Intellectual Ventures Claims It's Misunderstood: It's Really Just Trying To Help Everyone Sift Through And Find Good Patents

from the that's-all-bullshit dept

Intellectual Ventures is at it again -- playing the "oh, little innocent us? we're not doing anything that should really concern anyone" card in the press. Wired is running an op-ed by Raymond Hegarty, IV's "VP Of Global Licensing in Europe." He's a long term patent maximalist... and it shows. The article is entitled: Intellectual Ventures: Why the Patent System Needs Aggregators Like Us, which should give you an idea of the fanciful rewriting of history you're about to read.

The U.S. patent system borrowed from mainland Europe a concept that had evolved over hundreds of years: the “moral right” for inventors to protect their ideas. But America's founders went even further – they also included the obligation for inventors to publish.

This extra part of the deal was ingenious: It has been key to America's history as a global leader in innovation.

Except, of course, that patents weren't actually based on "moral rights" at all. Hegarty is making that part up. It was an economic right designed solely for the purpose of "promoting the progress" of "the useful arts." And, yes, it had a disclosure component -- which would be brilliant if it worked. But it doesn't. Especially in the technology industry where IV holds most of its patents. Time and time again we've seen the same thing. No one in technology learns anything from looking over broadly written patents full of legal phrases that mean nothing to engineers. It's not uncommon to hear engineers say that they don't even understand what's in their own patents, once the lawyers get through reworking them. The whole idea that patents disclose things is a myth.

If Hegarty really wanted patents to disclose things, he'd support the idea that any software code covered by a patent had to have the original, working source code be submitted with the patent. Of course, that would make an awful lot of IV's patents not worth very much, since they could no longer be used to shake down companies which are actually innovating.

Because inventors were incentivized by protection, yet still obligated to publish, their ideas became available for everybody to see. Not only did this increase the global pool of knowledge, it also allowed follow-on developers to avoid the blind alleys experienced by the original inventor.

Again, this is part of the myth -- but it's bunk, as most engineers will tell you. It's much, much easier to learn from other products just by looking at those products or reverse engineering what they do, rather than reading over the patent. Hegarty is simply making up a world that does not exist.

The published patent also provides a roadmap to further innovation: the work-around. When developers become too enamored with popular features, they stop innovating. By preventing access to such successful features, patents conversely force competitors to come up with the new ideas or workarounds that lead to fresh innovation.

Another myth with no real support. The idea that developers become "too enamored with popular features" and only innovate because patents block them from staying enamored is laughable. It makes you feel like he's never spent any time with any living engineers or innovators. People innovate for a variety of reasons, and the idea that people don't try something new unless forced to by a patent limitation is simply ridiculous. Studies have shown that the driving causes of innovation are self-need first of all and to stay ahead of the competition second. Both of those give plenty of reasons for innovation without the artificial restriction of a patent.

Having started out his article by rewriting history and how and why people innovate, he then goes on to suggest that in such a purely mythical world, massive, obnoxious patent trolls like the one who pays his salary don't just have a place, but are somehow vital to the system.

But as technologies converge and the products we use become increasingly complex, the system needs intermediaries within the market – companies like Intellectual Ventures – to help sift through and navigate the published landscape. By developing focused expertise, these patent licensing entities and intermediaries can function as patent aggregators, assembling portfolios of relevant inventions and providing access through licensing.

Don't you see? Intellectual Ventures didn't just buy up 30,000 or so patents from a bunch of universities struggling to defend their overeager decisions to set up tech transfer offices just for the sake of shaking down actual innovators -- it did it to help companies "sift through and navigate" the patent "landscape." This is the point at which most normal, living, thinking people who are familiar with the patent system call this out for what it is: bullshit. 100% bullshit.

No company is going to Intellectual Ventures and paying them upwards of $100 million to have IV help them sift through the patents that are out there, to better understand the "disclosures" so they can further innovate. They're paying up to avoid getting sued and hit with a judgment that could be many hundreds of millions of dollars. In more colloquial language, this is generally known as a shakedown. But, thanks to our patent system, it's a "legal" form of a shakedown.

Yes, sometimes aggregators have to go to court to protect their patent rights – and get labeled with all kinds of nasty names for doing so.

Oh, Hegarty, be fair now: people were calling Intellectual Ventures a patent troll since long before it started suing companies. And no one is calling you nasty names for going to court. We're calling you nasty names for abusing the system massively to take money away from actual innovators to move it to those who have done nothing to move the market forward.

He then goes on to wax rhapsodic about the wonderful smartphone and how it's just so chock full of patent goodness. And, you see, what that really means is not that there are tons of companies abusing the system, but that the little guy -- the mythical sole inventor laboring away in his garage -- is somehow at risk of not getting his due, if it weren't for the kindly and benevolent likes of Intellectual Ventures... here to save the day.

Patent aggregators sift through the issued patents with an expert eye, and provide efficient access to the long tail of patents. When tens of thousands of patents touch a product, hundreds of inventors spread around the globe deserve to be paid. But in the race to market, product companies often ignore the long tail; small inventors have very little power to do anything about this unless they can enlist the help of patent aggregators.

In other words: please small-time patent holder, sell us your patent, so we can shakedown big companies for more money. The whole idea that anyone at Intellectual Ventures "sifts through" its patents with an "expert eye" for the sake of helping companies innovate is laughable. They look to bundle as many patents together as possible, so that they can go to companies and use the modern equivalent of the famous line from an IBM lawyer to Sun execs back in the day: "OK, maybe you don't infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?"

It's notable, by the way, that last year, when the reporters at This American Life did their episode all about patent trolls, mainly focusing on Intellectual Ventures, and they asked the company to give them any evidence of individual inventors helped along by IV, the company could only come up with one name, and when TAL tried to track that guy down, they discovered nothing to support the claims at all, but rather another troll case with a questionable patent being used to shake down actual innovators.

But aggregators, in order to maximize returns from the patents they've acquired, are incentivized to package and license patents as broadly as possible. If patents are available to all-comers, not just used to exclude, companies can focus on improving their products and competing through innovation.

You have to sit back and wonder if Hegarty actually believes this stuff or if he's really just getting a chance to exercise the more "creative" muscles in his writing skills. The company has done more to block competing through innovation than probably anyone else. It's done more to funnel money that could have gone towards actual innovation into the wallets of its own execs and investors. No one is running to IV because they think that it will help them "improve their products." In talking to lots of companies who have dealt with IV over the years I've never, not once, come across one who did a deal with the company eagerly or for the sake of helping them innovate. No, everyone does it for one reason only: to not get sued (or, possibly, to have access to patents to hit back against others who sue). IV isn't helping innovation, it's trying to monopolize the arms dealership business in the patent wars. And it's laughing all the way to the bank.

Despite this complexity, we must maintain the founding principle of the U.S. patent system – providing an incentive for inventors to create without fear of being ripped off. Only then can inventors continue to focus on doing what they do best: inventing. Society benefits when the value of ideas is recognized.

Society benefits when innovative products are brought to market and people who want them buy them in a free market. Society does not benefit when one company buys up a ton of useless, broad and vague patents that have nothing to do with the innovative products on the market, and then demands cash from companies if they don't want to get sued.

Aggregators also provide a signal to the market as the debate around patent quality continues. Every time Intellectual Ventures purchases a patent, we are making a bet that it is a quality patent. We purchase only 15 percent of the tens of thousands of patents we review, drawing on and continually building the expertise of our acquisitions team. Sometimes patents come as a package deal so we have to buy 10 to get the six or seven we really want, which is why only 40,000 of our 70,000 assets are in active licensing programs. But we continuously prune our portfolio to maximize quality – thus helping the market navigate the long tail of patents.

Translation: yes, some patents are so bad that even we can't figure out ways to misread what they were supposed to cover into pretending they cover something entirely different.

Ultimately, the users of those products – you – are the ones who benefit.

By paying a tax that increases the cost of the products you buy by a massive amount.

The whole thing is, once again, ridiculous. It's based on myths and an attempted rewriting of what's actually happening. It's sick and it's cynical to make such claims knowing full well that the only thing that Intellectual Ventures is doing for this market is sucking money out of actual research and development.

Filed Under: efficiency, patent trolls, patents, raymond hegarty
Companies: intellectual ventures