Intellectual Ventures is cutting 19 percent of its staff in a second round of layoffs this year, raising fresh questions about the stability of a business that became the poster child for “patent trolling.”
Intellectual Ventures Cuts 19 Percent of Staff in Second Layoffs This Year
The patent trolling firm is making “operational changes.”
Asa Mathat
The news was first reported by Bloomberg, which pegged the cuts at 140 staffers and took a deeper look at the Bellevue, Wash., firm’s controversial practices.
“We are making operational changes that are consistent with this reduction and will enable us to maintain and expand our leadership in the market for invention,” the company said in an emailed statement to Re/code. “Our assets — both people and intellectual property — are among the best in the industry.”
The company, co-founded by Microsoft executives Nathan Myhrvold and Edward Jung, has amassed an arsenal of patents during the last decade and a half by buying up portfolios and tapping some of the world’s sharpest minds for concepts. Participants in IV brainstorming sessions have reportedly included people like Bill Gates and Lawrence Livermore physicist Lowell Wood.
But for the most part, the company hasn’t put those inventions to work. Instead, it primarily leverages its intellectual property to seek licensing fees from companies or investments in its funds, sometimes under implicit threat of lawsuits.
Few in Silicon Valley have complained publicly about the practices, but investor Chris Sacca spoke up in a revealing piece on NPR’s Planet Money in 2011.
… the truth is the threat of their patent arsenal can’t actually be realized, it can’t be taken seriously, unless they have that offensive posture, unless they’re willing to assert those patents. And so it’s this very delicate balancing act that is quite reminiscent of scenes you see in movies when the mafia comes and visits your butcher shop and they say, “Hey, It would be a real shame if they came and sued you. Tell you what: pay us an exorbitant membership fee into our collective and we’ll keep you protected that way.” A protection scheme isn’t credible if some butcher shops don’t burn down now and then.
As Businessweek pointed out, a number of companies, notably including Google, eventually refused to invest into IV’s funds, squeezing a critical source of revenue.
Myhrvold has repeatedly defended the company’s practices, arguing they work to protect the value of inventions and property of inventors. That defense included an onstage interview with Re/code’s Walt Mossberg at the 10th D: All Things Digital conference.
This article originally appeared on Recode.net.
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