EE204: Business Management for
Electrical Engineers and Computer Scientists

Intellectual Ventures

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1. Patent Sharks
2. Intellectual Ventures

Case Summary

Intellectual Ventures creates and acquires intellectual property, which it then seeks to monetize through non-exclusive licensing. In early 2009, as an increasing number of companies were trying to position themselves as leading intermediaries in the market for intellectual property, IV was looking for the best business model to become such a leading intermediary. Its model was predicated on making it easy for small inventors to monetize their inventions and IP (by selling it to IV) and then using its scale and aggregate IP portfolio to extract revenues from potential licensees (usually technology companies).

Discussion Questions

1. Is IV a patent shark?
2. Do you share Nathan Myhrvold's vision of creating an "Intellectual Capital" industry and his analogy with "Venture Capital"?
   1. The VC model looks for a 8-10x return on invested capital over ten years. What would be required in terms of number of licensees, average revenue per licensee and break-even for IV to return 10x its investors' capital.
   2. What are the challenges in the IV business model and do you recommend any changes?
      1. Screening process
      2. Expense structure
      3. Investor expectations