Nathan Myhrvold's Intellectual Ventures Using Over 1,000 Shell Companies To Hide Patent Shakedown

from the incredibly-lame dept

It's no secret that we think Nathan Myhrvold's Intellectual Ventures is a dangerous, innovation harming monstrosity. The company used a bait and switch scheme to get a bunch of big tech companies to fund it, not realizing that they were then going to be targets of his shakedown system. Basically, IV buys up (or in some cases, applies for) tons of patents, and then demands huge cash outlays from those same companies (often hundreds of millions of dollars) for a combined promise not to sue over those patents and (here's the sneaky bit) a bit of a pyramid scheme, where those in early supposedly get a cut of later deals. Of course, to just talk to IV requires strict NDAs, so the details of these deals are kept under wraps and only leaked out anonymously. But the hundreds of millions of dollars going towards this sort of trolling behavior, rather than any actual innovation in the marketplace can be seen on various financial filings (you can't hide hundreds of millions of dollars in payments that easily).

Now, for years, Myhrvold tried to avoid the term "patent troll," by claiming that IV had never actually sued anyone. Two years ago, though, it seemed clear that the company was on the verge of breaking out the lawsuits. However, the company still hasn't been directly linked to a lawsuit. Late last year, though, some eagle-eyed reporters noticed that IV patents were showing up in lawsuits, but those lawsuits were from different companies. Reading between the lines, it became clear that IV had decided to protect its brand name by getting other companies or creating those companies itself, giving the patent to those other companies that no one had ever heard of, and having them sue. This is a very common practice among patent hoarders. They set up shell companies for their lawsuits, that often make it difficult to track back who actually owns what patents. It's all a shell game to extort more money.

The NY Times is now running yet another profile (they do this every two years or so) of Myhrvold and Intellectual Ventures that covers the usual bogus claims by Myhrvold about how he's creating "invention capital," with very little skepticism. However, it does reveal one interesting tidbit that we had missed. Last year, a research firm released a report highlighting that Intellectual Ventures has up to 1,110 shell companies, with which it can hide its activities. No wonder IV can pretend it doesn't sue anyone. It can simply hide behind its shell companies.

It's hard to find anything in Myhrvold's activities that actually contribute to any innovation, but you can see billions of dollars being siphoned away from actual innovation -- the kind that brings real products to market -- and see it being fed into what appears to be a giant shakedown scheme that is trying to pull as much money out of the system as possible before Congress wakes up and realizes it needs to fix an incredibly broken patent system.
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Filed Under: nathan myhrvold, patents, shell companies
Companies: intellectual ventures


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  1. identicon
    Anonymous Coward, 19 Feb 2010 @ 12:41am

    These people should be punished for hindering the progress in violation of the constitution. The constitution clearly states that IP is to PROMOTE the progress, not hinder it, yet too many entities are getting away with using IP only to hinder the progress. This is unconstitutional.

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