Apple accused of feeding intellectual property to 'patent troll'

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According to a new report, Apple has transferred some of its patents to patent-licensing firm Digitude Innovations, prompting accusations that the company is aiding a so-called "patent troll."

Digitude Innovations filed suit against a slew of tech giants this week, including Research in Motion, HTC, LG, Motorola, Samsung, Sony, Amazon and Nokia. Apple was noticeably absent from the list.

Further investigation by TechCrunch revealed that two of the patents wielded in the lawsuit had belonged to Apple earlier this year. The report noted that documents had been uncovered confirming a license agreement between Apple and Digitude, though the actual details of the agreement were not available to the public.

Apple apparently transferred a dozen patents to a shell company, called Cliff Island LLC, earlier this year. Though little information was available on Cliff Island, report author Jason Kincaid was able to ascertain that the company's address is the same as Digitude investor Altitude Capital. Cliff Island subsequently transferred the patents to Digitude.

A Forbes report from June noted that Digitude Innovations was "put together" by Altitude founder Robert Kramer. Altitude then went on to invest $50 million for the purpose of purchasing consumer electronics patents that would be used to sue big tech companies.

At the time, Kramer said he had "reached out to many of our prospective customers to encourage them to become early strategic licensees," while a formal licensing program was set to launch in the fourth quarter. Kramer also noted that Digitude is utilizing a new investment strategy of allowing investors to contribute patents instead of money. Participating companies would then receive a license for all of the firm's patents.

Given that Digitude is in the business of acquiring patents to sue others, the company has been labeled a "patent troll." However, Kramer asserts that he is a financial investor with legitimate claims.

Though it's not completely clear whether Apple has entered into a more formal agreement with Digitude beyond a licensing agreement, Kincaid offered several plausible scenarios for its relationship with the company. According to him, Apple could be using Digitude as a "hired gun" in its patent battles. However, he did point out that Apple not hesitated to sue its competitors outright when it felt its intellectual property was being infringed on.

Alternatively, Apple may have traded its patents to Digitude as part of a settlement. Kincaid noted that this scenario "seems more likely," while noting that it was hard to see Apple in a "positive light" if that was the case.

"The idea that the company didn’t have any options other than handing over valuable patents to a patent troll — knowing full well that it would then use those patents to sue other tech companies — seems ludicrous," he wrote.

Also worth noting is the fact that Apple, with $81 billion in the bank, is by no means strapped for cash.

The patent troll issue became a hot topic for debate earlier this year when non-practicing entity Lodsys went after a number of independent iOS and Android developers over an patent related to in-app purchasing. Apple has asked the court to allow it to intervene on behalf of the developers in the suit. The iPhone maker has asserted that iOS developers are covered under its pre-existing license with Lodsys.

Apple rival Google has been vociferous in its complaints about the current patent system. In August, David Drummond, the company's chief legal officer accused Apple and Microsoft of "banding together" to use patents to attack its Android operating system.

"Patents were meant to encourage innovation, but lately they are being used as a weapon to stop it," Drummond wrote.

Google has also said that "anticompetitive" patent lawsuits from Apple and Microsoft against Android vendors had forced the company into purchasing Motorola Mobility for $12.5 billion. The handset maker has nearly 17,000 issued patents and more than 7,000 filed patent applications.