| For Ronald Katz, Patent Litigation Pays Billions
Ronald A. Katz once predicted that he would someday become the wealthiest patent holder ever. By most estimates, he has achieved that goal – or will soon.
He has arrived there through an aggressive strategy of patent litigation that has had him taking on many of the nation's largest corporations in virtually every industry. His portfolio includes more than 50 patents and thousands of claims, all dealing with telephonic interactive voice applications.
A search of federal district court filings shows that just since 2004, his company, Ronald A. Katz Technology Licensing (RAKTL), has filed more than 100 lawsuits against defendants as diverse as New York Life, General Motors and United Airlines. One report said that RAKTL had initiated more than 3,000 claims for patent violations over the last 15 years.
Twenty-five of those cases, from federal courts in Texas and Delaware, have been consolidated under the Judicial Panel on Multidistrict Litigation. Others remain pending in various federal districts. But most result in licensing agreements.
Just in the month of November, RAKTL settled litigation and entered into separate licensing agreements with at least 30 major corporations in industries as diverse as retail, health care, insurance, hospitality, energy and financial services.
That list of 30 companies included Avon Products, Countrywide Financial, DTE Energy, Ford Motor, GMAC, Massachusetts Mutual, Morgan Stanley, Northeast Utilities, Safeway, Target, United Airlines and Wal-Mart.
They join a who's who of more than 200 companies that have licensed rights under the RAKTL portfolio. That list already included American Express, AT&T, Bank of America, Delta Air Lines, IBM, Merck, Microsoft, Sears Roebuck and Wachovia.
Who is Ronald Katz?
So who is Ronald Katz and how has he come to be such a potent force in the world of patenting?
Now in his early 70's, Katz was a cofounder in 1961 of Telecredit Inc., said to be the first company that enabled merchants to verify consumer checks by phone without the assistance of a live operator. He was awarded a patent as co-inventor of that technology.
In the 1980's, he was awarded a number of patents related to his work involving interactive telephone services. His inventions relate to toll-free numbers, automated attendants, automated call distribution, voice-response units, computer telephone integration and speech recognition. In 1988, he formed a partnership with American Express to provide call processing services which later became First Data Corporation.
In the late 1990's, Katz set up RAKTL to license his portfolio to companies using automated call centers. Unlike many patent holders who shy away from litigation due to its high costs and uncertainty, RAKTL has been aggressive in filing lawsuits against companies that refuse to take a license.
With several of his patents already expired and most due to end in 2009, Katz is keeping up the pace. A 2005 Forbes magazine article estimated that he had already earned $750 million in licensing fees then and would bring in $2 billion in fees by 2009. That would put him above the man long known as the country's most aggressive patent enforcer, Jerome Lemelson, who earned more than $1 billion in fees before his death in 1997.
In 2005, some companies banded together to fight back against what they saw as RAKTL's aggressive tactics. Both Forbes and American Banker reported that several financial-services companies had formed a lobbying coalition to get the U.S. Patent & Trademark Office to reexamine Katz's portfolio.
In a rare move a year earlier in 2004, the director of the PTO, Jon W. Dudas, ordered reexamination of four of the Katz patents on his own initiative. At least six others are the subjects of reexamination requests.
Attempts were unsuccessful to reach the lawyer who was helping to organize that 2005 coalition. Lawyers pres
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