The Intellectual Ventures Report (2nd Ed., Version 2.4) builds upon the information disclosed in previous editions of our report. Avancept applied the skills and techniques mastered through more than 30 years experience in law, business, technology, and journalism to uncover a tremendous amount of information about IV. Version 2.4 of our Second Edition provides four times the information found in our First Edition and reveals the remarkable growth of IV during just a few short years of active IP asset acquisition.   We are now pleased to offer a 2,506-page report detailing our findings.

A search on “Intellectual Ventures” reveals lots of opinions about the company but few independent facts.  Most information about IV comes from the company’s own nuanced disclosures.  This report aims to fill that void by providing information on the intellectual property assets that the company appears to own and the parties who supplied these assets. Among other things, we describe how IV employed IP arbitrage as a technique for building one of the world’s largest IP portfolios in just a few short years.

What is Intellectual Ventures

Intellectual Ventures was founded by Nathan Myhrvold and Edward Jung in 2000, “driven by the belief that invention is the highest-value and most interesting part of the commercial food chain.” Myhrvold formerly served as Microsoft’s chief technology officer, and Jung was Microsoft’s chief architect. Intellectual Ventures has been organised to invest in
innovations and technologies across a broad spectrum of industries – everything from computer hardware to biotechnology, and consumer electronics to nanotechnology. The company has acquired inventions and related IP from a combination of corporations, individual inventors, government agencies, and universities worldwide. In addition, Intellectual Ventures has contracted with numerous inventors to develop its own IP, much of which is still pending in various patent offices around the world. Intellectual Ventures now claims to be one of the top 50 patent filers in the US.  The company has also struck licensing arrangements of various sorts with universities and research labs throughout the developed and developing worlds.

To finance these IP acquisitions, Intellectual Ventures has raised more than $5 billion from companies such as Microsoft, Intel, Sony, Nokia, Apple, Google, and eBay, and various financial investors, according to published reports and documents disclosed in open court. Intellectual Venture’s corporate investors typically receive a royalty-free license to the entire Intellectual Ventures portfolio in exchange for their investment. According to published reports, Intellectual Ventures plans to group all acquired patents into clusters of like technology and then license the patents to potential users or infringers of each technology cluster. The goal is to derive more value than would likely be attained from the licensing of any individual patent.

Intellectual Ventures has been at the forefront of efforts promoting intellectual property as a legitimate business in its own right. Myhrvold even authored a white paper on the benefits of invention entitled  “Invention – the Next Software.” The paper, part of Myhrvold’s testimony before the US Senate, suggests that a viable and socially beneficial
business can be based upon the commercial exploitation of invention alone. This paper discloses a variant of the post industrial “open innovation” model advocated by various economists and others.

The Avancept IV Report (Second Ed., Version 2.4)

Our report attempts to fill the void in information about Intellectual Venture’s (IV) patent portfolio. IV does not reveal its portfolio publicly, relying instead upon numerous shell companies to conduct IP transactions. Using only publicly available information, we believe that we have found some 1,276 shell companies associated with IV. From these shell companies and other IV entities, we have found 954 apparently relevant IP transactions from 2001-2011. These transactions pertain to  8,093 US patents, and 2,998 US patent applications that appear to be directly controlled by the company. We have further categorized these patents and applications according to their technical subject matter.  We believe that we have also found another 3,100 patents/applications that appear to be controlled by IV.

We use the transactions found and other information to estimate the portfolio’s overall size to comprise more than 10,000 patent families that amount to some 30,000-60,000 directly controlled patents/applications worldwide by the end of 2010, although this number could range even higher depending on factors such as the company’s international filing preferences.  Thus, in just a few years of active acquisition, IV appears to have acquired a patent portfolio among the top 10 in size for domestic US companies and quite possibly at the upper end of the top 10.

We have also attempted to describe IV’s apparent organization and its corporate philosophy of “invention capitalism.”  We provide some information about the company’s funding and investment mechanisms, as well as its sales and licensing efforts.  We also discuss the company’s forays into actual technology development with IV Labs and TerraPower.

IV may represent the greatest exemplar of IP arbitrage to date. We note that approximately half of IV’s US portfolio originated with non-US entities. As an IP arbitrageur, IV seems to have successfully exploited the relative disparities in IP value between the US and the rest of the world. We note that much of IV’s portfolio originated from European entities, where IP seems to be particularly undervalued as a general rule.  The company has also been successful at obtaining IP from universities and governments worldwide.

We are generally enthusiastic about IV’s reported goal of turning invention per se into a sustainable and socially useful business model, and we believe that the public should be able to study this portfolio as easily as it can study the portfolios of the world’s other great IP portfolios.

We hope that this report will assist in according this remarkable portfolio its full and appropriate commercial import.