4 ms·

I met Nathan Myhrvold while giving his son a tour of my school. He struck me as a much nicer guy than what all of these articles play him up as. Extortion is al

by aston 18y ago

I met Nathan Myhrvold while giving his son a tour of my school. He struck me as a much nicer guy than what all of these articles play him up as. Extortion is almost certainly too bold of a term for what his company does. The patent system was set up to be taken advantage of in this exact way. If someone comes up with/legally documents an idea before you do, you have to get them to let you use it (via licensing fees). I don't see how that's tantamount to protection money. If you're one of the companies involved, there's pretty clear net gain for you since you're essentially outsourcing R&D to some smart people and virtually extending your patent portfolio at the same time, which is an asset on its own.

chaostheory 18y ago
how is this outsourcing r&d?
- aston 18y ago
  Intellectual Ventures is basically all R. These guys are indeed buying up patents, but they're doing a lot of thought themselves about how to solve problems and then going out and doing the due diligence to acquire all of the assets (patents, theirs or others') they need to present a full solution to a company.
  - asda55 18y ago
    You sound like Myrhvold's mom. How is this outsourcing R&D if you've already done the R&D, since you're clearly using the techniques, and then Nathan comes along and takes you to court for millions? You're buying into the spin. Intellectual Ventures is not a think-tank for nuclear geniuses and never was. Do you really believe the marketing story Intellectual Ventures puts out? Do you think that Trident makes your teeth whiter, and that Snapple is made from the best stuff on earth?
    - aston 18y ago
      I actually am his mom. Just curious, though, do you actually have any evidence that Intellectual Ventures is charging people for stuff they were already doing? Have they taken anyone to court over these patents? I'm not buying their spin, I'm assuming their innocence until guilt is proven.
      - jcromartie 18y ago
        > I'm assuming their innocence until guilt is proven. They are extortionists and vultures. Their business model is to buy cheap patents from people who just do pure research. Then they go and sue the pants off people who do real work and make a honest living by doing things that make real products. So I don't know how you can say they need to be proven guilty when they plainly state what they are doing.
        aston 18y ago
        Again, have they sued anyone? Has any company/institution they've dealt with actually been wronged? And, as far as the patent buying goes, I don't really see a moral hazard with arbitrage. Either the market for patents is really inefficient and they're reaping rewards for exploiting that, or they're actually (gasp) providing a service to the market by connecting companies to institutions, and they're being compensated for it. Either way, I'm thumbs up on the enterprise.
        jcromartie 18y ago
        They don't make money hand-over-fist by being nice. Licensing the patent is the first step. If a company doesn't agree to license, then the IP firm sues. So far they have gone after those with the deep pockets or insufficient intestinal fortitude it takes to pay up when these bastards come knocking.
        anamax 18y ago
        > Their business model is to buy cheap patents from people who just do pure research. Then they go and sue the pants off people who do real work and make a honest living by doing things that make real products. Doing pure research isn't making an honest living?
  - utnick 18y ago
    Do you know what some of these patents are? It would be interesting to see how innovative they really are.
edw519 18y ago
He struck me as a much nicer guy than what all of these articles play him up as. "Smiling faces sometime pretend to be your friend..."
jcl 18y ago
The patent system was set up to be taken advantage of in this exact way. Well, maybe not this exact way. It was certainly never intended to have the consequences Bill Gates foresaw in his leaked 1991 memo: "If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. [...] The solution to this is patent exchanges with large companies and patenting as much as we can." http://arstechnica.com/news.ars/post/20070313-analysis-microsofts-software-patent-flip-flop.html http://arstechnica.com/news.ars/post/20070313-analysis-micro...
harshavr 18y ago
>> The patent system was set up to be taken advantage of in this exact way Pheraps, but the question is should it be set up this way? Two justifications of the patent system are - inventors have more incentives, hence new ideas will emerge faster - when these new ideas/inventions emerge, the patent ensures that it is openly documented and hence, can be used by everyone after the patent expires. And the price that one pays for this is that noone can use the idea without a deal with the patent owner. Is the price worth the benefit? This depends on things like a) how easy it is to discover the idea Two extreme cases would be say , a cure for AIDS vs. one-click patent b) the existence and the power of non-patent incentives for the discovery of the idea Would the idea be discovered without patents? Ideas/inventions are discovered all the time simply because one is working on some problem and one needs new tools to solve it. The university system is also a strong alternative system of incentives. But, there will be holes in what these systems incentivize. c) how many things depend on the thing being patented? This is a kind of an amplifying factor. Say, there a huge number of systems which depend on an idea. If the idea could be discovered without the patent system, the economy loses a lot of value and on the other side if patents were what made the discovery possible, then the patent system has caused great gain. Software, where ideas are built upon each other at great speed is full of these amplifying factors. A patent on say, garbage collection or oop, if granted, would affect a huge number of systems.(though, probably this would have expired before the 90's, but consider more recent ideas like say, stm.) the the rapid growth of the computer industry in the current phase increases this amplifying factor. d) The negative effect of patents on the culture of open sharing of ideas. Precisely, because people are doing this without making money, there is little scope for licensing from the patent holder. And this culture has a lot of value, intrinsic, educational and economic. Abolishing patents would probably be bad,(unless we can make alternative systems of incentives work. prizes?) But the important point here, is that there are a lot of free parameters - the length of patent, limitations on licensing fees, the nature of things which could be patented(i have used ideas/inventions interchangeably, but this is a controversial issue) Deciding optimal values for these parameters is a complex task and it isn't clear how one should be doing this. For instance, the length of the patent, if decided in a market would probably vary with the field in which the idea applies. For some fields, the optimal parameter might well be 0.
- 18y ago
mattmaroon 18y ago
I don't ever have a problem with people exploiting a broken system. Even in a society with strong patents, companies like this would exist, and it isn't extortion, rather than a form of investment. Without knowing what sort of patents he's purchased and is enforcing, it's impossible to make a moral judgment.
- asda55 18y ago
  Matt, whereas arbitrage is a lucrative activity that's worthless to everybody else, this is a lucrative activity that's worthless and damaging. It hurts productive companies who are helping other people, at a 1:1 ratio. Each dollar Intellectual Ventures earns comes out of someone else's pocket, against their will, and in exchange for nothing. Even if you look at it from your own self-interested perspective: wouldn't you rather they were making a useful internet service, something that might provide benefit to you? These are smart guys from Microsoft, why don't they make a company that produces a product? This isn't a typical case of intellectual property providing a return. They're worse than the RIAA. It's an investment vehicle that provides revenue for the owners, with the added barbs that it 1.) Drains productive companies 2.) In the case of court cases, is subsidized by taxpayers. Do you think that with $4 billion under management they only stop and enforce the legitimate and fair patents? There's only one moral judgement to make. What they are doing is legal and unethical (hence morally wrong), and it should be made illegal, or rather, impossible under patent law. Arbitrageurs make a lot of money. They don't go to heaven.
  - mattmaroon 18y ago
    Yeah, I'm not buying it. They're a natural byproduct of a functioning patent system. Part of the incentive to invent and produce new things is the ability to sell the IP itself. A lot of people are brilliant at building new things, but not so great at producing them and getting them into stores. They're two very different skills. It's a very useful middleman. They don't just get these patents from nowhere. They pay inventors and investors in bankrupt companies for them. It's no different than real estate investors buying up strip malls in areas they think will be big in a few years and then raising the rent. It isn't extortion, and it doesn't slow progress down. It incentivizes it. It creates a larger market for intellectual property. I won't say that our patent system is perfect, it clearly needs a lot of work, especially in the software era. But overall, it's pretty good, as evidenced by the resulting economy. It's easy to pass these people off as valueless middlemen, but they're not.
wallflower 18y ago
I read this article about Intellectual Ventures earlier this year and was struck by how he was trying to engineer ingenuity: "They had different backgrounds and temperaments and perspectives, and if you gave them something to think about that they did not ordinarily think about—like hurricanes, or jet engines, or metastatic cancer—you were guaranteed a fresh set of eyes." "At one point, Myhrvold asked the surgeons what, in a perfect world, would make their lives easier, and they said that they wanted an X-ray that went only skin deep. They wanted to know, before they made their first incision, what was just below the surface. When the Intellectual Ventures crew heard that, their response was amazement. “That’s your dream? A subcutaneous X-ray? We can do that.”" http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_gladwell?currentPage=all http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_...

by aston 18y ago

chaostheory 18y ago

how is this outsourcing r&d?

aston 18y ago
Intellectual Ventures is basically all R. These guys are indeed buying up patents, but they're doing a lot of thought themselves about how to solve problems and then going out and doing the due diligence to acquire all of the assets (patents, theirs or others') they need to present a full solution to a company.
- asda55 18y ago
  You sound like Myrhvold's mom. How is this outsourcing R&D if you've already done the R&D, since you're clearly using the techniques, and then Nathan comes along and takes you to court for millions? You're buying into the spin. Intellectual Ventures is not a think-tank for nuclear geniuses and never was. Do you really believe the marketing story Intellectual Ventures puts out? Do you think that Trident makes your teeth whiter, and that Snapple is made from the best stuff on earth?
  - aston 18y ago
    I actually am his mom. Just curious, though, do you actually have any evidence that Intellectual Ventures is charging people for stuff they were already doing? Have they taken anyone to court over these patents? I'm not buying their spin, I'm assuming their innocence until guilt is proven.
    - jcromartie 18y ago
      > I'm assuming their innocence until guilt is proven. They are extortionists and vultures. Their business model is to buy cheap patents from people who just do pure research. Then they go and sue the pants off people who do real work and make a honest living by doing things that make real products. So I don't know how you can say they need to be proven guilty when they plainly state what they are doing.
      - aston 18y ago
        Again, have they sued anyone? Has any company/institution they've dealt with actually been wronged? And, as far as the patent buying goes, I don't really see a moral hazard with arbitrage. Either the market for patents is really inefficient and they're reaping rewards for exploiting that, or they're actually (gasp) providing a service to the market by connecting companies to institutions, and they're being compensated for it. Either way, I'm thumbs up on the enterprise.
        jcromartie 18y ago
        They don't make money hand-over-fist by being nice. Licensing the patent is the first step. If a company doesn't agree to license, then the IP firm sues. So far they have gone after those with the deep pockets or insufficient intestinal fortitude it takes to pay up when these bastards come knocking.
      - anamax 18y ago
        > Their business model is to buy cheap patents from people who just do pure research. Then they go and sue the pants off people who do real work and make a honest living by doing things that make real products. Doing pure research isn't making an honest living?
- utnick 18y ago
  Do you know what some of these patents are? It would be interesting to see how innovative they really are.

edw519 18y ago

He struck me as a much nicer guy than what all of these articles play him up as. "Smiling faces sometime pretend to be your friend..."

jcl 18y ago

The patent system was set up to be taken advantage of in this exact way. Well, maybe not this exact way. It was certainly never intended to have the consequences Bill Gates foresaw in his leaked 1991 memo: "If people had understood how patents would be granted when most of today's ideas were invented, and had taken out patents, the industry would be at a complete standstill today. [...] The solution to this is patent exchanges with large companies and patenting as much as we can." http://arstechnica.com/news.ars/post/20070313-analysis-microsofts-software-patent-flip-flop.html http://arstechnica.com/news.ars/post/20070313-analysis-micro...

harshavr 18y ago

>> The patent system was set up to be taken advantage of in this exact way Pheraps, but the question is should it be set up this way? Two justifications of the patent system are - inventors have more incentives, hence new ideas will emerge faster - when these new ideas/inventions emerge, the patent ensures that it is openly documented and hence, can be used by everyone after the patent expires. And the price that one pays for this is that noone can use the idea without a deal with the patent owner. Is the price worth the benefit? This depends on things like a) how easy it is to discover the idea Two extreme cases would be say , a cure for AIDS vs. one-click patent b) the existence and the power of non-patent incentives for the discovery of the idea Would the idea be discovered without patents? Ideas/inventions are discovered all the time simply because one is working on some problem and one needs new tools to solve it. The university system is also a strong alternative system of incentives. But, there will be holes in what these systems incentivize. c) how many things depend on the thing being patented? This is a kind of an amplifying factor. Say, there a huge number of systems which depend on an idea. If the idea could be discovered without the patent system, the economy loses a lot of value and on the other side if patents were what made the discovery possible, then the patent system has caused great gain. Software, where ideas are built upon each other at great speed is full of these amplifying factors. A patent on say, garbage collection or oop, if granted, would affect a huge number of systems.(though, probably this would have expired before the 90's, but consider more recent ideas like say, stm.) the the rapid growth of the computer industry in the current phase increases this amplifying factor. d) The negative effect of patents on the culture of open sharing of ideas. Precisely, because people are doing this without making money, there is little scope for licensing from the patent holder. And this culture has a lot of value, intrinsic, educational and economic. Abolishing patents would probably be bad,(unless we can make alternative systems of incentives work. prizes?) But the important point here, is that there are a lot of free parameters - the length of patent, limitations on licensing fees, the nature of things which could be patented(i have used ideas/inventions interchangeably, but this is a controversial issue) Deciding optimal values for these parameters is a complex task and it isn't clear how one should be doing this. For instance, the length of the patent, if decided in a market would probably vary with the field in which the idea applies. For some fields, the optimal parameter might well be 0.

18y ago

mattmaroon 18y ago

I don't ever have a problem with people exploiting a broken system. Even in a society with strong patents, companies like this would exist, and it isn't extortion, rather than a form of investment. Without knowing what sort of patents he's purchased and is enforcing, it's impossible to make a moral judgment.

asda55 18y ago
Matt, whereas arbitrage is a lucrative activity that's worthless to everybody else, this is a lucrative activity that's worthless and damaging. It hurts productive companies who are helping other people, at a 1:1 ratio. Each dollar Intellectual Ventures earns comes out of someone else's pocket, against their will, and in exchange for nothing. Even if you look at it from your own self-interested perspective: wouldn't you rather they were making a useful internet service, something that might provide benefit to you? These are smart guys from Microsoft, why don't they make a company that produces a product? This isn't a typical case of intellectual property providing a return. They're worse than the RIAA. It's an investment vehicle that provides revenue for the owners, with the added barbs that it 1.) Drains productive companies 2.) In the case of court cases, is subsidized by taxpayers. Do you think that with $4 billion under management they only stop and enforce the legitimate and fair patents? There's only one moral judgement to make. What they are doing is legal and unethical (hence morally wrong), and it should be made illegal, or rather, impossible under patent law. Arbitrageurs make a lot of money. They don't go to heaven.
- mattmaroon 18y ago
  Yeah, I'm not buying it. They're a natural byproduct of a functioning patent system. Part of the incentive to invent and produce new things is the ability to sell the IP itself. A lot of people are brilliant at building new things, but not so great at producing them and getting them into stores. They're two very different skills. It's a very useful middleman. They don't just get these patents from nowhere. They pay inventors and investors in bankrupt companies for them. It's no different than real estate investors buying up strip malls in areas they think will be big in a few years and then raising the rent. It isn't extortion, and it doesn't slow progress down. It incentivizes it. It creates a larger market for intellectual property. I won't say that our patent system is perfect, it clearly needs a lot of work, especially in the software era. But overall, it's pretty good, as evidenced by the resulting economy. It's easy to pass these people off as valueless middlemen, but they're not.

wallflower 18y ago

I read this article about Intellectual Ventures earlier this year and was struck by how he was trying to engineer ingenuity: "They had different backgrounds and temperaments and perspectives, and if you gave them something to think about that they did not ordinarily think about—like hurricanes, or jet engines, or metastatic cancer—you were guaranteed a fresh set of eyes." "At one point, Myhrvold asked the surgeons what, in a perfect world, would make their lives easier, and they said that they wanted an X-ray that went only skin deep. They wanted to know, before they made their first incision, what was just below the surface. When the Intellectual Ventures crew heard that, their response was amazement. “That’s your dream? A subcutaneous X-ray? We can do that.”" http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_gladwell?currentPage=all http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_...