Intellectual Ventures’ Indian Deal Epitomizes Strategy to Support Invention in Asia
On Monday, Bellevue, WA-based Intellectual Ventures signed an agreement with the Indian Institute of Technology-Bombay to license some of the university’s inventions and to work on technology commercialization strategies with its researchers, as reported by CIOL, Express India, TechFlash, and other outlets. It’s not really big news by itself—Intellectual Ventures has formed similar partnerships with other institutes in India, as well as in China, Japan, Korea, and soon, Singapore—but it fits into the broader strategy the firm is pursuing around the world to foster invention.
Last fall, Intellectual Ventures opened offices in five Asian countries in an effort to gain access to a much wider pool of inventors and talent. Led by global head of technology Patrick Ennis, a physicist and former managing director at Arch Venture Partners—and other members of Intellectual Ventures’ senior leadership team, including co-founder and president Edward Jung—the company is building relationships with prominent academic scientists in Asia, and setting up partnerships whereby it can license certain inventions in exchange for helping with patents and commercialization. The strategy reminds me a lot of Microsoft Research, which has set up labs in China and India in the past 10 years and built partnerships with local university researchers and administrators. (This blueprint is not surprising, given that Intellectual Ventures’ co-founder and CEO Nathan Myhrvold was the founder of Microsoft Research.)
The reception Intellectual Ventures is getting also reminds me of Microsoft Research. While most university officials see the partnerships as benefiting their researchers and increasing the flow of innovation, critics have rolled out the standard “patent troll” fears that the company is coming in to buy up all the best intellectual property—which will only be assuaged by years of relationship building and repeatedly demonstrating that these sorts of deals can benefit both sides.
Nevertheless, Intellectual Ventures’ Indian operation seems to be off to a strong start. It is now staffed by about 15 people, led by Ashok Misra, the former head of IIT-Bombay and a highly respected polymer materials scientist.
I caught up with the staff of Intellectual Ventures to hear about the workings of the Indian university partnership. Nicholas Gibson, one of the firm’s directors of business development in Japan, said via e-mail, “The agreement with IIT-Bombay is important as it gives [us] more direct access to top flight university-based Indian inventors. The deal also gives IIT-B access to commercialization possibilities that they haven’t really had much opportunity to access as of yet. Finally, it gives their faculty and students access to the many ‘problems needing solutions’ that Patrick and his team work on every day to identify, thereby making the chance that an IIT-B invention will make a global impact a little closer to reality.”
Gibson, who also handles Intellectual Ventures’ marketing and public relations in Asia, shed more light on the significance of the deal as well. “IIT-B is one of roughly 10 schools in India we are now working with. However IIT-B is one of the premier universities in India—one of the original IITs, so it is a little like working with, say, a Harvard or Stanford for us,” he said. “We were excited and proud to make the announcement.” (IIT-Bombay is known for its strengths in electronics, software, chemistry, and materials, among other areas.)
Full financial terms of the partnership weren’t disclosed. But Gibson says, “The arrangement is for the university…to send us invention disclosures from time to time as well as allow us to directly work with professors we have identified to partner on brand new inventions…The arrangement is not exclusive and the university is free to pick and choose which inventions it gives to us and which it doesn’t. [Intellectual Ventures] pays a fee once we decide to actually accept the invention from the university and we pay all associated patenting fees. It is important to note that we are not purchasing these inventions, we are exclusively licensing them—it’s a big difference that allows the university and the inventor to be better recognized for their invention by the companies that eventually license it.”
So how is this a win-win for the firm and foreign universities? Gibson didn’t say specifically how much university inventors stand to gain if their inventions are translated into moneymaking products, but he described the terms this way: “It’s generally a good deal for the university as they don’t have to pay those costs themselves and they get some upfront money out of the deal—which means [Intellectual Ventures] is taking on a certain amount of risk in the expectation that we can and will monetize the invention either by licensing, spinning out a specialized company (like TerraPower [a maker of nuclear reactors]), or partnering with a third party,” Gibson said. “Generally, we also pay the school a piece of the back-end we generate from licensing or other commercialization event—which can be significant in some cases.”