Myhrvold’s Business Model: “Invention Capitalist” or “Patent Troll”?

Former Microsoft CTO Nathan Myhrvold and his company Intellectual Ventures are discussed extensively in a feature article published in the latest edition of Fortune.

The fundamental question about Intellectual Ventures (IV) is whether it is an “invention capitalist,” as the polymathic Myhrvold would have us believe, or a “patent troll,” as executives from HP and Cisco contend. It’s a vigorous debate, and Fortune gives both sides a fair hearing.

From his time spent at Microsoft, Myhrvold has accumulated enough wealth to do whatever he wants, as often or as seldom as he wishes. At just 47, he presumably has many years ahead of him, so it’s puzzling to many that he would choose to launch a company that purchases and invent patents and then licenses them to manufacturers. As a project, it doesn’t seem to possess the gravitas or nobility with which an obscenely wealthy ex-Microsoft CTO would want to be associated as he saunters toward his golden years. Bill Gates aims for unprecedented philanthropic largess in his post-Microsoft incarnation, whereas Nathan Myhrrvold reputedly has hoarded from 3,000 to 5,000 technology patents.

While many in Silicon Valley are skeptical or hostile to Intellectual Ventures, assuming that Myhrvold and company are preparing to launch patent litigation like Microsoft issues press releases, Myhrvold claims his intentions are not nearly so sinister. He says he merely is following a well-established business model.

“We want to build a portfolio just like those companies have, with licensing approaches broadly like they have … I want to achieve what IBM has achieved. That’s my financial model. This is a play where I take portfolio theory and apply it to something illiquid to deliver a return for my investors. I don’t see that as evil. I don’t see that as particularly threatening.”

Also, it would seem there’s some ambivalence toward Intellectual Ventures in Silicon Valley. Microsoft is among its confirmed investors, and other reported investors include Intel, Apple, Sony, eBay, and Google.

HP definitely is not among Intellectual Ventures’ investment group, with an HP executive quoted in the story as follows: “We’re trying to run a business. We’re not in the business of running around the world pissing everyone off.”

Anyway, I recommend the article. Feel free to let me know what you think.

If nothing else, this quote from Myhrvold, on how big technology companies, with their phalanx of legal eagles, historically infringe with impunity on the patents of smaller industry players, warrants your expenditure of time and energy:

“This isn’t some X-Files conspiracy theory. I was in the meetings at Microsoft!”

Enough said.


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