Legal News

Invention Capitalism & the Law: Checking in on Nathan Myhrvold

By Dan Slater

Nathan Myhrvold — who began college at age 14, and went on to earn a master’s degree in mathematical economics and a PhD in theoretical and mathematical physics by age 23 — is perhaps the most mentioned Law Blog subject who doesn’t own a law degree. (See here, here and here.)

Why? One word: patents. Over the past few years, reports the WSJ’s Amol Sharma and Don Clark, Microsoft’s former chief technology officer has quietly amassed a trove of 20,000-plus patents and patent applications related to everything from lasers to computer chips. Myhrvold’s firm, Intellectual Ventures, now ranks among the world’s largest patent-holders, writes the WSJ, and is using that clout to press tech giants to sign some of the costliest patent-licensing deals ever negotiated. (For a recent New Yorker feature on Myhrvold by Malcom Gladwell, click here.)

In recent months Myhrvold’s firm, the eight-year old Intellectual Ventures — which is known, alternatively, but not necessarily inconsistently, as a patent troll and a hothouse of innovation — has secured payments in the range of $200 million to $400 million from companies such as Verizon and Cisco. Verizon, for instance, disclosed in a July filing with the SEC that it plans to pay as much as $350 million for patent licenses and an equity stake in a patent-holding investment fund. The company operating that investment fund is Intellectual Ventures, according to a person familiar with the terms of the deal.

As Intellectual Ventures has grown, reports the WSJ, its relationship with the tech industry has become increasingly adversarial. There is an “implicit threat” that if companies don’t agree to a licensing deal with Intellectual Ventures, they could face costly patent-infringement lawsuits, says Henry Gutman, a Simpson Thacher lawyer whose clients include companies that have been approached with licensing deals by Intellectual Ventures. Myhrvold’s firm holds so many patents, it is “operating on a scale where it becomes really difficult to just say ‘no,’” Gutman says.

Myhrvold told the WSJ that he acknowledges facing resistance from companies he targets for licenses. But his patent inventory gives him leverage to extract settlements without litigation. “I say, ‘I can’t afford to sue you on all of these, and you can’t afford to defend on all these,’” he said.

Full post as published by Law Blog - WSJ.com on September 17, 2008 (boomark / email).