Exclusive: Microsoft, Apple diverge on bankrolling big patent buyer

Fri Apr 11, 2014 2:28pm EDT
 
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By Dan Levine

SAN FRANCISCO (Reuters) - Patent buyer Intellectual Ventures has persuaded Microsoft and Sony to invest in its latest acquisition fund while Apple and Intel, which invested with IV previously, declined to participate, according to people briefed on the fundraising.

The investment decisions by four technology companies come in the midst of a heated debate over whether it is too easy for patent owners to extract large royalty payments, and whether patent buying firms spur or stifle innovation.

Last year IV curtailed patent acquisitions as it sought new investors, and IV now is ramping up, say three sources familiar with IV's activity in the patent market.

"Microsoft and Sony's investments give IV a fresh war chest to buy new patents," said Kevin Jakel, chief executive of Unified Patents, which advises tech companies on alternatives to patent aggregators like IV.

But Apple and Intel's decision is significant because the biggest tech companies have supported IV in the past. "This would be a dramatic departure," Jakel said.

Intellectual Ventures declined to discuss investments. Microsoft, Sony, Intel and Apple also would not comment. It is unclear whether Intel and Apple could still opt to invest in IV's vehicle at a later time.

Created in 2000, Intellectual Ventures has raised about $6 billion and acquired 70,000 patents and other intellectual property assets. The company is seeking to raise $3 billion more, a 2013 investor presentation reviewed by Reuters shows.

Over the years IV and other firms like it have faced criticism from some in the technology industry, who argue that firms like IV, which do not primarily make products, exploit the patent system by demanding royalties and threatening litigation.   Continued...

 
Microsoft CEO Satya Nadella gestures during his keynote address at the company's "build" conference in San Francisco, California April 2, 2014. REUTERS/Robert Galbraith