Update: I’ve added the actual transcript of the exchange below.
Today, Nathan Myhrvold, the head of Intellectual Ventures, did an event on Capitol Hill. It was mainly a hagiographic exposition, so it didn’t get interesting until the audience Q & A.
Someone in the audience (OK, me) asked why, if IV is so focused on protecting innovation, it sued banks based on their ATMs rather than the ATM manufacturers. After all, it’s the ATM manufacturers that supposedly took IV’s inventions without paying, not the banks. Myhrvold responded by talking about the billions in ATM fees that the banks make.
The questioner (oh, right, me) noted that this was the Willie Sutton rule. (Willie Sutton was a bank robber, who, when asked why he kept robbing banks, was said to have responded, “That’s where the money is.”)
Myhrvold didn’t deny it. He insisted that banks shouldn’t be able to profit from using someone else’s invention.
I won’t explain here why the particular patents IV used against the banks aren’t valid (although they’re not), but the big takeaway should be that IV has nothing to do with protecting inventors’ rights. This is, as I’ve been saying, just about the money.
And now you have it from the King Troll himself.
Update: Here’s the official transcript of the exchange:
Thank you, everyone, for joining us today. I think we’re close to the end here. If you have time, one more question, maybe.
MR. MYHRVOLD: Yeah.
Q: So as I’m sure most people here know, re-examination is quite limited in what you can review. You can only review on prior art grounds, which actually suggests expanding the covered business method review program. Also, for – (inaudible) – statistics as misleading because there’s a major thumb on the scale in favor of validities and the fact that if, as you say, half of them are found invalid, that’s significant.
But my actual question is this. So Intellectual Ventures recently sued a number of banks on several patents relating to their ATMs scanning checks. My question is, you know, listening to what you’ve said, I’m having trouble reconciling that with the choice to sue the banks who purchased the ATM systems instead of suing the ATM manufacturers, who apparently, in your view, would have ripped off the patents. So can you reconcile that?
MR. MYHRVOLD: Banks make billions and billions of dollars on ATM fees. They – they’re in a position to charge enormous fees because they control the ATM networks that their depositors or others wind up using. That’s how they are using this set of inventions. And the set of inventions, in our belief, leads very fairly and very squarely into what they’re doing. So I think that it’s only fair for them to pay a certain amount of those billions back to the original inventors.
Q: But that sounds like the Willie Sutton view; you know, that’s where the money is. But I mean, the ATM manufacturer built the system that you’re seeing increase. So I’m just asking, why not sue them, since they’re the one that ripped you off?
MR. MYHRVOLD: Well, I’m glad that you’ve stipulated that they’re – ripped me off. (Laughter.) We certainly will take note of that. But look, this is – the patent statute says – (inaudible) – and if you go through – I’m – I would be shocked if banks don’t have an indemnity clause in how they buy their things. Essentially, when we were at Microsoft and we sold software to banks, there’s – indemnity is one of the things that people asked about, or they say if there’s a patent issue associated with this, then come back to us. If in fact it’s a system-level thing that doesn’t occur in any single product and incurs (sic) instead in the system, then it’s absolutely fair to go after the banks because they’re the ones that create the whole system. And you can’t have them get out of their responsibility simply by saying, oh, we chose to structure this through a bunch of purchase orders so that all these billions are just our right to collect, no matter what technology they did, go after somebody else. That isn’t the way the patent statute reads, nor is it fair.
MR. MOSSOFF: Thank you. I mean, you’ve asked several follow-ups. Do we have enough time – (inaudible) – one more question? Because I saw a hand. Yes.