Microsoft alums amass thousands of patents

By Michael Kanellos
Staff Writer, CNET News.com

Published: November 3, 2005, 4:00 AM PST

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Intellectual Ventures, a start-up specializing in intellectual property, has proclaimed its dedication to inventing new technologies.

And it has amassed quite a large patent portfolio, as well.

The company, founded by former Microsoft scientists Nathan Myhrvold and Edward Jung, has acquired thousands of patents in the past few years, according to sources close to the company. Some sources have further narrowed the figure to between 3,000 and 5,000 patents.

Many were bought from companies still in business, such as Ramtron International. Others came from inventors with expired patents or from listing companies such as General Magic. Although Intellectual Ventures has been open about its patent buying activities, its portfolio's size had been unclear. Earlier, some had estimated its patents to number in the hundreds.

A patent portfolio of thousands is somewhat unusual for a company with around 50 employees. To put it in perspective, the U.S. Patent and Trademark Office in 2004 granted IBM 3,248 patents, the most it issued to any company in the world last year. Matsushita and Canon landed in second place and third place with 1,934 and 1,805 U.S. patents, respectively.

Intellectual Ventures' patent portfolio also appears to be quite large compared to other intellectual property firms dedicated to buying third-party patents. Acacia Research, for example, has acquired a total of about 120 patents.

The surge in the Intellectual Ventures' patent portfolio is likely to fuel tech industry speculation about the company's business plans. Some executives have worried, privately, that it will seek royalties. Since few companies pay royalties voluntarily, a push on licensing could prompt a rash of lawsuits.

While most individual patents do not result in royalties or lawsuit verdicts, the rare diamond in the rough can really pay off. Forgent Networks has garnered around $100 million in royalties revenue from the so-called JPEG patent. With further lawsuits pending, Forgent has said that the patent could ultimately bring the company $1 billion.

Peter Detkin, managing director for Intellectual Ventures, asserted that the speculation doesn't really mesh with the company's plans, which revolve around finding and promoting promising ideas.

"Our mantra is we invent and invest in invention," Detkin said. "There are a lot of small inventors out there that do not have the time, resources or expertise to be compensated for it."

Patents can be used in a number of ways, he added.

"We could do spinoffs. We can do licensing. We could work with other industry organizations," Detkin explained. "We work with both small inventors and large companies."

Although litigation is always a possibility in the IP business, Detkin indicated that Intellectual Ventures' intent is not to use its patent portfolio as an engine for lawsuits.

Conceivably, the acquired patents could also be exploited to prevent litigation. The company's investors include