The Two Sides of Intellectual Ventures
The Two Sides of Intellectual Ventures
The Two Sides of Intellectual Ventures

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    Breaking down the two completely opposing sides of Intellectual Ventures and showing once again that we need patent reform.

    What is Intellectual Ventures? The stories have been so divergent that people might as well be talking about two different companies.  

    Intellectual Ventures describes themselves as an “invention capital company.” On their website they write, “Like a venture capitalist, part of our business is focused on funding the creation of new ideas.” Why? “We believe that ideas are valuable. We’re creating a market where patents have value.”

    Journalists, the tech community, and stakeholders feel otherwise. As Mike Masnick said while summing up an article by Jeff Roberts from GigaOm, “Intellectual Ventures’ entire business is focused on screwing over innovators by charging them an often-substantial tax by bundling together tens of thousands of broad patents.”

    So, how can we explain these two completely opposing views of one company? It really boils down to a major ideological difference in what patents mean to society.

    Nathan Myhrvold is the President and CEO of Intellectual Ventures.  Last week in a luncheon panel on Capitol Hill, he explained Intellectual Ventures’ business practices. He asserted that inventions in themselves have intrinsic value that makes the pursuit of patents, standing alone, a worthy exercise.

    But he’s wrong. Patents and inventions, while certainly a component of innovation, mean very little without being implemented.  Patents should be seen as a means to an end, the end being access to knowledge, technology, and further innovation.

    During Mr. Myhrvold’s panel he went on to detail that the purpose of Intellectual Ventures is to fund invention. Much like the venture capitalists of Silicon Valley, who inject money into startups to build great technology companies, he sees himself as an “invention capitalist” who injects money into inventions to create patents.

    At first glance, this might sound like a good idea. Increasing the value of patents, that’s a good thing right? After all, we celebrate Thomas Edison, who built a whole business around acquiring patents. Intellectual Ventures’ underlying principle is that an invention, a patent, standing alone, is a valuable thing. But is it?

    The value of an invention does not come from merely coming up with an invention. And it definitely doesn’t come from writing that idea in vague and technical language to file in the impenetrable cabinets of the Patent Office. The value comes from using the invention. Using the invention to build a technology startup. Using the invention to market an idea to the big company. Using the invention to educate the next generation of students so they can build inventions of their own.

    Certainly the best of society uses inventions for these noble purposes. Entrepreneurs, universities, and to an extent even Intellectual Ventures use their patents to foster development of actual technologies. But this does not always happen. Certainly, in the case of Intellectual Ventures, who holds upwards of 36,000 patents, but markets not a single product, not always.

    Intellectual Ventures is giving you the good side of the story. They say that they are champions of invention and they’re quick to point out their health and medical research. Everyone else in the battle for patent reform sees the other side. The side that preys on businesses without penalty, that buys up patents to sue innovators building companies, and that ultimately keeps innovation at a standstill while raking in massive profits.

    This is why we need patent reform. We need laws that defend small businesses from patent trolls like Intellectual Ventures, and uphold the value of innovation and productive use of patents, which ultimately puts new products and services into the hands of consumers. Because when a company like Intellectual Ventures sits on technologies and patents, waiting for someone to independently make a product to become unintentional fodder for a lawsuit trap, there is no benefit to knowledge, consumers, or to society.