Yieldify, the Google Ventures-backed startup accused of stealing code from British adtech company Bounce Exchange, has been making some unusual friends.
Yieldify has acquired an ancient web patent from III Holdings which was first filed in 2007. III Holdings is better known as Inside Intellectual Ventures, co-founded by Nathan Myhrvold. It has been dubbed “the most hated company in tech” and “the world's biggest patent troll.”
IIV is a “NPE” (non-practicising entity), which gathers up patents and seeks to unlock their value through selling on or licensing the IP. This has been backed up by litigation, such as Samsung, a recipient of one of III’s sueballs.
In a court filing made last week, Yieldify made a request for declaratory judgement in its ongoing case versus Bounce Exchange, citing the IIV patent. This is a request for the case to be thrown out. The complaint also uses the patent in question to lodge an infringement claim against Bounce Exchange.
In June last year, Google Ventures’ UK arm invested £8m (US $11.5m) in Zeus Enterprises, trading as Yieldify, for its third high profile investment.
New York-based Bounce Exchange, founded in 2010, claims in a lawsuit filed in December that Yieldify met Bounce Exchange posing as a customer, then copied its customer conversion software.
Bounce Exchange is seeking $100m in damages in a New York court for the original copyright infringement case, but opened a second front last month alleging patent infringement.
Google has been stung by patent trolls before, and in 2012 was ordered to pay a percentage of Adwords revenue to Lycos, a defunct search engine. Last year Google vowed to buy up patents from NPEs before they could launch lawsuits against startups. In addition, its own former head of patents, Michelle Lee, now runs the US Patents and Trademarks Office.
Clearly, patent trolls are unacceptable when they’re trolling you, but become strategically useful when you can troll back.
We have requested comment from Google Ventures and will update the story when we hear back.
Ryan Urban, CEO of Bounce Exchange, told us: "Because the case is pending I can't comment other than to say that at Bounce Exchange we respect intellectual property rights. We believe these rights are vital to the protection of software developers and all those who foster innovation in the hopes of furthering technology to the benefit of the marketplace. It is disappointing to see intellectual property rights being exploited as a diversionary tactic when faced with a losing lawsuit instead of being used to encourage innovation." ®