Tuesday, September 16, 2008

WSJ discusses Intellectual Ventures, Myhrvold

The WSJ writes:

Unlike most other pure licensing companies, Intellectual Ventures hasn't filed patent-infringement lawsuits to help force settlements. But the group lobbying on behalf of tech companies in Washington, the Coalition for Patent Fairness -- which includes several companies that have been approached for licensing deals by Intellectual Ventures -- says it is only a matter of time. "Since these thousands of patents only give [Intellectual Ventures] the right to stop others from making products, through lawsuits, it is obvious what they intend to do," the group said in a statement.

In an interview at his Bellevue, Wash., headquarters, Mr. Myhrvold acknowledged facing resistance from companies he targets for licenses. But his patent inventory gives him leverage to extract settlements without litigation. "I say, 'I can't afford to sue you on all of these, and you can't afford to defend on all these,'" Mr. Myhrvold said.

Companies that are unhappy with him, he said, are simply accustomed to infringing on patents with no repercussions. Or else they are looking for a bargain deal on his patent portfolio. He declined to comment on specific companies.

Of details-->

It works like this: Technology companies agree to pay patent-licensing fees to inoculate themselves against potential lawsuits by Intellectual Ventures. These fees are how the fund generates its returns. As part of the deal, though, these same companies also put up the cash Mr. Myhrvold uses to buy more patents, receiving an equity stake in the fund in return. (Some companies don't obtain long-term patent licenses, but instead get shorter "guillotine" licenses that must be renewed periodically.)

Mr. Myhrvold, who has a staff of 400 (including an army of patent lawyers), collects an annual 2% management fee from investors, according to several people familiar with the fee structure. Intellectual Ventures also keeps a percentage of any gains. Mr. Myhrvold declined to comment on the specific fee structure of his funds.

Mr. Myhrvold obtains his patents from sources including universities, bankrupt companies and individual inventors.

The venture is intensely secret. He disguises his patent-buying activities by using holding companies with names such as Quasimodo Tolling LLC and Gigaloo LLC.

**But wait, who was backing Intellectual Ventures in the first place???

from the Seattle Times: Lately, Stephenson's been part of the team of inventors at Intellectual Ventures, a Bellevue idea factory started by ex-Microsoft Chief Technology Officer Nathan Myhrvold, with backing from Bill Gates and others.

from eeindia: Others pointed to Intellectual Ventures, a company founded by the former chief technology officer of Microsoft to acquire and file patents as a related player in IP markets. The company is said to have backing from Intel, Microsoft and Sony among others.

from IP Law & Business: ...But at Intellectual Ventures, not all the big ideas come from the Jedis. Another arm of the 100-employee company, headed up by former Intel Corporation in-house counsel Peter Detkin--a Darth Vader figure to many--has been buying up thousands of patents through shell corporations. A $400 million investment from some of the biggest technology companies, including Nokia Corporation, Intel, Apple Computer Inc., Sony Corporation, and Microsoft, funds the shopping spree. (None of these companies would comment for this story.) Some in the IP asset management field estimate that Intellectual Ventures has amassed 3,000-5,000 patents.

Mike Masnick on Myhrvold: Nathan Myhrvold may not have done much of note yet with Intellectual Ventures, but he sure is good at getting press attention. It seems to come in waves, too, with multiple stories popping up all around the same time.

**AND, who is IN the Coalition for Patent Fairness?

***Recall also Newsweek's


It has no factories, machine shops or marketing teams. Only patent attorneys populate the quiet hallways. The five-year-old firm's plan is to create or buy new ideas, accumulate patents--exclusive rights to use the inventions--and rent those ideas to companies that need them to do the gritty work of producing real products. Because today's businesses are constrained by their need to make money, Myhrvold says, "it is irresponsible for them to think wildly outside the box." He wants to fill that innovation gap--"We are thinking wilder, crazier thoughts than anyone else." (...)

But now companies with more patents than actual products and a few bloodthirsty lawyers on the payroll have no reason to strike partnerships; they are out to win lawsuits. And the biggest companies with the most products that conceivably trample the most patents are sitting ducks.


One participant, Dr. Leroy Hood of the Institute for Systems Biology in Seattle, says: "We are thinking about how you can solve problems that have never been solved before." Since the company has been holding sessions for only a year, it has likely produced about a hundred ideas whose patent applications won't be processed--or start earning any money--for at least three years.


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