Nathan Myhrvold Ups The Ante; Raising $1 Billion To Hoard More Patents

from the just-can't-stop dept

Former Microsoft CTO, Nathan Myhrvold has been working for years on his plan to buy up as many patents as possible in order to force companies to pay him license fees. It's been mighty successful. He kicked it off with a $350 million fund, which he raised from tech companies using a bait-and-switch tactic. The original business plan he pitched was that he would license up all the leftover patents from failing dot coms and then build a pool that all the big Silicon Valley firms could use as a sort of "patent defense" shield against patent lawsuits from patent hoarding companies. Except, somewhere along the line, he seemed to realize that being on the side of patent hoarders was a lot more profitable -- so he used the big tech company's money to buy up a bunch of patents, and then started referring to his own investors as "the patent infringers lobby." Nice guy.

Of course, when people complain about what he's doing, he's quick to note that the company, Intellectual Ventures, has yet to sue anyone for patent infringement. That may be true, but as someone says in a new profile of the company in the Wall Street Journal, when you have a company that can "send letters to big companies saying, 'We have 800 patents that cover your business'... nobody can risk going to court, and they're just going to write you a check." The big news in the WSJ piece is that the $350 million to buy patents wasn't enough. Myhrvold is now out raising a $1 billion fund to buy up patents -- with a big target on sucking up patents from universities throughout Asia. This takes the concept of patent hoarding to entirely new levels. Traditionally, such firms are somewhat secretive and try to get a big win or two to fund a warchest for buying up more patents. In this case, Myhrvold seems to want to do the same thing, but in a much more professional looking manner. It's a total disgrace of the patent system, of course. About the only good news in the entire article is that Stanford and MIT refuse to work with Intellectual Ventures, stating: "We want to work with companies that are really going to develop the technology." Don't we all?
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Filed Under: nathan myhrvold, patent hoarding, patents
Companies: intellectual ventures


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  1. identicon
    Pandu Rao, 13 Nov 2007 @ 3:21pm

    Intellectual Ventures is not invulnerable

    I do not think Intellectual Ventures is invulnerable.

    Here is why-

    Let us say IV sues Company X for infringing on certain patents. The argument is that IV does not develop anything and is therefore immune from a counter-suit launched by Company X.

    Retaliation can be as follows:
    1. Company X studies the connections of Intellectual Ventures to its clients (C1, C2, C3) and its financial backers (B1, B2).
    2. Company X studies the products/services offered by C1, C2, C3, etc and other clients (C4, C5, etc) of backers B1 and B2.
    3. Company X purchases patents or ties up with Patent Pooling Organizations (PPO) which have patents in fields that affect C1, C2, C3, C4 and C5.
    4. Company X/PPO brings one or more patent lawsuits against one or more of the client C1 through C5 (with damages equal to twice the amount demanded by IV).
    5. Company X/PPO thus brings pressure on IV to back off.

    Company X and the PPO sends a message that it is not in anyone's interest to settle with IV.

    As Ben Franklin would say, "We must all hang together, or assuredly we shall all hang separately".

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