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Intellectual Ventures investigation struggles to find backers

Last month, patent analytics firm IP Checkups announced its plans to create a free online database documenting the patents owned by Intellectual Ventures and the various shell companies that are under the NPE’s control. In order to finance this ambitious project, IP Checkups said it would be seeking donations via online crowdfunding platform Indiegogo.

The proposals certainly grabbed media attention, with the Wall Street Journal, Bloomberg and CNET (and, of course, IAM) all running reports on the initiative. Furthermore, Matt Rappaport, managing director of IP CheckUps, told this blog that he had received plenty of encouraging feedback from the IP community too. So why is ‘Case IV Thicket’ desperately struggling to reach its funding target?

The crowdfunding campaign was launched on 15th October, but as of this morning UK time only $5,555 had been pledged to the project – an amount well short of the minimum target of $80,000 set by IP Checkups. Considering that the funding period has just 13 days left to run, it looks increasingly likely that Rappaport and co won’t hit their target – unless, of course, there is a sudden flurry of donations or a few big pledges come in before the deadline. As per Indiegogo’s Fixed Funding rules, the project will get none of the pledged money if the fundraising goal is not reached.

As reflected in the rewards that IP Checkups is offering to prospective donors – including limited access to its patent landscape databases and free patent searches– it is targeting potential funders from the IP and high-tech communities. To put it another way, Rappaport expects pledges from the people and companies that are most at risk of being accused of infringing IV’s patents; or those that would be keen to identify which patents the firm owns in order to be able to challenge them through the re-exam process at the USPTO. “What’s interesting is that we have talked to quite a few people face to face and over the phone about it,” he tells IAM. “They say, ‘it’s very interesting, we think it’s a good project, it ought to be done – but it’s highly controversial’. And anytime you do controversial, a lot of folks just aren’t willing to put their necks out.”

As Rappaport points out, one might expect that those being sued for infringement by IV would be among the first to fund a project aimed at shining a light on the NPE’s patent holdings – particularly as the cost would pale in comparison to the money they spend on lawsuits. “The nature of the IP community is that typically many of the market participants – the larger ones at least – are well-heeled,” he says. “The amount of money we are trying to raise is a blip on the radar for some of them. If four or five of them decided to go in with just $10,000 or $12,000 each then it would be done.”

Speaking to IAM anonymously, some have suggested that the seeming lack of willingness to invest in the analysis of IV’s portfolio may indicate the level of influence that the NPE holds over the marketplace. Perhaps, they say, companies are worried that IV will come after them or will not work with them in the future if they are seen to be involved in the scheme. However, there is no reason why donors should make their names known, so perhaps it is actually the case that many companies that might be thought-of as potential donors themselves use similar tactics to IV, or are quite happy with the relationship they have with the firm. Alternatively, there is an argument that the lack of transparency inherent in the use of shell companies, privateers and the like is beneficial, rather than burdensome, to many more than IV, as it can create increased leverage over prospective licensees and thus potentially bring in higher returns. Even simpler, despite all the criticism and rage that IV attracts, when push comes to shove perhaps it is the case that the firm just does not have enough critics willing to put their money where their mouths are.

That said, corporates and others in the IP community may be more comfortable contributing money to Case IV Thicket after the crowdfunding stage has finished and the proposal is out of the public gaze. Rappaport makes it clear that failure to meet the crowdfunding target would not necessarily spell the end for the databasing project. In fact, maybe the cowdfunding angle was all about generating interest in the project overall and nothing more – in which case it has been very clever marketing. But whether the mapping of IV’s portfolio happens or not, the apparent aversion to investing in the venture may tell us something just as important about the nature of the patent marketplace.


Jack Ellis
IAM Magazine
15 November 2012

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IP management, Licensing, IP litigation, Patents, IP business, IP finance

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