One of my least favorite business models just gained another disciple. Say hello to Unwired Planet (NASDAQ:GECXU), the latest pure patent troll.
The company formerly known as Openwave Systems just shared two major news items. First, the company has acquired more than 2,000 wireless patents from Swedish mobility veteran Ericsson (NASDAQ:ERIC). It's a two-way transaction that effectively turns Unwired Planet into Ericsson's patent enforcement agency, returning some of its licensing and litigation income to the Swedes.
For Ericsson, the deal puts some distance between the industry giant and the distasteful business of twisting the arms of its own competitors, customers, and suppliers. Leave that dirty work to Unwired Planet and count the risk-free winnings later!
A job well done?
Having completed this transformation from mobile software and services provider to a pure intellectual property wrangler, CEO Mike Mulica also announced that he's leaving the company.
Mulica had nothing to do with Openwave's drastic plunge in 2006 to 2008, having taken the CEO spot in 2011. That disaster, which left longtime shareholders with just 10% of investments made in 2006, happened because true smartphones started showing up and making the company's innovations obsolete in a hurry. Hold that thought.
"Unwired Planet is now ready to emerge as the leader in the mobile IP licensing space," he said. "We have arrived at our strategic destination."
The journey involved landing the Ericsson contract, coming up with the IP licensing (read: litigation) strategy, replacing the entire staff, and getting rid of "legacy product businesses." That last part is important, because litigation targets can hit you back if you actually make or sell something. That risk is totally unacceptable, especially when you're targeting much larger and richer companies with patent portfolios of their own.
Indeed, Mulica launched lawsuits against mobile titans Apple and Google (NASDAQ:GOOGL) last September, accusing both companies of patent infringement. Big G is on the hook for atrocities like putting location markers on digital maps and including ad links in mobile messages. Apple should pay up for having an App Store, and for receiving online data when you turn your iPhone on.
If these infringement claims seem ridiculously broad to you, then welcome to the club. Also, get ready for a whole lot more of it as Unwired Planet's lawyers sort through their brand-new Ericsson toys.
Join the club!
So Unwired Planet has become a carbon copy of product-free patent litigators VirnetX (NYSEMKT:VHC) and Vringo (UNKNOWN:VRNG.DL). This company does have a base of patents developed in-house, mostly in the field of push notifications. VirnetX's homemade claims focus on data security, and Vringo's domestic innovations are an aging set of search and advertising claims.
To my experienced but admittedly non-lawyerly eyes, all three of these stooges want to capitalize on the mobile revolution without actually contributing anything to it. Many of these so-called inventions are obvious to regular Joes today, and have been self-evident to mobile technology experts for ages. I mean, seriously -- placing markers on a map? The Patent Office should never have approved these flimsy applications to begin with, and I believe that judges and juries have enough brains to throw most of them out with the bathwater.
It's one thing to file lawsuits to protect real innovation, but a totally different thing to fire a patent blunderbuss at anything that moves. It's a crapshoot, not a business strategy. You shouldn't be surprised to find out that two of these companies are headquartered in gambling haven Nevada, and the third has an easy two-hour drive to the casinos in Atlantic City.
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