Who you gonna sue?
Intellectual Ventures trolling for cash
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 claustrophobic development.
According to an investor presentation viewed by 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 Ventures.
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 be, ‘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.
Image by Eyes On My World