Patent venture

BY SPECIAL ARRANGEMENT

THEY call themselves an invention capital company. As against the traditional venture capitalists and other private equity investors, who basically invest in technological endeavours at R&D and post-R&D stages, with clear marketable technologies or products in view, Intellectual Ventures (IV) is a new business model that looks at the earlier stages of invention and the formation of the technology idea itself.

Investing in pure inventions is the underlying concept and focus of this company, which was founded in January 2000 by Microsofts former chief technology officer (CTO), Nathan Myhrvold, along with Edward Jung, former chief software architect at Microsoft, Greg Gorder, former partner of Seattle-based firm Perkins Coie, and Peter Detkin, former vice-president of Intel Corporation. Towards this objective, IV has gone about creating a large patent portfolio by buying up existing patents, acquiring exclusive marketing rights for existing patents and filing for patents for inventions and ideas that it invests in.

The investments that IV makes in patented inventions and patentable ideas essentially convert what are illiquid assets into liquid money for the inventors. For IV, the returns on investments comes from royalties the company receives from patents it licences to various customers.

The company is also engaged in making inventions in-house and patenting them. It has filed as many as 1,200 patent applications and has been granted about 40 patents. To date, IV has a portfolio of 20,000 patents, a third of which, according to it, are applications. On IVs staff are more than 350 people, including computer scientists, programmers, technicians, technical analysts, software engineers, biotechnologists, physicists and mathematicians. In addition, it employs intellectual property (IP) experts, patent attorneys as well as licensing and business development executives who have worked as top contributors to many leading technology companies.

Besides Myhrvold and Jung, who are themselves inventors holding several individual patents, IV has hired prominent scientists, including Robert Langer of the Massachusetts Institute of Technology (MIT), Leroy Hood of the Institute for Systems Biology, Ed Harlow of the Harvard Medical School, Danny Hills of Applied Minds and Sir John Pendry of Imperial College. It is this skill base that allows IV to evaluate ideas and inventions out there in universities and research institutions, and pick the ones with the potential to grow into technologies or products some years down the line.

Such a business model, with its underpinnings essentially on technology forecast and technology vision, is clearly fraught with far greater risks than a model that has a venture capital approach. But Myhrvold, the key person behind this model, is well aware of the risks and expects more than half of the 20,000 patents the company has invested in, and made payments for up front, to lead to nothing. The workability of the model, Myhrvold argues, hinges on the statistical probability of huge returns from a few ideas and inventions that will translate into really successful technologies or products in the future, which in the long run will effectively offset the large amount lost through failed or commercially unsuccessful ideas. It is the large portfolio and the large investor base of IV that drives its unique and untested business model.

While the company sees its model as revolutionary and visionary, it has been variously described as a patent aggregator or patent troll or intellectual vulture that accumulates patents not to develop technologies or products around them but to target large companies into paying licensing fees. This, Myhrvold argues, is the result of a complete misunderstanding of his model or a feeling of threat by technology areas that have survived essentially by disregarding intellectual property rights (IPRs).

Intellectual Ventures had been operating within the United States until 2008 when it went global by starting operations in China, India, South Korea and Japan. In India, it opened an office in October and has already entered into agreements with Anna Universitys KBC centre, the Indian Institute of Science (IISc), some Indian Institutes of Technology and some companies. In fact, Ashok Misra, former director of IITBombay, has joined the enterprise and has been appointed the chairman of the companys India operations. Through its discussions over the last six months, IV has apparently acquired about 100 inventions or patents. There are others, such as the Council of Scientific and Industrial Research (CSIR), who are talking to them.

In an interview with Frontlines Science Correspondent R. Ramachandran on October 5, Myhrvold and Jung talked about their business model, its underlying philosophy and the role, in the present and in the future, of such untried approaches in nurturing technologies for the future. Excerpts:

What is Intellectual Ventures (IV) all about?

Nathan Myhrvold: Our basic idea is that we invest in inventions. We do that in several ways. We both create our own inventions with our staff; we fund other inventors to have inventions. If the inventions already exist, we may invest in them or partner with them. The programme that we are here in India [for] is specifically to partner with inventing institutions, like a research lab or a university, to help provide some funding and expertise for stimulating more and more inventions.

You have been in operation for about eight years now. Were these the objectives that you set out with or did they sort of evolved over time?

Myhrvold: It evolved a little bit over time. Weve been doing this particular thing for six years now.

How did the idea come about?

Myhrvold: Edward and I had worked in Microsoft, and we had started the Microsoft Research lab; we were getting familiar with research and the economics of doing inventions. We didnt have the resources that Microsoft had. So we had to come up with a different model. And we realised that many of the worlds best inventors dont get the attention theyd like to get because they lack one set or the other of resources. They lack the expertise, or the funding, or the motivation. They lack something that prevents them from taking an idea all the way through. If we could provide a business that would provide the right context for those inventors to be successful, we could create lots of inventions, more than what would happen otherwise. That could be a very important thing to do.

Edward Jung: I think that one of the challenges when you come from a company like Microsoft is obviously its immense success. We could claim that we helped change the world with a company like Microsoft. So when you think about what is the next thing to do, you know you have a very high bar and you are going to do even better. But one of the things that is very clear is that the world has a lot of very fundamental problems. And anything you can do to get more people thinking about those problems and solving them and making it easier for getting that invention out so that people can use it creates a huge societal benefit and can change the world multiple times. Thats really what our endeavour is about create a business that can actually accelerate the translation of ideas out into the society and also create the incentives for more people to come up with those ideas.

How many ideas have you been able to nurture and how many inventions that you picked up have actually gone into the market as products?

Myhrvold: Many of the inventions that we have done have the property that they are in products, but they are piece of a larger product. We have now about 20,000 patents and patent applications from the activities we have done so far. That makes us about eighth in the world within the technologies that we care about. And those patents are used in lots and lots of products. We have about a billion-dollar licensing revenue so far from companies that have paid us to use those patents. Id love to say: Okay. Look, here is one thats exactly as what we have patented. There are some examples like that. But mostly what we have are things that are infrastructure. For example, a feature of a chip that is not particularly visible and its less easy to make it an example.

Jung: One of the things we also recognised early on is that it is a little bit harder today to have one invention, one product. So, outside of pharmaceuticals it is not likely. Nowadays products can have lots of inventions in them. It is an assembly of things. There are a lot of enabling technologies in science that are required to be pooled together to create a product. So, one of our values in the market is to bring those things together.

Who are your licensees, the entities your patents have been licensed out to?

Myhrvold: They are large technology companies, so far. We have got 15 licensees. They have asked us to keep their identities confidential because they think it is a strategic advantage for them. Most of the biggest technology companies in the world have licences from us. And those who do not, we expect [they] will conclude licences sometime in the future. Whoever is a monolith already, we are talking to them. Thats one class and thats what we have been successful with so far. Over time we will also be spinning out companies we are in the process of doing a couple of those to address new inventions as well as doing some joint ventures.

How do you scout for inventions that you think could be promising?

Jung: We have a process called RFI Request for Invention. It starts off with an idea of a problem to solve. As an example, one of the themes has to do with how do you take care of a chronic disease and relieve patients. From that theme we look down the road, both from a short term two or three years all the way up to 10 years, and try to find out what kind of technologies and problems are there that need to be solved in order for that to happen.

Then we develop a document called Request for Invention. It describes a relatively narrow area where we see a problem, and we pass it out to our network of, predominantly, scientists and ask them to invent in that area. If we get good inventions in that area, we put money up front, we pay for all the patenting worldwide and we pay for the development of that IP, [its] marketing and, eventually, licensing, and share the profits with the inventor. Thats basically the mechanism we use.

Do you also recruit potential inventors in universities or institutions who could solve a problem but do not have concrete ideas yet because of lack of funding to build on?

Myhrvold: Sort of. We tend not to fund basic research. What we try to do is to leverage basic research funding with this. But when we recruit inventors, we recruit them on the basis of what they have done in the past, not what they are doing right now. Thats exactly what we did with many of the investors we are associated closely with. We met the people [and said] why dont you come, invent with us; youve done some interesting things in the past. I bet you can do some interesting things going forward.

So you take them on your staff.

Myhrvold: Some, yes. If we want to operate across Asia, we cant take every scientist in Asia on staff. So we have both the models: we work with them very closely and a few of them end up coming to work for us full-time.

Jung: We are early in this programme in Asia. Over time we expect to find through this activity who are really very good inventors. It will make sense for us to make more up-front investment with them. But to date, although we have 600 inventors in the network, our relationship with them has been for an average of about six months. So, it is not very long yet. I think over the next several years well start to understand the ones we would really like to support more deeply and the ones we would like to support less deeply.

When you approach a potential inventor or someone who already has an invention, how do you convince that person to hand over the patent or give the idea to you? What does the person get in return?

Myhrvold: There are several kinds of those people. There are folks who work in the university. Then in that case we have to have a relationship with both the university and the professor; if it is a research institute, with the research scientist and the institute. In some cases it is the companies that we go with, in which case we have to have a relationship with the company of the inventor. In most cases, it is a two-part relationship, one with the institution a kind of an umbrella agreement that sets the terms for talking with the institutions staff and the other with the actual man or woman who has the idea. If they do get inspired, it doesnt matter what you do with the management.

Jung:As far as the scientist or the inventor, usually what they see as the benefit is that we are willing to invest in that invention up front. So, before the invention is licensed or shown to be practical, we are willing to put money and commit resources and skills to develop that IP.

There are inventors who have hundreds of inventions locally, say in India, but none in the U.S. or Europe. Why? Because it is very expensive. It is also very hard to find people with skills for writing patents over there. It is even harder to find someone who is going to actually deploy them in a start-up or start a company with that or license that to a large company. It is virtually impossible for someone sitting here in India or Korea or China.

We bring that to the inventor. We say, Look, we like your invention, we are willing to invest up front. You can take some money from us and use it to hire graduate students or do some more inventions or do whatever you want with it. At the same time, we are willing to deploy the skills we have, this network of people that weve got, to do a good job in developing the invention, to try to attract other inventions that are similar or are helpful to it, to create a sort of portfolio of related inventions and then go and market it worldwide to the people who may need it.

How do you make a valuation of an invention and how does the up-front payment vary from one invention to another?

Jung: Once someone submits an invention in response to our RFI, and we think the invention is interesting, we create a valuation for it. We do this with the help of our internal people and our network of 200 external experts, and we have a process by which we create a value. That is related to the process of creating the RFI in the first place, because we have a sense that we are doing this for a reason and we think there is a value there.

We have a value that we are ready to invest, and we offer an amount depending upon how much we think it is worth down the line and factoring in the risk we are taking. Then we pay the inventor, and because we are often wrong we also have a profit share. If we make money on it, we share it with the inventor.

At the end of the day, thats where it becomes immensely successful. This profit-sharing is where most of the returns are going to come from. So its very hard for me to predict, to give you an expectation value or an average.

How do you go about the patenting process?

Jung: We start off with a disclosure, which is a description of the idea. Then we elaborate on it with our subject-matter experts and our patent attorneys. They work with the inventor and expand that disclosure, and then we do all the research what are the ways to expand it to cover the right kind of claims for customers to have interest in this, and so on. Then we write the patent and we file it in multiple countries.

Does the inventor have a choice about where he would like the invention to be patented? For an inventor from India, for example, would India automatically be included or no?

Jung: No. At this point we are managing that entire process. Once the inventor has decided to submit the invention to us, from then on we manage the invention.

Myhrvold: We cant delay patenting in India because we think India is going to grow enormously. Lots of companies dont file for patents in India because they look at todays business, which is probably marginal. We look at the long term. So, we like patenting in countries like India and China. However, the primary focus of our patenting efforts is in the major technology markets the U.S., Europe and Japan.

Jung: Currently, the rule is to file the patent in the inventors own country and then do an economic analysis [of] which other countries it makes sense to file. Thats likely to be the rule for a very long time. For all intents and purposes, it makes sense to do it that way. Very often the inventors institution, particularly if its an academic institution, wants it filed locally. We dont actually own the patent in most of those cases; they own the patent. We just own the right to develop markets and monetise it.

What kind of rights does the inventor or the entity still have after giving the rights to you, to leverage for work in the future?

Jung: Great question. We usually give a grant back to the institution or the inventor for the patent so that they can practise it. In some cases, where the inventor has a preconceived notion that he wants to do something with it, part of the negotiation is whether we give them the right to do that too. Beyond that the interest is economics.

Myhrvold: One of the things thats important is that when we do deal with an institution we do not have to lock up everything that happens. So, if you work with us on this idea you dont have to with the next idea. Neither the institution nor the individual is locked up. The umbrella agreement allows them to decide on a case-by-case basis. They get to choose, Is this idea what Im going to do with IV and this one myself or some other way? However, once theyve made the choice and we [have] stuck out the money, then we lock the mistake [and] opt for that one idea. We are prepared for complete flexibility but before they make the decision. Similarly for other future ideas they [may] have.

Jung: A perverse example is an inventor quits an invention completely to us and we pay $100,000 or $200,000, and they can use that money to come up with a new invention, which they dont give to us. Thats fine. We hope that over time they choose to do things with us.

Does the inventor or the institution remain in the loop to know to whom you are talking and what kinds of decisions are being taken?

Myhrvold: I think it is quite likely that they will be in the loop for knowing what we are doing.

Jung: However, there are cases where many companies are very proud of what they built. After that they dont want their customers or competitors to know from where they are getting the technology. So often they want that to be kept confidential.

While you have a non-disclosure agreement with your licensees, can you share that information at least with the inventor or the institution who may like to know where the technology is being used and where the revenueis coming from?

Myhrvold: When we can, we share that information. There may be some cases where its difficult to share that information.

Jung: There are reports they get about where the money is coming from.

So they remain in the loop right up to the stage of commercialisation even if you do not want to name the customer.

Myhrvold: Oh. Absolutely.

Jung: They have an economic-profits interest. They basically can see where the cheques come from and what the amount is.

At the start of this interview you said you did not have the resources. Now when you are actually offering to pay someone up front, where did the initial money come from?

Myhrvold: One of the big challenges for this was to get people to believe in it enough to give us money. The very first investors we had were some people in the technology industry myself, Bill Gates and a couple of others. Weve been successful in convincing others to invest. So today we have investments from pension funds and university endowments.

Its pretty common for those sorts of entities to invest in venture capital or others, what they call alternative investments, not just stocks and bonds.

Jung: One of the things we have thought about is that there can be an economic model behind the support of interest in science and invention. By making that economic model, it is possible to get money from other sources, long-term investors. So we manage a very large amount of capital, which otherwise is an alternative piece of capital to, say, government funding of science, and are going to deploy that capital to scientists and inventors all over the world, essentially in the next five-plus years. Its a large amount well be deploying $5 billion. Its something you couldnt build another way.

Myhrvold: Another thing that is very important is that we have enough scale and we make lots of investments. So a single patent may be worth negative because it might get you nothing for the lots of money invested to get the patent or may be worth billions of dollars. There is this statistical stuff called distribution. Most of them are worth zero or very little. But some of them are worth an enormous amount. So, part of our idea is that we operate on a scale that we make thousands of these investments and most of them will funnel this money out.

You should not get surprised if its more than half. But that doesnt matter. What matters is that we have enough scale that we can get this in. You know, the variance of this distribution is too high to invest in a small number of these things. If you invest in enough of them, it becomes almost a sure thing that something is going to be valuable.

Are the licensees themselves investors?

Myhrvold: In some cases, yes. But over time our licensees have expanded to a much broader set of companies. With the breadth of operations that we have, we will probably have about thousands of different entities that are licensing our patents. But it takes time to do that. So we are developing that.

How many investors do you have now?

Myhrvold: I am not sure, probably 57 institutions and not all companies many of them are pension funds, university endowments.

Is the identification of ideas and inventions driven by the interests of your major investors, which, as you said, are large technology companies?

Myhrvold: A little bit. We try to take a very broad view of it because any time you are doing a new patent you are talking of something thats really quite far in the future. Typically it takes about three years just to get a patent from the process of applying for it. Most of the ideas that we invest in probably have reached five years late; many really are 10 years late.

So, you dont want to be too blinded to today when you are looking at something thats 10 years out. We see how much technology has changed in the last 10 years. Its very important for us to think ahead and try to make sure that we arent too focussed on the present.

Jung: We are organised in such a way that we have investors; they give us money but they have no control over our operations. So, in that sense, we are free agents and we can decide where we want to invest and they are coming along as riders trusting us to make the right decisions. Its a little bit different from a small tech start-up whose investors try to control it. Here there is no control.

So what kind of returns do you promise the investors?

Myhrvold: Well, we promise them that we are going to work as hard as we can and we hope that over time this will finance the returns part of it. If they lose their money, they wont give us any more [laughs]. Whereas, if we are successful and the returns show that this is a good investment model, we will be able to keep doing this. And, again, besides us, others will be able to do this.

Jung: Eventually. Right now we are the first organisation trying to do a model like this at this scale, which is either very smart or very crazy. Nobody knows yet. So these investors are taking a risk. But they share our belief that there are really valuable inventions in the world. And so if you can help them come up better or faster, there is value in that. They are just kind of taking it on faith and hoping that it gets proved over the next several years that its actually worked out very well.

Myhrvold: Thats a good way to put it. Its very clear that new inventions are worth something. And some are worth an enormous amount. A new drug can save lots of peoples lives; a new technology device can enormously improve productivity. But the world doesnt really treat it much like it has value. Its very difficult to get it funded and, as a result, inventors are mostly left on their own to build on their idea, fund it, market it.

There are many classic stories of inventors where half of their success wasnt just due to their idea but due to their persistence. They had to keep pushing and pushing to get the world to listen. If you needed [to make] it a little easier for the inventions to come out we think there are lots of them it comes across to us that the inventions are valuable but the world isnt treating them as valuable.

You are already sitting on a whole lot of patents. Is it not time to have a closer look at the entire portfolio to see where you are headed?

Jung: We are doing this all the time. We are continuously looking at portfolios to decide where to invest next, which customers would be interested in taking out licences. As Nathan pointed out, we already have 15 customers. Almost all our licensing activity has been concentrated in the last 18 months. So it is fairly recent to us because you have to first have the assets to talk to somebody to make it interesting. We will continue to do that.

Myhrvold: Let me answer your question another way. We have enough patents based on our operations in the U.S. We could have stayed there; we didnt need to come to India. But if you look around the world where invention is the output of smart, educated people who are working on hard problems, and say, Our business is to take the smart, educated people and make it easier for them to get to the market, where are the important places to go to in the long run?

In the long run, if you look at India, for example, you have a very strong university system, lots of smart people [and] growth in technology business in all forms. This is a great place for us to invest in now [and] early. Many people say too early, frankly. But if we invest in India now, we will produce a stream of patents and innovations that, over a long period of time, will be very, very important.

So we dont need to come here because we ran out of patents in the rest of the world. There are plenty of patents in the U.S. The difference is if you take a professor at Stanford or MIT, for example, they have a pretty direct way that their ideas can impact the world. They can start up companies, they can file patents [and] they have direct access. If you look at a professor in the IIT campus here, I think it is more difficult than it is for the people in Stanford or MIT. Over time, that will equalise. We are trying to make it equalise a little bit sooner [and] a little bit better than it would otherwise. We see that as an opportunity.

There are all kinds of descriptions of your enterprise in literature, such as patent troll. That you only aggregate patents and do little about them while cashing in on them at various points of time by various other means. One can understand the logic of this allegation. On the one hand you can say to big investors that you are protecting them against lawsuits for patent infringement and on the other you can tell the inventor that you are ensuring that his or her patent is not misused. How do you react to this?

Myhrvold: Whenever you get into a model that is very new, it is both misunderstood by some people and also viewed as threatening by some others. In some industries there is an attitude in favour of patents and in some there is an attitude against patents. For example, the biotech industry or the pharmaceutical industry, or, strangely, the toy industry at least in the United States is totally about patents. Most toy companies had all of their toys invented by independent small companies or individuals and licensed their patents and produced on a large scale. So thats typically what happens. Same thing is true with biotech.

In software and [the] Internet, its not been traditional to get patents. Companies would copy each other all the time. It is sort of the Wild West; no sheriff, no stopping it. Those companies feel very threatened because they would prefer not to pay for the patents.

Our attitude is that we are channelling this money to the inventors. We paid inventors already more than a billion dollars. And thats a significant amount of money that stimulates them one way or another. Worldwide it creates incentives to do more inventions. And the net result of this is positive.

Even to companies that have to pay us, we say, look, its better you pay us something reasonable and get the benefits of the new inventions that are coming out than not to do it. Over time there has been a shift of more attitudes in this direction. But it takes time, and not everyone is going to be happy with us.

Jung: I think over time our customers have shifted their focus from Oh! You are trying to punish me for patents in the past to Oh! You are really going to be an interesting supplier of inventions in the future. And now all companies know two things that were clear to me 30 years ago: They must be effective to survive, and they cannot get all of their innovations internally. Those kinds of companies are the best partners for us.

We are not just aggregating; we are trying to build products out of inventions. I like to tell people that if we are an aggregator of patents, then Toyota is an aggregator of car parts [Myhrvold laughs loudly]. We are 500 people. This is not just pulling it together and putting it out. A lot of thought goes into deciding which kinds of inventions are valuable, packaging them in interesting ways that are both useful for today and predict the future.

Myhrvold: The fact that we are in India and what we are doing in India is testimony to that. There have been some law firms and some small companies in the U.S. that buy patents and sue people and get a bad name for us. But those people arent opening a big office in India and reaching out to Indian universities to stimulate new inventions. We think that this kind of activity is going to create a lot of value in inventions. Otherwise, people who have the thought would just let it die as stray thought. Or other people would have used it and there would be no recognition. When we come here or go to China or to other places in Asia, I think recognition and participation is almost as important in the long run as the financial aspect.

Jung: Networking is the other thing that people got quite excited about. In a university, in theory, if you are a chemist you can go across and go meet the computer scientist or what have you. But in practice it doesnt happen that often because there isnt a real problem to solve that brings them together. So one of the things that we found people got quite excited about was when we gave them problems that gave them the context and gave them even a suggestion of what will make people come together and in a network. Literally, we have a network kind of map that shows different people and their expertise and how to connect, that allows them to find a peer, a like-minded but different discipline expert, to work on the problem.

Is there not a downside to the extreme importance that you give to patents in the academia in that the scientists will have a tendency to focus on patents for patents sake and not focus on work that can be for public good, which as members of publicly funded institutions they should be doing?

Jung: A lot of the discussion about the negativity of patents in academia comes from the way economics forces the technology licensing offices [TLOs] of universities to license. The ideal licence for a TLO is a pharma patent because you only have to license it to one company and you can get good money. One of the advantages that we have is that we can expand the capacity of a TLO or other technology licensing groups hugely. Our incentive is most large when we license it to lots of companies. So I like to look at it in the following way.

Our view is to put economics to the open sharing of information. Patents, in essence, are a public document. And our view is to give non-exclusive licences; we license it to all the companies that need the technology. We are really getting it out there for everyone to use. Its just something thats very difficult for most universities and institutions to do just from a staffing perspective. We get to amortise that cost which is not trivial. I am talking to a thousand companies over thousands of patents that we can pool together from lots of organisations. Its very difficult to assemble patents from different academic institutions together and license them together because no TLO or an institutional framework has that charter.

One of the noble things that we could do in our business model thats because we want to do it for free; its actually part of our business is that its natural in our business model to do that; to pull them together when they are related and license them to all the people who need it.

So the licences that you have already given out, you have the right to license them again to other companies even if they are investors?

Myhrvold: Yes. Absolutely.

Jung: In fact, most of these 15 companies that we have licensed are actually competing with one another.

Myhrvold: In general, we give non-exclusive licences. There may be some cases [when this may not be so]. For computer science-related things essentially, all are non-exclusive. The only time we have to give an exclusive licence to someone is if the industry situation demands it.

In the case of a medical device, for example, because of the problems involved in getting government approval and the huge expenses involved in clinical trials, typically, companies wont touch it if it isnt done exclusively or there is an exclusivity period. However, in almost all cases we license non-exclusively.

When you say non-exclusive, does it include the governments rights of marching in for compulsory licensing for public good if the government wants?

Myhrvold: Well, that happens no matter what. There are some important cases in the U.S. where the government has mandated that some things be licensed for public good. Its an extraordinary procedure that doesnt happen very often. But, essentially, any patent could be subject to that.

There could be instances that you have bought off licences that could be used immediately but you are sitting on without actually putting them to work? Such a suspicion is what forms the basis of you being labelled a troll.

Myhrvold: By and large we are interested in getting our patents used, unlike many companies which get patents they dont want to use. If a company has a product, it gets patents all around the product that it doesnt actually use and threatens to sue people if they use it.

That kind of thing doesnt make us any money, so there is no reason for us to do that. Our focus is to say, lets get things licensed as widely as possible, and to pick a wealthy baiter in financial terms that are reasonable so that we can pay better. Half a loaf is much better than none.

How do you see your operations shaping up in the future with the increasing trend towards open source software and open access literature? Even in biotechnology there is talk of open source genomics information or in medicine, with generic drugs gaining importance, how do you see your role?

Myhrvold: We think there is going to be a role with inventors coming up with brand new, clever ideas that no one ever had, which are useful. We think that is always going to happen and the world is developing and we are becoming technologically more sophisticated. Cellphones have some of the excellent operating systems in them, but that doesnt stop the fact that there are brand new ideas to be had. And some of those ideas are very important.

I dont think there ever will be a point where you cant find individuals who have brilliant new ideas. When those brilliant ideas fit the model of what a patent covers, then there is an opportunity to protect those and make a little bit of money by licensing them and channel more money back to the inventors. This is what makes the whole process go.

The venture capital industry, overall, has created tens of thousands of companies, and in recent years more than 10,000 a year. Many of them fail but companies that succeed have totally changed the world. Companies like Intel, Microsoft, Cisco, Google and Amazon have gone forward. The fact that venture capitals exist has stimulated that to occur. Our economy worldwide, in India or the U.S., is better, peoples lives are better for this [betterment] happens to companies.

I think the same is true for ideas and inventions, and if we can stimulate the creation of thousands of new inventions, which would not have happened otherwise or have happened sooner or better because of us, thats going to change the world for the better. Thats a theory you know [laughs]. In 10 years I will come back and you can tell if I was right or wrong. We are risking our time, energy, money and our reputations for this.

Why did you jump into this with your reputation as a polymath a mathematician, a physicist, an inventor, a palaeogeologist, a chef, and what not?

Myhrvold: Because stimulating other inventors to invent is even more important for me to do than my own inventions. I still invent. There are about 100 patents all together.

Jung: As I mentioned in the beginning, if you come from a company that kind of changed the world and you think you are doing something better, what can be bigger? This is actually incredibly powerful. We can catalyse multiple changes in a very broad way in helping inventors of the world to get their ideas out.

There is no shortage of problems to solve that are incredibly important, socially, economically or what have you, that unlocking this power is going to be hugely [beneficial].