Intellectual Ventures, the controversial patent-licensing company founded by former Microsoft technology chief Nathan Myhrvold, has settled a high-profile legal dispute with a pair of Asian memory manufacturers.
Terms of the deal were not disclosed, but it seems likely that Intellectual Ventures was able to secure licensing payments from South Korea-based SK hynix and Japan-based Elpida Memory—that’s what Intellectual Ventures had been seeking before it went to court in 2010 as part of the Bellevue, WA-based company’s first batch of patent lawsuits.
In a blog post, Intellectual Ventures legal chief Melissa Finocchio praises SK hynix and Elpida Memory as “formidable and sophisticated companies.” She also says in a news release that Intellectual Ventures’ “preference is to sign license agreements and form productive, long-standing relationships with innovative companies rather than to litigate.”
Hynix and Elpida both make DRAM, a kind of memory used in computers and servers. Hynix also makes NAND Flash memory, which is used in things like iPods.
Intellectual Ventures says it has amassed more 35,000 patents, delivering hundreds of millions of dollars to inventors and earning the company some $2 billion in licensing fees. The company’s investors include big technology companies like Adobe, Apple, Cisco, and Microsoft.
Myhrvold says Intellectual Ventures’ overall goal is to make the market for intellectual property assets more liquid and accessible, similar to the way companies trade financial commodities. His pitch: Patents are unevenly wielded by big tech companies with large legal departments, and inventors often get too little money for their work. Building up a “middleman” class that licenses patents to lots of different parties, Myhrvold says, can level the playing field.
Intellectual Ventures also operates a laboratory, which is bankrolled by its own investment fund. Employees there work on far-out projects like a “laser fence” for zapping malaria-spreading mosquitoes in midair. Intellectual Ventures also has spun out a pair of companies: The next-generation nuclear power startup TerraPower, and a new company called Kymeta, which is building an enhanced broadband antenna made of advanced materials. Both are backed in part by Bill Gates.
But the company and Myhrvold have been heavily criticized within the technology industry, particularly by early stage companies and investors who say the U.S. patent system is broken and stifles new ideas from blooming. Perhaps the central piece of public evidence for this claim is This American Life’s in-depth report from last year, which showed that some of Intellectual Ventures’ claims don’t hold up upon further investigation.
The dispute with Hynix and Elpida grew to include two federal court lawsuits (here’s a copy of the second) and a complaint with the International Trade Commission. The legal wrangling also ensnared an array of domestic tech companies that make and sell products with components from the two memory manufacturers, but Intellectual Ventures said that was a technicality prompted by ITC rules. All of the complaints and lawsuits relating to Hynix and Elpida are being dismissed.
