WASHINGTON -- The world's largest patent holder, Intellectual Ventures Management, this summer quietly set up a lobbying shop halfway between the White House and the Capitol as Congress and federal regulators debated how to curb patent trolling, the practice of accumulating patents and pressuring companies into paying licensing fees.
Intellectual Ventures, a Bellevue, Wash.,-based company that owns some 70,000 patents, filed paperwork this month to establish a lobbying practice, which will be run by well-known tech lobbyist Russell Merbeth. The company's new office was first reported by The Washington Post.
Intellectual Ventures spent more than $1 million on lobbying in both 2011 and 2012. But the establishment of a permanent lobbying office represents a new phase in the company's outreach to legislators.
Intellectual Ventures makes no products, and its business depends on selling the rights to its thousands of patents. The company also finds companies that use products or technologies similar to those patented by Intellectual Ventures, and demands payment or sues them for patent infringement. Given the high cost of litigation, companies targeted by these types of lawsuits tend to settle instead of fighting in court. The practice of accumulating patents and pressuring violators for payment is called patent trolling and is prevalent in industries such as tech and media.
President Barack Obama earlier this year had harsh words for companies like Intellectual Ventures, accusing them of "trying to essentially leverage and hijack somebody else’s idea and see if they can extort some money out of them.”
Intellectual Ventures rejects the notion that it is a patent troll. Founder Nathan Myhrvold, the former chief technology officer of Microsoft, said people use the term patent troll, "to mean someone they don't like who has patents. I think you would find almost anyone who stands up for their patent rights has been called a patent troll," he told the radio program "This American Life" in 2011.
Reached for comment on the state of patent reforms in Washington, a spokeswoman for Intellectual Ventures pointed to recent blog posts by co-founder Peter Detkin, who encouraged Congress not to "punish inventors" who receive some of the company's licensing fees, and "not to discriminate against business models," a reference to comments like Obama's.
While patent owners like Intellectual Ventures earn billions of dollars a year enforcing patents, it's going to take more than good lawyers to defend their business model against growing opposition in Washington.
In June, the White House released a set of proposals it said were designed to combat patent trolling and "protect innovators from frivolous litigation." Legislation to combat patent trolling also enjoys broad support in Congress, making it one of the rare issues where Republicans and Democrats find common ground.
Merbeth, Intellectual Ventures' lobbyist, said in public filings he plans to focus on issues "related to patent reform, intellectual property rights, taxation of patent royalties, and corporate tax reform." He told The Washington Post that, "part of the idea is to have a consistent presence here in Washington to educate members of Congress and the administration.”