Intellectual Ventures

Patent troll

Intellectual Ventures is a private company notable for being one of the top-five owners of U.S. patents, as of 2011. Its business model has a focus on buying patents and aggregating them into a large patent portfolio and licensing this ‘IV’ portfolio to companies.

Publicly, it states that a major goal is to assist small inventors against corporations. In practice, the vast majority of IV’s revenue comes from buying patents, aggregating them into a large portfolio and licensing this portfolio to other companies or filing lawsuits for infringement of patents, a controversial practice known as patent trolling.

Intellectual Ventures was founded as a private partnership in 2000 by Nathan Myhrvold and Edward Jung of Microsoft, later joined by co-founders Peter Detkin of Intel, and Gregory Gorder of Perkins Coie, a Seattle-based law firm. They reportedly have raised over $5.5 billion from many large companies including Microsoft, Intel, Sony, Nokia, Apple, Google, SAP, Nvidia, and eBay, plus investment firms such as Stanford, Hewlett Foundation, Mayo Clinic, and Charles River Ventures. Reported statistics indicate over 30,000 purchased patents and applications and over 2000 internally developed inventions. Licenses to patents are obtained through investment and royalties.

The company operates three primary investment funds: Invention Investment Fund (purchasing existing inventions); Invention Development Fund (partnering chiefly with research institutions to file descriptions of inventions which don’t currently exist); and Investment Science Fund (focused on internally-developed inventions).

Intellectual Ventures launched a prototyping and research laboratory in 2009 called ‘Intellectual Ventures Lab’ which attracted media controversy when the book ‘SuperFreakonomics’ described its ideas for reducing global climate change. Its employees are predominantly patent attorneys, physicists, engineers and biotechnologists. The company hired prominent scientists to imagine inventions which could exist but do not yet exist, and then filed descriptions of these inventions with the US Patent Office. Notable participants of this process include Robert Langer of MIT, Leroy Hood of the Institute for Systems Biology, Ed Harlow of Harvard Medical School, Danny Hillis of Applied Minds, and Sir John Pendry of Imperial College.

‘The Sunday Times’ reported that the company applies for about 450 patents per year, in areas from vaccine research to optical computing and, as of  2010, 91 of the applications had been approved. Internally developed inventions include a safer nuclear reactor design (which won the MIT ‘Technology Review Top 10 Emerging Technologies’ in 2009) that can use uranium waste as fuel or thorium which is plentiful and poses no proliferation risk, a mosquito targeting laser based on Strategic Defense Initiative Star Wars technology, and a series of computer models of infectious disease.

Their efforts to promote a method to reverse or reduce the effects of global climate change by artificially recreating the conditions from the aftermath of a volcanic eruption gained media coverage following the release of the book ‘SuperFreakonomics.’ Information in the fifth chapter of the book about global warming proposes that the global climate can be regulated by geo-engineering of a stratoshield based upon patented technology from Nathan Myhrvold’s company. The chapter has been criticized by some economists and climate science experts who say it contains numerous misleading statements and discredited arguments, including this presentation of geoengineering as a replacement for CO2 emissions reduction.

Among the critics are Paul Krugman, and ‘The Economist; Elizabeth Kolbert, a science writer for ‘The New Yorker’ who has written extensively on global warming, contends that ‘just about everything they [Levitt and Dubner] have to say on the topic is, factually speaking, wrong.’ In response, Levitt and Dubner have stated on their ‘Freakonomics blog’ that global warming is manmade and an important issue. They warn against the exaggerated claims of an inevitable doomsday; instead they look to raise awareness of other, less traditional or popular, methods to tackle the potential problem of global warming.

Intellectual Ventures’ purchased patents have largely been kept secret, though press releases indicated some or all of their patent portfolios were sold to the company. Investigative journalism suggests that the company makes most of its income from lawsuits and licensing of already-existing inventions, rather than from its own innovation. Intellectual Ventures has been described as a ‘patent troll’ by Shane Robison, CTO of Hewlett Packard and others, allegedly accumulating patents not in order to develop products around them but with the goal to pressure large companies into paying licensing fees. Recent reports indicate that Verizon and Cisco made payments of $200 million to $400 million for investment and licenses to the Intellectual Ventures portfolio.

In late 2010, in its 10th year of operations, Intellectual Ventures filed its first lawsuit, accusing Check Point, McAfee, Symantec, Trend Micro, Elpida, Hynix, Altera, Lattice, and Microsemi of patent infringement. The company has also been accused of hiding behind shell companies for earlier lawsuits, an accusation consistent with the findings of NPR’s ‘Planet Money’ in 2011. The episode, which also aired as ‘When Patents Attack’ of ‘This American Life,’ was dedicated to software patents, prominently featuring Intellectual Ventures. It includes sources accusing Intellectual Ventures of pursuing a strategy encouraging mutually assured destruction, including Chris Sacca calling Nathan Myhrvold’s argument that Intellectual Ventures is offering protection from lawsuits a ‘mafia style shakedown.’

Intellectual Ventures staff are active in lobbying and testifying in court on United States patent policy. It reports its purchasing activity as of spring 2010 has sent $350 million to individual inventors and $848 million to small and medium size enterprises as well as returning ‘approximately $1 billion’ to investors before filing any lawsuits. In 2009 Intellectual Ventures announced expansion into China, India, Japan, Korea, and Singapore to build partnerships with prominent scientists and institutions in Asia to create and market inventions.

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