EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

02.22.10

Intellectual Ventures “a Combination Mob Protection Racket + Ponzi Monetization Scheme”

Posted in Bill Gates, Microsoft, Patents at 9:22 am by Dr. Roy Schestowitz

Nathan Myhrvold

Summary: People who are personally or distantly familiar with Microsoft’s patent troll Nathan Myhrvold openly explain what he is doing

THE firm called Intellectual Ventures, which is backed by Gates’ investment vehicle (mentioned earlier this morning) and typically described as a Microsoft-created patent troll, is a lot more than just that. It is connected to 1,000+ other entities such as Bill Gates’ Searete and people who claim to have “had some direct experience with Myhrvold’s group” have a lot more to say. It adds to what we wrote about the New York Times article a few days ago.

The Against Monopoly Web site refers to that same article which reveals the lesser-known sides of Intellectual Ventures:

Is this just a patent troll or a new way to extract money from everybody?

[...]

It doesn’t sound to me like Myhrvold has much interest in the poor inventors. Rather, he just seems to want their patents so he can make piles of money suing manufacturers.

One reader of ours says that “Intellectual Ventures & Myhrvold [are a] fraud worse than patents trolls” and he points to this first comment from the Against Monopoly Web site (written by “Repentant Patent Owner”):

Having had some direct experience with Myhrvold’s group (and hence my desire to remain anonymous), I suggest the following. “Patent troll” is too simplistic and limiting. Think of IV as a combination mob protection racket + ponzi monetization scheme.

The goal is build an increasing portfolio of interlocking patents under control through a kind of pyramid scheme. Eventually the principals (Myhrvold, Gates, others) will cash out later. The patents are rarely held directly, instead they are held in an elaborate pyramidal network of LLC’s, LLP’s, etc.

The mob protection racket is in the form of thier pitch to current patent owners & potential licensees: “we’ve never sued for infringement, but of course a few of our patents have been sold to folks who do sue for nasty damages. Be a shame if anything would happen to your nice business, eh? Why not join us as a licensee AND investor? I’m sure we can make sure no patents of interest to you end up with the nasties.”

The idea is to get patent-owning firms (particularly multi-patent owners) to agree to sell ownership of the patents to IV, but also to get them simultaneouslyh INVEST in LLP’s that buy more patents. More investors means more $ to buy more patents, which brings more investors, which (especially when leveraged) brings more patents, which, …. until (someday) they have all the patents (of course Myhrvold & Gates are gone by then). All along the way, IV takes substantial mgt fees for managing all these portfolios & LLP’s.

No, IV isn’t a troll per se. It’s probably worse long-term for the larger economy. Kind of like how some of the worse Wall St creatures haven’t been extorting per se, but when you put together a pyramid of SIV’s levering off each other and buying Mortgage backed securities and then artificial derivatives based off the already derivative securities, all with 1% capital you get something not very healthy for the economy, but enormously profitable for the bank that manages the setup for fees.

If it is indeed a pyramid scheme, then it should be treated as such, despite the massive PR and lobbying that Intellectual Ventures is doing. The president of the FFII points out that “Even the average reader of the Harvard Business Review has a gut appreciation for the fundamental unfairness of software patents.” He points to this VC who speaks about Intellectual Ventures in response to that same report from The New York Times:

Software patents are the problem not the answer

[...]

Nathan supports this argument by comparing the current market for intellectual property to the early days of the computer industry. He argues that in the 1970s people did not believe the software industry could be an independent business and that it would always be linked to hardware. He says that software industry developed for two reasons. First, software vendors persuaded software users to respect intellectual property rights through both education and lawsuits, and second, the vendors overcame system incompatibilities and developed solutions that would work on different computers. Nathan suggests that a market for inventions would emerge if the same two conditions are met, and then offers his company Intellectual Ventures as a model for how to meet them.

I do not agree. Here’s why.

Let’s start with software analogy. Put aside the fact that in the 70′s software vendors used copyright law to prevent the outright copying of their software and not patents as Nathan proposes to do. The real reason the independent software industry emerged is that operating systems and APIs made it possible for independent software vendors to develop applications independently. They no longer had to ask permission of the hardware vendors. This same characteristic of permissionless innovation led to the explosion of independently created services on the internet. The rampant abuse of the patent system has created the opposite condition for the creators of software and web services today.

Here is Brad Feld’s take on it:

Perhaps Mr. Myrhvold recognizes this, because in the article he says “I’m trying to get inventions that kind of respect as an economic entity.” (Emphasis added).  IV apparently incentivizes innovation on…inventions?  “Inventions” are actually a term of art in patent law, they are the things for which one can legally be granted patent rights.  IV, therefore, seems to admit that it wants to enforce patent rights so that we can…have more patents.  Mr. Myhrvold wants to create an entire economic category based on payments to entitles that don’t build, produce, sell, etc, any products, or create anything of value (i.e., that don’t innovate, at least in any useful way that advances human progress), in exchange for not being sued on exclusionary patent rights.

Groklaw quotes from the article a part which says: “In the article and in conversation, Mr. Myhrvold describes the patent world as a vastly underdeveloped market, starved for private capital and too dependent on federal financing for universities and government agencies, which is mainly aimed at scientific discovery anyway. Eventually, he foresees patents being valued as a separate asset class, like real estate or securities.”

“A new way to gamble at the public’s expense, as I see it.”
      –Pamela Jones, Groklaw
Pamela Jones mocks this comparison to “real estate”. “Is he kidding,” she asks, “After what investors/bankers/hedge funds in real estate did to the world’s economy? He wants to do that with patents? A new way to gamble at the public’s expense, as I see it.”

One of our readers, the one who wrote a short article about Myhrvold glorification in some gullible Web sites, points to this followup and calls it “More vacuous glorification of Gates and Myhrvold, “The Dawning of the Age of Biology” is a dinner that makes me want to gag. There’s a nice picture of Gates looking nasty, but the text is gibberish. It is not surprising to see Huffington Post people at such a gathering, but it is sad to see BoingBoing getting suckered by the “shoulder rub”. Jardin might want to take a shower to wash that rub off if she thinks of what Microsoft business methods will do to medicine and food.”

Yes, those old PR stunts of Myhrvold do receive some attention and the same goes for Gates (coverage from The GigaOM Network which was paid by Microsoft). The writers seem not to pay attention to what really happens out there (lack of context) and overall, the problem is no longer just Microsoft because the Gates family is spreading to other abusive monopolies and even funds/creates this patent menace that Myhrvold is engineering.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. More Media Reports About Decline in Quality of European Patents (Granted by the EPO)

    What the media is saying about the letter from Grünecker, Hoffmann Eitle, Maiwald and Vossius & Partner whilst EPO communications shift attention to shallow puff pieces about how wonderful Benoît Battistelli is



  2. Beware Team UPC's Biggest Two Lies About the Unitary Patent (UPC)

    Claims that a Unified Patent Court (UPC) will commence next year are nothing but a fantasy of the Liar in Chief, Benoît Battistelli, who keeps telling lies to French media (some of which he passes EPO money to, just like he passes EPO money to his other employer)



  3. Diversity at the EPO

    Two decades of EPO with 16-17 years under the control of French Presidents (and nowadays predominantly French management in general with Inventor Award held in France almost half the time) is "diversity at the EPO"



  4. Orrin Hatch, Sponsored the Most by the Pharmaceutical Industry, Tries to Make Its Patents Immune From Scrutiny (PTAB)

    Orrin Hatch is the latest example of laws being up for sale, i.e. companies can 'buy' politicians to act as their 'couriers' and pass laws for them, including laws pertaining to patents



  5. Links 17/6/2018: Linux 4.18 RC1 and Deepin 15.6 Released

    Links for the day



  6. To Keep the Patent System Alive and Going Practitioners Will Have to Accept Compromises on Scope Being Narrowed

    35 U.S.C. § 101 still squashes a lot of software patents, reducing confidence in US patents; the only way to correct this is to reduce patent filings and file fewer lawsuits, judging their merit in advance based on precedents from higher courts



  7. The Affairs of the USPTO Have Turned Into Somewhat of a Battle Against the Courts, Which Are Simply Applying the Law to Invalidate US Patents

    The struggle between law, public interest, and the Cult of Patents (which only ever celebrates more patents and lawsuits) as observed in the midst of recent events in the United States



  8. Patent Marketing Disguised as Patent 'Advice'

    The meta-industry which profits from patents and lawsuits claims that it's guiding us and pursuing innovation, but in reality its sole goal is enriching itself, even if that means holding science back



  9. Microsoft is Still 'Cybermobbing' Its Competition Using Patent Trolls Such as Finjan

    In the "cybersecurity" space, a sub-domain where many software patents have been granted by the US patent office, the patent extortion by Microsoft-connected trolls (and Microsoft's 'protection' racket) seems to carry on; but Microsoft continues to insist that it has changed its ways



  10. Links 16/6/2018: LiMux Story, Okta Openwashing and More

    Links for the day



  11. The EPO's Response to the Open Letter About Decline in Patent Quality as the Latest Example of Arrogance and Resistance to Facts, Truth

    Sidestepping the existential crisis of the EPO (running out of work and issuing many questionable patents with expectation of impending layoffs), the PR people at the Office choose a facts-denying, face-saving 'damage control' strategy while staff speaks out, wholeheartedly agreeing with concerned stakeholders



  12. In the United States the Patent Trial and Appeal Board, Which Assures Patent Quality, is Still Being Smeared by Law Firms That Profit From Patent Maximalism, Lawsuits

    Auditory roles which help ascertain high quality of patents (or invalidate low-quality patents, at least those pointed out by petitions) are being smeared, demonised as "death squads" and worked around using dirty tricks that are widely described as "scams"



  13. The 'Artificial Intelligence' (AI) Hype, Propped Up by Events of the European Patent Office (EPO), is Infectious and It Threatens Patent Quality Worldwide

    Having spread surrogate terms like “4IR” (somewhat of a 'mask' for software patents, by the EPO's own admission in the Gazette), the EPO continues with several more terms like “ICT” and now we’re grappling with terms like “AI”, which the media endlessly perpetuates these days (in relation to patents it de facto means little more than "clever algorithms")



  14. Links 15/6/2018: HP Chromebook X2 With GNU/Linux Software, Apple Admits and Closes a Back Door ('Loophole')

    Links for the day



  15. The '4iP Council' is a Megaphone of Team UPC and Team Battistelli at the EPO

    The EPO keeps demonstrating lack of interest in genuine patent quality (it uses buzzwords to compensate for deviation from the EPC and replaces humans with shoddy translators); it is being aided by law firms which work for patent trolls and think tanks that propel their interests



  16. Grünecker, Hoffmann Eitle, Maiwald and Vossius & Partner Find the Courage to Express Concerns About Battistelli's Ugly Legacy and Low Patent Quality

    The astounding levels of abuse at the EPO have caused some of the EPO's biggest stakeholders to speak out and lash out, condemning the Office for mismanagement amongst other things



  17. IAM Concludes Its Latest Anti-§ 101 Think Tank, Featuring Crooked Benoît Battistelli

    The attack on 35 U.S.C. § 101, which invalidates most if not all software patents, as seen through the lens of a Battistelli- and Iancu-led lobbying event (set up by IAM)



  18. Google Gets Told Off -- Even by the Typically Supportive EFF and TechDirt -- Over Patenting of Software

    The EFF's Daniel Nazer, as well as TechDirt's founder Mike Masnick, won't tolerate Google's misuse of Jarek Duda's work; the USPTO should generally reject all applications for software patents -- something which a former Commissioner for Patents at the USPTO seems to be accepting now (that such patents have no potency after Alice)



  19. From the Eastern District of Texas to Delaware, US Patent Litigation is (Overall) Still Declining

    Patent disputes/conflicts are increasingly being settled outside the courts and patents that aren't really potent/eligible are being eliminated or never brought forth at all



  20. Links 13/6/2018: Cockpit 170, Plasma 5.13, Krita 4.0.4

    Links for the day



  21. When the USPTO Grants Patents in Defiance of 35 U.S.C. § 101 the Courts Will Eventually Squash These Anyway

    Software/abstract patents, as per § 101 (Section 101) which relates to Alice Corp v CLS Bank at the US Supreme Court, are not valid in the United States, albeit one typically has to pay a fortune for a court battle to show it because the patent office (USPTO) is still far too lenient and careless



  22. Buzzwords and Three-Letter Acronyms Still Abused by the EPO to Grant a Lot of Patents on Algorithms

    Aided by Microsoft lobbying (with its very many patent trolls) as well as corrupt Battistelli, the push for software patenting under the guise of "artificial intelligence" ("AI") carries on, boosted by Battistelli's own "Pravda" (which he writes for), IAM Magazine



  23. The United States is Far Better Off With the Patent Trial and Appeal Board (PTAB), So Why Do Lawyers Attack It?

    The anti-PTAB lobby (which is basically the pro-troll or pro-litigation lobby) continues to belittle and insult PTAB, having repeatedly failed to dismantle it; in the meantime PTAB is disarming several more patent trolls and removing from the system patents which were granted in error (as well as the associated lawsuits)



  24. Links 12/6/2018: Neovim 0.3 and Wine 3.10

    Links for the day



  25. Corrupt Benoît Battistelli Promotes Software Patents in IAM's Patent Trolls-Funded Event in the United States

    With less than 3 weeks remaining for Battistelli's term he engages in gross revisionism, lobbying, and even looting of the patent office



  26. The EPO's 'Expert' Georg Weber is Still Advocating Software Patents in Europe (But He Disguises Them Using Buzzwords)

    The EPO's overzealous support for software patents continues unabated while the European Parliament looks the other way; this is part of the plan to expand patent scope in Europe and flood the continent with low-quality patents (causing a ruinous litigation boom like in China)



  27. Battistelli's EPO is Outdoing North Korea When It Comes to Propaganda and Abuses Against Staff

    Battistelli’s ‘scorched Earth’ approach — his sole legacy at the EPO — has left many workers in mental breakdowns (if not dead), but to celebrate the ‘Battistelli years’ three weeks before the end of his term the Office issues new propaganda material (pertaining exclusively to the Battistelli years, 2010 to 2018) while Battistelli-leaning media offers ‘cover’



  28. IPBC, a Patent Trolls-Funded Event of IAM, is Advancing the Attacks on Section 101/Alice

    Andrei Iancu preaches to the litigation 'industry' in an event (lobbying opportunity) organised by the patent trolls' lobby, IAM



  29. PTAB Carries on Undeterred and Unabated, Courts Are Becoming Less Tolerant of Low-Quality Patents

    With the shift away from the Eastern District of Texas (EDTX) and with PTAB applying growing levels of scrutiny to patents the likelihood that abstract patents will endure at the patent office or the courts is greatly diminished



  30. Apple v Samsung Not Over, Hearing on a New Design Patent Trial Next Month

    Apple's legal battles against phones that have Linux inside them simply aren't ending; meanwhile, there's more evidence that Apple would be wise to simply push for patent reforms, namely further restrictions on patent scope


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts