Wired’s Intellectual Ventures spin

I’ve noticed that recently Wired (UK edition) has been writing largely positive stories about the technology and people behind some of the less appealing sides of business.

The main examples for me up until now were the website providing credit at at exorbitant interest rates and the UK company behind the technology used in particularly effective sniper rifles (link to come as the article appears in the most recent issue, and it is not available online at the time of writing.)

Now, Wired is at heart a technology magazine, and this is perfectly fair game – and interesting enough in its own right.  Also, even if these companies are not dealing in the most feel-good of market niches, they are not doing anything illegal and providing a product where there is demand.  We all love capitalism, right?

I had seen the article on Intellectual Ventures earlier on in the year, and knew that the company was one that people held varying points of view about, but never thought enough of it to warrant a blog post (or even a tweet.)

What changed my mind was a podcast that I discovered via Daring Fireball –  When Patents Attack.  This is a good piece of persistent, incisive journalism and it is very effective at exposing the flaws in the US (but no doubt just as relevant here in the UK) patent system, and how patents can be used and abused.  Let’s just say that the way that Intellectual Ventures does business is not cast in the most favourable of lights.  It is well worth a listen.

So, should Wired stop its coverage of these types of company?  No – if  your conscience cannot deal with the subject matter, then just turn the page (or click another link.)  But at the same time, maybe it is time for the reader to hold Wired more to account for its stories, particularly if they appear to be overtly one-sided.  Its Intellectual Ventures article now appears to fit very much into that category.  Wired does mention some of the criticism of the company – this is the extent of it:

It’s the ruthless licensing of its patent acquisitions, not the media-friendly, blue-sky thinking, which has been instrumental in IV turning over $1bn (£600 million) since its founding. The company has gained a reputation for aggressively pressing companies to sign costly patent-licensing deals. In a New York Times story published in February 2010, unnamed critics dubbed the company “Intellectual Vultures”.

Though there are other firms that hold patents without making products (they are known as “non-practising entities”), IV is the biggest — and to some technology companies, the most threatening. Shane Robinson, Hewlett-Packard’s chief strategy and technology officer, has said IV hides behind talk of headline-grabbing inventions and is no more than “a patent troll”, a term (coined, ironically, by IV’s Detkin) that disparages those who buy patents primarily to litigate against infringers. To date, IV has sued no one.

That is 144 words in a piece of nearly 5000 words.  And when Wired states “To date, IV has sued no one”, it may have been true at the time,  the podcast finishes with the news that IV has now started its first direct lawsuit.  The amount of venture capital that IV took on means that they need to recover a lot more money to be able to meet their investors’ expectations of financial return.  It appears this is only the start.  The podcast also talks of IV’s “close to 1,300” shell companies and a number of companies that are very closely related –   from whom IV can get money when that company sues someone for patent infringement.

The New York Times article is well worth reading.  In comparison to Wired’s headline of “The intellectual venturer”, the NYT uses the more sober “Turning Patents Into ‘Invention Capital’”.  Read it in full for yourself, but here are some excepts:

His detractors see a cynical operator deploying his bulging patent trove as a powerful bargaining chip, along with the implied threat of costly litigation, to prod high-tech companies to pay him lucrative fees. They call his company “Intellectual Vultures.”

White hat or black hat, Intellectual Ventures is growing rapidly and becoming a major force in the marketplace for intellectual capital. Its rise comes as Congress is considering legislation, championed by large technology companies, that would make it more difficult for patent holders to win large damage awards in court — changes that Mr. Myhrvold has opposed in Congressional testimony and that his company has lobbied against.

…Intellectual Ventures spent more than $1 million on lobbying last year…

Several analysts say that Intellectual Ventures has been primarily a master practitioner of exploiting the current rules of the game to its advantage. Many companies in the patent field use shell companies to mask their activities, and Intellectual Ventures seems to employ them with uncommon frequency. A report last month by Avancept, an intellectual property consulting firm, said that up to 1,110 shell companies and affiliated entities appear to be linked to Intellectual Ventures.

Given this level of comment, perhaps Wired should have devoted more than 3% of it’s piece on the controversy surrounding Intellectual Ventures.

Promoting technology (especially when it is home grown) is a good thing.  Promoting a company in such a prominent way, without some real element of balance is not journalism – it’s advertising, or plain old spin.

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