Intuit Pays $120 Million 'Don't Sue Us' Tax To Intellectual Ventures

from the money-wasted dept

It's no secret that I have tremendous problems with Nathan Myhrvold's Intellectual Ventures, which many have described as the world's biggest patent "trolling" operation. The company has raised a ton of money and uses it to buy up thousands of patents. While it hasn't sued anyone, Myhrvold has made clear that's always an option. The company has remained incredibly secret, but it has somehow convinced some big companies to pay hundreds of millions to IV. Due to the secrecy, the details aren't clear -- and some of the deals apparently are a mix of "licensing" and an equity investment. But, still, the numbers are stunning. The latest, as pointed out by Stephen Kinsella is that Intuit has apparently paid $120 million to IV. For what? The right not to get sued. Think about that for a second. This is a pure dead weight net loss to society. It's $120 million that Intuit could have put towards further innovating, or to pay off investors via a dividend. Instead, it goes towards nothing productive, in terms of actually creating new products. It will now likely be used to buy up more patents so that IV can get similar black hole money grabs from other companies, as well. It's like a black hole where real innovation goes to die.

Filed Under: patents, software
Companies: intellectual ventures, intuit


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  1. icon
    Tek'a R (profile), 1 Jul 2009 @ 7:50pm

    Its like this:
    IV buys, begs borrows or steals (with lawyers) a fuzzy patent, like "System for having a cover and keeping out rain"

    They then make sure it is fully amended and expanded to the extent that examiners can ignore.
    "System for having a cover and keeping out rain"
    *On houses
    *On cars
    *On orphanages
    *On decorative hirdhouses, because the word 'house' is used.

    They then go around to Orphanage builders, car companies, birdhouse designers and home builders and Casually mention "Oh.. by the way, I have a huge portfolio of patents that could somewhat apply to your product in the right light.. give me money or I might just have to call my lawyers and interfere with your business for the next 5 years"

    Some are asked for small fees, and pay up fast and try to move on. These fees are used to buy more lawyers for the next people. Others fight it, burning millions of dollars in the courtroom trying to convince a patent-ignorant judge that 1+1=2. Still others, with looming lawsuits, just close up and abandon Orphanage Construction CO.

    The horrible net result is scummy lawyers making money, scummy patent troll companies making money (and using it to buy more patents) and legitimate businesses getting bad promotion and mindless judgments against them ("I rule that 1+1=4, pay IV 5 dollars per unit you build, forever")

    This is not to say that everyone who has ever been sued or threatened in an infringement issue is as pure as fallen snow, but we can certainly see that the "defender" in many of these cases is anything but.

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