Intellectual Ventures trolling for cash
Notorious patent wars instigator Intellectual Ventures is seeking $3 billion from investors – does this mark the end of the era of the patent troll?
As epithets go, should Intellectual Ventures
sink, it’ll have the dubious privilege of being known as the
company that virtually spawned the
market for patent and innovation buying. Founding in the heady days
of the first dotcom bubble, over thirteen years, the firm has
accrued around $6 billion and accumulated a hoard of 70,000 patents
and other assets.
Before Intellectual Ventures came along and
upended the business model, companies would routinely enter into
broad cross-licensing deals enabling them to
use each anothers’ inventions. Intellectual
Venture’s business model, based on acquiring patents and then
seeking royalties from companies that wanted to use them, turned
this inside out. It sparked a damaging new mentality
of ‘patent trolling’ that serves to stifle
innovation, restrict the growth of smaller companies, and promotes
a culture of
According to an investor presentation viewed
Reuters, the company is now trying to raise
a further $3 billion. Without funds in place, it’s had to back out
of buying any new patents and push back closing date on others.
Whilst the many opponents of aggressive
patent trolls will be cheered by the news that things aren’t quite
as buoyant as they once were for Intellectual Ventures,
unfortunately, there are more than enough stand ins for waiting in
the wings should the company ever fold.
In the early days of Intellectual Ventures, it
certainly had some impressive big name backers, including Microsoft
and Google. There were also a number of institutional investors
such as endowments and venture funds in the mix. Investments form
tech company investments often included licensing agreements
enabling them to use patents held by Intellectual
In recent years though, some of these investors
have found themselves diametrically opposed to what Intellectual
Ventures stands for, including Google. Talking to Reuters,
spokesman Matt Kallman said, “Once we came to understand IV’s
operating model, we didn’t join its later funds”.
Founded by one- term Microsoft CTO
Nathan Myhrvold, who openly admits that he will never
‘the popular kid in the class’, Intellectual
Ventures finds itself in a market which is increasingly hostile to
his business model of “invention capital” (read: patent trolling).
Unfortunately, that model, whilst reviled, is unlikely to go away
anytime soon. Just last month, the company struck a deal with Nest,
a smart-thermostat company, and, with the lure of the charismatic
Myhrvoid, there will doubtless be more eager to help prop up
Intellectual Ventures – regardless of how dubious the
morality of the firm may be.
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