Patent Troll Intellectual Ventures Running Out Of Cash; Looking For $3 Billion From Investors
from the troll-troll-troll dept
Of course, the Reuters article also highlights how many of the big tech companies who signed up early on are not at all interested in supporting IV any more. As we noted years ago, Nathan Myhrvold built IV with a sort of bait-and-switch pitch. He told everyone that he was building a "patent defense fund," which tech companies could share to avoid getting sued by others. It was only later that the companies realized they were enabling a new massive patent troll instead. And it seems that many are not happy.
It is not clear how close IV is to completing its new fund, or which type of investors might participate. Microsoft Corp, an early IV backer, has not invested in IV's new fund "at this time," spokeswoman Jennifer Crider said.The Reuters report also highlights how it doesn't appear that IV's actual business looks very good either. While it claims at least some positive rate of return on some of its funds, numbers provided publicly by the University of Texas make it look pretty weak:
Google Inc, an early investor that in recent years has found itself opposed to IV in the patent policy debate, also said it will not participate.
"We joined Intellectual Ventures' first fund as a way to defend ourselves against unjustified patent claims," Google spokesman Matt Kallman said. "Once we came to understand IV's operating model, we didn't join its later funds."
[....] One of IV's early tech company investors, the chip design firm Xilinx, sued IV in 2011 after Xilinx refused IV demands to license additional patents, according to court filings. Xilinx's attempt to invalidate those patents in court is still pending.
The IV investor presentation reviewed by Reuters shows that at the end of last year, the average rate of return for IV's 2003 fund was 16.2 percent, while the 2008 fund stood at 2.5 percent. In a court filing in August, Intellectual Ventures said it has earned more than $3 billion to date in licensing fees....That said, as we pointed out a few years ago, looking at the return rates on investment funds before they're closed can often be misleading, since many are dependent on big homeruns that may occur late in the game. Still, IV has been around for a decade now, and despite all the hype and fuss, it's not at all clear that the company has a real business. Yes, billions went into it, but that has led to zero actual products, and not much return for investors.
[...] UTIMCO [University of Texas Investment Management Company] invested $50 million in Intellectual Ventures' 2008 fund. By the end of May 2013, IV had returned 31 cents on the dollar to UTIMCO, which ranked it 22nd out of 38 on cash returns among all of UTIMCO's 2008 private investments. The value of UTIMCO's stake in IV declined more than 4 percent since 2008, putting it fifth from the bottom among UTIMCO's 2008 deals.
The company still may be able to find that $3 billion -- a lot of big money folks who don't really understand the nature of trolling may be dazzled by the Nathan Myhrvold charm offensive and the silly stories he likes to tell -- but perhaps we can hope that people will finally start to realize that the emperor has no clothes. Patent trolling harms the wider economy, taking money away from actual innovation and products that improve lives, while handing it off to a bunch of lawyers for no good purpose at all.