During last week’s Department of Justice/Federal Trade Commission workshop on Patent Assertion Entities (PAEs), one of the panelists was Peter Detkin. Detkin is a founder of Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures., one of the PAEs we have been critical of on Patent Progress.
In the run up to the workshop, Detkin authored a blog post attempting to issue a pre-emptive rhetorical strike against the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]., which is strongly considering bringing transparency to patent ownership, and has announced an open submission for comments on this issue. As we have discussed before, Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. has set up almost 1276 shell companies, obscuring the ability of their opponents to figure out who owns what.
At the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]./DOJ workshop on patent trolls, Detkin, along with other PAEs, asserted that the PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). business model is good for the economy and good for individual inventors. Detkin proposes in his blog post that transparency, the undoing of the elaborate shell company structure, would hinder Intellectual Ventures’ ability to be innovation speculators. Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. buys patents today based on what they think the technology trends will be a decade down the road. This is pernicious economic activity that harms consumers and businesses — basically, Detkin is admitting they need shell companies to hide their portfolio because it will tip off the market to what they see as the future. But unlike investment portfolios that speculate on future gains, Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. is not seeking to benefit off of the success of future technologies and help them flourish. Rather, Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. wants to hold them back and extort a fee from their success. This is not an economic benefit and it is an absurd reason to allow continued transparency. For Detkin’s theory to have any standing, a prior assumption that Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. is providing economic benefits would be required.
The idea that PAEs like Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. are providing an economic benefit to society is a fallacy. Another panelist, Mallun Yen of RPX Corp, disposed of that assertion neatly by citing to a study showing that only a small percentage of the proceeds of PAEs go to inventors and investors — rather, they end up in the hands of law firms, patent consultancies and so forth. In other words, there are very high transaction costs without an economic benefit from Intellectual Ventures’s business model.
Similarly, the claim that PAEs, through their litigation activities, create an efficient and robust secondary market in patents is also a sham. The only thing the PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). “market” incentivizes is additional litigation. They have successfully created a litigation marketplace, not an innovation marketplace. One simple piece of evidence supporting this assertion: operating firms that actually practice inventions and deliver goods and services in the marketplace spend more money on obtaining and litigating patents than they do on research and development.
We don’t mean to pick on Peter Detkin exclusively. Another PAEPatent Assertion Entity. A narrower term for trolls that focuses on the core business model rather than whether the entity is actually making use of the patented technology ("working the patent"). at the FTCU.S. Federal Trade Commission. An independent regulatory agency charged with consumer protection and competition policy, which conducted several influential studies on how patents work in practice. Authored several key studies: 2003’s To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy [PDF] and 2011’s The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition [PDF]./DOJ workshop, Ron Epstein, CEO of Epicenter IP Group, in an effort to defend patent trolling, inadvertently supported the FTC’s transparency push. Epstein argued that because once-in-a-while a tech patent comes along that all can agree is genuinely innovative and valuable, trolls are needed to “arbitrate” the process of obtaining a reasonable royalty from unanimously and belligerently unwilling companies. But PAEs like Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. do not license individual patents. They license patent portfolios. In other words, they wrap one or two good patents in a thick wad of garbage patents, and license the entire thing. This gives an unwarranted patina of validity to the bad patents and blurs the lines. Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. and other PAEs do exactly the opposite of the supposed good that Epstein asserted. Their model is not about finding the good and valuable patents and making sure the inventor gets paid for it, but rather about obscuring the value of individual patents via the portfolio model in order to enrich themselves.