Nathan Myhrvold
Nathan Myhrvold

Intellectual Ventures, the Bellevue, Wash.-based patent holding firm run by former Microsoft technology chief Nathan Myhrvold, has laid off 20 percent of its employees.

The layoffs will affect around 140 people, leaving 540 people at the firm, according to Bloomberg BusinessWeek, which spoke to Edward Jung, the company’s co-founder and CTO, about the staffing changes.

Jung claims that it needs fewer people to do the job now that it has automated the patent-buying process, but the report by Bloomberg BusinessWeek suggests that it is also because the company has fallen on hard times as some of its bigger investors become less interested in buying into its funds.

“The reality is that much of the work has been simplified and automated,” Jung told Bloomberg BusinessWeek.

An Intellectual Ventures spokesperson said in a statement sent to GeekWire: “Today, Intellectual Ventures announced a global workforce reduction of 19 percent. 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. Our assets – both people and intellectual property – are among the best in the industry.”

Intellectual Ventures operates similar to a venture capital fund, but instead of investing in companies, it acquires patents. Companies could buy into the fund, and in exchange, it potentially received legal protection from the patent portfolio.

Some of the major companies that have agreed to invest recently include Microsoft and Sony, but Apple and Intel — both of which had invested in IV in the past — declined to participate. In October, it was seeking to raise 3 billion in fresh capital. Bloomberg BusinessWeek reports that IV kept asking the same companies to reinvest, and if they didn’t, the threat was that the company could always find something to sue one of the entities over.

Over time, the company has amassed about 70,000 patents and it has become increasingly litigious, with lawsuits against companies such as Toshiba, Canon, Symantec, AT&T, CenturyLink, Windstream, as well as banks like Capital One, First National Bank of Omaha and PNC.

The main issue debated is whether or not companies like IV hurt or help innovation with its business practices.

Recently, IV has tried highlighting its efforts to develop new inventions. For example, in April, it spun out a new Seattle-based company called CF Global, which aims to develop a market for a new product called Coffee Flour, a food ingredient derived from discarded coffee cherries.

Comments

  • Harkonnen

    Meh, scumbag patent trolls.

  • http://fearmyblog.com/ tacanderson

    I’m not a lawyer, so could someone explain the difference between this:

    “Intellectual Ventures operates similar to a venture capital fund, but instead of investing in companies, it acquires patents. Companies could buy into the fund, and in exchange, it potentially received legal protection from the patent portfolio.”

    And this http://en.wikipedia.org/wiki/Racket_(crime):

    “A racket is a service that is fraudulently offered to solve a problem, such as for a problem that does not actually exist, that will not be put into effect, or that would not otherwise exist if the racket were not to exist. Conducting a racket is racketeering. Particularly, the potential problem may be caused by the same party that offers to solve it, although that fact may be concealed, with the specific intent to engender continual patronage for this party.”

    #JustCurious

    • Chris Oates

      My understanding is that companies who bought into the fund not only got use of the patents in question for their own purposes, but got a percentage of the royalties for licensing those patents to others. It’s far from just “receiving legal protection” as the article implies.

  • Blah

    IV does not have huge capital remaining to buy patents and is unlikely to be able to raise another significant fund so no surprise that it is reducing its patent buying workforce. IV has brought on significant legal talent over the past years but none of them seem to work very hard. Lots of Microsoft like flexible schedules.

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