Startup Holds Nose, Pays Up To Intellectual Ventures To Get Patents It Needs In Patent Fight

from the that's-not-how-the-patent-system-is-supposed-to-work dept

Intellectual Ventures is the infamous company founded by former Microsoft CTO Nathan Myrhvold to hoard patents on a massive scale and to basically get companies to pay up "protection money" to (1) keep those patents from being used against them and (2) let them use those patents against others. While for years Myrhvold insisted that Intellectual Ventures was avoiding lawsuits, we have seen IV patents showing up in lawsuits lately. The first one was last year, involving a patent IV had sold, but it wasn't clear if it still had an interest in any awards or settlements received. It has become clear that the company has set up over 1,000 shell companies, however, so that makes it more difficult to know sometimes.

However, there have been two cases of IV patents officially involved in lawsuits lately, and both are on the "defensive" side. The first was back in March, where IV sold some patents to Verizon that it could use in its fight against TiVo. TiVo had sued Verizon, but since Verizon had paid IV some huge amount of money (hundreds of millions of dollars), it had the right to pick from IV's patent portfolio to sue back. That same thing appears to be happening again, though, this time with a smaller company who wasn't already an IV member. Speech to text company Vlingo was sued by speech recognition software giant Nuance for patent infringement, and now Vlingo has paid Intellectual Ventures to "join" and to get patents back, which it can use to fight back against Nuance.

Now, you might consider this situation to be slightly better than using IV's patents to directly sue, but it actually makes the whole situation a lot worse. Basically, IV is about patents for hire, at a super high premium. This has nothing whatsoever to do with encouraging innovation at all. Instead, IV has every incentive in the world to see more wasteful lawsuits, so more companies feel the need to pay up to grab some patents. It's making a complete farce of the already troubled patent system.

Even Vlingo, the company that just paid up, seems to recognize this. In commenting about the "deal," Vlingo's CEO said:

"Our patent system in America is horribly broken. If we had a rational patent system, there wouldn't be a place in the market for Intellectual Ventures. It's a shame they even need to exist."

Indeed. When your newest "customers" admit it's a shame you need to exist, it seems pretty evident that what you're doing is not benefiting society at all, but causing more harm.

Filed Under: patents, protection money
Companies: intellectual ventures, nuance, vlingo