If Apple Inc. (NASDAQ:AAPL) really did decline to participate in Intellectual Ventures’ latest acquisition fund, it would be a key departure from a major funder. Many have accused IV of acting like a patent troll. The company has been criticized because it doesn’t actually make products. Instead, critics say IV just exploits the patent system by threatening to sue companies and charging royalties.
Microsoft, Sony invest in IV; Apple, Intel don’t
Reuters cites unnamed sources who said Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (ADR) (NYSE:SNE) (TYO:6758) both paid into IV’s new acquisition fund. However, Apple Inc. (NASDAQ:AAPL) and Intel Corporation (NASDAQ:INTC) apparently didn’t. Both Apple and Intel have supported IV in the past.
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
Sources reportedly said that last year, IV put a hold on acquiring new patents so that it could seek new investors. They say now the company is ramping up for another acquisition round. The money from Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (ADR) (NYSE:SNE) (TYO:6758) will give it a fresh injection of cash to purchase more patents.
IV defends its business model
IV says it protect the patent system by enabling investors to monetize their patents by selling them. Nonetheless, the company has been at the center of debate over patent reform. Google Inc (NASDAQ:GOOG) was another company which once invested in IV, but it later chose to stop doing so. Currently there is still an ongoing lawsuit filed by IV against Google’s Motorola Mobility division.
Experts suggest that perhaps Apple Inc. (NASDAQ:AAPL) and Intel Corporation (NASDAQ:INTC) simply found “something better” to do with their money. They don’t think it has anything to do with the politics surrounding the debate about the patent system.
According to Reuters, the average return rate for IV’s 2003 fund was 16.2% at the end of 2012. Its 2008 fund had a 2.5% return rate. IV said last year in a court filing that it has brought in over $3 billion so far in licensing fees.