A significant event took place yesterday: potentially the biggest software patent troll of all has finally woken from its slumbers: Today Intellectual Ventures (“IV”) enforced its rights and filed patent infringement complaints in...
A significant event took place yesterday: potentially the biggest software patent troll of all has finally woken from its slumbers:
Today Intellectual Ventures ("IV") enforced its rights and filed patent infringement complaints in the U.S. District Court of Delaware against companies in the software security; dynamic random access memory (DRAM) and Flash memory; and field-programmable gate array (FPGA) industries.
Unless you follow this field closely (and frankly, why should you?), you could be forgiven for not knowing who this unhelpfully-named Intellectual Ventures might be, because until now its policy has been to keep a very low profile. That's what makes yesterday's announcement so important: it seems to mark the start of a new phase in its business plan.
Here's Wikipedia's description of the outfit:
Intellectual Ventures was originally founded in 2000 by Nathan Myhrvold and Edward Jung of Microsoft as a private partnership. It lists Peter Detkin of Intel, and Gregory Gorder of Perkins Coie, a Seattle-based law firm as co-founders. They reportedly have raised over $5 billion from many large companies including Microsoft, Intel, Sony, Nokia, Apple, Google and eBay. Reported statistics claim over 30,000 purchased patents and applications and over 2000 internally-developed inventions. Licenses to patents are obtained through investment and royalties.
And here's the company's own statement from the press release linked to above:
Founded in 2000, Intellectual Ventures (IV) is the global leader in the business of invention. IV collaborates with leading inventors, partners with pioneering companies, and invests both expertise and capital in the process of invention. IV's mission is to energize and streamline an invention economy that will drive innovation around the world.
This harping on "invention" and "innovation" is rather misleading. As far as I can tell, it doesn't really invent anything for the purpose of commercialisation, manufacture or sale: it just comes up with ideas and applies for patents on them (or buys patents from others). Its business model is founded on amassing a huge collection of patents, and then getting companies to licence them – whether they want to or not – because their inventions are or may be "infringing" according to Intellectual Ventures.
It's clear from this that the real invention is done by other companies who devise things they want to sell; IV, by contrast, thrives by exacting a tax on innovation done elsewhere. It can do that because of the flawed US patent system, which does not allow independent invention as a defence against allegations of infringement. That is, even though you provably didn't "steal" another company's idea, but came up with it on your own, if someone else patented it – or something similar enough – first you still have to pay for the "right" to use your own invention.
Of course, this is absurd: the whole premise of the patent system is that it should encourage as many people as possible to innovate, but this aspect actually punishes it, because it makes independent research vulnerable to this kind of penalty. That means companies will be less inclined to invest in research if they think there's a chance they may get scooped in filing for the result – something that's hard to tell in advance. Moreover, with the growth of ever-vaster patent thickets, it is increasingly difficult to come up with any new product that does not touch on one or more existing patents, especially when they are framed as vaguely as possible precisely for that purpose.
What makes Intellectual Ventures different from all the other patent trolls that live off others' work is the scale of its operations. Nobody really knows the extent of its holdings, but the consensus is that we are talking about over 30,000 patents – an extraordinary number of government-granted intellectual monopolies.
Because IV's patent portfolio is so big, it is almost certain that any truly inventive, innovative company in the markets it covers will be infringing on something, at least nominally. And the more that decide to cut their losses by paying Intellectual Ventures' patent taxes, the more others will feel compelled to do the same – and the more money IV will have for taking others that don't to court: it's a clever, self-fuelling scheme once people start accepting its premise.
Strangely, I welcome Intellectual Venture's latest move to sue other companies directly, rather than by proxy, which seems to have been its preferred approach until now. I welcome its increased legal action, and look forward to seeing many thousands of similar lawsuits filed. I hope that IV goes after every single outfit it thinks has infringed on its vast hoard of patents, whether that company is big or small.
I do so, because it could well be the coup de grace for the dysfunctional US patent edifice, already tottering. It would cause so many companies to turn against Intellectual Ventures, and rightly to blame the patent system that allows IV to exist, that real reform might at last be possible.