News / Economy

Microsoft, Apple Diverge on Bankrolling Big Patent Buyer

FILE - Bill Gates (R) and former Microsoft chief technology officer and co-founder of Intellectual Ventures Nathan Myhrvold (L) speak while reviewing the displays at the
FILE - Bill Gates (R) and former Microsoft chief technology officer and co-founder of Intellectual Ventures Nathan Myhrvold (L) speak while reviewing the displays at the "Reinvent the Toilet Fair" competition at the Bill and Melinda Gates Foundation.
Reuters
Patent buyer Intellectual Ventures 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 comes 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 $6 billion and acquired 70,000 patents and other intellectual property assets. The company is seeking to raise $3 billion 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 capitalize on their ideas. Several large tech companies previously invested in IV, which gave them low-cost licenses to IV's vast patent portfolios as well as a portion of royalties IV collected.
 
Microsoft Corp, Sony Corp, 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 House of Representatives last year and is currently pending in the Senate Judiciary Committee.
 
Some companies like Google Inc 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 which warned last week that some of the bill's provisions could weaken the patent system and hurt innovative companies.
 
Amy Landers, an intellectual property professor at University of the Pacific McGeorge School of Law, said Apple and Intel's decision on IV's latest fund was probably unrelated to the political debate on patent reform.
 
“The companies that are not investing in the fund have probably just found better uses for their money,” Landers said.
 
At the end of 2012 the average rate of return for IV's 2003 fund was 16.2 percent, while the 2008 fund stood at 2.5 percent, according to the 2013 investor presentation. In a court filing last year, Intellectual Ventures said it has earned more than $3 billion to date in licensing fees.
 
Patent buyers also are facing some competition from companies like Unified Patents, which argue that tech companies should try to invalidate threatening patents instead of just financing aggregators like IV to acquire them.
 
“I think there's a recognition by a lot of companies that simply trying to buy your way out of the problem is like bailing water from a sinking ship,” Jakel said.
 
Jakel declined to disclose whether any of the tech companies in this report are clients.

You May Like

Obama: Alaskans Feel Signs of Climate Change

They're seeing bigger storm surges as sea ice melts, more wildfires, erosion of glaciers, shorelines More

1855 Slave Brochure Starkly Details Sale of Black Americans

Document lists entire families that were up for sale in New Orleans, offering graphic insight into the slavery trade More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nobel Prize Winner Malala Talks to VOAi
X
August 31, 2015 2:17 AM
Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.

VOA Blogs

World Currencies

EUR
USD
0.8874
JPY
USD
120.83
GBP
USD
0.6497
CAD
USD
1.3271
INR
USD
66.162

Rates may not be current.