Intellectual Ventures cuts 140 employees from its patent-buying workforce

http://www.geekwire.com/2014/nathan-myhrvolds-intellectual-ventures-cuts-fifth-patent-buying-workforce/

by aaronbrethorst • 12 years ago

104 77 12 years ago

geekwire.com

higherpurpose• 12 years ago

Alice effect?

impendia• 12 years ago

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

This is an interesting point. Has anyone (without a direct financial interest to do so) made a credible argument that IV is anything other than harmful to innovation?

asaddhamani2• 12 years ago

There's this one article, it might not meet all your criteria though. [1]

[1] http://www.ipwatchdog.com/2013/12/10/the-other-side-of-the-d...

lukifer3• 12 years ago

Devil's advocate: A secondary market for patents incentivizes investors to fund innovation, in the hopes of re-selling when/if the IP becomes valuable.

That's the story, anyway. In the real world, I think patents are vastly net-negative towards genuine innovation, and in most cases, morally repugnant besides.

jsmeaton2• 12 years ago

A secondary market for patents is fantastic. There are secondary markets for everything. The banking/venture system is designed to allocate scarce resources as efficiently as possible - why wouldn't the same thing exist for inventions?

The real problem IMO is that patents are being issued for frivolous ideas. If patents really represented inventions of value, then the secondary market should be correctly allocating those patents to the right people. Unfortunately, patents do not represent inventions of value, because what we see is the secondary market identifying "infringements" everywhere, so it's more profitable to extort.

If there are so many infringements, how is the patent possibly novel?

axman6• 12 years ago

Without an excellent argument, I don't think I can agree. Many members of the public believe patents are a bad thing for society because 99% of all reporting on them is about the negative aspects; you rarely hear about the good that has come from them. It's the same reason people in the US feel less safe than ever from violent crimes even though the rates have dropped significantly. the norm is boring and the exceptions are newsworthy.

chris_va• 12 years ago

Good question, unclear answer.

IV is not a typical patent troll, so the standard patent troll argument is hard to apply. They do not file large numbers of small lawsuits, but rather a small number of very large lawsuits (e.g. against the Intel/Ford/AIG types). They generally do loser pays, and a few other things that make them hard to bucket as a normal patent troll.

IV spends a large amount of money (billions [1]) on purchasing patents. One might reasonably expect that to encourage innovation. As I understand it, most of those patents are not software patents, though (again I am not 100% sure) a large fraction of their lawsuits are based on software patents [citation needed]. One might reasonable expect that to discourage innovation.

An interesting anecdote: Nest bought IV licenses to defend itself from Honeywell [2]. I would argue that Nest is a relatively decent innovation, so in this (very specific) case, one could argue that IV encouraged innovation.

As I said, hard to balance.

[1] http://www.reuters.com/article/2014/04/11/us-microsoft-apple... [2] http://techcrunch.com/2013/09/11/nest-buys-protection-licens...

shmerl8• 12 years ago

IV spends a large amount of money (billions [1]) on purchasing patents. One might reasonably expect that to encourage innovation.

I don't see how purchasing any kind of patents can encourage innovation. Innovation is encouraged by returns from the innovation, not by returns from sold patents. Recycling patents for profit is a completely parasitic business which has nothing to do with innovation.

jamra2• 12 years ago

It's more simple than that. Does IV produce anything?

If they don't have a product or a revenue stream other than suing companies, then they are parasite to the economy.

kqr2• 12 years ago

IV outsources a lot of its trolling to shell companies so it can maintain a clean image.

Check out the "When Patents Attack" series from This American Life:

http://www.thisamericanlife.org/radio-archives/episode/441/w...

k__• 12 years ago

Nest bought IV licenses to defend itself from Honeywell

lol, sounds like the mob...

baddox• 12 years ago

This is grasping at straws, but I could argue that IV has brought a lot of attention to the ludicrous nature of our IP system, which might lead to increased support of IP reform, which could help innovation.

tzs• 12 years ago

Their partner programs where they partner with inventors to fund the development of inventions, and then handle the licensing and commercialization, seem like they could help innovation. Here's a description of their partnership with Caltech [1]:

   The partnership allows Intellectual Ventures to fund
   the inventive work of students and faculty in areas of
   interest to Intellectual Ventures, such as next generation
   data centers, dynamic surgical enhancements, and green and
   sustainable chemistry. Caltech will own the resulting patents
   and IV will receive a license to commercialize the technology.
   The inventors will earn a share of the profits from inventions
   that are commercialized, and will also have an option to create
   startup companies based on their innovations.

I believe they have made similar arrangements with several other universities.

[1] http://www.intellectualventures.com/news/press-releases/cali...

asaddhamani2• 12 years ago

This is that patent troll organization right?

"the company has fallen on hard times as some of its bigger investors become less interested in buying into its funds."

Good.

ianlevesque• 12 years ago

I imagine giving patents from your portfolio to patent trolling companies (Lodsys), who then sue your client's (Apple) partners, doesn't help.

shmerl8• 12 years ago

I hope this whole racketeering workshop will be cut for good sooner than later.

lotsofmangos2• 12 years ago

"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."

Say, nice corporation you got there. Shame if anything were to happen to it.

TheMagicHorsey4• 12 years ago

IV is a garbage company trying to portray itself as a bastion of innovation.

There are certain severe "bugs" in the way our intellectual property laws work in the US. IV exploits these bugs to make Billions of dollars.

IV is not concerned with whether something is good or not. They exist to make hay while the intellectual property laws remain broken.

I had no idea they had 500 people working for them. That means that there are at least 500 people that are severely deluded, or morally repugnant.

If you are an engineer or a lawyer familiar with the patent laws in this country, you can't read the claims asserted by IV and say that they are boosting "innovation" with a straight face. What they do is a dead weight loss on our economy.

I feel sorry for the people that work at IV. They have whored themselves out for a little bit more money, instead of just working productively in this economy.

I don't know how you can show your face in front of your kids and family knowing you go to work every day in an extortion racket.

I would rather make a modest living and look at myself in the mirror with no shame.

sonoffett• 12 years ago

Do you find judgement and shame to be constructive communication tools for positive change?

Natsu• 12 years ago

They appear to be widely and successfully used tools, but I don't like them.

lotsofmangos2• 12 years ago

Well, if we look to religious texts, they have been the cornerstone of social control for millennia. There may be better tools, but judgement and shame have been undeniably effective.

TheMagicHorsey4• 12 years ago

If it shames people from joining them and filing garbage software patents, then yes.

You aren't going to convince someone that works at IV one way or another. Its not like they haven't heard the arguments before. Its just that they don't care.

letstryagain• 12 years ago

IV is an evil corporation. It does not feel pain. It cannot be reasoned with. Nathan Myhrvold struck it rich with Microsoft, then he beat cancer and now he's repaying us for all this luck by becoming the biggest patent troll the world has ever seen. Nathan is a shitstain.

programmarchy• 12 years ago

I think dogpiling Intellectual Ventures is striking at the branches, and not at the root. The problem isn’t “patent trolls.” The problem is patents:

Even if patents actually accomplished their advertised purpose — “securing for limited Times to … Inventors the exclusive Right to their … Discoveries,” as the US Constitution puts it — they’d be a very bad idea. The claim that one can own an idea is silly on its face, and not a claim that anyone would pay the slightest mind to were it not enforced at gunpoint by the state.
But the advertised purpose of patents is not their actual purpose.
Their actual purpose is to restrain competition and limit innovation so as to provide economic advantage — monopoly pricing power, in fact — to established firms who, by virtue of their ability to pay off (pardon my indelicate language; I believe the word I’m looking for is “lobby”) politicians, bureaucrats and judges, can thereby indulge their desire avoid market competition on price or quality. [1]

[1] http://c4ss.org/content/24371

dredmorbius• 12 years ago

Poisoning the fruit of those branches (those who've worked there) is absolutely fine by me.

zak_mc_kracken2• 12 years ago

The problem is patents:

No, patents are fine. The problem is that current patent laws enable patent trolls. If we could find a way to eradicate patent trolls while preserving patents, their intent would be served much better.

For example, you should only be able to acquire patents if you can prove you have a business pertinent to those patents. This kind of measure would instantly kill all patent trolls.

ejain• 12 years ago

I think dogpiling Intellectual Ventures is striking at the branches, and not at the root.

Unfortunately the branches are protecting the roots with millions of dollars in lobbying [1]...

[1] http://www.washingtonpost.com/business/capitalbusiness/paten...

ranran876• 12 years ago

Well if you assume the judicial system is corrupt - then the real problem lies in the courts - not necessarily in patents.

The claim that one can own an idea is silly on its face

You do realize that the la-la land you want to live in doesn't preclude the ownership of ideas. Trade secrets will always exist and there is no practical way to prevent their existence.

Not only do patents allow innovations to be shared - but it also opens up the limited-time monopolistic advantage to other industries. It's easy for Google to have a secret algorithm on their servers, or for KFC to have a secret recipe - but it's harder to have a secret algo in a DLL, or a secret engine in a car.

In your world, hilariously, in-house server side software development would be significantly more profitable than client side software development.

shmerl8• 12 years ago

The problem isn’t “patent trolls.” The problem is patents

It doesn't make them any less guilty. It's like saying that criminals aren't the problem, but weapons they use are.

TheMagicHorsey4• 12 years ago

I tend to agree with you.

Patents were made to protect against an injustice, but they are causing a greater injustice. The injustice they sought to protect against, is the cheating of the inventor of the fruits of his labor, by some Capitalist exploiter, who takes the invention without compensating the inventor.

Unfortunately, in order to protect against that injustice, we have created a framework that perpetuates a greater injustice. The "inventors" have become the wolves in this system, because the bar for invention is so low. And arguably there is no practical and economic system we could use to properly raise this bar. The expertise required to properly remove "trivial" patents is too expensive for the state to deploy, and is in too short supply. We need that expertise to be used to make things, not sit at the Patent Office to sort through patent applications.

Analogously, what if we were greatly troubled by bullies in American schools, and decided to deploy a system whereby highly trained monitors would follow each child around to make sure they were not bullied. The system might result in zero bullying, but the costs might be prohibitive, not only in terms of salaries for all of these monitors, but in invasion of privacy, and perhaps even persecution of innocent children that are mistakenly identified as bullies by under-skilled monitors.

If we sought to remove this system of anti-bully monitors, I'm sure we would here a giant ruckus from all the anti-bullying activists who would demand that the system be kept in place ... to stop bullying. And since bullying is such a terrible thing, we would have a hard time repealing the anti-bullying law in Congress.

And no doubt, the union of anti-bullying monitors would raise the money to lobby against us in congress, as their jobs and benefits would be under threat.

Patents were the worst "good" idea that the founding fathers had. They really fucked up bad. And I don't think we will ever be able to get out from under this shit system. The patent lawyers make too much money. The trolls make too much money. The shit-stains who file the bullshit patents and don't know how to make real products, make too much money.

And the American people don't care, because, so far, the system has just acted as a tax on engineers ... and engineers make enough money to eat. It doesn't matter to the American people that an entry level Patent associate at a big law firm makes $160,000 per year (standard and without much variation) while a software engineer that produces the patented technology makes only about $80,000. Nobody thinks there is any irony in that.

tempermanent• 12 years ago

severely deluded, or morally repugnant.

c'mon, man ... capitalism isn't as voluntary as you're suggesting. Are these really the only possibilities?

kelukelugames• 12 years ago

One of the IV execs lived in my building. He was a self-obsessed douche.

judk2• 12 years ago

One the IV lawyers gave my kid a stuffed toy. I felt dirty accepting it, once I learned the provenance.

lostcolony• 12 years ago

540 left to go.

ww520• 12 years ago

20% for 140 people. That's 700 people. Do they really need that many people to buy patents?

51Cards• 12 years ago

Intellectual Vultures would be a more apt name.

bkruse3• 12 years ago

I was part of a "partnership" with IV and MagicJack.

http://www.intellectualventures.com/news/press-releases/magi...

Even though the PR seems to say that MJ is joining the force - you can clearly see that none of the original Vocaltec/Magicjack VoIP patents have been asserted against anyone else/used as defense in any patent lawsuit. By playing ball, we were able to use their patent portfolio to defend against the MANY patent lawsuits brought against MJ. It did help in a few cases when we were sued over a number of different VoIP and USB-related patents. From what I remember, though, it was expensive to be in their alliance and you had to contribute your own patents as well. The idea itself is interesting. I think a non-profit could better fill the need for everyone sharing a big patent blanket.

bpdenimy• 12 years ago

The lawsuits that IV helped you defend against, were those from trolls or from practicing entities that had patents?

I'm asking because I would think that having a bunch of patents would only protect you against practicing entities that are in violation of random other patents just by being alive, it wouldn't really stop trolls from trolling. Do I have that right?

(Possibly an ignorant question, sorry.)

bkruse3• 12 years ago

Not an ignorant question at all!

All were from trolls/non-practicing entities except for one (which we settled). As soon as we went public, we became a target.

It would come in the form of:

"Hello, we are XYZ company are you are infringing on 1,324 of our patents related to computing and to communicating over USB - we would be happy to not move forward with our lawsuit for the sum of $500,000"

We called it the reverse nigerian prince.

It protected us from the vast majority of trolls - and it really came down to the "thump" test. The thump test is when company A asserts patents against company B. Company A comes storming in the court room (or via plain ole email) and drops it's stack of patents on top of the table. We now have to invalidate each and every claim which puts the vast majority of the burden on us. We would then turn around and drop our borrowed patent portfolio on the desk and it would thump pretty loud as well. That stopped 95% of the major patent lawsuits from moving forward, as stupid as it was. We took an aggressive stance to counter-sue for patent infringement and ALSO to invalidate via prior-art. Instead of sharks smelling blood in the water, we stopped getting the lawsuits because we aggressive sought to not only stop a lawsuit, but to invalidate the patent from ever being asserted again due to prior art which could be applied in any future patent lawsuit case (and in some instances, would invalidate the patent or have it "re-examined")

Unfortunately, I feel there is still a very vulnerable phase of small business between profitable and not profitable enough to employ these strategies. As the MJs of the world (~$200M market cap) start to adapt - the trolls simply get change their nigerian email to $100,000 instead of $500,000 and start working their way down to smaller companies.

thinkcomp• 12 years ago

Here's a list of their shell companies:

http://www.plainsite.org/tags/intellectual-ventures-shell-co...

lawnchair_larry• 12 years ago

How did you miss LodSys?

anactofgod• 12 years ago

I'd be curious to know what returns have IV realized for it's investors to date?

Also, "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."? Sounds like an extortion racket.

zak_mc_kracken2• 12 years ago

Companies could buy into the fund, and in exchange, it potentially received legal protection from the patent portfolio.

This is like a gun company asking you to invest in them and in exchange, they guarantee their guns won't be used to attack you.

There's a word for this kind of practice: extortion.

If anything, I'm sad that the 140 people being laid off only represent 20% of that scum company.

MattyRad• 12 years ago

Kind of eerie when you realize you're looking into the portrait of someone without any conscious or ethics.

I have little sympathy for the employees that got laid off, and am reassured that IV is finding it harder to operate. However, it's a bit disconcerting that they've claimed to "automate" their process.

aswanson• 12 years ago

I dont get Myhrvold. He was wealthy beyond all get-out and, judging by his educational background, was probably intellectually curious at one point in his existence. Why would he direct the fall/winter of his life energy into this bullshit?

judk2• 12 years ago

Because he likes money, and likes what money buys, and likes what LOTS of money buys.

It's not unusual by any means. Morally bankrupt, but not unusual.

adventured• 12 years ago

It's entirely plausible - perhaps very likely - Myhrvold believes in what he's doing, believes in patents, believes patents help innovation, and so on.

The world is filled with billions of people that believe truly crazy things, plenty of those people are smart and successful.

shmerl8• 12 years ago

Myhrvold believes in what he's doing, believes in patents, believes patents help innovation, and so on.

I strongly doubt that. It's more likely that believes in filling his pockets using crooked means.

shmerl8• 12 years ago

Simple. Being a parasite feeds his greed more than doing something useful for society.

TheMagicHorsey4• 12 years ago

I believe its a deep feeling of inadequacy. We are not his peers. He considers Gates and Jobs as his peers.

I suspect that despite his achievements he may have felt a bit like a peasant in their presence.

He may have wanted to achieve their fame and wealth.

He thought IV would be a good vehicle to achieve fame and fortune. I think he may not have understood the deep revulsion of the engineering world towards his methods.

He may have initially thought we would consider him a savior working for our benefit ... after all I think he used to believe he was doing it for "inventors".

Now he is too far gone probably. He either no longer cares what engineers and the world thinks, or he has deluded himself into thinking that his scamming is good for the world.

Either way, he will probably carry this infamy to his grave.

Although, I have to say, our country has a way of rehabilitating robber barons who give their wealth away. So his end-game may be to take his enormous wealth and use it to destroy some terrible affliction of mankind.

I think it would be a triumph, and perhaps ironic(?) if he took his wealth and used it to reform the patent system.

But short of that, he will probably be remembered by those of us in the tech and legal fields as a scammer and a scumbag of epic proportions, who was protected in his thieving by the laws of the USA. In any other time or place, such a man would have been tarred and feathered by a posse of his community for his conspiracies and crimes.

inthewoods• 12 years ago

Wow - I don't think I've ever seen a company discussed on HN that didn't have a single defender. IV may be the most hated company ever!

shmerl8• 12 years ago

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.

This is such a brazen shakedown, it's not even funny. Are there any laws which can be applied to prevent this?

Intellectual Ventures cuts 140 employees from its patent-buying workforce

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