There is an air of celebration emanating from IIT-Bombay. Reports in the local papers suggest that the senior faculty is delighted with a memorandum of understanding (MoU) that IIT-B signed last Monday with Intellectual Ventures (IV), a Washington-based company that specialises in buying patents and leveraging them for optimum gain.
IIT-B is clearly expecting great things from this agreement. It hopes that IV will be able to monetise its intellectual property (IP) in a more systematic way and help it to reap the rewards of global commercialisation. For academic institutions in India, even IITs which are regarded as top-flight hubs of innovation, the path to commercial success is strewn with problems. Not only are patents costly, but institutes have to struggle to create a prototype or take their idea to a level where the technology can be proven, as those in charge of IIT-B’s research and development moaned at the MoU-signing function. IIT-B has about 130 patents under its belt, but these have not generated any revenues for the institution.
So for these academics, the partnership with IV brims with hope and promise. IV will pay IIT-B a licensing fee for these patents and will also bear the patenting costs. The partnership is not exclusive and IIT-B is free to engage with others for IP-related matters. IV is offering its global network to help IIT-B to make the most of its innovation and will also bring a sharper focus to its R&D by identifying the demand-areas in the coming decade.
On the face of it, the open-ended licensing agreement is the best kind of deal for the institute since it allows IIT-B the option to pursue other ways of capitalising its IP. IV enjoys a fearsome reputation globally of being a patent troll, that is, a company which specialises in buying up patents and licensing it to others. As a result, it engages in a vast amount of litigation to pursue other companies that it believes might have incorporated any part of the IP in the patents that it owns without due permission. The patent troll’s main activity is seen as litigation and thus the reason for its unsavoury reputation.
IV’s founder is Nathan Myhrvold, earlier the chief strategist and chief technology officer of Microsoft, who describes himself as an ‘intellectual capitalist’ — akin to, but superior to a venture capitalist. IV has built up a formidable war chest of patents and, according to reports in the US, has more than 20,000 patents and patent applications “related to everything from lasers to computer chips.” It has also set up a fund (estimated to be $500 million) with a limited number of strategic partners who are investors as well as customers in IV’s patent portfolio.
Why would a company of this kind be interested in India which is a notorious laggard in innovation? One explanation is that IV is intent on mopping up potentially-promising technologies that are being thrown up in the IITs and the public research institutions in India. Reports suggest that IV is also seeking an agreement with the Council for Scientific and Industrial Research, the vast network of the country’s public research institutes, which is sitting on some 3,000 patents.
But not everyone is enamoured of IV. Critics predict that IIT-B is unlikely to benefit from this agreement because there is no evidence yet that the US firm’s hybrid business model has worked. They say there is need for transparency in such MoUs, especially on the valuation of the patents. For IIT-B, however, the comfort with IV comes from Ashok Misra, who heads its India operations. Misra is an IIT veteran who has been in Delhi and Mumbai for decades. He was the director of IIT-B when he left his assignment mid-way last July to join IV. So when Misra claims that IV’s unique business model will “enhance the creation, dissemination and use of technological inventions coming out of premier institutes such as IIT- Bombay”, his peers will believe him. Misra says his goal is to find “excellent collaborators to help develop the best solutions for the global marketplace of the near future”, a tantalising prospect for IITs which have made little impact in even the domestic market.
But that, according to one view, is not the solution. Scientists point out that Indian institutes have been unable to make the most of their IP because there is no portfolio management of their patents. As a result, they end up with bits and pieces of interesting IP which do not add up to much. It’s a bit like owning small pieces of property; only a significant chunk of real estate helps one to reap the true value of property. It remains to be seen whether the patent troll can help IITs to increase their IP holdings.