The Trouble with Nathan Myhrvold’s Pro-Patent Arguments

Nathan Myhrvold is a smart guy. I haven’t met him, but everyone tells me that, so I’ll take it as given. I have a hunch he’s 1980s Microsoft-smart, which is to say he’s about as much fun to be with as a talking Wikipedia page, but hey, some people like that.

Nevertheless, I don’t normally care what over-monied ex-Microsoft executives do with their time. They can save the planet, collect guitars, write cookbooks, etc. Myhrvold, however, is now regularly writing columns in praise of the glories of the U.S. patent system, about how technology companies once ignored patents, and how it’s now coming back to bite them. Myhrvold, a principal in a patent holding company, somehow gets treated deferentially, in a way that, say, a hedge fund manager talking about his largest position wouldn’t be.

His arguments veer from hysterical, to unsupportable, and back again. Paragraphs like the following from his latest column will serve to show his full-of-shit-ishness:

The biggest companies, which have always touted their brilliant innovations to justify the billions of dollars in stock options they pay their executives, have been in the odd position of attacking the patent system and publicly deprecating the innovations of others. Patents attempt to create a level playing field, but the last thing an 800-pound gorilla of a company wants is a fair fight. After succeeding in part by stealing other people’s inventions, they decry any inventors who have the temerity to ask for a share of the returns.

Let’s parse that paragraph’s claims:

  1. That technology companies promote their innovations mostly to justify compensation is shaky populism at best. Where is the evidence? And it is amusingly tone-deaf for Myhrvold — a man who made billions from Microsoft’s innovations (sic.) — to take this tack.
  2. There is no inconsistency in promoting innovation while attacking the software patent system. Most software companies, large and small, think the patent system is an obstacle to innovation given the prevalence of nonsensical blocking patents and patent trolls. I would hope that they attack it.
  3. Far from trying to create a level playing field, the history of patents in software is one of blocking, extorting and general innovation-slowing gamesmanship. To pretend otherwise is silly, ahistorical, and willfully blinkered.
  4. Suggesting that large technology companies succeed “in large part” by stealing other people’s inventions is a wild-eyed claim. Is there something in Microsoft’s history he’d like to share with us? This rapidly become unsupportable nonsense at best, and conspiracy theorizing at worst.
  5. Arguing that blackmailers (those fine inventors with “temerity”) with nonsensical patents should be paid off is not an argument. It is simply talking his own book.

What we have here, in short, is this: Myhrvold is happy to see patent portfolios like Nortel’s being bid up because it increases his own company’s value with its thousands of patents. This is an arms-dealer applauding the outbreak of hostilities, meanwhile pointing to people making war-like faces on the sidelines. (Whoa, watch out for those guys!) This is far, far from a disinterested observer of a fundamentally broken U.S. software patent system. Let’s end the deference.


  1. Not Nathan says:


    Long time listener and first time caller. I couldn't agree more with your article. Personally, I was offered a job with Nathan's firm, Intellectual Ventures, which I subsequently turned down because I felt they purported to be this invention company when in reality they purported to be that while actually being a patent troll. If you look at their website they are an invention company, whatever that means, but in reality all of the cash flow from the business comes from enforcing licenses and threatening to sue legimate companies It made me sick and I am glad I don't work there.


    • Well I can see both sides of this issue:

      1) It is not right to allow a company to steal the intellectual property of another company and someone has to enforce the laws
      2) They should not misrepresent their company but this is a very common tactic with many companies

      I really don't have any problem with this company and what they do, but I feel this site should be clearer.

  2. Paul,

    Excellent post – I was unaware of Nathan's articles and had previously only enountered him in a weekend magazine (in light of the above – puff piece) which left me in wonder of his prowess.

    However, I think we probably shouldn't reject the inventing part of his business as patent trolling out-of-hand just because of all the other patents he has bought. Someone with his amount of money probably looked around and found a superior ROE and simply parked his money there rather than elsewhere. Again though, hes obviously talking his own book and his opinion taken with a grain of salt.

  3. the post would be better without the "I won't personally attack him while attacking him" angle. The rest of it is interesting.

  4. I've long thought the same things. What a clown NM is. I love this line: "he’s 1980s Microsoft-smart, which is to say he’s about as much fun to be with as a talking Wikipedia page, but hey, some people like that". Ha!

  5. But What Do I Know? says:

    Thanks for elucidating your criticisms of this self-justifying rentier. I felt there was a high BS content when I read the piece, but I couldn't put my finger on it.

    This guy is a looter.

  6. Put quite simply, patents, by their nature, prevent people from doing something (unless they can get a contract with the patent holder). By definition, the direct effect of a patent is always to impede innovation. There is, however, a secondary effect: patents may make money for inventors and thus motivate people to become inventors. The whole idea behind patents is that this secondary effect may promote innovation more than the primary effect impedes it.

    • I would love to see evidence that patents motivate people to innovate. Near as far as I can tell the idea that people wouldn't invent or create without gov't granted monopolies is entirely faith-based.

      • Douglas Knight says:

        The alternative to patents is not lack of innovation, but trade secrets.

  7. fresno dan says:

    " Paragraphs like the following from his latest column will serve to show his full-of-shit-ishness:"

    wow, I've never seen you display such vituperous-ness. This guy must be evil incarnate!

  8. I think Myhrvold might actually have a valid(ish) point. Microsoft was long been a technology stalker. They wait for someone to open a market, then they dive in with a boat load of programmers. I've met a few people who were on the receiving end of that, and certainly read enough stories. This has been going on long before they changes the patent rules (although I suspect that the rules just make it easier to happen now).

    The current patent system is beyond hopeless, but that doesn't mean its original intent is bad. A little guy with a great idea should get some time to get it going, before the wolves descend. But all they seem to have done with our current software patent mess is give the wolves motorcycles …


    • "but that doesn't mean the original intent is bad" — couldn't the same be said of unions, or state pension systems, or anti-drug laws etc? Lots of things start out with good intent and metastasize later on.

      p.s. Wolves on motorcycles is a pretty sweet image — I could see it on a leather jacket. Maybe Myhrvold would wear it…

  9. anonymous says:

    My husband worked for Microsoft and NM was widely hated. They had to hire people as go-betweens between him and other employees because all the money in the world was not enough for most people to be around him. This was in the '90s. To me he embodies high IQ with no common sense. Most employees were not like that at all or the company would never have done so well in those years. Most even had social skills.

  10. I remember a scene in Charles Ferguson's book about him trying to avoid having to interact with NM while selling Vermeer to Microsoft.

    My impression is that the "invention" part of IV, their lab etc., is mostly window dressing + indulging in NM's hobbies while providing intellectual cover for their trolling.

  11. The most epicly loltastic blog post I've read in a long time. Definitely going to steal the "1980s Microsoft smart" line.

  12. Your contribution to the argument seems to be "Nathan's rich and boring.", "Nuh-uh. You're stupid if you agree with Nathan!" and "Nathan's wrong because he makes money in the current patent system."

    I now put Paul Kedrosky right up there with MG Siegler as someone who authors rants and pretends it's useful or insightful.

  13. Laurence says:

    So, it's his "talking his own book book?"

  14. Nathan is engaging in completely rational economic behavior. He is as good at regulatory arbitrage as any global bank. While we all wish the patent system was different it is not and probably stands very little chance of being reformed. He has built a company that can do at an industrial scale what little patent trolls can do. And since he has an enormous portfolio of patents he can force them into either a licensing deal or go back to the warhouse get out some more patents and sue them again.

    Think Magnetar getting banks to build worse and worse CDOs for them to short. Same trade as John Paulson with ABACUS 2007 but done at scale. I don't fault him for what he is doing. He saw that patents would become a viable financial asset and got in early when they were cheap. He is also relatively difficult to go after because he has no products, thus it will be harder to prove that IV is itself infringing on one of the targets patents.

    I personally detest patent trolling although I find the patenting of genetic sequences to be far more dangerous to innovation than software patents. Maybe one day the patent system will be reformed and the regulatory arbitrage opportunity will disappear and IV will go out of business. However until then it looks form the outside like a very viable business model. I wish I could wake up in the morning and shake down companies for billions of dollars.

  15. "I have a hunch he’s 1980s Microsoft-smart, which is to say he’s about as much fun to be with as a talking Wikipedia page, but hey, some people like that."

    There is a lot you can (and do) criticize Nathan for around IV, but he's pretty entertaining in person. Hopefully that is the only hunch you got wrong.

  16. jon staenberg says:

    Anyone care to guess how big a fund they have? And then guess the size of the next biggest one…..

  17. i hate patents – the other day I invented something, but someone had already patented it and even named it! I mean what kind of a name for a thing is "Aeroplane"?

    Joking aside, I'm serious about patents being a problem for inventors. You go away and invent something or come up with a genuinely unique idea and it turns out someone else already has a patent for something that's different, but general enough that they can claim your idea.

    This has happened to me twice now. I hate patents

  18. the main thrust of the critique here seems to be that the guy worked for Ms and this new patent troll and that this invalidates any opinion he may have on the matter… The paragraph quoted does seem at odds with itself as previous commenters have mentionedpatents are a double edged sword, used the wrong way they of course prevent the small guy from developing his ideas, but they also protect his ideas if it is a viable one. Like many tools its not the tool's problem but the users… and in this case also the regulation/administration

  19. Hey, Paul —

    I work at the USPTO and yes there are a lot of problems. But given the reality that software patents seem very unlikely to be simply scrapped, do you have any specific improvements in the area of software patents?

    There is patent reform legislation that will likely happen this year and if you have any motivation, ideas and influence, you could be spelling out and advocating specific language to get into the patent reform legislation. This is a rare oppurtunity and the window is about to close.

    • Personally, I think they had it right when software was unpatentable, before the Supreme Court decided otherwise — but short of invalidating all purely software-based patents ever, the largest part of the problem is that multiple software patents get issues for the EXACT SAME IDEAS — or for things that are so blatantly obvious that they shouldn't qualify for being patents in the first place, such as the one for in-app purchasing that Lodsys is having a field day with right now.

      I don't think we need more legislation to "fix" it. What we need is the USPTO to actually DO what it's SUPPOSED to.

  20. Bills have passed the House and Senate but they are different. Probably as soon as the debt talks are done this patent thing will wrap up.

  21. David W. says:

    According to This American Life, there’s a connection between Lodsys, the firm suing independent Android and iOS app developers for using the API provided by Apple and Google, and Nathan Myhrvold’s Intellectual Ventures. Intellectual Ventures has been accused of “selling” patents to shell companies it controls in order to hide its own involvement in patent suits.

  22. The fallacy of patents is the concept that "ideas are valuable". Well ideas are cheap and easy to come by. Especially the kinds of ideas that get into patents.

    The things that are valuable are ideas put into practice.

  23. In the world of patent reform, I don't want to take all these patents away. I think a few (very few) software items can be patented, or should be. Codecs, for instance. Bits of truly ingenious software that deliver something mind-blowing. The great majority of them, no patents. Or maybe this much: software patents could be held for 3 years. They are not transferable. No financial firms could buy them up to become patent trolls.

    The US Patent Office did not want to grant software patents. It had to be pushed into it by a couple of Supreme Court decisions.

  24. You may be interested to know that New Zealand is in the process of removing patentability for software. The process has been opposed by patent lawyers (no surprise) and software multinationals, but indigenous software developers generally don't want them. Kudos to our parliamentarians who saw through the FUD about innovation and understood that software patents make no sense and generally benefit large companies at the expense of smaller ones. The concern is that the forces of darkness may yet overturn the decision or that NZ will lose this progress as part of the TPPA IP negotiations.