Patent Profiting

With a tip of the hat to IP Watchdog for alerting us to a new, novel, and controversial way to make a quick buck on patents.

As reported by the Wall Street Journal, hedge fund manager Kyle Bass — with the help of Erich Spangenberg, formerly known as the patent troll that everyone loved to hate — has begun filing and publicizing IPR challenges before the PTO against pharmaceutical companies, while also betting against their shares (for example, by buying up shares of competitors who would be benefited if the patent owner’s rights were terminated). The primary loophole permitting Bass to do so is the fact that there are more lax standing requirements (i.e. ability to bring a claim) for IPR proceedings compared to federal lawsuits.

Perhaps a creative response to the challenge Alice and Congressional patent reform have posed to the traditional profiteering model on patent litigation, Bass’ approach may be as unusual as it seems unsavory. Still, one wonders whether it will be the subject of future Congressional reforms.