Rise of Invention Capital

Out of all the broad categories of intellectual property, I am most troubled by patents for the reason that they amount to a monopoly in an idea for extended periods of time. In addition a whole lot of intellectual products are gaining classification as patents and thereby conferring on their owners a lot of monopoly power even when the idea itself is not altogether novel. In spite of my concern for the fact that a number of corporations hold enormous patents and use these to extracts revenues out of their monopoly, I still think that broadly stated, the intellectual property architecture is necessary for innovation.

Intellectual Ventures is a new kind of corporation that generates intellectual property and utilizes it in an entirely different way. Steven Lohr of the NYT captures the rising trend in firms that exists purely to generate ideas and collect patents. Nathan Myhrvold seems to instinctively understand that the market place of ideas will become increasingly valuable and has dedicated himself to building this this firm.

Taking the claim that the firm has paid up to US$ 315 million to inventors makes it clear that the business model is beginning to work. And perhaps as Myhrvold hopes, it is clear that corporations that rely on technology will be faced by a change in the power equation because he understands that patents do not sufficiently reward the generators of ideas. Having been at Microsoft, it is is obvious that corporations may be faced with a new environment when it comes to licensing intellectual property represented by patents. I welcome the competition and the rise of a new corporate model which makes thinking as the primary business.Needless to state, this is a category of corporations that is worth watching at close quarters.