HBR Article Takes Aim at IV Doubters

Intellectual Ventures makes its most convincing argument yet in support of its patent rights business model in an article in the current (March) Harvard Business Review. In “The Big Idea, Funding Eureka!” IV CEO and founder Nathan Myhrvold says that patented research should be funded in much the same way that venture capital is provided to start-ups.

“Our goal,” says Myhrvold, “is to make applied research a profitable activity that attracts vastly more private investment than it does today so that the number of inventions generated soars.”

Sounds pretty good. The HBR article may be IV’s most graphic illustration to date about what it does, how it does it and its potential impact on innovation. [Brody Berman Associates, BTW, is not retained by IV.]

IV has been superb at raising capital, almost $6 billion of it, but weak on convincing the technology and legal communities that IV’s business model has meaning and is not a larger, more evolved predator. “The Big Idea” attempts to bypass nay-sayers and directly address the business-financial community, still largely clueless about how what IP rights are and how they can be used to generate ROI.

The firm has attracted its fair share or detractors (operating companies who may be vulnerable to IV’s 30,000+ patents), inventors who may feel crammed down by their market-driven offers and competitors, jealous of its ability to raise capital, control pricing and generate licensing agreements, mostly without litigating.

The question that really needs to be asked: Is IV’s impact on innovation and commerce net positive or is it effectively a hedge fund designed to exploit the  inefficiencies in a nascent innovation market? IV’s real genius may be in raising capital and buying a critical mass of relevant patents that are good or, at least, good enough to have an impact.

While the jury is still out (couldn’t resist that), the nine year-old, the 650-employee company has provided new ideas about ideas, and has been a catalyst for how they are best identified, packaged and monetized.  The HBR article is worth reading.