Joff Wild

Patent analytics firm IP Checkups got a lot of coverage last week following its announcement that it plans to create a free online database that will provide details of Intellectual Ventures’ patent portfolio, as well as the names of the various shell companies which hold them. I met up with Matthew Rappaport, managing director of IP Checkups, at the LES annual conference in Toronto and asked him to provide a few more details of what is being planned. This is what he replied:

Intellectual Ventures is arguably the largest holder of patent rights in the United States and the most notorious of the non-practicing entities (NPEs). The company owns over 40,000 patents in technologies as diverse as software, wireless technology, and medical devices, yet little is known about the true extent of IV’s portfolio and the nature of its patent activities. In part, this is because IV hides its immense patent portfolio in over 1200 shell companies, and uses these shells to leverage licensing fees and anonymously sue operating companies.

In our view, the secrecy surrounding IV’s patent portfolio gives IV an unfair advantage when approaching potential licensees with a set of patents. IV’s shell companies leave open the possibility – the threat – that IV has strong IP funneled away in some bizarrely-named entity. Operating companies will acquiesce to inflated licensing and settlement fees to avoid this spectre of future litigation.

We announced on Monday that we will publish IV’s patent portfolio and shell companies through a free, online database. In addition, IP Checkups will give updates on its research into IV through a blog written in the style of a "detective film noir".

We hope the project, dubbed “Case IV Thicket”, will empower companies to take patent issues into their own hands. By using the database, start-ups can make informed decisions early on whether to license technology from IV or other companies, or even decide to drop a product altogether.

IP Checkups is asking for $80,000 in donations through the crowdfunding web site Indiegogo to complete the project. If the project is overfunded or very successful, IP Checkups may extend the database to other NPEs, like RPX Corporation and Acacia Research Group LLC. The ultimate goal: full transparency of all NPE patent holdings – to foster an open and vibrant patent marketplace.

If the project does get underway, it will not be the first time that IV ‘s patents and holding companies have come under the microscope. The UK’s IP Value Added produced a report on the firm as far back as 2007, while in recent times Tom Ewing of Avancept has made IV his speciality subject, to the extent that I doubt there is anyone outside of IV’s Bellevue HQ who knows more about them, while most who work there probably know far less. What makes the IP Checkups project different, though, is that it will be free – as long as that $80,000 turns up. That said, IV attracts reads and leads, so even if this project is being done out of the goodness of IP Checkup’s corporate heart, there are almost certainly bound to be tangible benefits that spring from it; to the extent that it may well be worth them doing the work even if the crowdfunding raises less than is hoped for.

IV has always had a reputation for secrecy and though it is much more open now than before, it continues to play its cards very close to its chest. While I can appreciate the tactical appeal of concealment, I can’t help thinking that IV would do much better to make clear what it owns. Strategically and reputationally, it seems to me that IV loses more than it gains by maintaining all these holding companies and placing its patent with them. Why not just assign them all to an entity called Intellectual Ventures Holdings, put the cloak and dagger stuff to one side and get on with generating returns? If I were an IV investor I would certainly want to know what my money was buying and to have a chance to analyse its quality and potential value. Cynics might argue this could be one of the problems with disclosure. But, then, as long as there is secrecy people can make up whatever they like. From IV’s perspective, I am not sure that is such a good thing.  And I bet there are at least a few inside IV who feel the same way.