Tech giants give patent buyer 'war-chest'
Patent buyer Intellectual Ventures (IV) has persuaded Microsoft and Sony to invest in its latest acquisition fund while Apple and Intel, which invested with IV previously, declined to participate, according to people briefed on the fundraising.
The investment decisions by four iconic technology companies come in the midst of a heated debate over whether it is too easy for patent owners to extract large royalty payments, and whether patent buying firms spur or stifle innovation.
Last year, IV curtailed patent acquisitions as it sought new investors, and IV now is ramping up, say three sources familiar with IV's activity in the patent market.
"Microsoft and Sony's investments give IV a fresh war-chest to buy new patents," said Kevin Jakel, chief executive of Unified Patents, which advises tech companies on alternatives to patent aggregators like IV.
But Apple and Intel's decision is significant because the biggest tech companies have supported IV in the past.
"This would be a dramatic departure," Jakel said.
Intellectual Ventures declined to discuss investments. Microsoft, Sony, Intel and Apple also would not comment. It is unclear whether Intel and Apple could still opt to invest in IV's vehicle at a later time.
Created in 2000, Intellectual Ventures has raised about $6bn and acquired 70,000 patents and other intellectual property assets. The company is seeking to raise $3bn more, a 2013 investor presentation reviewed by Reuters shows.
Over the years, IV and other firms like it have faced criticism from some in the technology industry, who argue that firms like IV, which do not primarily make products, exploit the patent system by demanding royalties and threatening litigation.
IV argues that by buying patents from inventors it creates a mechanism for them to capitalise on their ideas. Several large tech companies previously invested in IV, which gave them low-cost licences to IV's vast patent portfolios as well as a portion of royalties IV collected.
Microsoft, Sony, Apple and Intel all invested in IV's previous funds, court filings show.
Prior to co-founding IV, Nathan Myhrvold was chief technology officer at Microsoft working closely with Bill Gates. Another IV co-founder, Peter Detkin, was previously an Intel in-house lawyer.
IV's fundraising comes as a proposal to make it easier to fight patent lawsuits passed the US House of Representatives last year and is pending in the Senate Judiciary Committee.
Some companies like Google publicly supported the bill, which included a provision to make it easier for the winner of a patent lawsuit to recover legal fees. Google invested in IV's first fund in 2003 but has said it declined to participate in subsequent ventures. IV sued Google's Motorola Mobility unit in 2011, and that litigation is ongoing.
Microsoft and Apple, meanwhile, were among seven major corporations that warned last week that some of the bill's provisions could weaken the patent system and hurt innovative companies. (Reuters)