Today’s edition of the Wall Street Journal includes a letter to the editor from Peter Detkin, founder and vice chairman of Intellectual Ventures. Peter’s letter addresses an August 22 editorial by Gordon Crovitz on the U.S. patent system, and discusses Google’s recent acquisition of Motorola Mobility as an example of how the system has evolved to treat patents as a liquid form of capital.

You can read the full text of Peter’s letter below and on the Wall Street Journal online.

Patents Are Another Kind of Capital

Gordon Crovitz looks at the Nortel patent auction and Google-Motorola deal and sees rampant dysfunction in the patent system ("Google, Motorola and the Patent Wars," Information Age, Aug. 22). But the billions of dollars that recently changed hands as patents are bought and sold show that the system has evolved to treat patents like any other liquid form of capital, which will actually accelerate innovation.

A functioning market for patents protects the rights of inventors but also ensures that new entrants to a mature industry, such as Google's nascent wireless division, are not wholly shut out by established competitors. While $12.5 billion may seem a high entry fee for Google to pay, it's a small fraction of the total that Motorola and others invested in the R&D that made smartphones what they are today.

That deal returns value to Motorola shareholders, whose investments enabled many of today's most fundamental cellular features, and it gives Google assets to trade or license with its competitors in exchange for access to invention rights that they own, allowing Google to continue developing its Android software. Google's actions show that a market where patents are treated as liquid capital can help companies efficiently bring new ideas to market without trampling over all the inventors and investors who came before.

Peter Detkin
Founder, Vice Chairman, Intellectual Ventures
Mountain View, Calif.

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