PublishedFebruary 18, 2010

New York Times Takes A Small Peek Under IV’s Cloak

In today’s New York Times, Steve Lohr has a write up and a blog post about the highly controversial ‘Intellectual Ventures.’ Due to their intensively secretive nature and unusual business models (Lohr reports: “Intellectual Ventures, a secretive $5 billion investment firm has scooped up 30,000 patents, inspire admiration and angst,” as a result “Several analysts say that Intellectual Ventures has been primarily a master practitioner of exploiting the current rules of the game to its advantage”), IV has long sparked deep suspicion.

It is no secret that IV has been substantially growing its patent portfolio for the past few years. However, one new nugget about a different kind of growth jumped out from Lohr’s story:
Intellectual Ventures spent more than $1 million on lobbying last year, according to public filings compiled by OpenSecrets.org. In the three most recent election cycles — 2006, 2008 and 2010 — Intellectual Ventures executives, led by Mr. Myhrvold, have contributed more than $1 million to Democratic and Republican candidates and committees.

While we’ve never seen this previously reported, it should come as no big surprise. Over the last several years, Congress has taken a number of stabs at patent reform. Should our system see the overhaul reformers are pushing for, certain types of abusive business models may be in great danger. Certainly, companies that are merely in the business of charging for “being infringed” by productive U.S. enterprises have much to fear from patent reform.

IV’s desire for influence is telling of their desire to protect their business model – whatever it may be. Some IV revenue comes from licensing deals. Given the fiercely tight-lipped temperament of IV, it is unclear where additional revenue may come, from though IV has long held out the threat of litigation (but, they claim, never acted on it). However, Lohr in his informative blog post that accompanied the initial story, shines some new light on this. Regarding one particular case involving a suit against Eastman Kodak, IV admits involvement:

Donald Merino, senior vice president of licensing for Intellectual Ventures, said that the company did step in, but only after the shell company had started litigation. It bought or licensed a handful of patents from the shell company, and then licensed them back to the shell company, represented by the Niro firm.

Consider: benevolent or litigious? Of course, IV refused to answer who shares in the monetary outcome of the suit.

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