$400 Million IP Experiment Making Some Nervous

BrianWCarver writes "IP Law & Business shines the spotlight on Intellectual Ventures, the IP start-up founded in 2000 by former Microsoft chief technologist Nathan Myhrvold. According to some estimates, Intellectual Ventures has amassed 3,000-5,000 patents, with the help of a $400 million investment from some of the biggest technology companies, including Nokia, Intel, Apple, Sony, and Microsoft. As the patent stockpile grows, so does the speculation--and the fear. IP lawyers and tech executives worry that Intellectual Ventures is less interested in changing the world with big ideas, and more focused on becoming an über patent troll, wreaking litigation havoc across industries with its patents."

I knew I should have patented...

I knew I should have patented the idea of patent-trolling. Dang.

Re:I knew I should have patented...

The term "patent trolling" is just name-calling. Patents are supposed to be used by the people who invent things to get money from the people who use those inventions to make products. There is no reason to expect people only to invent things that they themselves are capable of bringing to market, and to impose that expectation would reduce the ideas being published in patents and give no incentive to invent or to disclose.

Focus instead on the real problems with the current parent system:

-companies and their engineers are discouraged from using or even looking at existing 3rd party patents due to a stupid interpretation of the willful infringement rule

-it is too expensive to apply for patents, especially for individuals

-it is far too expensive and time-consuming to get legitimate judgements against infringers

-obvious or prior-art patents are routinely granted, and the examiners' incentives encourage this

-patents are often issued that either do not work or do not fully and comprehensibly disclose how to implement the invention

-there is no automatic licensing scheme (as for public playing of music) or overall royalty % cap to asuage the fears of companies that they'll get nibbled to death by various IP holders for acknowledging all the patented technology that goes into making a state-of-the-art product.

Decent points, but

Let's not forget the other thing patents are supposed to do: disclose to the public an invention, in exchange for exclusive control of that invention.

NB:
-If the invention is, e.g. "one-click shopping" the public will reply "who gives a fuck?! duh!" Hence the non-obviousness requirement.

This is why patent-trolling is not just name-calling. Many companies (and here it seems we have the epitome) have, as their business model, making-it-impossible-for-others-to-do-their-work-w ithout-paying-us-a-fee.

Patents are supposed to be about collecting-a-fee-for-helping-others-do-their-work- better. In particular: helping them do it better in a way they might never have imagined.

Re:I knew I should have patented...

I regret to inform you, PCeye, that you are in violation of patent 1,521,271 "Method for whining about the patent situation" which I filed on July 22, 1998. You have 30 minutes to cease and desist violating my intellectual property, or you may opt to negotiate a license for continuing using my method. You may contact me at [e-mail]

For the better, no doubt

IP lawyers and tech executives worry that Intellectual Ventures is less interested in changing the world with big ideas, and more focused on becoming an über patent troll, wreaking litigation havoc across industries with its patents.

Perhaps now it will finally compell change to the (broken) patent system.

Re:For the better, no doubt

Not that soon, I think... but eventually it might.

Right now, too many too powerful have too much to lose should the status quo change.

net here!

not in the EU, as software patent are (still) not allowed :)

That is incorrect.

The UKPTO is one of EU member offices known to actively *reject* attempted software and business method patents even if it has to go all the way to the high court. [lawpundit.com]

In fact, they were recently held as a 'good example' by the FFII.

Patent Bashing

A company of this size and portfolia could litaerally drag the entire economy to a standstill if allowed to patent everything. It's one thing to have a whole bunch of different companies pushing competing patents, but when several large (and supposedly competing?) firms get together and pool their patents into one collossus, then you can be certain noone else will be allowed to enter any market remotly connected. This is not a good thing.

Re:Patent Bashing

On the contrary; maybe having the economy dragged to a standstill is the only way to let the politicians realize the folly of the 'everything's patentable' world. If it would lead to change, the temporary stagnation might be worth it.

IP is the oil of the information age

On the contrary; maybe having the economy dragged to a standstill is the only way to let the politicians realize the folly of the 'everything's patentable' world. If it would lead to change, the temporary stagnation might be worth it.

Just like skyrocketting oil prices have convinced politicians on the need for alternative energy sources. Sure an economic standstill works, but it's horribly painful for everybody (except for those who are profiting short-term).
What is really needed is an education effort on IP reform. Not just for the politicians, but for the public at large, so they can elect forward thinking leaders.

I want to be a scientist know...

Last January a dozen of the world's most respected scientists gathered in a nondescript conference room at an office building outside of Seattle. They sat around a table cluttered with laptops and papers, snacked on bowls of beef jerky and Chex Mix

Beef jerky and Chex Mix?
Sign me up!

International Impact

How does patent work internationally?

Imagine in 10-20 years, China becomes the biggest economy in the world, it ignores all the US patents, and just use those patents to roll out their own products.

For example, a patented medicine sold by an US company to Africa at $10 per bill, and the same "Made-In-China" pill cost $0.01, what is to stop Africa from buying from China instead?

Right now US is still powerful enough so that other countries must agree to certain rules/laws made in USA, in exchange for free trade deals, but when that strength faded, so will the leverage.

I draw this opinion from the recent, possible change of international whaling law, where Japan is about to gather enough votes to start commercial whaling again. So what is deemed illegal in the last few decades will soon become acceptable when the power shifted.

Re:International Impact

You need to respect US patents if you intend to sell in the US. I suspect that this is going to start really hurting the US in the next few years. What do you think will happen when, for example, an EU or Asian software company gets hit with a software patent suit? If the US is not their principle market, then they will just pull out - sell their products everywhere except the US. Other companies might decide that selling in the US is too risky, and also ignore the US market.

Since software is often not a real product (it's a tool that is used to make other products), this could have a serious effect on the US economy. In the worst case, this would start happening to Free Software - it would be free-beer for any non-US company to use, but cost money for the patent license in the USA.

Political Leverage

With the sheer volume of patents they hold, the smart move would be to avoid garnering too much attention from Congress and instead sell advantage to competing companies. In other words, their primary source of income wouldn't come from pure patent protection litigation, it would come from companies paying them to tie up their competitors' product lines with injunctions and patent violation suits. The 800 lbs. gorilla would get richer as a hitman than as a tyrant.

It should be easy to figure out.

Nathan Myhrvold is not a nobody. He has a rich history all saved on google. A little bit of research should show you whether is a nice guy who is trying to make the world a better place or an evil son of a bitch or somewhere in between.

Anybody who has been throught the early years of Microsoft's war on the IT industry knows what kind of a person he is. Suffice it to say he is not a nice guy trying to make the world a better place.

Here's how it works

Right now, large companies amass huge throw weights of patents. In general, the outcome of a patent war is Mutually Assured Destruction, so they also enter into mutual cross-licensing agreements that in effect create a patent-free zone for the Fortune 500.

What Intellectual Ventures could do is create a patent pool for the present members of the club.

It works like this: Microsoft transfers its patent portfolio to IV in return for a license to IV's patent portfolio. This is no loss to MS because they've already cross-licensed everything with Philips, Cisco, etc. -- all of whom do the same. From the POV of club members, nothing changes, except perhaps that they spend much less money negotiating cross-licensing agreements and pay a bit to IV for the convenience.

On the other hand, now IV has practically all of that throw weight. Anyone not an "Executive Member" of the club will have to pay (dearly!) to use any of the IV portfolio. What's more, Mutually Assured Destruction doesn't work because IV doesn't actually do anything -- they can't be sued for infringing patents when they don't make anything.

The upside to the club (aside from convenience noted above) is that any of the "little people" who get uppity are now facing the combined throw weight of all of the patents in the world -- and the club members don't have to accept the public-relations liabilities.

It's a total win-win situation. For instance, if done right Microsoft could keep Linux tied up in court forever without ever themselves taking a PR hit. Sort of like the BSA except for suppressing potential competition instead of keeping customers in line.

Re:Here's how it works

You make an interesting argument, but I don't know if I fully agree. Let's say Microsoft wants to keep Linux buried in litigation through this organization. Well, the problem is that it has other members with very likely competing interests. For example, Nokia might not like seeing its patent troll baby being used to quash one of its own business partners [slashdot.org]. So what happens when this sort of conflict of interest arises? And it will.

I find it hard to believe this troll group will be used for the evil people seem to be claiming. More likely, it will be used as a massive reserve for defensive patents. Much like a defensive alliance between nations, you won't see members picking fights and suing people actively, but instead the group exists to allow for a collective means to *defend* from REAL patent trolls.

Hold that thought

From TFA

'They can't be screwing around with a bunch of ideas for that long,'

Why not? I've been screwing around with the idea of screwing around with multiple hot chicks since I can remember. Wish I could get a patent on that.

Re:Hold that thought

Why not? I've been screwing around with the idea of screwing around with multiple hot chicks since I can remember. Wish I could get a patent on that.

Now that's one case where I really wish I had prior art...

been here before

Gould & Fisk tried the same thing with the gold market. [wikipedia.org] At which point, fundamental flaws in the gold standard and the Greenback became rather obvious.

Maybe we'll have the same corrections this time but without the economic collapse. Did I just suggest we've learned anything from the past? Very sorry, I'll stop now.

My understanding of IV

Alright patent bashing aside ...
As I understand IV from some people working with them (with the caveat that my understanding is not based on a direct relationship with them, but lunch conversations/rumor):

1) The $400M is NOT an investment. It is blackmail, like protection money. Company X pays IV for the costs of a patent portfolio with the understanding that IV will not sue Company X based on those patents (i.e. they get a license). So, Company X pays protection money to IV and IV gets new patents paid for to go sue others on.

2) There is no "speculation" that IV is a troll. As I understand it, that is their purpose.

3) IV doesn't invent anything. They buy blocks of patents on the cheap (especially if they get other firms to pay) from some other company's firesale. Usually these patents are an unusable mess and require massive clean-up. But, if you buy thousands of patents you'll hit gold eventually.

4) As a troll, if you don't have deep pockets, IV doesn't care about you (unless you have something to sell). This is cincontrast with real companies that often use their patents to prevent a second company from making a product. IV just wants money.

Let's see this for what it is, shall we?

The US Constitution recognized only individuals with respect to copyrights, patents, etc.. At the point where corporations were given equal status with individuals then all of the rights that had been held by individuals then became rights that corporations could also hold. Corporations can, with this accession, do things that no individual could possibly do. Therein lies many a disaster, many of which lie immediately ahead in the future. Every time a corporation petitions a legislator for a law that gives it more power, the rights of the individuals are the currency paid in this transaction. The eventual outcome of this, it should be clear to all by now, is that a few corporations will hold all the power and no individuals will have any rights except those that the corporations see fit to allow them to have to the extent that it fulfils the plan of the corporations to manipulate the people. As Ralph Nader has often explained, unless and until we people put an end to this individuals will find themselves with fewer and fewer rights, and corporations will grab more and more power over individuals. This is a war, folks. If you don't think so you are condemning your progeny to virtual slavery.

Re:why would they do that?

niché : a clichéd niche?

It's just not one big player

Imagine that Intel, AMD and IBM not only patented everything imaginable in the uProcessor space, but that they got together and cross-licensed all that tech.

On the face of it, this sounds advantageous. It allows more cool features in processors and alleviates those three companies from having to worry about getting involved in frivolous lawsuits with their main competitors.

Now perhaps Intel patented the XOR operation. Sure the patent is blatantly unfair, but since IBM and AMD can already use it then they have no need to fight intel's patent. THe only person who would want to fight it would be some new player in that space, but who'd have the resources?

If large corporations start broadly cross-licensing technologies then it'll effectively kill the little guy and sew up the market.