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. EPO Did Not Want to Take Down One Techrights Article, It Wanted to Take Down Many Articles Using Intimidation, SLAPPing, and Psychological Manipulation Late on a Friday Night

    Recalling the dirty tactics by which the European Patent Office sought to remove criticism of its dirty secret deals with large corporations, for whom it made available and was increasingly offering preferential treatment

  2. The European Private Office: What Was Once a Public Service is Now Crony Capitalism With Private Contractors

    The increasing privatisation of the European Patent Office (EPO), resembling what happens in the UK to the NHS, shows that the real goal is to crush the quality of the service and instead serve a bunch of rich and powerful interests, in defiance of the original goals of this well-funded (by taxpayers) organisation

  3. Microsoft Once Again Disregards People's Settings and Abuses Them, Again Pretends It's Just an Accident

    A conceited corporation, Microsoft, shows not only that it exploits its botnet to forcibly download massive binaries without consent but also that it vainly overrides people's privacy settings to spy on these people, sometimes with help from malicious hardware vendors such as Dell or Lenovo

  4. When the EPO Liaised With Capone (Literally) to Silence Bloggers, Delete Articles

    A dissection of the EPO's current media strategy, which involves not only funneling money into the media but also actively silencing opposing views

  5. Blogger Who Wrote About the EPO's Abuses Retires

    Bloggers' independent rebuttal capability against a media apparatus that is deep in the EPO's pocket is greatly diminished as Jeremy Phillips suddenly retires

  6. Leaked: EPO Award of €880,000 “in Order to Address the Media Presence of the EPO” (Reputation Laundering)

    The European Patent Office, a public body, wastes extravagant amounts of money on public relations (for 'damage control', like FIFA's) in an effort to undermine critics, not only among staff (internally) but also among the media (externally)

  7. Links 27/11/2015: KDE Plasma 5.5 Plans, Oracle Linux 7.2

    Links for the day

  8. Documents Needed: Contract or Information About EPO PR/Media Campaign to Mislead the World

    Rumour that the EPO spends almost as much as a million US dollars “with some selected press agencies to refurbish the image of the EPO”

  9. Guest Post: The EPO, EPC, Unitary Patent and the Money Issue

    Remarks on the Unitary Patent (UP) and the lesser-known aspects of the EPO and EPC, where the “real issue is money, about which very little is discussed in public...”

  10. Saving the Integrity of the European Patent Office (EPO)

    Some timely perspective on what's needed at the European Patent Office, which was detabilised by 'virtue' of making tyrants its official figureheads

  11. A Call for Bloggers and Journalists: Did EPO Intimidate and Threaten You Too? Please Speak Out.

    An effort to discover just how many people out there have been subjected to censorship and/or self-censorship by EPO aggression against the media

  12. European Patent Office (EPO) a “Kingdom Above the EU Countries, a Tyranny With ZERO Accountability”

    Criticism of the EPO's thuggish behaviour and endless efforts to crush dissenting voices by all means available, even when these means are in clear violation of international or European laws

  13. Links 26/11/2015: The $5 Raspberry Pi Zero, Running Sans Systemd Gets Hard

    Links for the day

  14. EPO Management Needs to Finally Recognise That It Itself is the Issue, Not the Staff or the Unions

    A showing of dissent even from the representatives whom the EPO tightly controls and why the latest union-busting goes a lot further than most people realise

  15. Even the EPO Central Staff Committee is Unhappy With EPO Management

    The questions asked by the Central Staff Committee shared for the public to see that not only a single union is concerned about the management's behaviour

  16. The Broken Window Economics of Patent Trolls Are Already Coming to Europe

    The plague which is widely known as patent trolls (non-practicing entities that prey on practicing companies) is being spread to Europe, owing in part to misguided policies and patent maximalists

  17. Debunking the EPO's Latest Marketing Nonsense From Les Échos and More on Benoît Battistelli's Nastygram to French Politician

    Our detailed remarks about French brainwash from the EPO's media partner (with Benoît Battistelli extensively quoted) and the concerns increasingly raised by French politicians, who urge for national or even continental intervention

  18. The Sun King Delusion: The Views of Techrights Are Just a Mirror of EPO Staff Unions

    Tackling some emerging spin we have seen coming from Battistelli's private letters -- spin which strives to project the views of Techrights onto staff unions and why it's very hypocritical a form of spin

  19. Links 25/11/2015: Webconverger 33.1, Netrunner 17 Released

    Links for the day

  20. United They Stand: FFPE-EPO Supports Suspended Staff Representatives From SUEPO

    An obscure union from the Dutch side of things at the EPO is expressing support for the suspended colleagues from SUEPO (more German than Dutch)

  21. Censoring WIPR Article About Censorship by EPO

    A testament to how terrified journalists have become when it comes to EPO coverage, to the point of deleting entire paragraphs

  22. Censorship at the EPO Escalates: Now We Have Threats to Sue Publishers

    Having already blocked Techrights, the EPO's management proceeds to further suppressions of speech, impeding its staff's access to independently-distributed information (neither ordinary staff nor management)

  23. Response to Bogus Accusations That EPO Staff Protests Are Really an Attempt to Derail UPC

    Common myths about staff protests in the European Patent Office (EPO) debunked, with some additional background and general perspective on recent events, the unitary patent (UPC) and so on

  24. New Heise Article Makes It Clear That 'Nazi'-Themed Accusations Against the Suspended Board Judge Were Insufficiently Substantiated

    The personal attacks on a judge who was illegally suspended (a so-called 'house ban') increasingly look like the management's own campaign of defamation, mostly intended to marginalise and punish a judge who spoke about serious charges against VP4 (Željko Topić)

  25. Links 24/11/2015: Asus Chromebit CS10, Second Linux 4.4 RC

    Links for the day

  26. European Central Bank Staff Committee Adds to Growing Pressure on Abusive EPO Management

    The staff representatives of the European Central Bank E-mail their colleagues -- with European Central Bank managers' approval -- regarding the European Patent Office and its attacks on staff unions

  27. Gross Violation of Workers' Rights in EPO: Denial of Christmas Vacation/Leave for Slower Workers

    A look at an E-mail from within the EPO which shows how Christmas is used to squeeze staff, urging them to work even faster (despite speed gains) or lose their Christmas leave

  28. The Bogus Narrative Floated by EPO Management: Our Judges and Examiners Are Armed and Violent

    A look at the union-busting and protest-crushing moves from high-level EPO managers, who are trying to convince politicians that they do so in an effort to stop terrorists and neo-Nazis

  29. Support SUEPO or End Up Like They and Some of the Boards Did

    SUEPO, the fast-growing staff union of the EPO, increasingly needs the support and protection offered by action and participation from staff

  30. NRC Handelsblad (Dutch Evening Newspaper) Speaks About EPO's Refusal to Accept Court Orders From The Hague

    Article explains the depths of the issues inside the EPO and the unacceptable immunity that management at the EPO continues to exploit, shaming or discrediting the very notion of the rule of law in Europe


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