EE204: Business Management for
Electrical Engineers and Computer Scientists

Patent Sharks

Read

  1. Patent Sharks (HBS materials)
  2. Stanford's Office of Technology Licensing (OTL) website [optional]
  3. Intellectual Ventures (HBS materials)

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. Evaluate Nathan Myhrvold's stated vision for Intellectual Ventures, including motivation for founding the company; business and monetization models; and his aversion to being viewed as a "patent troll". Does this vision fit with Intellectual Venture's actions?
  2. What are the challenges in the IV business model, and do you recommend any changes? Consider the following topics:
    • Screening process
    • Expense structure
    • Investor expectations
    • No-sue policy
  3. The VC model looks for a return of 8-10x on invested capital over ten years. What would be required in terms of number of licensees, average revenue per license, and breakeven for IV to return 10x its investors' capital?
  4. What is your confidence that this is a viable business in the long run?

SCPD Students

See the SCPD Resource Page for general information on assignment submission, team building, expectations, and getting help. See the SCPD Grading Page for evaluation procedures for daily written assignments.

Written work should be submitted using SCPD Homework Processing procedures.

All times listed below are PDT (California time).

  1. Complete the assigned readings and submit answers to the Discussion Questions in Writeup 1 (1 page) by 9am Tuesday 5/15/2012.
  2. The videotaped class meeting should be available via SCPD by 2pm, Tuesday 5/15/2012.
  3. Watch the video of the class meeting and meet with your team to discuss.
  4. Submit Writeup 2 (1-2 pages) by 9pm Sunday 5/20/2012. This writeup should include the following:
    • A summary of the main points of the class discussion
    • Any points from the discussion that you found particularly enlightening or disagreed with
    • A discussion of how your initial responses did or did not align with the direction of the class discussion
    • A revised go-forward strategy for Intellectual Ventures