As the White House and federal regulators work to crack down on so-called patent trolls, one company that’s found success relying on a business model of licensing patents is building a new in-house lobbying team in Washington.
Intellectual Ventures, a privately owned company based in Bellevue, Wash., has tapped telecom lobbyist Russell Merbeth, former vice president of government affairs at wireless giant Cricket Communications, to build its first office in D.C.
Merbeth joined the company in March, and said he will likely add a communications specialist here within the next six months.
Intellectual Ventures, co-founded in 2000 by the former chief technology officer of Microsoft, has worked with several outside lobby firms since 2005, including the Nickles Group, Richetti and Venable. Last year, it spent about $1 million to lobby Congress and executive agencies — more than double the $440,000 it spent in 2005. During the first six months of 2013, the company spent $370,000 to advocate on various patent reform measures, including issues related to patent rights of patent assertion entities, labeled by some as patent trolls.
Merbeth will lobby on patent reform, intellectual property rights, taxation of patent royalties and corporate tax reform, according to Senate records filed this month.
“The company has been pretty active in Washington, maybe a little below the radar, but very active on public policy issues related to patents and litigation reform,” Merbeth said. “But after [America Invents Act] was passed, they were looking to bring someone in-house to standardize public policy operations and create programs the company could promote year-in and year-out, regardless of if there’s any legislation being considered at the moment. Part of the idea is to have a consistent presence here in Washington to educate members of Congress and the administration.”
Intellectual Ventures does not consider itself a patent troll — an entity that exists solely to buy up patents and sue companies to collect royalties. But it does sell portfolios of patents to businesses, and the majority of its revenue comes from patent licensing, which has made Intellectual Ventures $3 billion since its founding.
The firm, which employs 800 people in 11 offices around the world, has purchased more than 70,000 patents and filed about 25 lawsuits against companies for patent infringement after failed discussions with company representatives to buy part or all of some patent portfolios. They include HSBC Bank, Capital One, Motorola Mobility, Toshiba and Symantec.
Merbeth said Intellectual Ventures does not bring litigation against small companies, start-ups or consumers over vague or overly broad patents, like a spate of recent lawsuits targeting coffee shops over the technology that enables wireless Internet.
“If Congress wants to enact something to reform that without needlessly undermining the value of patents at large, we’re in support of that,” he said. “When we do wind up suing a company for infringement, these are large multinational corporations with hundreds of millions if not billions in annual revenue, distinguishing [Intellectual Ventures] from some of the companies and behavior that people are complaining about.”