EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS


Intellectual Ventures “a Combination Mob Protection Racket + Ponzi Monetization Scheme”

Posted in Bill Gates, Microsoft, Patents at 9:22 am by Dr. Roy Schestowitz

Nathan Myhrvold

Summary: People who are personally or distantly familiar with Microsoft’s patent troll Nathan Myhrvold openly explain what he is doing

THE firm called Intellectual Ventures, which is backed by Gates’ investment vehicle (mentioned earlier this morning) and typically described as a Microsoft-created patent troll, is a lot more than just that. It is connected to 1,000+ other entities such as Bill Gates’ Searete and people who claim to have “had some direct experience with Myhrvold’s group” have a lot more to say. It adds to what we wrote about the New York Times article a few days ago.

The Against Monopoly Web site refers to that same article which reveals the lesser-known sides of Intellectual Ventures:

Is this just a patent troll or a new way to extract money from everybody?


It doesn’t sound to me like Myhrvold has much interest in the poor inventors. Rather, he just seems to want their patents so he can make piles of money suing manufacturers.

One reader of ours says that “Intellectual Ventures & Myhrvold [are a] fraud worse than patents trolls” and he points to this first comment from the Against Monopoly Web site (written by “Repentant Patent Owner”):

Having had some direct experience with Myhrvold’s group (and hence my desire to remain anonymous), I suggest the following. “Patent troll” is too simplistic and limiting. Think of IV as a combination mob protection racket + ponzi monetization scheme.

The goal is build an increasing portfolio of interlocking patents under control through a kind of pyramid scheme. Eventually the principals (Myhrvold, Gates, others) will cash out later. The patents are rarely held directly, instead they are held in an elaborate pyramidal network of LLC’s, LLP’s, etc.

The mob protection racket is in the form of thier pitch to current patent owners & potential licensees: “we’ve never sued for infringement, but of course a few of our patents have been sold to folks who do sue for nasty damages. Be a shame if anything would happen to your nice business, eh? Why not join us as a licensee AND investor? I’m sure we can make sure no patents of interest to you end up with the nasties.”

The idea is to get patent-owning firms (particularly multi-patent owners) to agree to sell ownership of the patents to IV, but also to get them simultaneouslyh INVEST in LLP’s that buy more patents. More investors means more $ to buy more patents, which brings more investors, which (especially when leveraged) brings more patents, which, …. until (someday) they have all the patents (of course Myhrvold & Gates are gone by then). All along the way, IV takes substantial mgt fees for managing all these portfolios & LLP’s.

No, IV isn’t a troll per se. It’s probably worse long-term for the larger economy. Kind of like how some of the worse Wall St creatures haven’t been extorting per se, but when you put together a pyramid of SIV’s levering off each other and buying Mortgage backed securities and then artificial derivatives based off the already derivative securities, all with 1% capital you get something not very healthy for the economy, but enormously profitable for the bank that manages the setup for fees.

If it is indeed a pyramid scheme, then it should be treated as such, despite the massive PR and lobbying that Intellectual Ventures is doing. The president of the FFII points out that “Even the average reader of the Harvard Business Review has a gut appreciation for the fundamental unfairness of software patents.” He points to this VC who speaks about Intellectual Ventures in response to that same report from The New York Times:

Software patents are the problem not the answer


Nathan supports this argument by comparing the current market for intellectual property to the early days of the computer industry. He argues that in the 1970s people did not believe the software industry could be an independent business and that it would always be linked to hardware. He says that software industry developed for two reasons. First, software vendors persuaded software users to respect intellectual property rights through both education and lawsuits, and second, the vendors overcame system incompatibilities and developed solutions that would work on different computers. Nathan suggests that a market for inventions would emerge if the same two conditions are met, and then offers his company Intellectual Ventures as a model for how to meet them.

I do not agree. Here’s why.

Let’s start with software analogy. Put aside the fact that in the 70′s software vendors used copyright law to prevent the outright copying of their software and not patents as Nathan proposes to do. The real reason the independent software industry emerged is that operating systems and APIs made it possible for independent software vendors to develop applications independently. They no longer had to ask permission of the hardware vendors. This same characteristic of permissionless innovation led to the explosion of independently created services on the internet. The rampant abuse of the patent system has created the opposite condition for the creators of software and web services today.

Here is Brad Feld’s take on it:

Perhaps Mr. Myrhvold recognizes this, because in the article he says “I’m trying to get inventions that kind of respect as an economic entity.” (Emphasis added).  IV apparently incentivizes innovation on…inventions?  “Inventions” are actually a term of art in patent law, they are the things for which one can legally be granted patent rights.  IV, therefore, seems to admit that it wants to enforce patent rights so that we can…have more patents.  Mr. Myhrvold wants to create an entire economic category based on payments to entitles that don’t build, produce, sell, etc, any products, or create anything of value (i.e., that don’t innovate, at least in any useful way that advances human progress), in exchange for not being sued on exclusionary patent rights.

Groklaw quotes from the article a part which says: “In the article and in conversation, Mr. Myhrvold describes the patent world as a vastly underdeveloped market, starved for private capital and too dependent on federal financing for universities and government agencies, which is mainly aimed at scientific discovery anyway. Eventually, he foresees patents being valued as a separate asset class, like real estate or securities.”

“A new way to gamble at the public’s expense, as I see it.”
      –Pamela Jones, Groklaw
Pamela Jones mocks this comparison to “real estate”. “Is he kidding,” she asks, “After what investors/bankers/hedge funds in real estate did to the world’s economy? He wants to do that with patents? A new way to gamble at the public’s expense, as I see it.”

One of our readers, the one who wrote a short article about Myhrvold glorification in some gullible Web sites, points to this followup and calls it “More vacuous glorification of Gates and Myhrvold, “The Dawning of the Age of Biology” is a dinner that makes me want to gag. There’s a nice picture of Gates looking nasty, but the text is gibberish. It is not surprising to see Huffington Post people at such a gathering, but it is sad to see BoingBoing getting suckered by the “shoulder rub”. Jardin might want to take a shower to wash that rub off if she thinks of what Microsoft business methods will do to medicine and food.”

Yes, those old PR stunts of Myhrvold do receive some attention and the same goes for Gates (coverage from The GigaOM Network which was paid by Microsoft). The writers seem not to pay attention to what really happens out there (lack of context) and overall, the problem is no longer just Microsoft because the Gates family is spreading to other abusive monopolies and even funds/creates this patent menace that Myhrvold is engineering.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New

  1. The United States Pressures India to Broaden Patent Scope and Other Monopolies

    The envoy of the US is trying to tell India how to run the country (stricter laws regarding copyrights, trademarks, and patents), as a condition for foreign investment by multinational corporations

  2. Budget and Finance Committee of the Administrative Council (EPO) Confirms Exile of the Boards of Appeal

    Crushing of highly-skilled staff, propaganda in the form of new press releases, and recruitment attempts that won't succeed because the world now knows what goes on inside the European Patent Office

  3. Links 26/10/2016: “softWaves” in Debian 9, Rust in GNOME

    Links for the day

  4. Leaked: EPO's Vice-President Willie Minnoye Saying the Unsayable, Then Threatening Anyone Who Keeps Record (Evidence) of It

    E-mail that would leave Vice-President Willie Minnoye bashful, as it helps show not only bad policy but also attempts at suppression of discussion about it

  5. Puff Pieces of the EPO-IPO (EPO+EUIPO) Have Begun to Appear Amid New Evidence of Brain Drain, Lowered Standards

    The grim vision of the EPO which is losing all its talent (over time), becomes more like a production line (quality does not matter), and produces propaganda for "media positioning" (or "placements") -- all under the guise of 'studies'

  6. Leaked: Minutes From the Administrative Council of the EPO Regarding the 'Reform' (Exile) of the Boards of Appeal

    Details of the relatively secret proceedings back in June (belatedly released only a short while ago), carefully abbreviated to demonstrate which delegations helped Battistelli crush the Boards of Appeal and which ones insisted on maintaining the status quo, as per the EPC

  7. No Promising Future For the EPO Under Battistelli (If Any Future At All)

    Pessimism becomes realism at the European Patent Office as units are being torn apart, patent quality discarded, "unified" patent courts dreamed of (more patent lawsuits, higher damages), and EUIPO (EU-associated, unlike Eponia) gets closer to the EPO

  8. Leaked Minutes From the EPO Reveal That Battistelli is Detached From Reality and Blames Everything on “Union Officials”

    Minutes of the Administrative Council's meeting reveal some truly bizarre rants from Battistelli, who simply refuses to accept that the European Patent Office is burning (without a future direction, only burnout and brain drain) under his poor and abusive leadership

  9. Tata/TCS is Still Pushing for Software Patents in India

    The obnoxious company that is promoting Microsoft and software patents in a country that needs neither makes the headlines again (Financial Express)

  10. Links 25/10/2016: Rackspace's Praise of FOSS, Chain Chooses the GPL(v3)

    Links for the day

  11. Links 24/10/2016: Linux 4.9 RC2

    Links for the day

  12. Battistelli Plans to Expand the Social [sic] 'Study' (Then 'Conference') Propaganda Until Next Month, Under the 'Workshop' Umbrella

    Milking his shameless propaganda (paid-for 'studies'), Battistelli wants to rewrite the record by all means possible, then pretend that EPO staff participates in it

  13. EPO and EUIPO Join Hands to Release Propaganda (for European Media to Parrot) Some Time Tomorrow

    EPO and EUIPO in collaboration for the promotion of the notion that they are both necessary (and reinforced speculations about growing overlap between them)

  14. UPC Preparatory Committee Puts the Brakes on UPC Amid Brexit and Growing Uncertainty

    The Unified Patent Court (UPC) preparatory committee recognises that the UPC isn't going anywhere (any time soon) and false job advertisements -- or advertisements for jobs that will never exist -- are withdrawn

  15. Updates Regarding EPO and BoAC: Unrest and Injustice Carry on

    Some of the latest information which is publicly and privately available to us, in particular regarding the case of a suspended judge which represents unprecedented erosion of the appeal boards' independence (and hence lack of justice in the Organisation)

  16. EPO and the “Iberian Connection”: Patricia García-Escudero Márquez - Battistelli's Pet Chinchilla on the Boards of Appeal Committee?

    Why the Boards of Appeal Committee has begun showing prominent signs that it is anything but independent and capable of standing up to Battistelli (or his circle at the Office, which includes the “Iberian Connection")

  17. Links 23/10/2016: Alcatel's New Android Smartphones, Another Honorary Doctorate for Stallman

    Links for the day

  18. Open Letter Exposing the Farce Which Was Battistelli's 'Social Conference' Coinciding With Further (New) Attacks on EPO Staff Representatives

    A detailed letter reveals legitimate concerns expressed by staff representatives at the EPO ahead of the so-called Social Conference, in which we have highlighted severe factual flaws

  19. Translation of Latest Rant From French MP Philip Cordery About Benoît Battistelli's Abuses at the EPO

    Philip Cordery crosses horns with Benoît Battistelli, who has become a source of embarrassment for France with his autocratic tendencies and misguided policies that rapidly ruin the European Patent Office (EPO)

  20. Battistelli-Commissioned PwC ‘Study’: Leaked Document Shows PwC's Dishonesty and Misrepresentation of EPO Staff

    An in-depth analysis (but not comprehensive, just preliminary) of the so-called 'study' from PwC, which basically did what it was paid for (pay to say)

  21. Links 22/10/2016: Deus Ex for GNU/Linux, Global DDoS (DNS)

    Links for the day

  22. Battistelli-Commissioned PwC ‘Study’: Survey Comparison Shows Serious Deterioration and Efforts by PwC to Disguise the Truth

    The latest output from PwC turns out to be even worse than initially thought, indicating that not only did it find a degradation in the EPO but also attempted to hide/obscure it

  23. EPO Teaser - The "Iberian Connection" - Some Photos of García-Escudero and His Royal/Government Connections

    A look at the undeniably close connections between Mr. García-Escudero and the most powerful people in Spain

  24. Disruption to Site's Service

    A technical note about why Techrights has not been publishing many articles recently

  25. Links 21/10/2016: MPV 0.21, Mad Max for GNU/Linux

    Links for the day

  26. EPO Caricature: Battistelli's High Five

    Another cartoon about the sad state of the EPO

  27. Battistelli Ruins Not Only the EPO But Also the Whole of Europe By Ushering in Software Patents That Patent Trolls Love So Much

    Battistelli's bad leadership at the EPO threatens to bring to Europe all the ills and menaces of the patent system in the United States

  28. EPO Spokesman Lies to IP Watch in Order to Save Face and Save the King (Battistelli)

    Rewriting history (revisionism) regarding Battistelli and what was demanded amidst abusive behaviour from him

  29. Unitary Patent (UPC) is Dead, But 'Managing IP' and Selfish Patent Law Firms Still Try to Resurrect It

    The latest attempts to shore up the Unitary (or Unified) Patent Court and who's behind it other than the usual suspects

  30. Links 20/10/2016: Linux 4.10 Preview, ONF and ON.Labs to Merge

    Links for the day


RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time


Recent Posts