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 "Reinvent the Toilet Fair" competition at the Bill and Melinda Gates Foundation.
    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

    Clinton, Trump and the 'Woman’s Card'

    Ask supporters of Democratic front-runner in US presidential campaign, and they’ll tell you Republican presidential candidate is playing a dangerous hand

    Russian Censorship Group Seeks Chinese Help to Better Control Internet

    At recent Safe Internet League forum in Moscow, speakers from both nations underscored desire for authorities to further limit and control information online

    Video Makeshift Pakistani School Helps Slum Kids

    Free classes in Islamabad park serve a few of the country’s nearly 25 million out-of-school youths; NGO cites ‘education crisis’

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Turkish Kurd Islamist Rally Stokes Tensionsi
    X
    April 29, 2016 12:28 AM
    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Turkish Kurd Islamist Rally Stokes Tensions

    In a sign of the rising power of Islamists in Turkey, more than 100,000 people recently gathered in Diyarbakir, the main city in Turkey’s predominantly Kurdish southeast, to mark the birthday of the Prophet Muhammad. The gathering highlighted tensions with the pro-secular Kurdish nationalist movement. Dorian Jones reports from Diyarbakir.
    Video

    Video Pakistani School Helps Slum Kids

    Master Mohammad Ayub runs a makeshift school in a public park in Islamabad. Thousands of poor children have benefited from his services over the years, but, as VOA's Ayesha Tanzeem reports, roughly 25 million school-age youths don't get an education in Pakistan.
    Video

    Video Florida’s Weeki Wachee ‘Mermaids’ Make a Splash

    Since 1947, ‘mermaids’ have fascinated tourists at central Florida’s Weeki Wachee Springs State Park with their fluid movements and synchronized ballet. Performing underwater has its challenges, including cold temperatures and a steady current, as VOA’s Lin Yang and Joseph Mok report.
    Video

    Video Somali, African Union Forces Face Resurgent Al-Shabab

    The Islamic State terror group claimed its first attack in Somalia earlier this week, though the claim has not been verified by forces on the ground. Meanwhile, al-Shabab militants have stepped up their attacks as Somalia prepares for elections later this year. Henry Ridgwell reports there are growing frustrations among Somalia’s Western backers over the country’s slow progress in forming its own armed forces to establish security after 25 years of chaos.
    Video

    Video Bangladesh Targeted Killings Spark Wave of Fear

    People in Bangladesh’s capital are expressing deep concern over the brutal attacks that have killed secular blogger, and most recently a gay rights activist and an employee of the U.S. embassy. Xulhaz Mannan, an embassy protocol officer and the editor of the country’s only gay and transgender magazine Roopban; and his friend Mehboob Rabbi Tanoy, a gay rights activist, were hacked to death by five attackers in Mannan’s Dhaka home earlier this month.
    Video

    Video Documentary Tells Tale of Chernobyl Returnees

    Ukraine this week is marking the 30th anniversary of the world's worst nuclear accident, at the Chernobyl nuclear power plant. Soviet officials at first said little about the accident, but later evacuated a 2,600-square-kilometer "exclusion zone." Some people, though, came back. American directors Holly Morris and Anne Bogart created a documentary about this faithful and brave community. VOA's Tetiana Kharchenko reports from New York on "The Babushkas of Chernobyl." Carol Pearson narrates.
    Video

    Video Nigerians Feel Bite of Buhari Economic Policy

    Despite the global drop in the price of oil, Nigerian President Muhammadu Buhari has refused to allow the country's currency to devalue, leading to a shortage of foreign exchange. Chris Stein reports from Lagos businessmen and consumers are feeling the impact as the country deals with a severe fuel shortage.
    Video

    Video  Return to the Wild

    There’s a growing trend in the United States to let old or underused golf courses revert back to nature. But as Erika Celeste reports from one parcel in Grafton, Ohio, converting 39 hectares of land back to green space is a lot more complicated than just not mowing the fairway.
    Video

    Video West Urges Unity in Libya as Migrant Numbers Soar

    The Italian government says a NATO-led mission aimed at stemming the flow of migrants from Libya to Europe could be up and running by July. There are concerns that the number of migrants could soar as the route through Greece and the Balkans remains blocked. Western powers say the political chaos in Libya is being exploited by people smugglers — and they are pressuring rival groups to come together under the new unity government. VOA's Henry Ridgwell reports.
    Video

    Video Russia’s TV Rain Swims Against Tide in Sea of Kremlin Propaganda

    Russia’s media freedoms have been gradually eroded under President Vladimir Putin as his government has increased state ownership, influence, and restrictions on critical reporting. Television, where most Russians get their news, has been the main target and is now almost completely state controlled. But in the Russian capital, TV Rain stands out as an island in a sea of Kremlin propaganda.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8769
    JPY
    USD
    107.28
    GBP
    USD
    0.6842
    CAD
    USD
    1.2528
    INR
    USD
    66.384

    Rates may not be current.