Nathan Myhrvold
Nathan Myhrvold

A new report out from Reuters says that Intellectual Ventures — the Bellevue-based patent holding firm led by former Microsoft CTO Nathan Myhrvold — is on the prowl to raise as much as $3 billion in fresh capital.

The 13-year-old firm, the subject of much controversy in the tech industry, including a scathing report by This American Life, also has cooled its patent buying in recent months as it looks to raise the cash.

Reuters cites sources familiar with the firm, as well as other sources in the patent business and an investor presentation.

Intellectual Ventures has amassed about 70,000 patents over the years, and it has become increasingly litigious in recent years, with lawsuits against companies such as ToshibaCanonSymantecAT&T, CenturyLink, Windstream, as well as banks like Capital OneFirst National Bank of Omaha and PNC.

The FTC is now investigating patent holding firms, which could spell more trouble for IV’s fundraising efforts.

Reuters reports that Microsoft, an investor in IV’s earlier fund, has not yet committed money to the new fund. But what’s most interesting is Google’s response, which also was an investor in the earlier fund. Google spokesman Matt Kallman tells Reuters.

“We joined Intellectual Ventures’ first fund as a way to defend ourselves against unjustified patent claims. Once we came to understand IV’s operating model, we didn’t join its later funds.”

Ouch. That’s gotta sting. Interestingly, IV has sued Google’s Motorola unit for patent infringement.

According to Reuters, IV’s 2003 fund was showing a return of 16.2 percent, while the 2008 fund showed a return of 2.5 percent. The 2008 fund had a 5-year term on it, and since it has now expired the firm no longer can buy patents through it, Reuters reports.

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  • Guest

    Don’t really understand why they’d be raising more funds? Oh, and Google’s statement isn’t credible. IV has never made a secret of what it’s business model is.

    Google is the only major tech company every to be founded on a patent. Their hypocritical stance on patents and the rights of patent holders is really getting tiring. I’m not sure why you and others aren’t calling them on it.

    • are you sure?

      That isn’t necessarily true about IV circa 2003. IV’s initial investors believed they were buying insurance and protection from getting sued, and access to the patent pool for various ongoing patent wars among themselves. At the time IV was messaging a no litigation, particularly no litigation against investors, approach. Trolls also were not as well understood 10 years ago and IV’s approach against investors changed a few years ago.
      Lots of technology companies are founded based on patents. Perhaps they are the first major internet company with strong patents, but many entire sectors have a heavy patent focus. Hardware spaces, storage, semiconductors, communications infrastructure, biotech, all are patent focused spaces.

      • Yes, I’m positive

        They’re still buying that. That’s my point. The essentials of the business model are unchanged. IV still prefers to negotiate rather than litigate. They just do more of the latter lately, as does much of the industry, because some refuse to sign agreements even when they knowingly released stuff they knew violated others IP – like Android, for example.

    • Guest364

      IV is hardly the only major tech company to be founded on a patent. In fact, setting aside tech, the entire purpose of patents was to help people establish companies. The idea was that you’d get the patent, then raise capital, build the product, and take it to market and have some protection from a larger and more well funded company copying your idea before you got your company off the ground.
      Note that it had nothing to do with buying patents and then suing other companies for “license fees” or for getting investors to put money in so they won’t be sued (protection fees).
      I think it is pretty obvious what Google is saying and I don’t blame them. In essence: we invested in your first fund because we wanted the protection. Then you sued our newly acquired company, Motorola, so we won’t be investing further in your shakedown firm.

      • Guest

        I was talking about Google. And yes, they’re the only current major tech company to be founded on one. And regarding Motorola, the main reason Google bought them was for their patents.

        • Guest364

          Dude, biotech, just to name one category, is founded entirely on their patents. It is true that major consumer software companies don’t seem to be founded on their patents but given the fluidity of the market and the time it takes to get a patent that’s understandable. Still, while Amazon wasn’t founded on a patent, you could argue that their one click patent, which was awarded early in its life, was critical to their growth.

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