Google’s decision this week to buy high-tech thermostat maker Nest for $3.2 billion is creating more than just the usual winners whenever a start-up cashes out for a big amount. Among the not-so-obvious beneficiaries from the deal is Nathan Myhrvold, the former Microsoft research chief who now oversees a giant patent portfolio at Intellectual Ventures.
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Myrhvold’s firm entered the picture last September, when Nest bought some patents from Intellectual Ventures and worked out a licensing agreement that gave it access to a much wider range of patents that could be used for defensive purposes. Terms of the deal weren’t disclosed. But Nest evidently felt it would be wise to shore up its patent claims. Back in 2012, Honeywell had sued Nest, which led to some spirited name-calling between those two companies.
There’s been plenty of argument the past few years about whether Intellectual Ventures helps innovation — or is mostly a way to wring value out of patents that aren’t being actively commercialized but can be cited in lawsuits against other innovators. Intellectual Ventures has disputed critics’ efforts to portray it as a patent troll. But in the murky world of patent licensing and litigation, it’s been hard for the Bellevue, Wash., company to cite a case where its involvement led to headline-making social benefit.
With Nest’s future now looking quite brilliant, Myhrvold and the other investors and executives at Intellectual Ventures may finally have found their showcase success. By tapping into Intellectual Ventures’ licensing portfolio, says patent expert Maulin Shah, small companies that haven’t had time to build up much formal intellectual property of their own can keep innovating without being worried that bigger, more-established rivals will try to crush them in patent litigation.
“The deal with Nest may surprise many that label IV as the poster child of patent trolling,” says Shah, who is founder of Envision IP, a New York-based patent research firm. But Shah adds: “The end result of IV’s licensing program, as demonstrated by Nest, is that companies can continue to bring innovative technologies to the market, while also mitigating their own patent litigation risk.”