Intellectual Ventures' Patents Starting To Show Up In Lawsuits

from the the-beast-awakens? dept

Intellectual Ventures, of course, is the Nathan Myhrvold company that has been building up a huge portfolio of patents with which to get big tech companies to pay many millions of dollars to not get sued -- and, according to many, to get a cut of future deals as well, making the whole thing sound suspiciously like a pyramid scheme. However, the company has been quite careful to avoid actually suing anyone (despite setting up all sorts of shell companies commonly used in such lawsuits). From what we've heard from people who have been in or around IV, this has been a conscious decision to avoid attracting too much ill will and scorn. It lets the company pretend to take the high road, when people point out that its actions seem like the commonly defined "patent troll" on steroids. "But we haven't sued anyone" it can claim. As if the threat of being sued isn't a big enough weapon.

But, a year ago, we noted that the company appeared to be getting antsy. While it was bringing in some hefty fees from a small group of companies who bought into the equity pyramid (which neatly lets the world outside be confused over what's "investment" and what's "revenue"), there was concern that investors were getting impatient. Pouring billions of dollars into a company that isn't doing much can make some investors a little anxious. And while we still don't know of any direct lawsuits, Zusha Elinson has noticed that Intellectual Ventures' former patents are starting to show up in court, often involving some of the most well known names normally associated with "patent trolling." Now, it's clear that IV sold the patent, but what's not clear is if it still has a financial interest in it. The thinking is that IV may have "sold" the patent, with part of the terms being that it gets a cut of any money obtained via that patent. This way, IV gets to have its cake and eat it too. It still can claim it doesn't sue anyone, but it brings in revenues from exactly those types of lawsuits.

As Joe Mullin notes in the last link above, this is one of the massive problems with the way patent infringement lawsuits work today. Via different shell companies, those who have an interest in a patent can be hidden to protect their "good name" while still allowing them to actively have companies sued via that patent.

Filed Under: lawsuits, nathan myhrvold, patent troll, patents, raymond niro
Companies: intellectual ventures


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  1. identicon
    Anonymous Coward, 4 Sep 2009 @ 8:55am

    While not applicable to the mere transfer of title to a patent by IV to a third party, I do find it (and do believe most practitioners share my sentinemt) very troubling that certain members of my profession seem to have become little more than persons who seek profit from the mere existence of a patent, and not from a third party infringing a patent in a manner that negatively impacts a real business or one trying to create a real business (e.g., an inventor diligently trying to secure the services of others most persons would generally concede as necessary to get a business launched).

    Several years ago I happened to read a book entitled "Rembrandts in the Attic" and immediately dismissed it as a work calculated to encourage the likes of persons involved as plaintiffs in the noted lawsuit. It was not about a patentee being engaged in a business and attempting to assert a patent against a business competitor. It was about divorcing patents from business althogether, and then foisting lawsuits on persons/companies who in now way would ever be in competition with the patentee. For example, I am in the industrial equipment business and hold a patent important to my current and future business plans. Lo and behold I learn about a person in a totally different field who is infringing the patent and doing so on products and/or services that never will be a part of the foregoing business plans. Why a business with its eye on the goal of executing its own business plans to allow its energies to be diverted into matters having nothing to do with its business plans totally escapes me.

    There are ways to use patents to generate what are clearly win-win business deals, but turning them into little more than "negotialble instruments" designed solely to extract money from non-competitors is in my view certainly not one of them.

    How nice it would be if the concepts of "champerty" and "barratry" once more came to the fore within our judicial system and were applied fairly, but with vigor.

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