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

Pundits Split Over Long-Term US Role in Afghanistan

Security pact remains condition for American presence beyond 2014; deadline criticized More

US Eyes Islamic State Threat

Officials warn that IS could pose a threat to US homeland More

Video Ukraine: Captured Troops Proof of Russian Role in Separatist Fight

Moscow says Russian troops crossed into Ukrainian territory by mistake More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Scientists Unlock Mystery of Bird Flocksi
X
George Putic
August 25, 2014 4:00 PM
How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.
Video

Video Scientists Unlock Mystery of Bird Flocks

How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.
Video

Video Ukraine: Captured Troops Proof of Russian Role in Separatist Fight

Ukrainian officials say they have captured Russian soldiers on Ukrainian territory -- the latest accusation of Moscow's involvement in the conflict in eastern Ukraine. VOA's Gabe Joselow reports from the Ukrainian side of the battle, where soldiers are convinced of Russia's role.
Video

Video Rubber May Soon Come From Dandelions

Synthetic rubber has been around for more than a century, but quality tires for cars, trucks and aircraft still need up to 40 percent or more natural rubber content. As the source of natural rubber, the rubber tree, is prone to disease and can be affected by bad weather. So scientists are looking for replacements. And as VOA’s George Putic reports, they may have found one in a ubiquitous weed.
Video

Video Jewish Life in Argentina Reflected in Yiddish Tango

Jewish people from across Europe and Russia have been immigrating to Argentina for hundreds of years. They brought with them dance music that was eventually mixed with Argentine tango. The result is Yiddish tango -- a fusion of melodies and cultural experiences that is still evolving today. Elizabeth Lee reports on how one band is bringing Yiddish tango to Los Angeles.
Video

Video Peace Returns to Ferguson as Community Tries to Heal

Thousands of people nationwide are expected to attend funeral services Monday in the U.S. Midwestern city of St. Louis, Missouri, for Michael Brown, the unarmed African-American teenager who was fatally shot by a white police officer August 9 in the St. Louis suburb of Ferguson. The shooting touched off days of violent demonstrations there, resulting in more than 100 arrests. VOA's Chris Simkins reports from Ferguson where the community is trying to move on after weeks of racial tension.
Video

Video Meeting in Minsk May Hinge on Putin Story

The presidents of Russia and Ukraine are expected to meet face-to-face Tuesday in Minsk, along with European leaders, for talks on the situation in Ukraine. Political analysts say the much welcomed dialogue could help bring an end to months of deadly clashes between pro-Russia separatists and Ukrainian forces in the country's southeast. But much depends on the actions of one man, Russian President Vladimir Putin. VOA's Daniel Schearf reports from Moscow.
Video

Video Artists Shun Russia's Profanity Law

Russia in July enacted a law threatening fines for publicly displayed profanity in media, films, literature, music and theater. The restriction, the toughest since the Soviet era, aims to protect the Russian language and culture and has been welcomed by those who say cursing is getting out of control. But many artists reject the move as a patronizing and ineffective act of censorship in line with a string of conservative morality laws. VOA's Daniel Schearf reports from Moscow.
Video

Video British Fighters on Frontline of ISIS Information War

Security services are racing to identify the Islamic State militant who beheaded U.S. journalist James Foley in Syria. The murderer spoke English on camera with a British accent. It’s estimated that several hundred British citizens are fighting for the Islamic State, also called ISIL or ISIS, alongside thousands of other foreign jihadists. Henry Ridgwell reports for VOA from the center of the investigation in London.

AppleAndroid

World Currencies

EUR
USD
0.7537
JPY
USD
103.79
GBP
USD
0.6032
CAD
USD
1.0957
INR
USD
60.522

Rates may not be current.