Myhrvold heads to court

By Felix Salmon
December 9, 2010
important story about Nathan Myhrvold's patent-troll shop Intellectual Ventures:

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On September 17, 2008, while the rest of us were running around like headless chickens watching the world come to an end, the WSJ‘s Don Clark ran an important story about Nathan Myhrvold’s patent-troll shop Intellectual Ventures:

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…

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.

Now, two years later, Clark drops the inevitable update: Myhrvold hired a chief litigation counsel in May, and has now started suing:

On Wednesday, Mr. Myhrvold’s firm, unable to secure payments from nine companies, announced three patent-infringement suits. One suit names the best-known players in security software—Symantec Corp., McAfee Inc., Trend Micro Inc. and Check Point Software Technologies Ltd.

Some links would have been nice here: Intellectual Ventures is good about posting links to all the patents and complaints, even if it does make you download various PDF files to find them.

The complaints (here’s the security-software one) include some startling facts about the sheer scope of Myhrvold’s operation:

To date, Intellectual Ventures has purchased more than 30,000 patents and patent applications and, in the process, has paid hundreds of millions of dollars to individual inventors for their inventions. Intellectual Ventures, in turn, has earned nearly $2 billion by licensing these patents.

This is all predictably depressing, and poses, as I said two years ago, the single biggest risk to America’s continued leadership in technology and innovation. Intellectual Ventures might do a bit of R, but it doesn’t do any D. Instead, it just sits there, extracting rents (that’s the polite way of saying “blackmailing”) technology companies who actually want to make things.

The long term repercussions of this will be a competitive advantage for companies based in places like China or Brazil which have much weaker intellectual property laws. It’s sad, because patents, as originally envisaged, were designed to encourage innovation, rather than to stifle it.

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