Attack of the Patent Troll

The other shoe has fallen and Intellectual Ventures, LLC has filed suit against nine companies in three suits:

The secretive firm co-founded by former Microsoft Corp. Chief Technology Officer Nathan Myhrvold has raised $5 billion to amass thousands of patents over the past decade.

Unlike most specialists in the field, Intellectual Ventures has avoided litigation, persuading big tech companies to become investors in his firm—along with payments that sometimes came to hundreds of millions of dollars. But Mr. Myhrvold never ruled out lawsuits if negotiations failed.

But on Wednesday, Mr. Myhrvold’s firm, unable to secure payments from nine companies, announced three patent-infringement suits. One suit names the best-known players in security software—Symantec Corp., McAfee Inc., Trend Micro Inc. and Check Point Software Technologies Ltd.

The suits, all filed in federal court in Delaware, seek unspecified damages. The move comes on the heels of a raft of patent lawsuits among tech firms that has entangled numerous high-profile companies both as defendants and plaintiffs.

IV is a company that makes and sells no products. It is in the business of acquiring patents and licensing them. To a lesser degree it also produces patentable ideas of its own.

In a sane world such a business model wouldn’t be viable and IMO actions of this sort should provoke a revolt against our system of intellectual property. Such a revolt, of course, won’t happen.

For every Symantec or Trend Micro who can afford to fight or pay there are probably ten small companies that will be beaten out of existence, prevented from growing, or discouraged from even starting. About 20 years ago I began to see “hold harmless” clauses relating to intellectual property showing up in the contracts I was receiving with large companies. I can only imagine what they look like now.

File this among the many reasons that our economy isn’t growing fast enough.

Update

Felix Salmon adds this worthwhile observation:

Intellectual Ventures might do a bit of R, but it doesn’t do any D. Instead, it just sits there, extracting rents (that’s the polite way of saying “blackmailing”) technology companies who actually want to make things.

The long term repercussions of this will be a competitive advantage for companies based in places like China or Brazil which have much weaker intellectual property laws. It’s sad, because patents, as originally envisaged, were designed to encourage innovation, rather than to stifle it.

That’s about it.