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Olympus gives in, settles with Intellectual Ventures

Nathan Myhrvold's patent-holding outfit lands its fourth major lawsuit-settlement deal in two months. Are companies learning that if you can't beat them, might as well join them?

Intellectual Ventures, the giant patent-holding company that's become synonymous with the term "patent troll," says it has settled a contentious infringement suit with camera-maker Olympus.

The suit, filed in Sept. 2011 against Olympus and fellow camera-maker Canon, claimed the companies infringed on nine image sensor patents, the first of which was filed in 1995 and granted three years later. Intellectual Ventures, founded by ex-Microsoft executive Nathan Myhrvold, is still pursuing the case against Canon, as well as a similar suit, filed a month later, against Nikon.

Intellectual Ventures' Nathan Myhrvold Intellectual Ventures

Financial terms of the settlement were not disclosed. But the deal highlights a little-understood part of Intellectual Venture's business: its IP-for-Defense program. Basically, by licensing the patent from Intellectual Ventures, Olympus can assert the patents it just licensed if another company should come along and attempt to make a similar claim against Olympus (And, really, would anyone be shocked if that happened?).

It's that defensive program that drew a brutal comparison on the radio show This American Life to a member of the Mafia showing up at your butcher shop and asking for protection money so you don't have to worry about being bothered by other people like him.

Nonetheless, Olympus is the fourth company in the last two months to settle patent litigation with Intellectual Ventures, which says it now controls more than 40,000 intellectual-property assets (mostly patents and patent applications). In September, SK Hynix and Elpida settled a case involving computer memory technology. And last month, McAfee settled a separate suit.

Legal researchers who have studied Intellectual Ventures say the company will be under increasing pressure in the next few years to wring more money out of its intellectual assets.

As CNET wrote in a behind-the-scenes lookat the Bellevue, Wash., company, Myhrvold has described Intellectual Ventures and its $5 billion in funds raised in terms of venture capital. Researchers at the University of California's Hastings School of Law estimate that in order for a 10-year fund of that size to be successful, Intellectual Ventures would have to generate $40 billion in revenue through licensing, partnerships, and litigation.

Michael Meurer, a professor at the Boston University School of Law who has studied the impact of companies like Intellectual Ventures on the economy, told us those investors are going to expect venture capital-like returns.

"I don't know how they're going to recover money on all these patents they've purchased," Meurer said, "unless they engage in troll-like behavior."

(Via Geekwire)