Product startups Silicon Valley

The dietary habits of Finland’s populace went through a drastic change in 2011. Thanks to the low-carb craze and a rising preference for all-natural products, Finns started eating butter with impunity. Dairies failed to keep up with demand, and a butter crisis ensued. “It’s difficult to believe, but if you went to the grocery store, there was no butter, ” Merja Holma says.

Holma, an animal-nutrition expert, had 20 years earlier developed a cow feed that increased the fat content of their milk. At that time fat was the enemy, and her invention languished. Now it looked like a solution to Finland’s lipid shortage. Holma rushed the feed through successful trials, and her employer, agricultural supplier Raisioagro, began selling it under the name Benemilk. About 1, 000 Finnish farmers now rely on the feed, which turns out to produce not just higher-fat milk but also happier cows that pump out more milk overall. The Finns once again have ample butter.

Raisioagro next started looking for a partner that could help turn Benemilk into a global blockbuster. It needed expertise in patenting the ideas behind its cattle chow, making contact with large-scale dairies in other countries, and perfecting its feed recipe to maximize milk production. Raisioagro tapped Intellectual Ventures, a Bellevue (Wash.)-based technology investment company. The move made sense on one level: IV certainly knew how to handle the dirty work of protecting the ideas behind Benemilk. Less clear was how this loathed company, the supposed enemy of innovation, could help create a hit product.

Founded in 2000, IV has earned a special brand of hatred in the business world as the ultimate patent troll. It doesn’t delay your flight like United, buffer your movie stream like Comcast, or shellac your shrimp with oil like BP. Rather, it hoards ideas. Over the past 14 years, IV has bought tens of thousands of patents and hired teams of scientists and lawyers to brainstorm and file for thousands more. It then wields this intellectual-property portfolio—the world’s largest—like a weapon. Companies can either pay up or face a lawsuit.

“It’s unfortunate that we have a bad reputation. I don’t get why we’re singled out so much”

(GOOG), (AAPL), and (INTC), among other companies, have gritted their teeth and paid IV about $6 billion so far. “I think IV is basically a parasitic tax on the tech industry, ” says Peter Thiel, the venture capitalist and PayPal co-founder who’s also a Facebook board member.

Having earned billions in payouts from powerful technology companies, IV is setting out to build things on its own. Rather than keeping its IP under lock and key, the company is looking to see if its ideas can be turned into products and the basis for new companies. The first wave of products includes an ultra-efficient nuclear reactor, a waterless washing machine, self-healing concrete, and a giant squeegee for sucking up oil spills. One country has asked IV to help lower its temperature, and another wants it to create robots that can replace migrant workers.