Asa Mathat


Intellectual Ventures is cutting 19 percent of its staff in a second round of layoffs this year, raising fresh questions about the stability of a business that became the poster child for “patent trolling.”

The news was first reported by Bloomberg, which pegged the cuts at 140 staffers and took a deeper look at the Bellevue, Wash., firm’s controversial practices.

“We are making operational changes that are consistent with this reduction and will enable us to maintain and expand our leadership in the market for invention,” the company said in an emailed statement to Re/code. “Our assets — both people and intellectual property — are among the best in the industry.”

The company, co-founded by Microsoft executives Nathan Myhrvold and Edward Jung, has amassed an arsenal of patents during the last decade and a half by buying up portfolios and tapping some of the world’s sharpest minds for concepts. Participants in IV brainstorming sessions have reportedly included people like Bill Gates and Lawrence Livermore physicist Lowell Wood.

But for the most part, the company hasn’t put those inventions to work. Instead, it primarily leverages its intellectual property to seek licensing fees from companies or investments in its funds, sometimes under implicit threat of lawsuits.

Few in Silicon Valley have complained publicly about the practices, but investor Chris Sacca spoke up in a revealing piece on NPR’s Planet Money in 2011.

… the truth is the threat of their patent arsenal can’t actually be realized, it can’t be taken seriously, unless they have that offensive posture, unless they’re willing to assert those patents. And so it’s this very delicate balancing act that is quite reminiscent of scenes you see in movies when the mafia comes and visits your butcher shop and they say, “Hey, It would be a real shame if they came and sued you. Tell you what: pay us an exorbitant membership fee into our collective and we’ll keep you protected that way.” A protection scheme isn’t credible if some butcher shops don’t burn down now and then.

As Businessweek pointed out, a number of companies, notably including Google, eventually refused to invest into IV’s funds, squeezing a critical source of revenue.

Myhrvold has repeatedly defended the company’s practices, arguing they work to protect the value of inventions and property of inventors. That defense included an onstage interview with Re/code’s Walt Mossberg at the 10th D: All Things Digital conference.


The plot is thickening.  The FTC got the go ahead to do its Patent Assertion Entity Study which has a significant data collection burden.  FTC is going to send its subpoena backed survey to 25 PAEs.  IV is a likely candidate.

USPTO has issued new rulemaking that require patent owners to report attributable ownership - who owns what patents and what the business relationships among and between the people with an interest in the patent are structured.  

And there is a serious movement afoot to call out the patent quality of the 7,000 plus patent granted each week and to make those claiming infringement to provide better evidence of infringement.  

Let's hope as things move along there is something more useful than yet another name for people who make money on patents but don't build products.  We've moved from Non-practicing entity, to patent assertion entity, to patent monetization entity.  I suspect when all is said and done, patent monetization will continue.  There is no place in the patent laws that say the only way you can make money on patents is to make the things you invent. 


I don't buy the "patent troll" rolling pattern on every internet media. Medias having ads from big companies that also don't use a vast majority of their own patents.

Buying patents, they effectivley found inventors and small to medium companies that create IP and patent them. These individuals and companies "inventors" could not fight against trusts such Apple, Google or IBM when they illegally, wrongfully (and often knowingly) copy their patented work. They do it instead buying patents, knowing it's much more interesting on the long-run and no small "invetor" will be able to sue them (a matter of legal budget!).

So no, this is not "Patent trolling", this is inventors funding, and this is patent protection against big companies that don't hesitate to copy work.


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