08 September 2009

Intellectual (Monopolies) Ventures

I've been avoiding this story about nathan Myhrvold's Intellectual Ventures using patent trolls as proxies because it's just beyond even the deepest irony, and thus immune to my pen. But then I came across this post that puts it so well, and I felt had to pass it on:

Until recently, one of the few points Myhrvold could make in his own favor is that he hadn’t started suing firms that declined to license his patent portfolio. I say “until recently” because we’re now learning that the lawsuits have started. IV has begun selling off chunks of its patent portfolio to people like Raymond Niro with well-deserved reputations for being “patent trolls.” Threatening to sell patents to a third party who will sue you is more subtle than threatening to sue you directly, but the threat is just as potent. Myhrvold’s “sales pitch” to prospective licensees just got a lot more convincing.

The fundamental question we should be asking about this business strategy is how it benefits anyone other than Myhrvold and the patent bar. Remember that the standard policy argument for patents is that they incentivize beneficial research and development. Yet IV’s business model is based on the opposite premise: produce no innovative products, spend minimal amounts on research and development, and make a profit by compelling firms that are producing products and investing in R&D to pay up. Not only does this enrich Myhrvold at everyone else’s expense, but it also reduces the incentive to innovate, because anyone who produces an innovative product is forced to share his profits with Intellectual Ventures. Patents are supposed to make innovation more profitable. Myhrvold is using the patent system in a way that does just the opposite. In thinking about how to reform the patent system, a good yardstick would be to look for policy changes that would tend to put Myhrvold and his firm out of business.

That last line is an absolute killer.

Follow me @glynmoody on Twitter or identi.ca.

No comments: