How Holocaust foundation’s patents enabled a lawsuit against the N.Y. Times

A slew of leading tech corporations and now The New York Times have come under legal attack from an obscure company wielding a surprising weapon: patents from an effort to document Holocaust survivor testimony.

On Oct. 11, the Delaware-based Preservation Technologies LLC filed suit against The New York Times, presenting 29 claims of patent license violations, the tech website GigaOm reported. The patents, which concern digital library and multimedia cataloguing, originated with the Survivors of the Shoah Visual History Foundation (now known as the USC Shoah Foundation).

The foundation is best known for its association with Steven Spielberg, who established the project; the organization aims to record and preserve the testimony of Holocaust survivors, and has compiled thousands of interviews, videos and photos.

So how did a Holocaust remembrance organization’s intellectual property wind up being used in a lawsuit against a major newspaper?

The answer is illustrative of what some claim is a major problem in U.S. patent law. Patent assertion entities, or PAEs — known in less flattering terms as “patent trolls” — are shell companies created to collect patent licensing fees.

In a typical case, a PAE company will acquire the licensing rights to a variety of patents, often older ones (the Shoah Foundation’s patents were filed in 1998). It will then use these rights to sue companies it claims have violated its patent licenses, sometimes demanding millions of dollars. In many cases, companies will settle with the PAE rather than paying legal fees to challenge the claim.

In an interview last year, President Obama came out strongly against patent trolls. “They don’t actually produce anything themselves,” he said in February. “They’re just trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”

The path of patents can sometimes be bewildering. In the case of the Times lawsuit, the patents associated with the Shoah Foundation’s digital media-related innovations came into the possession of the University of Southern California when the foundation was incorporated into the university in 2006. In 2010, the university sold licensing rights to the Shoah Foundation’s patents for $7 million to a patent auction house called Ocean Tomo, the website TechDirt reported.

From there, the situation gets even murkier: The patent licensing rights to the Shoah Foundation’s innovations were acquired by a company called Altitude Capital Partners, a so-called private equity firm that primarily focuses on lucrative patent lawsuits, through a series of subsidiary companies. Preservation Technologies LLC is currently using the Shoah Foundation’s patents to sue a laundry list of the Web’s most innovative companies —  Google & YouTube, Netflix, Facebook, Sony, Dish and Amazon, Hulu, and now the New York Times.

 Although the USC Shoah Foundation still owns the patents in question, selling off the licensing rights to these technologies allowed them to be used for profit by other entities. A USC spokesperson told TechDirt that “USC has no say or financial stake in the litigation.”