Thursday, May 17, 2012

Pushing Patent Trolls - Intellectual Ventures

 aka Intellectual Vultures

Intellectual Ventures says it works with scores of colleges worldwide and touts itself as a champion of university-employed inventors whose patents might never be commercialized otherwise.

Since its beginnings about a decade ago, Intellectual Ventures has grown to be one of the largest holders of patents in the U.S. and abroad. Intellectual Ventures takes advantage of patent laws and squelches innovation by threatening lawsuits, critics say, and universities betray their values when they work with the company.

And in perhaps its most controversial role, Intellectual Ventures sues corporations that it believes infringe on its patents.
Designed to allow for the commercialization of intellectual property and protect inventors, patents are particularly controversial when it comes to tech companies. With thousands of little-known and sometimes vaguely worded patents floating around the public domain, tech startups and other companies run the risk of unwittingly infringing on patent rights.

Intellectual Ventures licenses its library of patents to corporations. Those who don’t sign on are sometimes sued for infringement if Intellectual Ventures believes the other company is violating one of its patents. This practice – in which Best Buy, HP, Wal-Mart and others have been targeted – has made Intellectual Ventures a frequent subject of unflattering media coverage. National Public Radio found a series of shell companies Intellectual Ventures uses to file lawsuits. The New York Times published a piece chronicling the company's rise and another story in which critics of the company dubbed it "Intellectual Vultures" after it filed several lawsuits.

But critics of the company say Intellectual Ventures’ lawsuits discourage companies from innovating, which alone should give them pause. Technology blogger Michael Masnick’s alma mater, Cornell University, is among the colleges that have invested in Intellectual Ventures. A critic of the current patent system and Intellectual Ventures’ business model, Masnick said universities should stay away from the company. Cornell officials declined to comment for this article.

“I don’t like the idea that my university is associated with this type of activity and then profiting off their potential success and using this to potentially stifle innovations from lots of really interesting companies and startups,” he said. “The incentives it provides for these universities is kind of going against what their overall mission is and should be.”

Few colleges are willing to disclose their relationships with Intellectual Ventures, whether they have a partnership with Poppe’s arm of the company, sell patents to Intellectual Ventures or invest in the corporation. But in 2011, Brown, Cornell, Northwestern and Stanford Universities, Grinnell College and the Universities of Minnesota, Texas and Southern California were listed as investors in the court filing.

Minnesota, through an investment in a venture capital fund, has a stake of “$100,000 or less, and really probably a lot less” in Intellectual Ventures. Stuart Mason, the university’s associate vice president and chief investment officer, said Minnesota’s stake in the company is probably close to $30,000 or $40,000. “Our involvement is secondhand and pretty nominal, really,” Mason said. But at the same time, Mason said “there’s nothing about what they do that on the surface would suggest to us that we shouldn’t invest.” The University of Minnesota Foundation has also invested in Intellectual Ventures, though a spokesman couldn't comment about the scope or nature of that investment.

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