Tomahawk, WI 03/28/2014 (Basicsmedia) – Technology companies have been fighting the menace of ‘patent trolls’ in recent years. Now, it’s Cisco Systems, Inc. (NASDAQ:CSCO)’s turn.

The neutral term for patent trolls is ‘non practicing entities.’ The modus operandi of these NPEs can amount to a form of extortion where they seek fat licensing fees from operating companies for patents the NPEs have acquired in the open market. When the NPEs fail to persuade these giant companies to pay them license fees, the NPEs file multi-billion dollar patent infringement suits.

Spherix Files Suit Against Cisco

Spherix claims that Cisco’s key products including the GSR 12000 Series routers and Nexus line of data center switches are infringing patents that were originally granted to Nortel which were acquired by Rockstar Consortium (along with other Nortel patents) in 2009 for $4.5 billion.

According to Spherix, most of Cisco Systems, Inc. (NASDAQ:CSCO)’s $43 billion revenue in the past five years in the routers and switching business has been generated by infringing Spherix patents.

Technology Companies Fighting Back

Many technology companies have been trying to deal with this menace through joint and coordinated efforts.

For example, Cisco Systems, Inc. (NASDAQ:CSCO) has been aggressively fighting against these businesses — like Spherix — who buy patents and then try to make money by asserting the patents in court against companies who have already launched products in the market. Cisco, Motorola Solutions and NetGear won a case in February against Innovatio IP Ventures which had acquired old Broadcom patents and shot off 14,000 letters to companies and organizations using Cisco WiFi technology demanding licensing fees.

Cross-Licensing to Avoid Litigation

On a related track, Cisco Systems, Inc. (NASDAQ:CSCO) has signed long-term patent cross-licensing agreements with the likes of Google Inc (NASDAQ:GOOG) and Samsung to reduce the chance of future litigation.

Rockstar Consortium itself resulted when technology giants Apple Inc. (NASDAQ;AAPL), Microsoft Corporation (NASDAQ:MSFT), BlackBerry Ltd (NASDAQ:BBRY), Ericsson (ADR) (NASDAQ:ERIC), and Sony Corporation (ADR) (NYSE:SNE) got together to buy more than 6,000 patents during the bankruptcy proceedings of Nortel Networks. Instead of dividing these patents among themselves, these companies put around 4,000 of these patents into the venture called Rockstart Consortium.

Patents are big business. When Google sold off Motorola Mobility to Lenovo recently, Google kept the Motorola patents with itself.

The NPE business is also expanding and maturing. Ten years ago, there was one major player, Intellectual Ventures, co-founded by Nathan Myhrvold. Now, there are many other ventures with business models that differ from that of Intellectual Ventures.

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