Intellectual Ventures and the Growing IP Monetization Community

We noticed over the last two years an increase in investment houses to invest in IP as an asset class showing quite interesting and different risk profiles. We continue to see parties tapping on this new interest finding appropriate business models to develop IP monetization strategies. The different models become clearer by time. We have the non practicing entities. We blogged earlier about this. As a category its way too diverse to be a helpful “definition”. The term “Patent troll” is something we just do not want to talk about anymore, as it’s a non sensical term, it does not help to distinguish between the good and the bad, nor does it help the upcoming monetization community to advance the business nor the understanding of the public of those business concepts. It puts IP in an unwarranted and unjustified bad light and its grist to the mill of the Anti-Patent community.

We have the brokers, often by themselves or in small entities, trying to sell patents (much less to assisting purchasing patents). We also have the large number of mainly US law firms who want to “assist” small inventors with out-licensing of their inventions to the Big Wicked Industry. We have IP investors-pur-sang who promote a more “marketing” approach to monetization.

Then of course we have those companies collecting patents at a (very) large scale, like Intellectual Ventures, but also collectors with purely “defensive” goals, like Allied Security Trust, led by Brian Hinman (ex-IBM).

A recent interview with IV’s CEO, Nathan Myhrvold, in The Wall Street Journal gives an interesting behind the scenes look into what has become one of the biggest Patent Collectors. Myhrvold promotes a moral argument where a formal legal argument is more appropriate and that may upset people. Inventions in the common-sense meaning can emerge independently many times, may places. IV has taken the business model of collecting them clustering them and licensing out in a cross licensing, annex contributory business model that monetizes IP in a very clever way.

One can be quite sure that Intellectual Ventures’ “clients” would have been happy to deal with the individual patent owners rather than this entity. Of course, everybody in the industry saw this coming when IV starting collecting all these patents. On the face of it, we don’t think there is anything fundamentally wrong about this. On the contrary, we blogged before saying that it only shows that there is a huge underutilization of valuable IP in many places, being it universities, SMEs but even large companies, that need to be “marketed”. Lying around doing nothing is not where the inventions were meant for in the first place.