I bet a lot of the IC industry wishes Rambus believed that patent trolling doesn’t pay :-P

Patent lawsuits take awhile to litigate, and then collect on. This is the return of the fund for a given amount of time. If the lawsuits go their way, the return for another duration of time might be something in the thousands of %.

Why on earth would you do a 2-year IRR on a venture fund?

Also, look at the capital invested vs capital returned. The capital returned shows 0.00 on one fund, most likely because that fund and the patents/cases that it represents are still in litigation.

This is, after all, a patent trolling fund so the returns exist when they collect royalties, or a settlement/judgement occurs in litigation.

The lottery has a negative expected return but people still play it.

Why the hell is U. of Texas investing in patent troll firms? That’s horrible and makes me pretty much lose all respect I could possibly have for this institution.

Exactly. Especially one that depends on litigation, lawyers, and courts.

“the IRR on Union Square Ventures 2008 so far is negative 15.75 percent”

Well of course the USV 08 IRR is negative. Think. You put cash into companies in the early years and get it back in later years. Their investment period is likely 3 years or so. So you can’t really bitch about negative IRR until year 5-7.

Actually I was talking about how silly it is to do an IRR on USV’s 2008 fund.

Union Square might be down for now, but they have money in a couple wee companies like Twitter and Zynga. I think they’ll be okay.

Isn’t it a bit like saying “Playing the lottery doesn’t pay” – except it might just do, big time (gambling)?

You can always count on Hunch founder Chris Dixon for interesting [Tweets] [emails] [IMs] [phone calls] [Pony Express messages].

The method of delivery adds nothing to the story.

I guess it was conversational but an odd lead in.

IV buys and licenses patents, but they also develop new inventions themselves and fund research. How do we know that the negative return isn’t due to those non-trolling activities?

Compare to Acacia Research, which is a pure patent trolling firm. They are doing great financially, handily beating the market.

not silly to do it, only silly to misinterpret it.

Shouldn’t you have to attempt to build the product or service to prosecute the IP, that is one change that would benefit everyone. An idea is worthless without execution. Not saying you have to build the best one or even the first if your patent was filed before your competitor built but before you prosecute I think you should have to show a material attempt to enter the business

Unless the idea is truly groundbreaking, then the only value of a patent to an entrepreneur is the ability of trolling it when looking for investment. The only incentive to file is external pressures for validation of the idea and not the original intent of protecting IP. Even now, I think most investors are paying less attention to patents and more attention to execution.

Just takes one big trolling hit, and those returns will look real good. Sorta like Hollywood. Alternatively, there are suggestions that IV has a complex net of shell companies that do its litigation — don’t want to appear to be a troll and tarnish Nathan’s image. Maybe the profits are still under these shells.

Just wondering …
if a judge (say a Texan judge) invests his private money in funds which the re-invest in these trolls.
Is there some reason why some of these cases are being treated in Texas ?

How do we kick them while they’re still down?

If the original patentholder’s idea was infringed upon by a large corporation, why not bring the Company to justice and reward the original inventor.

All too often large Corporations are able to take advantage of individuals lacking resources. Seen the movie ‘Flash of Genius’ ?

Not sure how their business model works, but if they are rewarding the original inventor, kudos to IV.

Also, a -70% IRR to a -10% IRR. Significant improvement. Let’s see where they go from here.

It is possible that those are patents produced by U of T faculty and students, so its not that sinister. Those are real inventions. Most universities would not seek patenting stuff themselves because they do not know what might be worth patenting anyway, and it is not cheap, some estimates are 25K/patent in legal fees just to register it.

More common for universities is to offer their research to be patented by industrial partners in exchange of some % of revenue from the royalties. I cant imagine much coming out of it, but it has no upfront costs either…

If you think it doesn’t pay, look at what happened with the ludicrous Juxtacomm lawsuit last year. Estimates of several hundred million to over half a billion for a company with no product, no customers, basically a shell run by an “investment” group of politicians and lawyers.

The “patent troll” is a myth propagated mainly by large corporations angered after having to pay up for infringing others’ IP rights. Apparently, trolling is in the eye of the beholder. To my mind, deliberate infringement is worse than asserting a valid right.
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