Part I: IPCheckups & Intellectual Ventures: What are they about?

Intellectual Ventures (IV) is a private company that is quite often heard about in the IP community. 

As per it’s wiki entry, “Intellectual Ventures is a private company notable for being one of the top-five owners of U.S. patents, as of 2011.[1] Its business model has a focus on developing a large patent portfolio and licensing these patents to companies. Publicly, it states that a major goal is to assist small inventors against corporations. In practice, much of their revenue comes from licensing patents from other corporations and then filing lawsuits for infringement of patents, a controversial practice known as patent trolling.”

Intellectual Ventures has caught the attention of much of the IP community for a variety of reasons, including the above, as well as including it’s secretive patent ownership strategy. In the linked article, Patently-O states that IV may even be the world’s largest patent holder, although they have not been very public about which patents are actually in their massive patent portfolio. According to a recent article by CNET, entitled “Inside Intellectual Ventures, the most hated company in tech“, Nathan Myhrvold, and other executives of IV defend it by saying that critics simply don’t understand what they’re doing. The critics they speak of, probably include those such as Mike Masnick at TechDirt, who  thinks it is a ‘dangerous, innovation harming monstrosity’. Certain types of Non Practicing Entities (NPEs) are often viewed quite controversially in patent circles. 

Thus, when a couple of weeks ago, we heard of a patent analytics firm, IP Checkups which claimed they were looking to unearth and make public the details of Intellectual Ventures’ patent portfolio, like much of the patent community, we were very interested in what their plan was. Transparency is always something that we’ve appreciated and strived for on this blog. So we decided to look further into it. 

News of their ambitious project, titled Case IV Thicket was reported in several sources including a WSJ writeup here. Interestingly, they have taken a novel crowdfunded approach to collecting the funds to complete this project. Surprisingly, they have not received as much backing as I would’ve expected them to, given the amount of questions that come up in regard to IV. For those willing to consider involving themselves in this, please check their indiegogo page here -> http://www.indiegogo.com/iv-thicket. 

At the same time, we wanted to hear what IV had to say about the queries into their company. Fortunately, we were able to get a good deal of information from both sides, and present them to you in this post and the next! 

I had a very informative meeting with Matthew Rappaport, founder of IPCheckups, and although much of it is paraphrased, I have listed in Q&A format what he had to say regarding their project. (Some crucial bits are in the 2nd question!). 

After that, in Part II , I have listed the answers given by the International Marketing Director, Intellectual Ventures, Nicholas Gibson to the questions I sent him. Although I have heard quite often that IV has been very hard to speak with, I must say that IV was very forthcoming when I contacted them. 

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Swaraj: There seems to be a lot in the recent news regarding IPCheckup’s plan of looking into Intellectual Ventures and what they’re doing. Could you tell us a little bit about this? 

Matthew: Certainly. We don’t have a problem with what IV is doing. It’s a viable business model and serves the patent community quite well. They believe in innovators and patent owners. We do too. We’re not an anti-patent group, we’re pro-patents. The reason we’re doing this is for transparency. Being able to see what a company owns helps to create more efficiency in the markets and more certainty for investors. Our customers, like most patent owners and investors, like certainty. We’re a patent research firm, so searching for the patents that Apple or HP have bought gives us a quick view of what they own. 

In the case of IV though, they claim to have a portfolio of 40,000 patents, but a search reveals only about 3-4000 patents. The rest are almost impossible to find, because you’d need to know the names of the shell companies. This makes it difficult for potential licensors as such information helps determine the price for the license. 

Matthew: When TechDirt covered this story, they suggested that it would be smart for us to release some information or data before hand, so as to encourage belief in ability. We think its a good suggestion and are incorporating it. So we’ll explain a bit of what we plan on doing, and will also be releasing some information that we’ve discovered already. 

To start off with, we’ve searched the US re-assignment database for IV patents. This brings up a few 1000s of patents that were owned by others and re-assigned to IV. Then we can see who they’ve done deals with, patent attorneys, agents, etc… the people involved. If we look at the file wrappers, we could look behind the scenes, sometimes discovering some of the strategies. We look at the litigations to see which law firms have been involved, etc. We take note of all this information and data. 

The 2nd thing we did is we took a couple of the alleged shell companies. One being RoseBush LLC and the other being Purple Mountain server. We looked up the corporate addresses of those organizations from the web, and then did a search on the re-assignment database for those addresses. We found 1000s of patents assigned to other companies at those addresses. That then gave us about 5 or 6000 US patents re-assigned to these organizations. So the idea would be to start to research these organizations, who’s involved and are they related to the others, etc. 

Example. We looked at who was listed as an inventor on multiple IV patents, this guy called David Martin Monroe. When we looked at the patents, the address was this address in Las Vegas. This was the same inventor of one of the patents that we found associated with one of the (shell) companies that it was re-assigned to, (that we found from the initial step we did), called ‘Ayschogh Visuals’. Basically there’s an inventor that’s shared between IV and Ayschogh, and the address of RoseBush has the same address as Ayshogh. We looked a little deeper and looked at the actual patent and the re-assignment data, and found that Ayschogh visuals has another address in Los Altos, and that address was the same as the same address of Purple Mountain Server! 

So it’s like a web of connectivity and we’re trying to untangle this complex web and the manner in which this web was created. Distributing this data for free is a big part of what we’re doing, but we also want to help untangle this web, so that other companies, people, academics, etc can understand the nature of how complex and probably very expensive method of capturing data and capturing patents and putting them into shell companies was created. Thereby putting transparency into not only the actual shells, but also the process. 

Perhaps other large corporations have also started to create their own shell companies, and in a short while, there’s suddenly this whole underground patent holding universe that’s just populated by shells and no one knows who owns what. We can see how that’s advantageous to patent owners, but it also brings a lot of uncertainty. ‘Who’s suing me? Why are they suing me? Who’s going to call me for a license? etc’ These are questions that all companies should be asking before investing their own or anyone else’s money in projects. 

Matthew: It’s a double edged sword of course. Will it drive it further underground? Or does it mean that because we’re unveiling the way it’s being done, people may think that if IV’s methods can be unveiled, perhaps theirs can as well. Remember, it’s not cheap to be doing this – Registering companies, paying taxes, the whole infrastructure thing. Why play cloak and dagger games? Why not just come out and show people what you have and try to legitimately sign up licenses? 

Our perspective is that bringing this out in the open will make it more likely that when I see their portfolios, I will be more likely to call them up and ask for licenses – rather than thinking ‘hey, it’s some small company in Nevada that we can’t find anybody at, forget it’. So we think it would drive more business since it would encourage more licenses, since they’re being more upfront about what’s going on. 

Matthew: Clearly Nathan and these other people are very smart people. They’ve made calculations and it’s fine, they can do that. But we’re trying to empower the crowd and level the playing field. 

Matthew: That’s a good question. When we started the project, we thought we would provide all the data for 5 years publicly. As it evolved, we had feedback from people asking how we can have it both ways – going for transparency but not providing all the data (ie, the data prior to the last 5 years). What will you do with the rest of it, etc.
After this feedback, we’ve changed the scope of the project, and will be giving all of it for free now, so everyone gets the same thing. If you give extra money though, you’ll get access to our sister company’s CleanTech Patent Edge database, a separate product that we sell. That’s a database of 1.5 million patents related to clean tech, thats categorised 150 different categories. So you get a certain amount of access to that database, rather than anything special for the IV data, which will just be out for free.

Swaraj: So there’s no connection between the IV data and the CleanTech data?

Matthew: The only connection is that some of the patents in the CleanTech Patent Database will be owned by IV, but that’s the same for any industry. All the IV patents data will be published for free for anybody. 

Matthew: Yeah, there were only about 1200 clean technology patents owned by NPEs. It makes sense because the value of clean tech patents to NPEs is somewhat limited, because markets aren’t that big. So NPEs don’t have products to trade, don’t have technologies to cross-license, etc. So for them, the most appealing places to go are where the biggest markets are. As clean technology evolves and grows, there will be more involvement. 

Matthew: We didn’t want to go for corporate partners because then we might not have been able to give it out for free. There has been some talk about us having relationships with IV. We don’t. We don’t receive funding from them or any NPEs. We’ve never raised venture capital money.We thought this would be equitable and fair for everyone. We’re trying to do the right thing for the community. Of course there is some benefit to us, in that we will get some publicity and more credibility to us. But in exchange for that we’re willing to give out this resource for free. Also it’s exciting and we haven’t seen anyone combining crowdfunding with IP research, so when we came up with the idea, we thought it would be a neat project. 

We’re confident that people will step up. But if we aren’t able to pull up enough money, it suggests that there isn’t enough interest. Maybe people aren’t willing to put their necks out and step up and publicly announce their support for the project. People have told me off the record that they like the project, but are scared of future implications – “If I put money into this, does it suggest that I am anti NPEs, or anti-IV?”.
We’re not doing this to destroy anything. We think its building more opportunities for people to come to agreements through licensing rather than litigation. 

A lot of people have wanted to cover reports of the project and there’s more exposure now. If people know about this, and we’ve done what we can… if people still aren’t interested in this, then it suggests that big companies who can benefit from this, and small/medium companies… it’s not enough on their radar. That said, there are different reports out there being sold for up to 10,000$ currently. 

Matthew: We saw a blogpost by him saying that he’s offering his data to anyone who’s being sued by IV for free. We think that’s fantastic and very generous of him. We understand he’s spent a lot of time developing and getting this data and he’s charged for it and he wants to get paid for it. He’s said he wants to partner with someone on a non-exclusive basis to buy the data .. We’ve contacted him to see if we can work together but haven’t heard back from him. I think there was a perception in the article that we got access to his data, but just to clarify, we didn’t, we haven’t seen his data. We know that he’s out there, but we wouldn’t want to use his data at all and unless he wants to work with us and offer the data up to the community, we’d want to do it ourself. 

Also, by having a free resource out there, it wouldn’t replace the paid reports. The attitude (from bigger companies) would probably be that ‘here’s the free version that these guys did for $80,000, let’s verify this with the paid version’. 

Again, our goal is not to shut anyone out of business. It is to support innovative companies creating products and to put a resource out there to to help bring transparency and level the playing field. 

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