Patent Troll Intellectual Ventures Claims Its Layoffs Are Because It's Invented A New Way To Buy Patents

from the a-patent-in-spinning-the-press dept

Times are tough for a patent troll, apparently. A year ago, we noted that Intellectual Ventures — the world’s largest patent troll, who brought in billions of dollars by getting companies to pay up a shakedown fee to avoid lawsuits over its giant portfolio of patents (mostly cast off from universities who couldn’t find any other buyers) — was running out of cash. While IV did convince Microsoft and Sony to dump in some more cash, IV’s litigation strategy is in shambles. Various lawsuits are dropping like flies without any of the big wins that IV promised.

Meanwhile, while its heavy lobbying may have helped to kill the latest attempts at patent reform, the Supreme Court’s big ruling about software patents in Alice v. CLS Bank suggests that many of IV’s patents just became worthless.

So it’s little surprise at all that the company has just announced that it’s laying off 20% of its staff — likely about 140 employees. But, of course, IV’s only real skill has been spinning the tech press into believing whatever bullshit story it’s come up with to justify its innovation taxing operations. And thus, with these layoffs, it’s right back into spin mode, presenting the most spectacularly ridiculous justification for the layoffs.

Does IV point to its litigation losses? Nope. Does it mention the Alice ruling? Hell no. How about the fact that many of its early backers have now turned into vicious opponents? Not at all. The fact that its in-house inventions have yet to lead to a single viable product on the market? Nope. The reason given? Apparently IV would like you to believe that it needed all those people to invent a new way to buy “ideas” in bulk and now that that’s done, they’re no longer needed. I’m honestly curious if IV’s co-founder Edward Jung said the following out loud without laughing, or if it was just delivered to Bloomberg reporter Ashlee Vance in written form to avoid the risk of guffawing at the pure ridiculousness of it all:

Edward Jung, IV?s co-founder and chief technology officer, insists that the business is doing fine. It?s true, he says, that not as many companies bought into the patent funds as IV expected, but he says the company is happy with its returns.

The layoffs, according to Jung, represent part of the company?s evolution. IV was the first company to try to amass so many patents, and it had to hire hundreds of people to invent the processes for buying ideas in bulk. People were needed to sort through patents, acquire them covertly, think up complementary ideas, and deal with the associated paperwork. ?We have more data than anybody and have analyzed it over the years,? Jung says. ?Our analysis has allowed us to save a lot of needless paperwork and become more efficient. We don?t need as many people to sift through and sort information now.? Much of the work has been simplified and automated.

Nice story, but… it’s rewriting history. As we’ve noted, IV just bought up giant patent portfolios in bulk from universities who had rushed to set up tech transfer offices in the wake of the Bayh-Dole Act in the 80s, expecting to get rich from “commercializing” all of the “inventions” that their faculty produced. The reality was that the vast majority of tech transfer offices lost money because none of the patents were worth anything by themselves, and no one wanted to buy them. IV stepped in at the perfect time, allowing tech transfer offices to save themselves the embarrassment of failing to make any money (and actually costing universities tons of money) by selling a boatload of useless patents in bulk, just so IV could run around claiming it held tens of thousands of patents, and demanding big tech companies pay up so that IV didn’t have to sift through all those patents to find something (anything!) to sue over.

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Comments on “Patent Troll Intellectual Ventures Claims Its Layoffs Are Because It's Invented A New Way To Buy Patents”

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Josh in CharlotteNC (profile) says:

Shareholder lawsuit?

If that’s the story IV is telling it’s shareholders, then they probably should’ve run it by their lawyers first (though isn’t everyone that works there a lawyer?). Lying to the public isn’t going to get them in trouble. But knowingly making false statements, or even ignorantly making false statements, to their shareholders is going to get them sued and especially fast as though shareholders just saw their “investment” go into red with the Alice decision.

Anonymous Coward says:

Re: Shareholder lawsuit?

The facts are still there. They are only polishing the turd.

You cannot proove what they have done wasn’t an effectivisation of their process. The reason for not patenting would be business patenting is officially not legal and for business reasons they cannot disclose their business secrets even in court etc. No proof, no lie.

That they are firing is out there. That the Alice-ruling is problematic for their business model and that they are making enemies among earlier investors is also out there.

Listening to the boss spinning the layoffs as a positive thing should not be relevant for rationally thinking investors. Then again, when is investment ever purely rational?

Alien Rebel (profile) says:

It's the Great Pumpkin, Charlie Brown

I particularly enjoyed the last two sentences of the Bloomberg piece:

IV is expected to unveil a number of new ventures in the coming weeks as proof that it’s expanding these parts of its business. If IV does become a startup factory, it’ll make it a bit tougher for the folks in Silicon Valley to loathe the company.

It made my day to read that pathetic plea, for all you investors to just wait a little longer in the pumpkin patch. The Great Pumpkin’s coming; You’ll see!

IV_guy says:

Re: Dear Intellectual Vultures

I work for Intellectual Ventures, but I’ve got good news for you if you don’t like us and are looking for an innovation to get rid of us. The good news is that such an innovation already exists and, in fact, it has existed since about 1789. It is called a “constitutional amendment”. Patents, you see, are protected by the US constitution. But the US constitution isn’t set in stone and there exists a mechanism for changing it if you feel that patents no longer are in the best interests of the country. Just get a constitutional amendment ratified that outlaws patents–or certain kinds of patents or certain kinds of patent companies.

Edward Teach says:

Standard, free market economics

Wait, isn’t this standard, classical free-market economics? That is, the price of a good in a competitive market falls to the marginal cost of production.

The price of their product is falling to the marginal cost of production, zero dollars.

Clearly, IV is getting out-competed in a competitive market. This sounds like Capitalism Is Working, shipmate. Arrrr!

IV_guy says:

software patents

I work for Intellectual Ventures, and prior to IV I worked for many years in the software industry. While I obviously can’t specifically comment on the recent news, I’ve never understood the dislike that the majority of people in software seem to have for software patents. Why shouldn’t people in software enjoy the same intellectual property protections for their ideas as people in other fields have enjoyed for hundreds of years? Take a software engineer who has worked hard to develop an idea but lacks the resources to either bring it to market or patent it him/herself. Why should he/she just have to sit idly by while the big players–like Google, Apple, etc–openly steal his/her idea without any kind of compensation?

Anonymous Coward says:

Re: software patents

I’ve never understood the dislike that the majority of people in software seem to have for software patents.

It’s probably because the majority of people in software aren’t greedy luddites who view ideas as chattel. Many of them are capable of seeing economies and laws as nothing more than processes, just like software development. It’s a mindset that accepts that all things change and evolve, and cruft is anathema.

Anonymous Coward says:

Re: Re: Re: software patents

Failure to sell your skills as a software developer has nothing to do with patents. Neither has success of any start up company. Both are dependent on providing something that will sell in the market. I also note that you are payed for your work at IV, rather than any patent that you brought to the table, so once again you are not relying on any patents you hold to make a living, but rather for Helping a company to tax people that actually produce sellable products and services.

IV_guy says:

Re: Re: Re:2 software patents

I don’t believe that I ever stated one way or the other whether I brought any patents of my own to the table.

The reality is that I can earn a living as a software developer, but after many years of doing it, it got a bit boring. IV both pays a bit better and provides a bit more interesting work. It’s good to know that I can earn a living as a software developer because obviously this week’s news shows that my position at IV is not 100% secure. But software development is definitely Plan B, not Plan A, for me at this point.

Edward Teach says:

Re: Re: Re: software patents

I guess I have to ask why you expect to earn a living wage?

If you don’t have marketable skills (in programming, or lawyering or public relations or whatever) why do you expect a living wage in programming or lawyering or public relations or whatever?

Nobody can “steal” an idea – infringement isn’t theft, legally or morally. It’s just copying. Copying isn’t theft.

Anonymous Coward says:

Re: Re: Re:2 software patents

“Nobody can “steal” an idea – infringement isn’t theft, legally or morally. It’s just copying. Copying isn’t theft.”

Tell that to the RIAA. Or MGM. Or Harper Collins. Any artist who gets paid for their limited edition works.

Of course you can steal ideas. And in plenty of cases copying is clearly theft and has always been treated in exactly that way.

And – just to put the cherry on top – my Mac dictionary gives this for the first definition of “infringement”: actively break the terms of (a law, agreement, etc.): making an unauthorized copy would infringe copyright.

Edward Teach says:

Re: Re: Re:3 software patents

I see you respect authorities, like RIAA, MGM and Harper Collins. Infringement is not theft – the US Supreme Court says so: That’s essentially the law of the land.

I expect a retraction, and a groveling apology from you.

But just to put a cherry on top, “stealing” something involves removing that something from someone’s possession. Copying, infringing or not, doesn’t remove anything from anyone. Simple logic refutes your propaganda, Dilbert.

Anonymous Coward says:

Re: Re: Re:4 software patents

The ruling was in the context of the language of the interstate commerse statute – not universal – and as the page you provide a link to says “Infringement implicates a more complex set of property interests than does run-of-the-mill theft, conversion, or fraud.” Who ever said IP law was run-of-the-mill? Not I.

Clearly the Supreme Court has not said that Infringement is not theft. That notion is idiotic. They are saying that some cases do not constitute theft – which is pretty clear. Go ahead – infringe my first amendment rights – it aint theft. No shit Edward.

Since you respect authorities I’ll refer to my dictionary again: steal – dishonestly pass off (another person’s ideas) as one’s own.

You are entitled to your own opinions Edward but not your own facts.

IV_guy says:

Re: Re: Re:2 software patents

I have very marketable skills as a programmer even though it is not my first choice as to what to do with my life.

My skills as a salesperson, OTOH, I will admit are not quite so marketable.

With that combination of skills and lack thereof, I have found IV to be the best path forward at this stage of life for bringing my own ideas to market. A little known fact about IV is that we do more than just sue people. YMMV.

Anonymous Coward says:

Re: software patents

I’ve never understood the dislike that the majority of people in software seem to have for software patents.

Being a software person myself, I can tell you why, 90% or more of the code in a modern project is in the form of libraries and tools provided by other people. This make it obvious that new ideas build upon and depend on the ideas of other people.

Anonymous Coward says:

Re: Re: Re: software patents

Because most of that isn’t really validly patentable either – what is new is usually new because no-one has tried to achieve that goal, not because no-one knew how. Even if they do happen to have something patentable, the little guy can’t easily afford to get and defend a patent, even if they haven’t infringed on someone else’s patent and thus can’t be forced to accept a cross-licensing deal.

There is also the problem of MS, Google, Oracle, IBM, etc. having the majority of software patents, not individuals or small companies.

Even copyright is of limited value to most software developers, because most developers work on either SAAS products, embedded systems, or bespoke software (whether as contractors or in-house dev teams).

Anonymous Coward says:

Re: software patents

I’m a software developer.

What I’m afraid of is not having Google or Apple or Microsoft use my ideas.

What I’m afraid of is being forbidden from using my ideas.

The amount of damage software patents create, by forbidding software developers from using certain classes of ideas, is much higher than any monetary compensation they could bring. We have seen it happen time and time again, either to us or to someone we know.

And there is also the fact that all software is math (see, for instance, the Church-Turing thesis). The thought of being able to forbid others from using math, either outright denying or requiring a toll, feels very icky to mathematically-minded people (which software developers often are).

IV_guy says:

Re: Re: software patents

Software’s roots, especially theoretical computer science, are certainly in mathematics. And I certainly don’t believe that pure mathematical theorems should be awarded patents. But software has moved away from its mathematical roots to the point where most of it today is no longer recognizable as math. There’s nothing wrong with that, but that also means that ‘software is just math’ shouldn’t be used as a justification for denying software patents.

IMHO the point at which software became patentable was about the time when they stopped calling it ‘computer science’ and started calling it ‘information technology’. Science isn’t patentable. Technology is.

Edward Teach says:

Re: software patents

I’m a programmer. I have been for 20-odd years.

Why shouldn’t software be patentable? Many reasons:

1. It’s math. Mathematical Logic, more specifically. Sometimes only one way of doing something exists, so everybody discovers it. Look up how many people discovered continuations.

2. Independent invention. I’ve written code to answer various test or puzzle questions – I like to solve puzzles. I can’t tell you how often my solution is essentially line-for-line identical to the given solution. It’s very, very easy to invent the same thing as many other people. Look at the Knuth-Morris-Pratt sorting algorithm as another good, documented example. This would point to obviousness – patentable stuff isn’t supposed to be obvious.

3. Software patents just aren’t needed to advance the public good. It doesn’t take much investment/sunk cost to write software, perhaps unlike things people usually point to as “needing patents”, like pharmacological inventions. The purpose of patents is to increase the public good, and we programmers are doing that without the hindrances of patents. They would just be government red tape that’s very obviously not needed.

I don’t expect you to understand any of these reasons, as your wages depend on you not understanding any of it. If you did understand, your job would probably seem less interesting and less relevant.

Anonymous Coward says:

Re: Re: software patents

1) The notion that software is math is horseshit – i say this as a guy who taught CS for many years and passed the theory qual. Please, edward, tell me the function for MS word. Evaluate that for me. Please. The only approach is to argue that existence itself is deterministic – thus it is not just software but literally everything that is math. But if you say that people start to think you are crazy.

2) If your solution is identical to what somebody else did it is not patentable because its not novel. If it is obvious it is not patentable. Not a problem. And in particular – not specific to software but rather patenting in general. If you are arguing against patents just do that.

3) Software patents aren’t needed to advance the public good. Well, I feel better knowing you’ve settled that issue and the constitution is wrong. Lots of great inventions of the past with huge importance took little time or money – resting instead on genius or luck of timing.

Edward Teach says:

Re: Re: Re: software patents

The notion that software is math is horseshit – you’re kidding, right? – I’m guessing you were a really shitty teacher. As far as the function for MS Word, a function doesn’t have to be computable to be describable, and vice versa (, but really, you’ve just added to my impression of you as a shitty teacher. What goes in to MS Word? The input file, which is a large number, and some other numbers, which we all agree represent key presses and mouse clicks and other events. What comes out of Word? Another large number. Jesus, this is basic computability. I’m beginning to doubt your assertion of “teaching CS for years”.

Anonymous Coward says:

Re: Re: Re:2 software patents

I’m familiar with the reasoning in that work – and have been for many years.

Take two computers communicating with a simple function combined between them – one result if A finishes first and a second if B does. But their speed depends on their temperature which varies. And at a particular critical temperature quantum effects become important. So whats the function Edward? Your argument is that the combined computation is mathematical – deterministic. Which requires the quantum universe to be deterministic. I introduced that alternative to you a little while ago as the necessary conclusion for your view – looks like you missed that.

MS word – cop out – MS word is software – tell me its function – literally – you just insisted that it is math so give me the equation to evaluate. I won’t hold my breath.

I’m convinced that you have no understanding of side effects, functional programming, determinism, or how to write software.

Really, anybody who wants to insist MS Word is math – literally – is hopelessly naive. Theory is incredibly useful – and incredibly limited – and its dangerous when you don’t understand the bounds.

Edward Teach says:

Re: Re: Re:3 software patents

Dear Never-taught-a-CS-class:

In your threading example, the temperature becomes an input into the function computed, doesn’t it? Control the temperatures, you’ve got known inputs, and the problem becomes deterministic. That’s how all threading bugs get solved. You figure out what inputs you don’t account for currently, control them one way or another, and the race condition or other so-called indeterminacy goes away.

MS Word is computing a function, and you’d know that if you understood anything of computability theory. Exactly what function isn’t interesting – Word is subject to all the theoretical considerations of computable functions. It’s math. That’s why I brought in the reference on “Busy Beaver” programs. Go read it, then come back and apologize.

Programming is mathematics, pure and simple. Patenting math is a bad idea, and in fact, not allowed under current laws.

I’m guessing that since you’re not a CS teacher, your current salary depends on you not understanding that programming is math, and hence arguing with you further will be pretty futile, but also pretty fun. And revealing, perhaps. Will we find out that you’ve studied law? Will we find out that you work in the “Intellectual Property” field? Stay tuned for the Next Episode of Deliberate Misunderstanding and find out!

Karl (profile) says:

Re: Re: Re:3 software patents

You know what? I am a software programmer (or in college to become one). And even a lowly undergraduate knows that ALL of these things:

side effects, functional programming, determinism

…originated in mathematics. Specifically, Turing machines and Church’s lambda calculus, both of which are abstract math.

Not to mention big-O notation, recursive formulas, P vs. NP completeness, matrix manipulation, etc. It’s like you have no understanding of how much programming depends upon the theories formed by discrete mathematics, linear algebra, or computation theory.

If any of these could be patented, then the software industry would be decades behind where it is now.

John Fenderson (profile) says:

Re: software patents

“I’ve never understood the dislike that the majority of people in software seem to have for software patents.”

That’s easy to explain.

1) Software patents harm the entire software industry in a number of ways. (I originally listed a number of those ways, but it was too lengthy for this comment).

2) By the plain reading and intention of patent law, it’s nearly impossible to reasonably explain how software even remotely qualifies as a patentable material. It’s like patenting an equation.

“Why shouldn’t people in software enjoy the same intellectual property protections for their ideas as people in other fields have enjoyed for hundreds of years?”

Because they aren’t necessary in the software industry. Perhaps you misunderstand the purpose of patents. Patents don’t exist for the benefit of the patent holders. They exist to encourage people to share their inventions with others. Period. Full stop.

The software business doesn’t need such an incentive because the inventions aren’t being kept a secret. Part of this is financial (software moves so fast that you’ll get most of your return on it within 18 months, patent or no patent, so dealing with patents is a time and money expense that is detracting from real work), and part of it is cultural (software engineers have a very strong culture of sharing ideas and approaches — and this is one of the main reasons that the software industry is progressing at such a mind-boggling rate).

“openly steal his/her idea”

Ideas can’t be stolen. Even if they could, ideas by themselves are rarely of much value — they’re a dime a dozen. The execution of the ideas is what counts.

Mike Masnick (profile) says:

Re: software patents

I’ve never understood the dislike that the majority of people in software seem to have for software patents

Mostly because patents are generally used to BLOCK people from innovating and building great products. It taxes or entirely blocks the production of innovation.

Why shouldn’t people in software enjoy the same intellectual property protections for their ideas as people in other fields have enjoyed for hundreds of years?

Some of us find all sorts of patents problematic, not just software. But in software it’s often much worse because you’re patenting very basic ideas, not specific and complex implementations.

Protecting “ideas” pretends falsely that only you have that idea. Yet when you patent it, you block anyone else who has the same idea from using it, even if they came up with it on their own (or improved upon your idea). Thus, you’re blocking people from innovating.

Take a software engineer who has worked hard to develop an idea but lacks the resources to either bring it to market or patent it him/herself.

The great thing about the American financial system is that if you have a truly great idea, it’s almost always possible to find partners for funding to bring it to market.

Why should he/she just have to sit idly by while the big players–like Google, Apple, etc–openly steal his/her idea without any kind of compensation?

People make this claim all the time, and yet they offer no evidence of it ever actually happening.

Besides, as we’ve detailed over and over again, an idea is worth very little without execution. People like you seem to overvalue the idea and don’t realize how little the idea matters in the long run.

IV_guy says:

Re: Re: software patents

“People make this claim all the time, and yet they offer no evidence of it ever actually happening.”

It happens every time someone signs a non-compete when they join a big player–or a startup for that matter–like Google or Apple.

IV is the only company I’ve ever worked for in my career that permits me to do some of my own innovating while on the payroll. Every other company had non-competes that prevented this. Pre-IV, the only times I’ve been able to innovate have been when I’ve been between jobs. That’s great, but in the long term the bills need to be paid, and I don’t necessarily have the sales skills to sell my ideas working completely on my own.

Zonker says:

Re: software patents

Because software is already protected under copyright law, not patent law. Books, art, music, movies, all these are protected by copyright law and not patent law. These are all creative works and expressions, not novel inventions of devices or compounds never before created and applied by humans.

The court decision that started the whole software patent mess was wrong: software compiled on a general computing device does not create a new machine and become magically patentable. Does reading a book on General Relativity turn your brain into a new device capable of doing things it could not do before? Would any other General Relativity book written completely differently but teaching you the same thing in the end be infringing?

Name one single medium other than software which has been simultaneously protected by both copyright and patent law at any time in history. A hardware invention could be controlled by specific software. We don’t copyright the hardware, but if it is a novel invention we may protect it with patents. Why should we patent the software if copyright already protects it? We could write completely different software to run on the hardware and not violate copyright law, but that would not circumvent any patent on the hardware invention itself.

Should Disney be able to patent Mickey Mouse to prevent others from making any cartoon character depiction of a mouse that talks and wears strange clothes? No, that is what copyright is for and only for that specific character.

Anonymous Coward says:

Should murder be illegal? No, of course it should not. Oh, sure, in a vacuum one might perhaps form an argument to support such a notion. But it is already illegal to assault a person with intent to cause great bodily harm.

Sorry, the notion that an act cannot be illegal for more than one reason doesn’t pass the sniff test.

Now I’ll take an arm core, some memory, dedicated circuitry, and build it into an SOC. Button it up tight. And *tell* you that I’ve used algorithms that, when implemented in hardware, you Zonker appear to believe should be patentable. Maybe they are done right there in the custom dedicated circuitry that I designed – but I guarantee you I’m using your quantization, motion estimation a crypto algorithms. Or, maybe, I implemented them on in SW on my ARM core. In any case the SOC is locked up tight, no SW comes in from the outside ever.

Your position seems to be that its OK if I used hardware to block me with a patent but not if I used SW. I think that view is unreasonable – the two approaches are used interchangably today. Now, if your view is that neither approach should be patentable that seems like a reasonable opinion to me. But if one and not the other I fail to see how the logic holds up in the real world.

Anonymous Coward says:

Holy fuck. Determinism originated in originated in math? No. Not really. Consider philosophy rather. Then, a better place to go, is Physics, which also is not equivalent to math despite the significant overlap.

Side effects originated in math? I would love to hear an explanation of that one. Please, take a crack at it. Math deals in functions which produce results. The definition of a side effect is a value that escapes outside of the function that produces it but is explicitly not a result of the function. So you’ve got:

Y2 =f(x)
and Y1!=Y2

I’m pretty confident you can code that up but if not let me suggest a global variable. Explain the mathematics of that baby please.

P vs. NP – like much of complexity – relies on logic and reasoning, for example the reduction of one problem to another by considering the various cases. This is not – however – mathematics.

Of course Karl much of software – algorithms to be a bit more precise – relates to math. Who has suggested they do not? The point being made is that the two are not equivalent.

Fortunately – no body is patenting any of those concepts. Nobody. And nobody is suggesting that they can or should be patented.

Oh, by the way, regarding MS Word, Edward has insisted that all software is math and with a functional form. MS Word is software – I did not assert that it could or should be patented but rather that he cannot provide a function that mathematically describes the entirety of MS word. Can you?

Finally, no, Open Office would not be “sued out of existence.” People file patent lawsuits to make money. Open Office makes no money. Thats why they don’t get sued.

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