Nathan Myhrvold

I was absolutely glued to the radio today as I listened to the latest episode of This American Life in which Planet Money’s Alex Blumberg and NPR’s Laura Sydell report on the complex underworld of high-tech patents. The investigative piece — titled When Patents Attack — is among the most comprehensive looks at the controversial business dealings of Intellectual Ventures.

The Bellevue firm, founded by former Microsoft CTO Nathan Myhrvold, certainly doesn’t come across in a positive light. And much of the criticism of the firm — which is described in the piece as a “troll on steroids” — comes via Silicon Valley venture capitalist Chris Sacca.

The attorney and former Google executive slams Intellectual Ventures, noting that the patent holding company has the power to “literally obliterate startups.”

Later in the story, Sacca claims that Intellectual Ventures’ model is one built around one that amounts to extortion.

He tells the reporters that IV essentially engages in “a mafia-style shakedown, where someone comes in the front door of your building and says, ‘It would be a shame if this place burnt down. I know the neighborhood really well and I can make sure that doesn’t happen.’ ”

Peter Detkin, who coined the term “patent troll” and now works for Intellectual Ventures, called Sacca’s suggestions “ridiculous and offensive.”

“We’re a disruptive company that’s providing a way for patent-holders to recognize value that wasn’t available before we came on the scene, and we are making a big impact on the market. That obviously makes people uncomfortable. But no amount of name-calling changes the fact that ideas have value.”

The hour-long piece covers a lot of ground, tracking the whereabouts of a patent once-owned by Intellectual Ventures and now tied to a mysterious entity by the name of Oasis Research. It is a fascinating journey which includes an NPR-loving attorney who refuses to talk and an unoccupied office in the town of Marshall, Texas.

At the end of the piece, there’s no conclusion left to draw but that the U.S. patent system is fundamentally broken.

We’ve asked Intellectual Ventures for a comment about the story, and we’ll update this report when we hear back from them.

[Follow-up: Intellectual Ventures responds to This American Life exposé: 'We fundamentally disagree']

The audio portion of the report is not yet online (which I highly recommend and should be available on Sunday), but you can read a transcript here.

Comments

  • http://www.facebook.com/eric.koester Eric Koester

    Great article — would love to have you “editorialize” the NPR piece and highlight some of the more interesting segments.  

  • Guest

    Haters are going to hate. Creators are going to create.

    Thank you, Intellectual Ventures, for monetizing the world’s great ideas such as curing global warming.

  • Joe the coder

    @bdd403e43d684fa0f94bba27ff0e3432:disqus  – thanks, Nathan.

    What’s really telling about this piece is that it shows the IV guys line “We’re just helping the inventors” is nothing but cynical marketing spin.  So, the game plan looks like this:  IV aggregates lots of patents.  It then sells them or licenses them out to small time lawyers that wrap an “empty office” company around the patents and go sue companies.  IV shares in the proceeds of the lawsuits.  In parallel, IV uses the threat of lawsuits to get lots of companies to directly license the patent portfolio directly from them.  I’d say the protection racket metaphor in the article is spot on.

    By the way, the article never really mentions it but all most all the patents that IV has were never owned by the inventors but were assigned to the company the inventors worked for.  Though I’m sure there are a few like the Crawford guy mentioned, I’d bet 99+% are/were company owned.  The whole “protecting the inventors” thing is ridiculous and, frankly, insulting to the inventors.

    • Joe the coder

      uh, guest, sorry.  I re-read your coment and missed the sarcasm.  Yeah, that global warming patent could be a real money maker.

      • Guest

        I’d buy a machine that would control my climate, Joe. Wouldn’t you?

      • Guest

        I’d buy a machine that would control my climate, Joe. Wouldn’t you?

  • http://www.facebook.com/michaelswhite Michael White

    This story makes me laugh — IV should sue sacca over his statements.  Put yourself on the other side of this this coin — You create something that is copied…  You’d sue too.  IV is providing a service that is legal.  If you disagree with the way things work in the patent realm you should get off your ass and work to reform the process.

    It sounds both silly and fitting.  Don’t hate the player – hate the game.

    Cheers!

    • Guest

      Thank you, Michael. Once our Congress fixes the budget deficit, they can set to work on the patent system.

  • Vern

    “That’s a term that has been used by people to mean someone they don’t like who owns patents. I think you’d find almost anyone who stands up to their patent rights has been called a patent troll.”

    No, Nathan, that’s not what it means. A Patent Troll is a company that buys patents, usually weak ones, has no intention of actually creating a product, and looks for broad and deep markets in which to sue for licenses. That’s a patent troll and from what I can tell that’s pretty close to what IV is doing.

    The reason that people find it so offensive is that you are parasitic. You are leaching and stealing from the hard work others have done to actually create a product, raise money, and then bring it to market.

    In many ways the easy part is the invention and the invention itself is very rarely an actual product.

  • Guest

    I understand the concern about potential abuse by IV and other patent owners. But a lot of the critics seems to ignore the obvious fact that abuse can and does happen in both directions. In fact it’s kind of ironic that Sacca is ex-Google. Here we have a company that was founded on a patent, is currently in court over what appears to be clear case of willfully violating Oracle’s patent (and that’s based on their own internal emails), has bought patents from others and used them to arm its own partners while simultaneously calling foul on others doing so, and is now a vocal proponent of patent reform. Is that kind of blatant hypocrisy any more admirable than what IV does? At least IV is consistent.

    And can we drop the mafia shakedown hyperbole? IV is not a criminal outfit, nor is anything they have done been shown to be against the law. You may not like. I may not in all cases either. But then I don’t like clear cases of companies abusing the IP of others either. So having someone like IV around is also a way of providing some counterbalance.

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