‘Patent Troll’ Legislation Being Pushed Using Misinformation, Says Intellectual Ventures CEO

AIA is only beginning to be implemented after a protracted period of debate, so it’s “way too early to be making a lot of changes to it,” Myhrvold said Thursday at an event his company sponsored. No one was “100 percent happy” with AIA’s final version, and some companies are finding it “cheaper and easier to go and lobby and get more tweaks in -- things that were rejected from AIA -- and get another bite at the apple,” he said. “I would encourage everyone to look very hard and say ‘are we doing things that are really necessary to improve what has been a terrific success for the country overall?'"

Claims that the U.S. Patent and Trademark Office issued large numbers of “bad” patents are “completely overblown,” Myhrvold said. PTO re-examination statistics have been relatively stable for many years, with 20-30 percent of patents not surviving the process and an equal number coming out unscathed, and the remainder of the re-examined patents emerge with some modifications, he said. Some fixes to the patent system are still necessary, Myhrvold said. Intellectual Ventures strongly favors ceasing fee diversion, the use of PTO funds to fund other parts of the government, he said. “You'd think that if lots of people are applying for patents, and they pay a fee, that those fees are then used to hire more examiners,” Myhrvold said. “In many recent years, Congress has diverted the fees off to other things.”

Much of the recent debate over patent reform has been about the abuses of PAEs, which critics refer to as “patent trolls” -- a term Myhrvold said was “derogatory.” Patent reform advocates use the term “against anybody you don’t like who’s a plaintiff in a patent case,” Myhrvold said. A market can’t exist “without having some abuse,” but the patent litigation abuses reform advocates cite are not widespread, he said. “I feel very strongly that my company is doing the right thing, and I feel very strongly that we have to be careful not to throw the baby out with the bath water.”

Critics have labeled Intellectual Ventures a “patent troll,” but the company strongly disputes that. Myhrvold said Intellectual Ventures is trying to be an “innovation capitalist,” investing in inventions in order increase innovation. The company has also partnered with Microsoft Chairman Bill Gates to run Global Good, an effort to engage top inventors to create inventions that address scientific and technical issues in developing countries, Myhrvold said. Intellectual Ventures also doesn’t engage in “privateering,” a company’s transfer of its patents to a PAE for the purpose of attacking the company’s rivals, he said. “Sellers can’t direct us to go sue someone else” using their patents, Myhrvold said. “We have to be in control of the asset."

Myhrvold’s version of Intellectual Ventures “is a very compelling one, and the shame is that it’s not really reflected in fact,” Computer and Communications Industry Association Patent Counsel Matt Levy told us after the event. Materials Intellectual Ventures provided at the event say the company has received $3 billion in cumulative licensing revenue and has paid out “almost half a billion dollars” to individual inventors. Those figures “aren’t pro-innovation,” Levy said. “Also, it’s very easy to make the statement that inventors are being ripped off, but these patents are not as clear-cut as he would make them sound. It’s usually extremely difficult and expensive to determine if you really do infringe. What Intellectual Ventures is taking advantage of is the fact that it’s so expensive to prove that you don’t infringe that it’s cheaper to pay up.”