Written by: Mark Terry

In light of all of the news about patent reform legislation and the backlash against Non-Practicing Entities (NPE) [you know … patent trolls], did you know that large corporations like Microsoft, Sony, Apple, Intel, and Google invest or have invested in patent funds? Why do they do it? Has it helped fuel infringement lawsuits? We explore these issues here.   Intellectual Ventures (IV) has opened funds to investors since 2000 and is currently courting investors to invest in its planned $3 billion fund for investing in patents. Microsoft and Sony have subscribed, but Intel and Apple have decided to sit this one out. Google has not invested in IV since 2003. Interestingly enough, after Google stopped investing in IV, Google’s Motorola Mobility unit was sued in 2011 by IV. Will IV go after Intel and Apple next?  

Should NPEs and other patent investment funds be barred from using patents as an investment vehicle? Perhaps IV is just another investment fund like any other, such as a real estate fund, stock fund and many other investment funds out there. A fund must do its best to generate the highest returns for its investors and thus must protect their assets. IV and NPEs have been criticized for owning patents while not actually producing anything. But upon further inquiry, this “non-productive” business model has been around for a long time in other industries. Banks own paper (mortgage backed securities), not the actual real estate; music publishers and license owners own the rights to copyrighted songs even though they may not even be the artist. As an example, in 1985 Michael Jackson bought the rights to the Beatles portfolio. And everyone knows about the David Bowie fund that sold interests in future earnings of Bowie songs. Examples of “non-productive” means of making money are everywhere in our economy, and they include owners of trademarks, copyrights, bond holders/issuers, stock investors, commodity trading and so on. In this modern economy it’s rare for people to own an asset outright. We are a service industry and therefore millions of jobs don’t really produce anything. So are investment funds and NPEs at fault for trying to make money using a known method? The way they do it appears aggressive and potentially immoral, but it’s not illegal.

Even though it seems like it’s extortion, asserting your patent rights as a patent troll is well within the law. But who’s to blame – NPEs, attorneys, inventors, corporations, the USPTO, Congress, the judicial system? Everyone plays a part in all of this and therefore everyone needs to be more vigilant and active about what is happening in our industry. Legislation has been introduced to combat issues relating to frivolous lawsuits, which is a good start. But as long as patents are treated as a form of investment, it is up to each individual and corporation to protect itself.  

Mark Terry is a Board-Certified Specialist in the area of Intellectual Property Law and operates a patent and trademark practice in the Cities of Miami, Fort Lauderdale, Naples, and the Palm Beaches. Contact Mark Terry if you have any questions regarding enforcement of patents, trademarks and copyrights.


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