Nick, check your facts. That is the picture now. But how did IV get started? An ex-Microsoftie used _his own money_ to acquire a critical mass of patents before anyone would pay attention to IV. None of those companies pledged funds for him to build a portfolio of mostly junk patents from scratch. He had to use his own money.

There is a pre-history of IV, before they had a website with press releases that can be cut and pasted into comments. None of those companies were signed on from day one, when IV's portfolio did not yet exist and was just an idea.

Is that what you are suggesting?

He did start it with his own money and did build up the initial pool himself, just like anybody else bootstrapped. I remember listening to him tell the story in an interview, I can't remember where (I also believe he mentioned that Bill Gates was personally invested, and an advisor). But above it was said that no sane company would invest in the idea of buying patents, when clearly a lot have.

What I am suggesting is that IV is not a rogue actor - they behave in the way they do with the consent, blessing and backing of many famous technology companies. They have, from all outward appearances, a very legitimate and profitable business model.

== Your missing the point, or at least part of it. It is akin to a protection racket. Those companies invest to not get sued, etc. So thats the sales pitch: invest, take a cut of the $$, and oh, btw IV wont sue you (as often) either.

The following is an oversimplification, but should give you an easy way to think about what IV is doing. It's oversimplified because IV is now in a position to pursue multiple patent strategies, including ones that make great PR: "Look, we're patenting the solution to malaria!" But let's focus on how they got started, their "bread and butter", how they actually make money.

The term "patent troll" came from an in-house lawyer for a large well-known IT company.

The idea is that small inventors or small companies sometimes with the help of NPE's or aggressive litigators would come after the large companies and ask them to "pay up".

Of course the reality is often that large companies are the only ones who are capable of practising the technology in these patents and actually producing products and services that people use. So to the large company with lots of cash, these threats are just trolling. The small guys, the NPE's and aggressive patent litigators trying to shake down the large companies don't produce anything. All they did was file receive a few (likely bogus) software patents. They are "patent trolls".

Now, obviously the definition has expanded, but now you know where it came from and the context.

Next an ex-MS CTO with considerable personal wealth has become so bothered by this (or intrigued, take your pick) that he decides instead fo trying to fix the system and solve this problem of trolling, he will stick himself into the space that the NPE's and the aggressive patent litigators occupy. He will be a middleman. The new middleman. One middleman to rule them all. And he will take his cut. They'll be no need to produce products. Of course, there's one problem with this idea. He does not have control of 100's or 1000's of patents.

Now, what nik seems to be missing is that no business is going to donate money or patents to an aspiring mega troll. Large companies don't want to pay unless they have to; if there's no litigation threat then there's no reason to pay. Small inventors, universities, NPE's, etc. OTOH want payment; they are not going to donate their patents into a trolling pool without cash up front or some guarantee of payment. And as for VC, at the time, they had better things to invest in, and still do. One could argue they like the small guy with a great story and huge potential, not some tax collector on innovation that is by and large just a group of patent lawyers with no intention of producing anything.

_Our mega troll had to use his own money to get this idea off the ground._ He had to create a threat, a pool of patents that would otherwise be worthless on their own, by spending _his own money._ If this is such a savvy business idea then why did he have to take on the risk personally? And why isn't every wealthy geek jumping on the bandwagon and launching an IV clone? Why bother making products? Why not just be a middleman that produces nothing? I'll leave those questions for the reader. Here's a hint: Because no one, other than the trolls themselves, wanted to exacerbate an already vexing problem.

Of course, to the troll, the system is not broken. To the troll bogus software patents are currency. The only problem the troll has is getting people to pay for his worthless patents; our mega troll does this only by aggregating them into an impenetrable thicket (much larger and broader than any previsouly existing NPE) of remote potential infringement suits and hiding behind ephemeral shell corporations. It's worthless currency that would otherwise be ignored by anyone producing products and offering services (as his former employer routinely did), unless you threaten to sue them.

As with the software bug analogy in an above comment, what the IV founder did was to become part of the problem, inserting himself into the chain of contributors, in order to profit from it.