$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."

For the better, no doubt

[Lead Butthead]

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.

Patent Bashing

[visionsofmcskill]

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.

International Impact

[foundme]

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:For the better, no doubt

[cp.tar]

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.

Re:No wonder some are nervous!

[grub]

They are proposing adding a 5th octet as an interim move until v6 is widely adopted.

That doesn't sound far off from what they're trying to do: patent every neat idea they can. "Hey! A fifth octet. IPv5! V5... hey! Patent a 5 cylinder internal combustion engine! {repeat ad infinitum}"

Re:Patent Bashing

[EvanED]

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.

It should be easy to figure out.

[killjoe]

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.

Re:net here!

[Anonymous Coward]

That's really only relevant if the company in question is only doing business in the EU. Look at the recent case of RIM (Research In Motion), they were perfectly legit in their home country of Canada but ran afoul of an American patent troll and have suffered for it.

been here before

[theCat]

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.

Re:net here!

[Opportunist]

Well, actually they're not defined and (hardly) enforcable. Why do you think the corporations are pushing so hard to get it signed?

I mean, the attempt alone to push it through as a sidenote in the fishing committee... Fishy doesn't even come close to how that reeked.

Re:International Impact

[TheRaven64]

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.

It's just not one big player

[grahamsz]

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.

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

[viewtouch]

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.

IP is the oil of the information age

[servognome]

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.

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

[RexRhino]

I agree with you... up until you started to bring up Ralph Nader. Ralph, unintentionally of course, is one of the biggest allies of the big corporations... by promoting expensive regulation that makes doing buisness unaffordable for anyone by huge corporations who can afford the initial capital investment to comply with regulations. Also, in his dream world, most of the economy and society would be controlled by the government (which is as bad or worse than having a few corporations control everything). Remember, the government IS a corporation, it is simply a corporation that can use violence to maintain it's monopoly, and can charge you for services against your will.

Re:Their "ambition" will undo them

[hsmith]

But see, it is because of big government that corporations CAN buy legistlation. More gov't isn't the answer, less gov't is.

Decent points, but

[Mateo_LeFou]

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.

it will backfire on them

[emagery]

the problem with this idea is that if they abuse it, they will either destroy the patent as a concept or be dismantled by the/a government as it was with other overly abusive megacorps.

Re:International Impact

[srw]

Besides in the USA, software is only copyrighted not patented (yet).

Excuse me? What, exactly, have we been talking about for the past 11 years then? See: http://cloanto.com/users/mcb/19950127giflzw.html [cloanto.com] and http://burnallgifs.org/archives/ [burnallgifs.org] for some background. Also see: http://swpat.ffii.de/pikta/xrani/mpeg/index.en.htm l [swpat.ffii.de]
Hell, for a more generic discussion see: http://www.bitlaw.com/software-patent/history.html [bitlaw.com]

(Score: 3, interesting) my A$$. Should be (Score: -1, wrong)

Re:For the better, no doubt

[Anonymous Coward]

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

You would be surprised. Enough people I deal with in both parties are annoyed with the intellectual property license abusers. The new scandal that is brewing is the payola scheme involving prescription drug firms paying off the generic firms to keep them from pulling their drug into generic land. It's a racket that represents collusion at the expense of the insurance carriers, government medical payments and ultimately the general public

IP parasites are not popular people. If you evaluate polling data on Congress, you will discover that is has a lower rating than the President's pathetic numbers (it's hard to believe there could be something even lower). When it comes to their re-election and special interests that have been too greedy, they'll throw the greedy overboard in a flash. Toss in the complexities of intellectual property law - it's something the common man cannot relate to. Let Nathan and his jet-setting, trust-fund peer group try explaining why they need another billion dollars from Joe consumer right now with $3.00 plus oil, GM/Ford demise, airline bankruptcy and pension fund disasters and you'll invite reform in the spirit of the French revolution.

It would be a tremendous benefit to have a parasitic IP troll effort come forward and help clean house. They certainly don't see it, but it would be received by the current Congressional climate as no different than the CEO of Worldcom, Enron and all the big oil CEOs demanding Congress give them even greater profits and multi-billion dollar paychecks.

Please Nathan, push your greed forward. Don't be satisfied with the hundreds of millions you already eeked out of a mediocre job. Congress needs another target to improve their polling data and the tiered Internet greed just lacks the emotional factors necessary for riling up the masses.

Re:I knew I should have patented...

[raftpeople]

"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"

Patents are "supposed" to be used for exactly what we the people decide they should be used for. They are an artificial temporary monopoly that WE citizens have agreed to allow (through our representatives) in exchange for the economic benefit that goes along with the monopoly. That benefit is a window of opportunity to recoup the investment in R&D used to create the product, which in turn encourages economic development and investment.

I (and it would appear I'm not alone) did not ever agree to "idea squatters" that randomly combine trivial technologies, never produce product and ultimately REDUCE the very economic investment and development that patents were supposed to encourage.

No, it's not name calling, it's calling a spade a spade.

Re:Patent Bashing

[Scarblac]

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.

The way I see it, without this whole IP/patent business, the situation is as follows:

1. Cost of production in the US is far higher than anywhere else
2. With education improving around the world, the US is losing any advantages on that front it used to have
3. Despite that, US insists on buying much much more than it sells
4. Consequence: dollar plunges, new equilibrium as a much poorer US

Politicians noticed that a long time ago, and try to fix it like this:

1. Invent a new form of property, "intellectual property", mostly consisting of banal ideas protected by law, that is "produce" from thin air
2. Give US companies a big headstart in acquiring it
3. Try to get laws passed around the world that protect this "IP"
4. Profit! An actual revenue stream for the US!

It's a rip off, it probably won't work in the long term, it wreaks havoc within the US on the short term, and it's counter productive as a whole - but the alternative is a lower standard of living for the whole US, and they're trying to postpone that.

(not an economist, and describing a view from Europe)

Re:For the better, no doubt

[bhiestand]

"Patent infringement" will be ignored because everyone owns a piece of each patent.

If by "everyone" you mean "established monopolies"... Say Apple and Microsoft agree to play together. With their pooled resource they have "a system of libraries for a graphical user interface that allows other applications to run" patented. Who is going to be able to challenge them in their markets? Or what if GSK patents "a system for cloning brain cells", even though they don't have the technology or products developed yet? That is pretty much this company's stated [intellectualventures.com] goal:

"We are focused on a wide range of technologies which represent our beliefs of where technology is headed. Some of these technologies are near term and others are much further out. By focusing on invention rather than product development, we have the freedom to work with 5-10 year (or even 20 year) time horizons rather than 2-3 years."

Maybe if I saw the EFF, ACLU, and Google combining their efforts to assist Intellectual Ventures I'd have more hope for this idealistic view of things...

Re:Decent points, but

[IAmTheDave]

In particular: helping them do it better in a way they might never have imagined.

And now "imagining" means "purchasing". In no way, shape, or form should patents be assignable to a third party. The potential for abuse has already been realized in the courts again and again.

Just look at the name of the company. They were set up, specifically to be a patent troll. Obviously the companies in question figure half a billion dollars is chump change in return for what they can get with just a few "settlements" (RIM, anyone?)

This scares me. No doubt this company will start buying out other "patent holding firms", amassing a rediculously big software IP portfolio, to the point that any development of any kind requires a "development license" that covers you against lawsuits. Because I have to assume that with 5000 patents and counting, just about any website or Windows/OSX app that I write is going to infringe on one of them.