Tag Archives: Intellectual Ventures
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Burford Capital, Digimarc and Imagination added to IP CloseUp 30

Three public companies that are active in patent licensing or highly dependent on patents for success have been added to the IP CloseUp 30 index of public intellectual property companies, or PIPCOs.

nav_3_7383531__burfordBurford Capital (BUR.L), is primarily a litigation funding organization that trades on the London Stock Exchange. It recently hired Justin Daniels, previously a IP litigation partner at Proskauer Rose, as a Managing Director to further develop and manage its IP offerings. Prior to Proskauer he was a litigator with Skadden, Sullivan & Cromwell and Cravath.

Digimarc Corporation, (DMRC) provides media identification and management solutions to commercial entities and governments. It has a number of key patents and was previously associated with Intellectual Ventures.Digimarc

Imagination Technologies Group (IGMNF) is involved in the development and licensing of silicon and software intellectual property solutions for system-on-chip devices for semiconductor, network operator and electronics original equipment manufacturer, and original design manufacturer companies.

Both Burford and Imagination are UK-based.

Real-Time PIPCO News

The IP CloseUp 30® is a real-time index of publicly traded IP monetization companies. By accessing it here, readers can add the url to their home screen or desk top for easy comparison of companies in the sector, and to get up-to-the-minute news.

imagination-logoTo be considered for inclusion in the index, invention rights (patents) must play a significant role in a company’s value or revenue stream, and its market capitalization must be above $5 million when included. A few companies on the list, including InterDigital, Rambus and Universal Display, are capitalized at over $1 billion. Companies are removed from time-to-time as lack of trading volume, market cap or share price warrant.

Image source: company websites

Top 4 Patent Sellers

Panasonic, NEC & Sony are battling with IBM for patent sales leadership

Despite dramatically lower patent valuations, some big companies, including under-performing foreign holders, have taken the number of U.S. sales to new highs.

While IBM still leads, over the past three and a half years, it has been joined by IP-conservative firms from Japan, notably Panasonic/Matsushita, NEC and Sony. All four of these companies have something in common: poor recent financial performance.

In the January IAM Magazine, the Intangible Investor looks at the latest trends in patent sales among the biggest sellers. Activity is up and emerging are new leaders, like Panasonic, which leads even IBM in U.S. sales for the first half of 2015.

Analysis conducted by Brody Berman Associates in conjunction with Envision IP, a law firm that specializes in patent research, reveals that “for the three-and-a-half year period from 2012 to early August 2015, the leading seller by far was IBM, with 5,356 patents. Buyers include Google, Facebook, Alibaba and Twitter. In 2014 alone, IBM sold 2,187 patents, the most in any year over the period by any of the 12 leading tech companies analyzed.

Leading Patent Sellers

“Surprisingly, the number two, three and four patent sellers in the 2012-2015 period were all Japanese companies,” writes this reporter. “Panasonic/Matsushita, NEC and Sony, with 4,203, 2,131 and 1,578 respectively. This is a dramatic shift for conservative Japanese electronics giants, which rarely litigate patents to generate revenue or enable others to.”

Subscribers can link to IAM’s January issue here.

Intellectual Venture’s 70,000 patent portfolio appears to contain no patents originally owned by Apple, Google or Qualcomm, as Envision’s findings indicate. Several patents owned by IV investors appear in its portfolio, including those of Nokia, Verizon, Microsoft and Sony. Only 268 of the 19,559 US patents owned by IV were identified as having a litigation history, representing less than 1.5% of the portfolio.

Top 4 Patent Sellers

Among the top companies IV purchased from are Kodak (1,057), American Express (643), AT&T (358) and Philips (313) and Ericsson (273).

A list of IV’s 35 top sources for acquisitions can be found here.

Image source: Envision IP, LLC

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IP Dealmakers Forum will host 200+ patent monetization bigs in NY

The second annual IP Dealmakers Forum, December 7 – 8, will bring together leaders from the finance, legal and business communities to discuss the issues affecting patent licensing, sales and value, and to facilitate transactions.

New this year is a separate workshop for institutional investors that focuses on understanding IP as an asset class. This invitation-only, closed-door workshop will address the characteristics, market size and scope of patents as business assets, discuss practical investment issues, and examine the current investment universe. For additional information, go to here.

Luncheon Keynote

This year’s luncheon keynote is Edward Jung, co-founder and Chief Technology Officer of Intellectual Ventures, which holds more than 70,000 patents.  After leaving Microsoft where he was Chief Architect, Jung founded IV in 2002. As CTO, Jung sets strategic technology direction and new business models for the company. He holds more than 750 patents worldwide with has an additional 1,000 pending in the areas of biomedicine, computing, networking, energy, and material sciences.

The keynote topic is Driving Deals Through the Patent Storm”ip-dealmakers-logo-2015

Other speakers, at the New York event which will be held at the Apella event center overlooking the East River, include chief or senior executives from leading IP holders, both NPEs (non-practicing entities) and operating companies, institutional investors, financial institutions and PIPCOs (public IP licensing companies), including

France Brevets, Techquity, EverEdge IP, Finjan, Royal Philips, Gerchen Keller Capital, Fortress, IP Bridge, Northwater Capital, Wood Creek Capital, Allied Minds, WiLAN, American Express, nXn Partners, Bridgestone Americas, Swiss Alpha, Freescale Semiconductor, Ericsson and Marathon Patent Group.

For this year’s IPDF agenda and speakers, go here.

IP CloseUp readers can still save $200 on Forum registration by using promo code “IPCloseUp_Special”.  A special landing page has been created for IP CloseUp reader registration: http://www.ipdealmakersforum.com/ipcloseup/

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Actionable Insights 

“The program is dedicated to providing attendees with actionable insights from successful dealmakers,” says Wendy Chou, co-founder and producer of IP Dealmakers Forum. Session topics include:

  • Boom or Bust: The Public IP Market One Year Later
  • All About Patent Quality – How to Invest in Powerful Patents
  • New IP Businesses, Investing for Innovation & Growth
  • The Evolution of IP Litigation Funding & Insurance Markets
  • 2016 Presidential Election Perspectives on Patents
  • How IP Drives Corporate Reinvention, M&A and Investments

Last year’s inaugural event connected diverse intellectual property monetization experts with public and private market investors, and was attended by approximately 200 investors, IP executives, and advisors. Due to popular demand, expanded space will be provided in 2015 for private one-on-one meetings.

Changing Times

“These are changing times,” said Ashley Keller, co-founder of Gerchen Keller Capital, and a scheduled speaker at this year’s Forum. “As the market shifts, understanding the increased importance of due diligence expertise, the changing perceptions of risk and valuation, and the sources and expectations of those with investment capital, is a prerequisite for anyone who intends to succeed in this arena.”

Image source: IP Dealmakers Forum 

GoogPatSales

Google’s patent buying program, an apparent success, is thinly reported

Better than one-in-four of the patents offered to Google for purchase as a result of its Patent Purchase Promotion in May were acquired by the search engine.

The only article we could find about IP buying experiment’s results appeared in IEEE Spectrum, which is published by a professional association of engineers. IP CloseUp has learned that IEEE Spectrum obtained the purchase data directly from Google. A Google search did not reveal other media coverage of the results.

The magazine article, “Google Tries to Keep Patents Out of the Hands of Trolls,” states that the search engine purchased 28% of the patents offered to it. This buy-rate seems high considering the poor quality of most patents being offered to most buyers. It is comparable to that of Intellectual Ventures in the early years (2003-2006) when it bought much of what it was shown, but typically at about $40,000 per patent.

“Google’s Patent Purchase Promotion,” reports IEEE Spectrum, “which the company says received ‘thousands’ of submissions during a three-week window [May 8 – May 27], may prompt similar experiments in keeping patents out of the hands of what it considers the bad guys of intellectual property.”

The experimental program was an attempt to intercept patents that individual inventors, operating companies, and others may have otherwise sold to organizations that don’t make products but rather use the patents to extract license fees from operating companies, which do… The program offered a chance for anybody to sell patents to Google “at a price set by the patent holder.”

“Google wound up buying 28 percent of the offered patents that it deemed relevant to its business, according to Kurt Brasch, the company’s senior product licensing manager,” reported the magazine.

GoogPatSales

The median price of the patents sold to Google, excluding those offered at US $1 billion or more, was $150,000, and the compant paid prices ranging from $3,000 to $250,000.

IP Watchdog and others are less certain about whether the program is designed to thwart trolls and enhance innovation, or to improve Google’s patent position.

The IEEE Spectrum article can be found here.

A summary of Google’s Patent Purchase Program can be found here.

 

Image source: IEEE Spectrum

 

 

3Q 2015 Fig 2 (labeled)

PIPEX patent company index falls 15.4% for 3Q, double the S&P 500

The PIPEX intellectual property sector stock index fell more than twice as much as the S&P 500 as the effects of the Alice and IPRs, in combination with a correcting stock market, came into play. 

Rambus, while loosing 18.6% in the quarter, still has gained 6.4% Year-to-Date, largely as a result of excellent 1Q and 2Q performance. Tessera and InterDigital stock which performed well in 4Q 2014, has less steep YTD declines (see YTD graph below).

The PIPEX index was down 15.4% vs. the S&P 500 which was lost 6.9%, its biggest quarterly drop since 2011. Unwired Planet was up 17.7 % for the quarter and Acacia 3.5%. For the previous 12 months, Surprisingly, InterDigital and Tessera were the leaders for 12 months, up 27.1% and 21.9% respectively because of a strong 2014 4Q.

3Q 2015 Fig 2 (labeled)

The PIPEX, provided exclusively to IP CloseUp by Dr. Kevin Klein, VP of Licensing for Freescale Semiconductor, is a “capitalization‐weighted price‐return measure of the change in value of this segment
of publicly traded companies.” The Index is designed to provide a measure of the market value and health of the intellectual property licensing business as a whole, while making it easier to identify individual performance. The stock performance of larger companies have a much more significant impact on the Index than those of the less highly valued. (See Fig. 4 weighting graph.)

The thirteen companies in the index are all publicly traded and at one time had a market capitalization of $100M or higher. Private companies such as Intellectual Ventures, Conversant and IPNav are not included, nor are struggling micro-caps like Inventergy.  Fortress, which provides loans to patent holders and is part of a large financial organization, also is excluded.

Year-to-Date

Parkervision and Marathon shares are down the most YTD, 79.1% and 78% respectively. Marathon announced a merger with Uniloc on August 14, which current shareholders may see as a mixed blessing. Eight of the thirteen companies that make up the index saw 12 month declines >40%; four did YTD, indicating a possibly improving trend for shares of some companies.

3Q 2015 YTD (labeled)

Conclusion

It is difficult to say if PIPCOs have hit bottom yet and are ready to rise. Certainly, as they adapt to changes in patent law, recent court decisions and the PTAB, those with larger, well-vetted portfolios, cash and patience are in the best position to prosper. For better or worse IPRs and the PTAB are a fact of patent licensing life which these businesses must learn to contend.

For the full PIPEX 3Q 2015 report go here.

3Q 2015 Fig 4 (labeled)

Image source: The PIPEX Intellectual Property Sector Index 

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Patent values are hit by uncertainty; operating co buying overtakes NPE

Three things are needed to succeed today in patent licensing: more capital, more patience and more good patents, which are in increasingly short supply. 

Uncertainty is the glue that binds weaker patents to cheaper ones.

Patent reliability is poorer than ever, in part because invalidating bad patents is now somewhat less arduous and costly. The courts are awarding fewer and lower damages awards, and defendants with time on their side and cash in their pockets, can play an even longer waiting game.

Increased uncertainty has encouraged more patent holders, mostly those operating companies that generate their inventions and rights internally, to consider purchases that they may not have previously. At “buyers’ market” prices, who can blame them? It will be interesting to see how uncertainty in the patent system will affect future R&D strategy and domestic patent filings.

With asking prices per asset trending down, and brokered patent sales lower, the percentage of packages sold is actually up significantly, as is opco buying.

The top buyers in 2015 Q1 according to Richardson Oliver Law Group, which tracks brokered patent transactions, were RPX, a Canadian numbered company, and Intellectual Ventures, for their Intellectual Investment Fund 3. These buyers accounted for 42% of all of the packages purchased in 2015 Q1 and RPX alone accounted for 28%. Other, much smaller buyers in Q1 include Apple and Philips.

patpkgssoldUntitled

Listings are Down; Sold Packages Up

ROL indicates that patent deal listings (patent and application packages) are down 20% from 4Q 2014 to 1Q 2015, but that packages sold are up 88%. In an article in IAM earlier this year by ROL (see The brokered patent market 2014,), it was shown that corporate buyers have overtaken NPEs in 2013 and 2014, comprising 46% for the market versus 38% for NPEs.

Asking prices for US-issued patents monitored have fallen from $577,000 in 2012 to $360,000 in 2014, a fall of 37.6%. ROL’s latest broker sales stats can be found here.

*****

“Uncertainty rules,” my latest Intangible Investor, the July IAM Magazine looks at why confusion over new patent hurdles and lower damages awards is creating an opportunity for some companies to buy patents at lower prices and settle disputes more favorably. Subscribers can get it here.

*****

Don’t expect to see patent uncertainty to wane anytime soon.  Many operating companies and at least some NPEs will be sad to see it go.

 

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Image source: Richardson Oliver Law Group

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Does Google’s patent buying experiment put it in competition w/ Intellectual Ventures and RPX?

On Friday May 8 Google will launch a two week experiment in acquiring patents from mainly small businesses and inventors.

Directly, or indirectly, the Patent Purchase Promotion (PPP) will be competing with NPEs and other operating companies for patent ownership.

The announcement raises questions: Is Google taking a page the play book written by IV and RPX (NASAQ: RPXC)? Is it aggregating patents for its own defensive use, the good of all operating businesses, or for potential investors/partners?

Has the company conceded that because it could not beat the patent-buying trolls it needs to kind of “join them,” or at least, compete with them?

It’s difficult to say what Google (NASDAQ: GOOG) is trying to accomplish. By its own admission, there is a lot of fine print in its agreement. The company’s LoT (License on Transfer) agreement, originally launched about 18 months ago, has generated mixed results, and PPP may be merely another arrow in Google’s IP quiver.

The company may be relying on inexperienced sellers to mis-price their assets, as did IV early in its buying cycle. No doubt some will ask for far too much. But, as IV learned ten years ago, there is no shortage of desperate sellers who will accept little or nothing in a down market for patents that could be quite valuable. With the market depressed and IV not buying the way it used to, the timing could be good for PPP to step 303170893_idu9a-m-300x199in. If Google can secured patents at a good price before NPEs do, it can improve its and other businesses’ defense against patent assertion.

Ars Technica wrote:

“As a way to combat the pernicious effects of patent trolls, Google announced Monday that it would be buying up patents from any inventor or entrepreneur who wants to sell.”

Google’s Patent Purchase Promotion is a radical change for a company that traditionally has been suspicious of patent buyers and sellers. For FAQs go here. The purchase program ends May 22. Decisions will be made no later than July 22.

Beginning on May 8 a copy of the actual PPP agreement can be found here.

Maturing IP Strategy

Google appears to be growing as an IP holder and user, and it is not surprising that it would want to take advantage of its formidable brand and cash position to strategically acquire patents that may be harmful to it and others at below market prices.

Whether or not Google will use acquired patents for defensive purposes only is unclear. (The company reserves the right to use the patents it acquires however it sees fit.)

Richard Lloyd wrote in a thoughtful piece about Google’s possible motivation in the IAM blog last week:

“The more you think about it,” he said, “the more it raises questions around why a patent owner with a high-quality asset who understands the IP market would consider this option, even under current tough conditions.

“Instead, the likelihood is that if Google does come across something interesting it will be offered by a party that may not fully appreciate what it owns and needs some money quickly; and that probably means a smaller, cash-strapped business with little access to specialist IP knowledge.”

A page torn from IV’s playbook?

This sounds very much like IV’s M.O. back eight or ten years ago: Gobble up decent (if not good) patents for others to pay access to or for the company to enforce, if necessary. It will certainly expand Google’s rapidly growing patent portfolio and provide access to IP rights out of its core search technology.

PPP may be nothing more than getting a leg up on the competition, whether they be opcos or NPEs. We will have to wait and see.

Image source: allthingsd.com; apexbeats.com

IPBC1imgres

Cross-Border IP Deals Scrutinized at Asia IP Business Congress

“Cross-border IP deals: bridges and barricades” will be a featured topic at this year’s IP Business Congress in Singapore, November 17-19.

Securing a patent license or sale is never been a simple matter, even under the best of circumstances. There is due diligence to conduct, skeptical executives to convince, and details that need to be negotiated.

When one or more deal participants is a continent away distances need to be traversed and diverse IPBC2imgrescultures and legal systems understood. There also is the problem of time zones and travel schedules.

In spite of these obstacles the number, type and demand for IP-related transactions have increased dramatically over the past decade, so too has the range of participants and types of assets.

The line up of panelists for this important IPBC Asia session is as follows, with your intrepid IP CloseUp reporter, serving as moderator:

“Cross-border IP deals: bridges and barricades”

Moderator:

Bruce Berman, CEO Brody Berman Associates Inc

Speakers:

Robert Aronoff, Founder and Managing Partner, Pluritas LLC
Masanobu Katoh, Executive Vice-President, Intellectual Ventures
Ruud J Peters, Chief Intellectual Property Officer, Royal Philips
Joo Sup Kim, Vice President of Intellectual Property, LG Electronics Co Ltd

*     *     *

For a full IPBC Asia agenda, speakers and other details, click here.

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When NPR Attacks Patents: Stories are Long on Drama, Short on Truth

“When Patents Attack… Part II!” revisits old ground about bad IP actors by relying on half-truths and high drama.

“This American Life,” an entertaining weekly NPR news feature, cannot resist using ill-defined “trolls” as a basis to attack the patent system. A more accurate title might be “This American Knife: When Public Radio Attacks Patents!”

Back in July of 2011 “This American Life” (TAL) spent an hour vilifying patent holders who do not practice their inventions, and attempting to convince listeners that they had uncovered a third-party IP monetization scheme that is destroying innovation. The story was largely focused on Intellectual Ventures, the largest patent buyer. “When Patents Attack!” relies on half-truths, questionable sources and a lot theatrics, which makes for good radio, but shoddy journalism.

On May 31 TAL broadcasted When Patents Attack…, Part Two! This time around, the host, Ira Glass, said, TAL’s reporters were urged on by the logo-v5challenge to complete the difficult investigation they had begun two years earlier. Sadly, this piece is should be required listening, like the previous one, especially for those who want to better understand how patent misinformation gets spread around.

The dramatic conclusion to Laura and Alex’s search for information about Intellectual Ventures, and the inventor they claimed they were helping, Chris Crawford. The story turns out to be different from the one Intellectual Ventures originally told.

Separating the Real Story from the Drama

I would rather not go toe-to-toe refuting each claim in the story. However, I will say that presenting facts and partial-facts with insufficient context is extremely damaging to establishing the truth about the real story: patent theft in the U.S.

If you cannot listen to the entire broadcast, please at least catch to the last five minutes. At approximately 50:30 (you can use the play bar to go right there) there is a statement delivered at the Electronic Frontier Foundation meeting in San Francisco by a young medical device inventor who is moved to tears, literally, because he believes that the big bad trolls are inevitably going to destroy his hard work establishing a potentially life-saving invention.

The young inventor explains how he looked up some patents in the heart device area he was working in, saw how many inventions there are and how broadly they are defined and precisely their claims are worded, and determined that he was doomed from the start. Since he believed that he had no chance he refused to develop his brilliant idea and allowed his hard work to be taken away [presumably by trolls, as opposed to medical device manufacturers].

“When Patent Attack…, Part Two!” may be more scurrilous and insulting than Part One. The U.S. Patent and Trademark Office, while far from perfect, has done a generally good job of identifying and codifying inventions. Due to the USPTO’s lack of resources, in relatively rare instances given the millions of issued patents, it is sometimes necessary for the courts to decide what is novel and unobvious, who is an infringer, and how much must be paid in damages. This system may be inefficient, and benefit some businesses more than others, but it is generally fair, even if the enforcer is not practicing an invention or selling products.

Occasionally, it is necessary for the courts to determine what is valid or infringed, but typically it is left to posterity to determine what is “truly” innovative. This TAL story implies that innovation can be readily identified and classified, belittling those inventions that do not fit its definition.

“Too Many” Patents

The patent attorney introduced in Part Two who claims that there are “too many patents” confuses the issue. (Are there too many parcels or real estate? Perhaps he means that they are too easily granted?) Who is in the position to judge that the owner of an invention that meets the appropriate tests of patentability should not receive one because it lacks sufficient meaning? “When Patents Attack, Parts I and II” plays directly into the hands of businesses that would benefit from a weaker patent system with fewer patents that can potentially be used to undermine their leadership. The exclusivity afforded to patents can provide inventors, SMEs, and in some cases investors, the leverage to challenge traditions and provide the kind of positive destruction that stimulates competition and creates jobs. Heck, Apple, Microsoft, Disney, Google, H-P, Xerox and Amazon all were founded in garages or dorm rooms. America needs to encourage other companies to follow in their footsteps.

* * *

“When Patents Attack, Parts I and II” does little to enlighten listeners about how the patent system really works. It does, however, make it easier for companies to justify practicing others’ inventions, while laughing all the way to the bank. God bless (this) American life.

Image source: thisamericanlife.org

eat people cover

Irresponsible Op-Eds Distort IP Facts, Promote Mis-Information

These Writers Don’t Improve Innovation, They Trample On It

Why are bright people uncharacteristically dense when it comes to understanding patents?

Ignorance about a simultaneously technical, legal and commercial discipline is a factor, but there may be something else going on. IP CloseUp refrains from investigative journalism. We leave that to the specialists. Its mission is to examine IP issues like transactions and people, and to provide a look behind the headlines.

The recent wave of assaults on patents and the patent system is difficult to ignore. Attributed to the innovation rights has been everything from destroying American innovation to genital warts. They and those who have the audacity to deploy them have been depicted as the evil marauders. It makes one wonder.

A particularly spurious attack was generated recently by Andy Kessler, a former hedge fund manager and AT&T engineer turned pop-business author. I was not alone feeling my skin crawl reading Mr. Kessler’s recent WSJ op-ed, Patent Trolls vs. Progress. It was little measure of relief that Mr. Kessler’s piece was eloquently skewered by Tessera Technologies’, General Counsel, Bernard J. Cassidy in a Politico commentary, Shooting a Patent Straw Man.

Cassidy explains that “The Founders granted patent rights to ‘non-practicing entities’ — in those days mostly poor but technically inventive farmers, workers and artisans — because they hoped to spark a surge of innovation activity among the citizens of our young and underdeveloped nation.” He also reminds us that the gamble paid off for the U.S. in the mid-19th century.

Mr. Kessler’s commentary was also taken to task by Patrick Anderson in Gametime IP, who called it insipid and a fairly predictable diatribe.

“Inessential Patents”

Even more outrageous than Mr. Kessler’s piece is another WSJ commentary, A Patently Obvious Problem, by Holly Finn.  It appeared a few days later in a weekend edition that many regular readers may have missed. Ms. Finn begins with the (now quite tired) “wacky” patent argument, to show how detached from reality the system has become. “Patents aren’t what they used to be,” she observes, referring to the USPTO’s allowance of too many “inessential patents.” She cites statistics and a dispute brought by Oracle against Google (Ms. Finn’s former employer) as “a broader assault against American imagination.”

Who can presume to know which inventions are essential, or will be? It is not the USPTO’s responsibility. Patent examiners review inventions for their novelty and whether they are obvious. They are not judging commercial or social relevance, nor should they. Often, the best invention is reinvention.  New features that make something work better or differently may constitute something valuable, no matter how inane they may seem at the time.

Ms. Finn continues bemoaning the patent glut, takes a shot at Intellectual Ventures and concludes: “Actual inventors in Silicon Valley are incensed, their faith in fair play as bruised as their bottom lines.”

I don’t know about you, but I don’t hear inventors decrying patents? Many are telling me that they wish they had more funds to file patents and enforce them.

Ms. Finn talks about a new company, Connected Patents, “to help bridge the gap between brains and bureaucracy.” The problem is I could not find anything on the Web about Connected Patents, not even a simple website. I did find a few sentences on CrunchBase where Connected Patents is vaguely described as something between as strategic adviser, investor and NPE. It is not at all clear when they do. Ms. Finn concludes with a knock on first-to-file, a ridiculously dated argument that the AIA has made moot and the U.S. is alone in, patent trolls (yawn) and an invocation to tech CEOs to be more mythic and take on the cause of tech defendants.

Holly Finn’s biography shows she is a Yale grad and holds an MBA from NYU-Stern.  She ran Google’s editorial team and has written on  Silicon Valley and is the author of a book, “The Baby Chase: An Adventure in Fertility”.  She also is communications director of the Skoll Foundation, a non-profit whose founder and major benefactor, Jeff Skoll, eBay’s first full-time employee and President, is the executive producer of 33 feature films. The Skoll Foundation’s mission is “to drive large-scale change by investing in, connecting and celebrating social entrepreneurs and the innovators who help them solve the world’s most pressing problems.”

You have to wonder how much patent-dubious, brand-savvy Google and social engineer Skoll, which sounds like something of a VC, shaped her thinking about IP and Silicon Valley. Both enterprises likely believe they stand to lose more from patents than gain.

*     *     *

It is sometimes difficult to understand what motivates people to write about patents. I tend to give people the benefit fo the doubt. I have a hard time recognizing that misconceptions are not always honest, and inaccuracies are often not the result of a familiarity deficit. Sometimes where a writer stands has a lot to do with where she sits.

The sad part is that there are people who take  fact-related commentary literally. This ultimately undermines innovators and effects commerce more than Ms. Finn and Mr. Kessler are willing to admit.

Contrary to what some commentators would have us believe, patents are not typically “gotcha” rights that unscrupulous speculators wield against innocent innovators, deep-pocketed corporations and hapless consumers. Time will determine whether it is the patent system or its more mis-guided detractors that are the greater threat to innovation.

Image source: quora.com, andykessler.com

Nathan Myhrvold

Cook Book by Innovative IP Owner is No Recipe for Success

Myhrvold’s ‘Modernist Cuisine’ Inspires and Confounds –

Over the past ten years much has been written about Intellectual Ventures, the IP acquisition and licensing business, and its enigmatic founder, Nathan Myhrvold.

A recent cover story in The New York Times Dining Section, of all places, may provide the clearest insight yet into IV and its CEO.

The article, The Conjurer,” (sic) looks at Modernist Cuisine, $625 ($467.62 on line), Myhrvold’s epic, six-volume team project intended to deconstruct food and food preparation and discover why ingredients and techniques work the want they do. Strangely, some of food reporter Michael Ruhlman’s frustrations about the book could be directed at IV:

“For nearly two weeks I lived with this extensively hyped work — immersion circulators humming on my counters, a pressure cooker hissing, food sealer and grinder hot from use beside them — and I remain frustrated that I lack so many tools and ingredients required to actually use this behemoth.

“I was left wondering how a book could be mind-crushingly boring, eye-bulgingly riveting, edifying, infuriating, frustrating, fascinating, all in the same moment. Every time I tore myself away from these stunning pages to emerge for air, I had to shake my head so hard my cheeks made Looney Tunes noises.”

Sound familiar?

Modernist Cuisine, equal parts science, artistry and bold perspective could be a work of genius or maybe just a very comprehensive work.

Blending Ingredients for Maxium Effect

Ironically, Myhrvold’s book research team shared the same 18,000 square foot laboratory built to conduct IV’s invention experiments.

It’s difficult to know if Myhrvold is just two chess moves ahead of us or really twenty-five. Is he as good as a Grandmaster, playing several related games simultaneously, or just one big one involving lot of pieces?

Modernist Cuisine, like Intellectual Ventures, may prove to be part of the oeuvre of a restless visionary not easily comprehended, or the grand design of a canny investor with the passion to turn turnips into soup.

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Pictured above: The Modernist Cuisine team with Martha Stewart
Illustration source: ModernistCuisine.com

ROI for Intellectual Ventures Funds Scrutinized

U of TX Return on IV is Off 73%

PE investor Chris Dixon unearthed some interesting news about returns on an investment in Intellectual Ventures funds held by the University of Texas Management Company. The news was picked up by TechCrunch last week.

Go to the report ending May 31, 2010 and blow up page 7. Read how IV’s ROI for Invention Investment Funds I and II were off significantly for the period, especially compared to the holder’s other private equity investments.

Writes TechCrunch reporter Erick Shonfeld:

“The link is a PDF download of a document from the University of Texas Management Company listing all of its private investments in venture funds and private equity funds, along with their internal rates of return (IRR). One of the worst performers is Intellectual Ventures, the patent portfolio fund started by Nathan Myrhvold that has a reputation for patent extortion.

“One of its funds, the Invention Development Fund I, has a negative 73 percent IRR (Dixon mistakenly thought it was negative 78 percent, but close enough). Another fund, the Invention Investment Fund II, has a negative 10 percent return. The two funds combined are delivering a negative 36.66 percent IRR for the University of Texas.”

In fairness to IV, you can’t mix apples and oranges. Performance really depends on the specific nature of UofT’s investment and the poor current results may not accurately represent IV’s overall return on those specific funds.

Early stage venture investments often show extraordinarily uneven results until certain benchmarks are achieved in later years. The private document was likely leaked, so no context is provided and I’m sure that IV is not discussing it publicly.

*     *     *

This document is a rare peek into what is presumably a direct IP investment. It shows that where patent licensing and litigation are concerned ROI can be difficult to read and painful to watch.

I’m uncomfortable about the lack of context. It is hard to know what the performance (or lack of) really means based in relation to other PE investments or even other licensing activities.

Readers who may be able to provide additional perspective please chime in.

Illustration source: linux.sys-con.com

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