Research published in the Stanford Law Review has uncovered a number of new details about patent aggregator Intellectual Ventures (IV). The company is one of the most notorious patent trolls, purchasing patents from others not to use the technology, but to reap licensing fees or get litigious if its targets don't play ball. Despite its high-profile name (best known from its lawsuit with Motorola), IV is remarkably secretive. Formed in 2000 by two former Microsoft senior staff and two intellectual property lawyers, IV's advertised activities revolve around a number of technological and medical inventions. However, underneath the IV parent is a number of shell companies, which serve to purchase, hold, license, and defend patents.

None of the above is new — the role of IV subsidiary Ferrara Ethereal LLC was detailed during the Lodsys vs. iOS developers case in May last year. However, the sheer scale of the company's operations is eye-opening. Professor Robin Feldman and lawyer Tom Ewing's research estimates that IV holds between 30,000 and 60,000 patents — a wide range, but even the low number would give IV the 15th biggest portfolio in the world. The company uses 1,300 holding companies to manage this stock, which often makes it difficult to track exactly when a company is facing legal action from IV. It's a business that has served the company well — in disclosures, IV claims to have made more than $2 billion from licensing alone.

Feldman and Ewing uncovered another element to IV's business model that it says can be compared to 19th-century privateering — selling patents to smaller, more agressive firms while retaining a license for IV investors. The new owner is free to sue anyone in breach of the patent who has not already become a licensee at an earlier point. It's also suggested that IV will then approach any companies that capitulate having been chased by the smaller company, seeing them as an easier potential licensee of other patents.

Despite their findings, Feldman and Ewing don't see a general problem with the trade in intellectual property, or see the current system as broken. Instead they believe that greater regulation — as found in other financial markets — are required in order to prevent abuse in the market.

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