Intellectual Ventures Getting Antsy; Expect Lawsuits Soon

from the patent-saber-rattling dept

By this point, it should be rather clear what we think of Nathan Myhrvold’s Intellectual Ventures project. It’s perhaps the biggest threat to innovation around, as Myhrvold is collecting a ton of patents (now up to 20,000 apparently) and pressuring companies to pay hundreds of millions of dollars to get blanket licenses to avoid getting sued. It’s a scam to shift money away from actual innovators and into the pockets of lawyers and speculators. For some reason, though, Myhrvold has a knack for getting press. His latest is a profile in the Wall Street Journal that covers much the same ground as previous profiles in places like Business Week and Fortune.

So what is new in this one? Well, less than a year after raising a $1 billion patent hoarding fund, he’s out raising a new $2.5 billion fund. So it seems like he’s good at getting press and raising money — but not so much actually making money at this point (well, Myhrvold personally is doing fine, since the piece notes that he gets a 2% management fee, just like a VC). And that’s where the saber rattling comes in. The article notes that Cisco and Verizon have paid up between $200 and $400 million as licensees — though, to make it more confusing some of that is invested back into the fund for equity. Thus, it’s not really clear as to how much is being used specifically to license patents. The article also highlights that some of Myhrvold’s earlier investors are going to start wondering when the fund is actually going to bring in some real revenue.

Another oddity is the vast amount of secrecy surrounding Intellectual Ventures. Anyone who sells a patent to the company or who licenses patents from the company are required to sign extensive non-disclosure agreements. When asked why, Myhrvold skirts the question by claiming many companies don’t want to reveal what they’re doing with IV. If that’s true, though, why do they need NDAs in the first place? The company also uses an array of secret shell companies to go around buying patents, again raising questions about what it’s doing. If the company is really so proud of its business model and doesn’t think it’s shameful, why is it hiding behind shell companies like garden variety patent hoarders. But, as we’ve learned, patent hoarders very much rely on secrecy to convince others to pay up.

And, then, of course, there are the myths that Myhrvold loves to repeat, but no reporters ever push him on. He insists that those who disagree with his business model are merely “infringers.” Yet, as we’ve all seen, so many patent infringement lawsuits these days are hardly about actual infringement, and much more about a company that didn’t succeed in the marketplace suing one that did. He also repeats the myth that patent lawsuits are decreasing, claiming that the number of lawsuits peaked in 2004 and has been declining. That’s misleading because it ignores the fact that patent hoarders are now suing larger and larger groups of companies in a single lawsuit meaning that the number of companies being sued has been increasing rapidly.

Either way, Myhrvold may want to close that new fund as quickly as possible. The Bilski ruling that could put an end to software and business method patents is expected sometime in October, and it could put a big dent in his patent portfolio.

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Companies: intellectual ventures

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Comments on “Intellectual Ventures Getting Antsy; Expect Lawsuits Soon”

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angry dude says:

Mikey is insane

From the clueless MIkey department:
“The Bilski ruling that could put an end to software … patents…”

Do you realize, Mikey, that most of what you call “software” patents were in existence long before the age of computers ?

Most of them are really not “software” patents, they are method or process patents
The very first US Patent was in fact a process patent
The fact that method patents are practiced using digital compuers nowadays does not make them “software” patents per se
Mikey is clueless as usual
Have a nice night techdirt punks

Douglas (user link) says:

Re: Mikey is insane

Oh, Angry Dude, you amusing little quote-miner. The quote was “software and business method patents” – that is to say, method (or process) patents that cover a software implementation of said method, or a means of running a business using said method. Those two are a subset of all method (process) patents; not all current method patents are practiced using digital computers or management techniques.

As an aside, I think removing *all* method patents would be a good step in the right direction, since method patents in their current form essentially grant a monopoly on the *problem*, not the solution (which is sufficiently covered by apparatus patents – that is, when we’re not talking about software or business methodologies).

Douglas (user link) says:

Re: Re: Re: Mikey is insane

With all due respect, you are a clueless idiot sir

So the due respect would be none, then.

The very first US patent was a process patent

And that’s evidence for why they should still exist now, is it?

You are talking complete destruction of the US patent system

Actually, I wasn’t. I was talking about only allowing apparatus patents, and I think I gave a decent reason why that might be a step forward.

However, I don’t think complete removal would necessarily be a bad thing either – I imagine you do, so care to provide any evidence that it would be terrible? Oh wait, you’re Angry Dude, you’re allergic to evidence. In all seriousness though, if anyone has any evidence of that, I’m sure I’m not the only one who’d love to see it.

GJ Hagenaars says:

has anyone noticed


John Galt is a man disgusted that non-productive members of society use laws and guilt to leech from the value created by productive members of society, and furthermore even exalt the qualities of the leeches over the workers and inventors. He made a pledge that he would never live his life for the sake of another man, nor ask another man to live for him

Time to re-read “Atlas Shrugged” by Ayn Rand!

Founderman says:


It is fashionable now to attack patent holders, while not realizing that patents are the fountain of innovation and also the way American companies can protect themselves from companies from abroad whose countries do not accord the same patent protection to American companies. The founding fathers understood how important it is to protect patents. Ignorant and jealous folks are trying to bring the country to ruin

Just sayin' says:

I cant imagine a more pathetic crowd than right here at Techdirt led by the uber nerd himself Mike. All you people do is complain about stuff. Since you have probably never innovated a day in your life (except new ways to convince your mom to let you stay in the basement for another month) how can you be taken seriously?

Mike says “infringement suits… are… much more about a company that didn’t succeed in the marketplace suing one that did” showing a complete and utter lack of understanding of how patents work.

Mike’s blog is not so much about informing people, but about rants from a loser that didn’t succeed in life being bitter about those that did.

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