a kind of memory used in computers and servers. Hynix also makes NAND Flash memory, which is used in things like iPods. Just as it did in its previous suit against the two companies, IV lays out a history of trying unsuccessfully to cut licensing agreements with the two firms over a set of patents.

Intellectual Ventures, co-founded by former Microsoft CTO Nathan Myhrvold, takes a two-pronged approach to building what it calls an “invention capital” company. The serious money is made by buying up and licensing patents—an approach that IV’s leaders have said is their attempt to establish a large, competitive market for patents as financial commodities. Intellectual Ventures says it has purchased more than 30,000 patents, paid inventors “hundreds of millions of dollars,” and earned close to $2 billion in licensing fees.

Those super-wonky descriptions of its efforts isn’t enough, of course, to persuade critics that the company is anything more than a “patent troll” on steroids, an accusation that IV has generally shrugged off.

The other side of IV’s efforts involves supporting inventors who come up with new technologies, either through its network of affiliates or at its in-house invention lab over in Bellevue. They work in a wide variety of fields, tackling projects as diverse as mosquito-zapping lasers, light-bending “metamaterials,” and next-generation nuclear reactors. In its court filing, IV says it “has invested millions of dollars developing such ideas and has filed hundreds of patent applications on its inventions every year, making it one of the top patent filers in the world.”

Intellectual Ventures says it could be entitled to triple damages, “but in no event less than a reasonable royalty.” Five total patents are at issue, with Hynix being sued over all five and Elpida tied to three.

The other defendants are tied to all five patents in the lawsuit. They make up a long list of technology and retail companies: Acer, Adata, Asus, H-P, Kingston Technology, Logitech, Pantech, Best Buy, and Wal-Mart. Intellectual Venture’s lawsuit essentially paints these companies as being pulled in downstream due to the infringement it’s claiming by Hynix and Elpida, saying those firms “induced” infringement by others who use, distribute, and sell products with Hynix and Elpida memory.

Elpida’s western U.S. offices said all inquiries about the lawsuit would have to be handled by the legal team in Japan. I’ve also e-mailed the contact I found for Hynix’s PR department and will update if I hear back.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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