Ocean Tomo hypes it this way: “Forever changing the way companies manage the risk of the unpredictable IP enforcement market, the sale of Round Rock Research’s Covenant Not to Sue marks a new day for licensing and litigation in the IP world. The covenant grants the acquirer freedom to operate under one or more patents – in this case, Round Rock’s portfolio of approximately 4,200 patents and pending applications, which spans several industries such as semiconductors, display technologies, flash, memory, and microprocessors. “The sale of this covenant not to sue is a game changer in the IP space,” said Dean Becker, CEO of ICAP Ocean Tomo. “Securing a covenant is as beneficial to a company’s freedom to operate as acquiring the patents themselves, so we believe that covenants are on their way to becoming a key component of strong IP portfolios globally.”
Ignoring the false hype from Ocean Tomo that covenants not to sue are something new for IP owners’ portfolios, it is interesting Round Rock Research, LLC chose to auction a Covenant Not to Sue when TransCore v ETC holds that such a covenant exhausts patent rights and when it will probably set a ceiling on reasonable royalty. They may have outsmarted themselves on this one. So Ocean Tomo will now auction patent licenses and covenants not to sue as well as patents? Increases the asset base and that raises possibilities for other auction houses to take on IP and compete with Ocean Tomo. Is Christies or Sotheby next? Raises some interesting issues, such as (1) Is this grounds for a DJ action by anyone who feels threatened by the patent ? (2) What if the patentee (Round Rock Research, LLC in this case) advises a possible infringer of the auction, does that justify a DJ? (3) What if the auction house (Ocean Tomo in this case) advises a possible infringer of the auction, does that justify a DJ? (4) Is this a way to threaten infringers without triggering a DJ since an auction is ostensibly not aimed at anyone in particular? (5) How does this affect “reasonable royalty” determinations (does it cap it, floor it, or standardize it)?