I don’t watch Techcrunch TV much (does it make sense to try to graft an old, dying media format onto a new, growing one?), but they had an interesting interview with Izhar Armory, a VC funder who backs Intellectual Ventures. They throw him a softball about Twitter strategy and backing MBA students, then from 3:00 – 9:00 it gets interesting. They give him a great “how could you support patents in this situation” hypo, and he goes on the defensive about how valuable Intellectual Ventures is to the world. Intellectual Ventures is a renowned patent troll, perhaps only behind Round Rock on the heinous trolling list. Hearing Armory (a former Israeli captain and somewhat scary dude) defend them is interesting, because he throws out a lot of terrible, ridiculous, but extremely common defenses. No offense to Izhar, who does well under the pressure, and really goes to bat for what must just be one of his many clients, but this was a tough situation for him to get out of. Here are some of the defenses, and why they are wrong/irrelevant.
Intellectual Ventures sends more money to universities than any other entity for patents. Great, so what? If the market valued those patents as useful for INNOVATION, they would be purchased by another company, perhaps even the company that actually wanted to use the patent to make a product. Intellectual Ventures only pays for so many patents because they use them as threats to sue on. Would the world really be worse off if the patents were sold to companies if they were useful, rather than one giant trolling company? The fact that Intellectual Ventures is in this position is probably a sign of how many useless patents there are; if the patents IV was buying up had market value of their own merit, IV would probably be outbid by a real company for them. And I’m not willing to accept that siphoning money from companies to give part of it to universities is inherently productive.
Inventors deserve compensation for their inventions, their “life’s work”. When asked whether a startup founder should license a crappy, overly broad patent to cover the founder’s independently created and actually useful IP, Armory says first that since the startup won’t be making money, he shouldn’t worry about it, a rather economic and practical perspective. But if the startup makes money, then screw that, its a moral wrong not to pay the inventor of a broad, unimplemented idea that the founder didn’t need to make his superior product. First off, if you really believe in this moral right stuff, it shouldn’t matter if the startup is profitable; somebody is stealing the inventors “life’s work” either way, right? But also, if your life’s work can be so easily replicated and made actually useful by a mid-20s kid in India (the details of this founder), why does the market need to give the original inventor anything? That’s patent law, but it makes no sense and nobody who works with entrepreneurs (rather than patent trolls) should hold that view.
He also claims that it’s good that Intellectual Ventures gets the patents, because otherwise they might wind up in the hands of patent trolls. Really pretty ridiculous given that most media outlets that comment on patents have identified IV as a top patent troll.
Kudos to Izhar, a VC and not a real representative of IV in a sense, for doing his best on defense in a tough environment, though.
danielmarkmiller.net 