Giant Patent-Holder Intellectual Ventures’ Investors Revealed In Court

Intellectual Ventures (IV) is one of the largest patent-holders in the country, and claims to hold more than 30,000 patents to its name. It also continues to be an organization with a somewhat shadowy business plan; it claims to “invest in invention,” but its real business is dealing in patents, and now, patent lawsuits. In December, IV started suing tech companies. But the beginning of IV’s litigation campaign has also compelled the company to reveal its biggest investors in court-and the list holds a few surprises.

The list was revealed as part of a lawsuit with Xilinx, a San Jose semiconductor company. Xilinx wasn’t in the batch of nine tech companies sued by IV back in December, but tired of having the threat of an IV infringement lawsuit hanging over it and went ahead and filed its own lawsuit in February, asking for a judgment of non-infringement. (It’s a “declaratory judgment” suit, which describes a lawsuit where a company being threatened with a legal claim goes ahead and takes the issue to court itself; it turns the party that would have been the defendant in a lawsuit into the plaintiff.)

The list of IV investors includes:

»  More than a dozen big tech companies, including Apple (NSDQ: AAPL), Google (NSDQ: GOOG), Cisco (NSDQ: CSCO), Amazon (NSDQ: AMZN), Adobe (NSDQ: ADBE), Microsoft (NSDQ: MSFT), Verizon, Yahoo (NSDQ: YHOO), and others. Those companies are believed to be “licensees” as well as investors. That is, they paid money for patent licenses so that IV would never sue them; and they’re also being promised something on the back-end, so that if IV makes money licensing from others, these companies profit.

However, the tech companies on the list should be considered in a different light than the other investors. They invested under duress, and knew that litigation with IV might be the end result if they didn’t pay up to become an “investment.” Also, some of these companies, including Google and Cisco, have been investors for many years, and in the early years IV had a very different tone. Back then, the giant patent-holding company, which was founded by ex-Microsoft CTO Nathan Myhrvold, billed itself as a “patent defense fund.” (Clearly, it hasn’t turned out that way. )

One strange twist is that Xilinx itself is also an investor, even though it’s engaged in litigation with IV. Perhaps Xilinx only licensed a portion of IV patents, and could still be sued under others; either way, it suggests a major falling-out between two entities that at one point were able to strike a deal.

»  Eight major research universities are on the list, as is the Mayo Clinic and Grinnell College in Iowa. These research institutions appear to have simply invested cash hoping for a return. While many (if not all) of these institutions own patents, they don’t appear to have transferred any to Intellectual Ventures.

The universities are unlikely to have been threatened with infringement lawsuits like the tech companies might have been, so they were likely simply pulled in by IV’s sales pitch.

»  Many top-tier technology investors are also involved with IV, including VC firms like Charles River Ventures and charitable foundations like the Hewlett Foundation and the Rockefeller Foundation.

Overall, the presence of the universities and foundations on this list is a somewhat unsettling revelation. It isn’t clear that IV’s patent-licensing behavior-and now, litigation-is good for innovation in any way. IV claims it “invests in invention,” but there aren’t any successful spinoffs that have spawned from IV funding or technology, and the social benefits of simply amassing patents are highly questionable, at best.

The full list of investors follows. The list was first reported on the blog of IAM, a UK magazine covering intellectual property issues. The list below is one categorized by Patently-O, the most popular patent law blog. Contacted by The American Lawyer, Intellectual Ventures declined to comment on the list “out of respect for our investors.” As TAL notes, court records indicate that Intellectual Ventures tried to keep this list secret, but ultimately did not succeed.

»  Technology Companies

American Express
Cisco Systems
Detelle Relay KG
eBay (NSDQ: EBAY), Inc.
OC Applications Research (merged with IV)
Sony (NYSE: SNE) Corp.
TR Technologies
Xilinx (yes, the plaintiff is also an investor)

»  Universities

Brown University
Cornell University
Grinnell College
Mayo Clinic
Northwestern University
Stanford University
University of Minnesota
University of Pennsylvania
University of Southern California
University of Texas

»  Individuals

Peter Detkin (IV Co-Founder and Vice-Chairman)
Eric Dobkin (Goldman Sachs; IV Board of Advisors)
Richard Fields
Gregory Gorder (IV Co-Founder and Vice-Chairman)
Paul Gould
Adam Holiber (IV Licensing Executive)
Edward Jung (IV Co-Founder and CTO)
Nathan Myhrvold (IV Co-Founder and CEO)
Nancy Peretsman (leading Investment Banker)

»  Investors

Allen SBH
Bush Foundation
Charles River Ventures
Commonfund Capital Venture Partners
Dore Capital
Flag Capital
Flora Family Foundation
Hewlett Foundation
Howard Hughes Medical Institute
Legacy Ventures
McKinsey and Co.
Next Generation Partners
Noregin Assets
Reading Hospital
Rockefeller Foundation
Roldan Block NY
Seqouia Holdings
Skillman Foundation
Sohn Partners
Taichi Holdings
TIFF Private Equity
White Plaza Group

— This story when originally published, citing the Patently-O blog, suggested that Allen SBH was connected to Paul Allen. An Allen spokesman has confirmed to me that this is not the case.